The Council and the European Parliament reached agreement on the Defective Product Directive on 14 December. It will update EU rules to adapt them to the reality of new technologies, digital products and the circular economy.
The new directive will update the current civil liability regulation, which dates back four decades. The aim is to provide better protection for consumers and greater legal certainty for businesses. For example, the liability directive extends the definition of «product» to files and digitally manufactured software. But it leaves out free and open source software that is developed or supplied outside the course of a commercial activity.
Compensation for defective products
The Product Liability Directive, also known as the Product Liability Directive, ensures that if a person suffers damage caused by a product they can claim compensation from the manufacturer or the company that placed the product on the single market.
This compensation shall cover material and non-material losses resulting from the damage, in so far as they are compensable under national law.
Controversy over the burden of proof
One of the aims of the Directive is to ensure that consumers have a real possibility to obtain compensation. In view of the increasing technical complexity of many products, Member States should ensure that the injured party can request access to the relevant evidence available to the manufacturer in order to prove his claim.
Even so, there is a last way out when a plaintiff encounters excessive difficulties in proving the defectiveness of the product or the causal link between the defectiveness of the product and the damage. For the court may decide that the plaintiff is only required to prove the likelihood that the product is defective or that the defect caused the damage.
This point has raised concerns among European companies in different sectors. Some warn in a joint communiqué that this directive could open the door to a litigation culture in Europe and hinder investment in innovation. According to the text: «A cornerstone of the current directive is that the claimant must prove the damage, the defect and the causal link between the two. This is a vital part of our European civil justice system. We are deeply concerned about the broad exceptions to this concept linked to undefined terms, which de facto lead to a reversal of the burden of proof. The scope of mitigation must be significantly reduced, and it must be made clear what claimants must do and prove before any liability can be presumed».
Online marketplaces
Internet platforms or marketplaces can also be held liable for a defective product if they present it or allow the transaction for sale. If the average consumer can believe that it is the platform itself or a trader under its authority or control that provides the product, it can be held liable for the defective product.
Circular economy
The new directive also takes into account the particularities of the circular economy. Products are increasingly reused, repaired and upgraded throughout their life cycle. Thus, when a product is substantially modified beyond the control of the original manufacturer and placed on the market or put back into service, the new directive stipulates that the company that carried out the modification must be held liable as the manufacturer of the final product.
Importers
The directive also provides that products or components from manufacturers located outside the Union must offer the same level of protection. In this case the importer, the manufacturer’s authorised representative or, as a last resort, the compliance service provider may be held liable.
At Confianz we remain attentive to the final drafting of the Defective Product Directive and its transposition into Spanish law. Because our aim is always to offer our clients the best advice.