The European Parliament and the Council of the EU have reached a political agreement on the updated directive on liability for defective products, which for the first time will specifically include software in the definition of ‘product’.
Main changes to the product liability regime:
- The scope is extended to all kinds of software, including AI, and digital manufacturing files. Open-source software that is developed or supplied outside of a commercial activity benefits from an exception.
- The right to compensation will also cover non-material losses, such as medically recognized damage to psychological health, and destruction or irreversible corruption of data.
- Significant changes are made regarding the burden of proof, as the courts will presume a product’s defectiveness when a claimant “faces excessive difficulties in particular due to technical or scientific complexity and the product is likely to be defective.”
- In the case of products or components from non-EU manufacturers, the rules require an EU representative (importer, authorized representative, fulfillment center/online platform) that can be held liable for a product that caused damage, even if the product was not bought in the EU.
The revised Product Liability Directive remains to be formally endorsed by the European Parliament and the Council. It will have to be transposed into Member States’ national law, and is expected to come into effect in 2026.
Developers Alliance was actively engaged in the debate on the revision of the Product Liability Directive, sharing its concerns on the negative consequences of a disproportionate liability regime for software, and proposing necessary alleviations. We were particularly concerned about the extension of the scope to standalone software that is not directly linked to the functionality of a product. We also advocated for a clear exception for open source software, mindful of the indirect impact of a strict liability regime on software development (which relies on open source components).
The following quote can be attributed to Karina Stan, Director of EU Policy of the Developers Alliance:
“While we are waiting for the final text of the directive, which will provide the concrete details of the new liability regime, we note with regret that the political agreement maintains many burdensome elements which will negatively impact the cost of software in the EU and profoundly impact software developers.
We recognize co-legislators’ consideration, especially of the Parliament’s rapporteurs and shadow rapporteurs, for an exception for free and open source software. Nevertheless, we see an indirect negative effect of the strict liability regime on the use of open source components for software development, an incentive for European software developers to use more proprietary software.”
About The Developers Alliance
The Developers Alliance is the world’s leading advocate for software developers and the companies invested in their success. Alliance members include industry leaders in consumer, enterprise, industrial, and emerging software development, and a global network of more than 75,000 developers.
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