EU's New Product Liability Rules: Game-Changer For AI & Software Businesses

On November 18th, 2024, Directive 2024/2853 on Liability for Defective Products ("PLD") was published in the Official Journal of the EU.

PLD shall replace Directive 85/374, after 40 years from its entry into force, in order to align with the emergence of ground-breaking technologies, such as AI.

It is part of EU's AI Strategy (along with Regulation 2024/1689 known as "AI Act" and the Proposal for AI Liability Directive, known as "ALID").

The EU's updated product liability rules transform how businesses handle software and AI. Key takeaways:

• Software = Product: Software, including SaaS and cloud-based tools, is now considered a product. Defects can trigger liability, just like physical goods.