by Stephen McGuinness , Conor Morgan March-25-2025 in Healthcare Law
The member states of the European Union have now given their approval to the final wording of the new product liability directive (2022/0302), which is set to replace the existing directive. This new directive is scheduled to be implemented across all member states by 9 December 2026. The Irish government has confirmed that steps are being taken to incorporate the directive into Irish law. Until the new directive is transposed into Irish law or until 9 December 2026, the Liability for Defective Products Act,1991 will remain the primary relevant legislation. However, thereafter the new directive will be applicable to all products put on the market after this date.
The need for reform in this area of law has arisen due to the complexities of contemporary products and technologies. This directive will significantly alter the landscape for product liability claims within the European Union, with substantial implications for manufacturers, developers, suppliers, and sellers. It will also be necessary for Insurers, in particular, to be acutely aware of the relevant changes within the directive to product liability law and the opportunities and challenges these changes present.
Definition of Producer
Under the previous regime, a producer was defined as the manufacturer, but it also included the supplier, in circumstances where the identity of the producer could not be identified. The new Product Liability Directive has expanded the definition of a producer to encompass a broader range of entities involved in the creation, distribution, and maintenance of products. This expanded definition aims to address the complexities of modern products and technologies, ensuring comprehensive consumer protection and accountability.
Traditional Manufacturers: As with the old directive, traditional manufacturers who produce finished goods, raw materials, or component parts are considered producers. This includes entities that design, create, and assemble physical products.
Digital Content and Service Providers: The new directive explicitly includes providers of digital content and services as producers. This means that companies offering software applications, online platforms, digital media, and other digital services are now liable for defects in their products.
AI and Algorithm Developers: Developers of artificial intelligence (AI) systems and algorithms are also classified as producers. This expansion addresses the unique risks associated with AI-driven technologies, such as autonomous vehicles, smart home devices, and AI-powered medical diagnostics.
Importers and Distributors: Importers and distributors who bring products into the European Union or distribute them within the EU are considered producers if the actual producer cannot be identified. This ensures that there is always a liable party within the EU for defective products.
Suppliers of 3D-Printed Products: Suppliers involved in the production and distribution of 3D-printed products are considered producers. This includes entities that provide 3D printing services or sell 3D-printed items, addressing the unique risks associated with this emerging technology.
Maintenance and Repair Service Providers: Companies that provide maintenance, repair, or refurbishment services for products are also classified as producers. This expansion ensures that entities responsible for the ongoing safety and functionality of products are held accountable for any defects arising from their services.
Definition of Product
The new product liability directive also brings significant changes to the definition of what constitutes a product. Under the old directive, a product was defined as any tangible movable item, even if it is incorporated into another movable item or into an immovable item. However, the new directive expands this definition to include digital manufacturing files and software, reflecting the advancements in technology and the increasing integration of digital elements into products.
This expanded definition acknowledges the growing importance of digital components in modern products and ensures that they are covered under the new directive. This change is particularly relevant for insurers, as it broadens the scope of potential claims and requires a more comprehensive understanding of the risks associated with digital products.
Burden of Proof
The product liability directive aims to shift some of the burden of proof from claimants to manufacturers and suppliers. Insurers must understand how this shift impacts their claims processes and the potential for increased litigation costs. The directive will shift the burden of proof so that it is in favour of claimants by introducing rebuttable assumptions regarding the defectiveness of a product and/or causation between the defectiveness and the damage occurred. The presumption of defectiveness is based on non-compliance with newly introduced disclosure duties, mandatory product safety requirements, or an obvious malfunction. Causation is presumed if the damage is of a kind typically consistent with the established defect. These mechanisms have been introduced to reduce the burden on claimants, in complex cases, such as those involving complex technologies.
Damages
The definition of damage under the new product liability directive has been broadened to encompass a wider range of recoverable losses. While the previous directive primarily focused on physical damage to persons and property, the new directive includes several additional categories of damage, reflecting the evolving nature of products and the types of harm they can cause.
Loss or Corruption of Data: One of the significant additions to the definition of damage is the inclusion of compensation for the loss or corruption of data. In today's digital age, data is a critical asset for both individuals and businesses. The loss or corruption of data can lead to significant financial and operational disruptions. By including this category of damage, the directive acknowledges the importance of data and the potential harm that can result from its loss or corruption.
Damage to Property: The new directive continues to cover damage to property, but it provides a more comprehensive definition. This includes not only physical damage to tangible property but also any economic loss resulting from the damage.
Medically Recognised Harm to Psychological Health: Another significant addition to the definition of damage is the inclusion of medically recognised harm to psychological health as a form of personal injury. This acknowledges the growing recognition of mental health issues and the impact that defective products can have on an individual's psychological well-being. For example, if a defective medical device causes a patient significant stress and anxiety, the patient can claim compensation for the psychological harm suffered.
Removal of the €500 Threshold: The previous directive included a threshold of €500 on the amount of compensation that could be claimed. This threshold has been removed in the new directive, making it easier for claimants to seek compensation for smaller amounts of damage. This change is likely to lead to an increase in the number of claims, as individuals and businesses will no longer be deterred by the threshold.
Extended Time Limits for Claims: The new directive also extends the time limits for bringing claims in certain cases. Under the previous directive, there was a ten-year long-stop for claims, meaning that claims had to be brought within ten years of the product being put into circulation. The new directive extends this long-stop to 25 years in some cases, such as those involving latent defects that may not become apparent until many years after the product has been put into circulation. This extension provides greater protection for consumers and ensures that they have sufficient time to bring claims for defects that may not be immediately apparent.
Summary
It is evident that the various amendments to the product liability directive will make it easier for claimants to succeed with their product liability claims. There may also be an increase in claims given the reduction of the minimum threshold and expansion of the definition of damage. The changes to the rebuttable presumption will also have a significant effect on the management of claims in this area. While these are clearly new challenges for insurers the new directive might also open up further business opportunities for insurers and underwriters, the potential entities exposed to the directive bringing new demand for product liability coverage.
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About the Authors
Stephen McGuinness
Stephen is a partner in the Healthcare team at Hayes solicitors. Stephen specialises in the defence of medical and dental negligence claims taken against hospitals as well as individual medical and dental practitioners.
Conor Morgan
Conor is a partner in the Healthcare team at Hayes solicitors. He has over nine years’ experience working for leading firms in both Ireland (north & south) and England. Conor advises clinical practitioners and their indemnity bodies on the defence of medical negligence claims.