The practice
More and more companies are developing software, integrating AI functionalities into their products or services, or placing products on the market in which software plays an essential role. The focus is often on innovation, efficiency and new commercial opportunities.
Much less attention is paid to another question: what legal risks does this technological development entail?
With the new European Product Liability Directive (Directive (EU) 2024/2853), product liability law is being adapted to the digital economy.
For companies that develop software, use AI or place products with digital functionalities on the market, this may have important consequences.
The legal issue
The new Product Liability Directive modernises European product liability law in three important respects.
First, software is expressly classified as a product. This also includes applications and AI systems. A defective software product or AI system may therefore, under certain circumstances, give rise to product liability.
Second, the Directive clarifies and expands which parties may be held liable. In addition to manufacturers and importers, authorised representatives, fulfilment service providers, parties that substantially modify a product and – under specific conditions – providers of online platforms may also fall within the scope of the rules.
Third, the scope of compensable damage is expanded. In addition to personal injury and damage to property, damage resulting from the destruction or corruption of data may, under certain conditions, also be eligible for compensation.
The Product Liability Directive is a European directive. This means that each Member State must transpose the rules into national law by 9 December 2026.
Although the Directive largely aims for maximum harmonisation, differences may still arise in certain areas due to national implementation and case law. Companies operating internationally would therefore be well advised to monitor these developments closely.
Legally sharp: Tips for entrepreneurs
Is your company involved in developing, selling, importing or distributing products in which software or AI plays a role? If so, now is the time to act.
Although the new rules will only apply to new products from December 2026, preparation is already essential. Software development, contracts, quality procedures and insurance policies are often put in place months or even years before market launch. Waiting until implementation is therefore, in practice, too late.
Start by addressing the following questions in good time:
- Is it clear who is responsible for developing, testing, maintaining and securing the software?
- Are responsibilities for software updates, security patches and bug fixes properly regulated in the relevant contracts?
- Does your company have procedures in place to identify and remedy software errors in good time and, where necessary, to inform users adequately?
- Can you demonstrate afterwards which software version or update was supplied to a customer, and when?
- Do your agreements with suppliers, developers and customers still reflect the new regulatory framework?
- Does your liability insurance provide sufficient cover for risks relating to software and AI?
Contact
Do you have questions about the impact of the new Product Liability Directive on your company? Please feel free to contact us at info@acginter.com.
