Changes from plenary report to adopted text

RemovedDRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

AddedTEXTS ADOPTED

Removedon the proposal for a directive of the European Parliament and of the Council on liability for defective products

AddedP9_TA(2024)0132

Removed(COM(2022)0495 – C90322/2022 – 2022/0302(COD))

AddedLiability for defective products

AddedCommittee on the Internal Market and Consumer Protection, Committee on Legal Affairs

AddedPE745.537

AddedEuropean Parliament legislative resolution of 12 March 2024 on the proposal for a directive of the European Parliament and of the Council on liability for defective products (COM(2022)0495 – C9-0322/2022 – 2022/0302(COD))

▸5 unchanged paragraphs

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2022)0495),

– having regard to Article 294(2) and Article 114 of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90322/2022),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

Changed– having regard to the opinion of the European Economic and Social Committee of ...,24 January 2023,

Added– having regard to the provisional agreement approved by the committees responsible under Rule 74(4) of its Rules of Procedure and the undertaking given by the Council representative by letter of 24 January 2024 to approve Parliament’s position, in accordance with Article 294(4) of the Treaty on the Functioning of the European Union,

– having regard to Rule 59 of its Rules of Procedure,

Changed– having regard to the joint deliberations of the Committee on the Internal Market and Consumer Protection and the Committee on Legal Affairs under Rule 58 of the Rules of Procedure,’Procedure,

▸4 unchanged paragraphs

– having regard to the report of the Committee on the Internal Market and Consumer Protection and the Committee on Legal Affairs (A9-0291/2023),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 1

RemovedRecital 1: (1) Council Directive 85/374/EEC39 lays down common rules on liability for defective products with the aim of removing divergences between the legal systems of Member States that may distort competition and affect the movement of goods within the internal market, and that entail a differing degree of protection of the consumer against damage to health or property caused by such products, and is aimed at providing compensation for such damage.

AddedP9_TC1-COD(2022)0302

RemovedRecital 3: (3) Directive 85/374/EEC has been an effective and important instrument, but it has emerged that it needs to be revised in light of developments related to new technologies, including artificial intelligence (AI), new circular economy business models and new global supply chains the development of which has led to inconsistencies and legal uncertainty, in particular as regards the meaning of the term ‘product’. Experience gained from applying Directive 85/374/EEC has also shown that injured persons face difficulties obtaining compensation due to restrictions on making compensation claims and due to challenges in gathering evidence to prove liability, especially in light of increasing technical and scientific complexity. This includes claims for damages related to new technologies. The revision will therefore encourage the roll-out and uptake of such new technologies, including AI, while ensuring that claimants can enjoy the same level of protection irrespective of the technology involved, and that all businesses benefit from a level playing field with legal certainty, while avoiding disproportionate costs and risks for microenterprises, small-sized businesses and start-ups.

AddedPosition of the European Parliament adopted at first reading on 12 March 2024 with a view to the adoption of Directive (EU) 2024/… of the European Parliament and of the Council on liability for defective products and repealing Council Directive 85/374/EEC

RemovedRecital 4: (4) A revision of Directive 85/374/EEC is also needed in order to ensure coherence and consistency with product safety and market surveillance legislation at Union and national level. In addition, a revision is necessary to complement national laws on extra-contractual liability, and to provide for compensation and a high level of protection for persons injured by defective products. Furthermore, there is a need to clarify basic notions and concepts to ensure coherence and legal certainty and a level playing field in the internal market, and to reflect recent case law of the Court of Justice of the European Union.

Added(As an agreement was reached between Parliament and Council, Parliament's position corresponds to the final legislative act, Directive (EU) 2024/2853.)

RemovedRecital 5: (5) Considering the extensive nature of the amendments that would be required and in order to ensure easy and effective applicability, clarity and legal certainty, Directive 85/374/EEC should be repealed and replaced with a new Directive.

RemovedRecital 6: (6) In order to ensure the Union’s product liability regime is comprehensive and easy and effective to apply, no-fault liability for defective products should apply to all movables, including software, irrespective of the mode of supply and including when they are integrated into other movables or installed in immovables.

RemovedRecital 8: (8) In order to create a genuine internal market with a high and uniform level of consumer protection, and to reflect the case law of the Court of Justice, Member States should not, in respect of matters, within the scope of this Directive, maintain or introduce more, or less, stringent provisions than those laid down in this Directive. For matters other than those provided for under this Directive, national procedural rules should apply in so far as they do not undermine the effectiveness and objectives of the system of product liability provided for under this Directive.

RemovedRecital 9: (9) Under the legal systems of Member States an injured person may have a claim for damages on the basis of contractual liability or on grounds of non-contractual liability that do not concern the defectiveness of a product, for example liability based on warranty or on fault. Such provisions, which also serve to attain inter alia the objective of effective protection of consumers, should remain unaffected by this Directive.

RemovedRecital 10: (10) In certain Member States, injured persons may be entitled to make claims for damages caused by pharmaceutical products under a special national liability system, with the result that effective protection of consumers in the pharmaceutical sector is already attained in those Member States. When it comes to harm suffered due to pharmaceuticals that are not defective, all Member States cover basic losses through national health systems or social security schemes. To cover further losses, some Member States have created special insurance schemes for pharmaceuticals, under which victims of harm are able to get compensation if, despite being non-defective, the pharmaceutical product nonetheless caused harm, without any need to prove fault or defectiveness. The right to make such claims should remain unaffected by this Directive. Amendments to those special national liability systems, health systems and social security schemes as well as the possible introduction of insurance schemes should not be precluded. However, such amendments should not undermine the effectiveness and objectives of the system of product liability provided for under this Directive.

RemovedRecital 12: (12) Products in the digital age can be tangible or intangible. Software, such as operating systems, firmware, computer programs, applications or AI systems, is increasingly common on the market and plays an increasingly important role for product safety. Software is capable of being placed on the market as a standalone product and may subsequently be integrated into other products as a component or may be provided as one or more services, and is capable of causing damage through its execution. The risk of damage is proportionate to the extent to which software is essential to the functioning of a product into which it is integrated or with which it is inter-connected, and in how far it contributes to one or more of the functions of the product, or in how far its absence would prevent the product from performing one or more of its functions. In particular where software that ordinarily and of itself does not pose a significant risk of damage is included in a product with higher safety expectations, the assessment of defectiveness leading to damage should take the original intent of the software producer into account. In the interest of legal certainty it should therefore be clarified that software is a product for the purposes of applying no-fault liability, irrespective of the mode of its supply or usage, and therefore irrespective of whether the software is stored on a device or accessed through a communication network or cloud technologies, or supplied through a software a…

RemovedRecital 12 a (new): (12a) Software in its own right, where specifically intended by the manufacturer to be used for one or more of the medical purposes set out in the definition of a medical device, should qualify as a medical device, while software intended for general purposes, even when used in a healthcare setting, or software intended for lifestyle and well-being purposes should not be considered a medical device. The qualification of software, either as a device or an accessory, should be independent of the software's location or the type of interconnection between the software and a device.

RemovedRecital 12 b (new): (12b) Individual natural persons who are typically employed in the context of a non-personal professional activity related to the development, manufacturing, production or design of a product and do not exert control over the manufacturing, integration, placing on the market or putting into service of the product should not be considered manufacturers in the meaning of this Directive.

RemovedRecital 13: (13) In order not to hamper innovation or research, this Directive should not apply to free and open-source software in accordance with the conditions laid down under this Directive. This is in particular the case for software, including its source code and modified versions, that is openly shared and freely accessible, usable, modifiable and redistributable. Free and open source software, where the source code is openly shared and users can freely access, use, modify and redistribute the software or modified versions thereof, can contribute to research and innovation on the market. Such software relies on public licences that guarantee the freedom to run, copy, distribute, study, change and improve the software. In order to ensure that innovation and research are not hindered, this Directive should not impact the use of such public licences. However where software is supplied in exchange for a price or personal data is used other than exclusively for improving the security, compatibility or interoperability of the software, the Directive should apply.

RemovedRecital 13 a (new): (13a) A manufacturer should be allowed to decide to integrate free and open-source software as a component of a product or authorise its integration, inter-connection or supply by a third party, which should then, in the interest of legal certainty, be considered to be modifications under the manufacturer’s control. In such cases, if the product is placed on the market or put into service in the course of a commercial activity, this Directive should apply, meaning that in that case the manufacturer of the product could be held liable for damage arising from a defect in the free and open source software. However, it should not be possible to hold the developer or producer of the free and open-source software liable for such damage unless the software is supplied to the manufacturer of the product for payment or for personal data other than data exclusively for improving the security, compatibility or interoperability of the software.

RemovedRecital 14: (14) Digital manufacturing files, which contain the functional information necessary to produce a tangible item by enabling the automated control of machinery or tools, such as drills, lathes, mills and 3D printers, should be considered as products, in order to ensure consumer protection in cases where such files are defective. For the avoidance of doubt, it should also be clarified that raw materials and electricity are products. Products that are digital manufacturing files, which are licensed under free and open-source licenses, should be treated analogously to how free and open-source software products are treated.

RemovedRecital 15: (15) It is becoming increasingly common for digital services to be integrated in or inter-connected with a product in such a way that the absence of the service would prevent the product from performing one of its functions, for example the continuous supply of traffic data in a navigation system. The relevant functions that should be considered for the purposes of this Directive are those that have been attributed to the product by its manufacturer or the functions that an average person would reasonably expect the product to have in light of the description of the product provided by the manufacturer. While this Directive should not apply to services as such, it is necessary to extend no-fault liability to such digital services as they determine the safety of the product just as much as physical or digital components. Such related services should be considered as components of the product to which they are inter-connected, when they are within the control of the manufacturer of that product, in the sense that they are supplied by the manufacturer itself or that the manufacturer authorises them or otherwise influences their supply by a third party.

RemovedRecital 15 a (new): (15a) Related services and other components, including software updates and upgrades, should be considered to be within the manufacturer's control where they are integrated, inter-connected or supplied by the manufacturer itself or where the manufacturer authorises or consents to their supply by a third party. In addition, once a product has been placed on the market, it should be considered to be within the manufacturer’s control in so far as the manufacturer decides to supply software updates or upgrades, or authorises or consents to the supply thereof by a third party.

RemovedRecital 16: (16) In recognition of the growing relevance and value of intangible assets, economic loss due to the destruction or irreversible corruption of data, such as digital files deleted from a hard drive, should also be compensated, when consumers cannot access data in the way they could before the damage and they have to pay a price for recovering and restoring that data. This should include, where relevant, the cost of recovering or restoring the data. As a result, the protection of consumers requires compensation for material losses resulting not only from death or personal injury, such as funeral or medical expenses or lost income, and from damage to property but also for destruction or irreversible corruption of data. However, in order to avoid the potential risk of litigation in an excessive number of cases, the destruction or irreversible corruption of data should not be compensated if the economic value of the damage is below EUR 1 000. Nevertheless, destruction or irreversible corruption of data is distinct from data leaks or breaches of data protection rules, and compensation for infringements of Regulation (EU) 2016/679 of the European Parliament and of the Council41, Directive 2002/58/EC of the European Parliament and of the Council42, Directive (EU) 2016/680 of the European Parliament and of the Council43 and Regulation (EU) 2018/1725 of the European Parliament and of the Council44 is not affected by this Directive. Destruction or corruption of data does not automatica…

RemovedRecital 17: (17) In the interests of legal certainty, it should be clarified that Member States should provide that personal injury includes medically recognised damage to psychological health, certified by a court ordered medical expert, including psychologists, and limited to serious adverse effects on the victim’s psychological integrity of such gravity or intensity that it affects the victim’s general state of health and cannot be resolved without therapy or medical treatment, taking , in particular, the International Classification of Diseases of the World Health Organisation into account.

RemovedRecital 18: (18) While Member States should provide full, proportionate and proper compensation for all material losses resulting from death, or personal injury, or damage to or destruction of property, Member States should ensure that their national rules on calculating compensation allow for injured persons to obtain full and proper compensation from the economic operator who is ultimately liable or from any other relevant party.

RemovedRecital 19: (19) In order to protect consumers, damage to any property owned by a natural person should be compensated. Since property is increasingly used for both private and professional purposes, it is appropriate to provide for the compensation of damage to such mixed-use property. In light of this Directive’s aim to protect consumers, property used exclusively for professional purposes should be excluded from its scope. However, several Member States provide for the possibility to extend consumer protection rules to other weaker parties, such as microenterprises as defined in Commission Recommendation 2003/361/EC1a. Member States should therefore be encouraged to compensate damage to property used exclusively for professional purposes by microenterprises. / 1a Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (OJ L 124, 20.5.2003, p. 36).

RemovedRecital 20: (20) This Directive should apply to products placed on the market or, where relevant, put into service in the course of a commercial activity, whether in return for payment or free of charge, for example products supplied in the context of a sponsoring campaign or products manufactured for the provision of a service financed by public funds, since this mode of supply still has an economic or business character. Neither the collaborative development of free and open-source software nor making such software available on open repositories should constitute placing on the market or putting into service. A commercial activity within the understanding of making available on the market might, however, be characterised by monetisation or paid software updates, unless that serves only to recover actual costs, or by the use of personal data for reasons other than exclusively for improving the security, compatibility or interoperability of the software. Occasional supplies by charities or hobbyists should not be considered as taking place in a business-related context.

RemovedRecital 20 a (new): (20a) Products which are not intended to be placed on the market or to be put into service, due to them, for example, being intended only for personal use or for use only in a controlled and confined setting, but which appear on the market or are put into service after, for example, being stolen, should be excluded from the scope of this Directive.

RemovedRecital 20 b (new): (20b) Taking into account the increased complexity of products, of business models and of supply chains, and considering that the aim of this Directive is to ensure that consumers can easily exercise their right to get compensation in case of damage caused by defective products, Member States should ensure that competent national consumer protection authorities and bodies provide all relevant information and tailored guidance to affected consumers to enable them to effectively exercise their right to compensation in accordance with this Directive. National consumer protection agencies and bodies should regularly exchange relevant information they become aware of and closely cooperate with market surveillance authorities.

RemovedRecital 22: (22) In order to protect the health and property of consumers, the defectiveness of a product should be determined by reference not to its fitness for use but to the lack of the safety an average person is entitled to expect or that is required under Union or national law. The assessment of defectiveness should involve an objective analysis and not refer to the safety that any particular person is entitled to expect. The safety that an average person is entitled to expect should be assessed by taking into account, inter alia, reasonably foreseeable use, the presentation, the objective characteristics and the properties of the product in question as well as the specific requirements of the group of users for whom the product is intended. In addition, the compliance with relevant product safety requirements laid down in Union and national law should be taken into account, in particular if non-compliance increased the risk of the product causing damage of the type suffered by the injured person and that risk has materialised. Economic operators should not be liable, however, if they prove that the damage suffered by the injured person would also have occurred if the relevant mandatory requirements under Union or national law had been complied with. Some products, such as life-sustaining medical devices, entail an especially high risk of damage to people and therefore give rise to particularly high safety expectations. In order to take such expectations into account, it should be…

RemovedRecital 23: (23) In order to reflect the increasing prevalence of inter-connected products, the assessment of a product’s safety should also take into account the reasonably foreseeable effects of other products on the product in question. The effect on a product’s safety of its ability to learn after it is placed on the market or put into service should also be taken into account, to reflect the legitimate expectation that a product’s software and underlying algorithms are designed in such a way as to prevent hazardous product behaviour. In particular where software that ordinarily and of itself does not pose a significant risk of damage is included in a product with higher safety expectations, such as in case of life-sustaining medical devices as defined in Article 2, point (1), of Regulation (EU) 2017/745 of the European Parliament and of the Council1a, the assessment of defectiveness leading to damage should take the original intent of the developer or manufacturer of the software into account. In order to reflect that in the digital age many products remain within the manufacturer’s control beyond the moment at which they are placed on the market, the moment in time at which a product leaves the manufacturer’s control should also be taken into account in the assessment of a product’s safety. A product can also be found to be defective on account of its cybersecurity vulnerability where the product does not fulfil safety-relevant cybersecurity requirements laid down in Union or natio…

RemovedRecital 24: (24) In order to reflect the relevance of product safety and market surveillance legislation for determining the level of safety that an average person is entitled to expect, it should be clarified that relevant product safety requirements, including safety-relevant cybersecurity requirements laid down in Union or national law, and interventions by regulatory authorities, such as issuing product recalls, or by economic operators themselves, should also be taken into account in that assessment. Voluntary interventions should, however, not of themselves create a presumption of defectiveness.

RemovedRecital 25: (25) In the interests of consumer choice and in order to encourage innovation, research and easy access to new technologies, the existence, or subsequent placing, on the market of a better product should not in itself lead to the conclusion that a previous product is defective. Equally, the supply of updates or upgrades to a product should not in itself lead to the conclusion that a previous version of the product is defective.

RemovedRecital 28: (28) Online selling has grown consistently and steadily, creating new business models and new actors in the market such as online platforms. Regulations (EU) 2022/20651a and (EU) 2023/9881b of the European Parliament and of the Council regulate, inter alia, the responsibility and accountability of online platforms with regard to illegal content, including products. When online platforms perform the role of manufacturer, importer or distributor in respect of a defective product, they should be liable on the same terms as such economic operators. When online platforms play a mere intermediary role in the sale of products between traders and consumers, they are covered by a conditional liability exemption under the Digital Services Act. However, the Digital Services Act establishes that online platforms that allow consumers to conclude distance contracts with traders are not exempt from liability under consumer protection law where they present the product or otherwise enable the specific transaction in question in a way that would lead an average consumer to believe that the product is provided either by the online platform itself or by a trader acting under its authority or control. In keeping with this principle, when online platforms do so present the product or otherwise enable the specific transaction, it should be possible to hold them liable, in the same way as distributors under this Directive. That means that they would be liable only when they do so present the produc…

RemovedRecital 29: (29) In the transition from a linear to a circular economy, products are designed to be more durable, reusable, reparable and upgradable. The Union is also promoting innovative and sustainable ways of production and consumption that prolong the functionality of products and components, such as remanufacturing, refurbishment and repair.47. In addition, products allow for modifications through changes to software, including upgrades. When a product is modified substantially outside the control of the original manufacturer, it is considered to be a new product and it should be possible to hold the person that made the substantial modification liable as a manufacturer of the modified product, and subject to the same obligations of a manufacturer, since under relevant Union legislation they are responsible for the product’s compliance with safety requirements. However, those requirements should only apply with respect to the modified part of the product, provided that the modification does not affect the product as a whole. Therefore, the liability of the person that made the substantial modification should be limited to the modified part of the product when the modification does not have an impact on the product as a whole. Whether a modification is substantial is determined according to criteria set out in relevant Union law, including Regulation (EU) 2023/988, and national product safety legislation. Modifications should be considered substantial, for instance, if they change t…

RemovedRecital 29 a (new): (29a) Where victims fail to obtain compensation because no economic operator is liable under this Directive or because the liable economic operators are insolvent or have ceased to exist, Member States should be able to use existing national sectorial compensation schemes or establish new ones under national law, which should not be funded by public revenues, to appropriately compensate injured persons who suffered damage caused by defective products.

RemovedRecital 30: (30) In light of the imposition on economic operators of liability irrespective of fault, and with a view to achieving a fair apportionment of risk, the injured person claiming compensation for damage caused by a defective product should bear the burden of proving the damage, the defectiveness of a product and the causal link between the two. It should be possible for Member States to empower national consumer protection bodies to represent the interests of consumers in the process of gathering the evidence necessary to prove the defectiveness of a product, the damage caused by the defective product and the causal link between the two. Injured persons, are, however, often at a significant disadvantage compared to manufacturers in terms of access to, and understanding of, information on how a product was produced and how it operates. This asymmetry of information can undermine the fair apportionment of risk, in particular in cases involving technical or scientific complexity. The Commission Impact Assessment Report accompanying the proposal for this Directive highlighted the fact that the most frequent reasons to reject claims relate to the proof of the defect and its link with the damage, which together account for 53 % of the cases of rejection. On the other hand, the 2018 Commission Evaluation of Council Directive 85/374/EEC assessed that around 60 % of the claims for defective products were successful from 2000 to 2016.

RemovedRecital 31: (31) Therefore, in legal proceedings to adjudicate on compensation for damage caused by a defective product, at the request of a claimant who has presented facts and evidence sufficient to support the plausibility of the claim for compensation, national courts should be able to order the defendant to disclose relevant evidence that is at its disposal, in accordance with national procedural law. At the request of the defendant, national courts should also be able to order the claimant to disclose relevant evidence that is at its disposal, in accordance with national procedural law. The requested disclosure of evidence should be limited to what is necessary and proportionate, and should be carried out in such a way as to ensure that trade secrets, in line with the Directive (EU) 2016/943 of the European Parliament and of the Council1a, are protected. Such evidence should also include documents that have to be created ex novo by the defendant by compiling or classifying the available evidence. Taking in consideration the complexity of certain types of data, especially those from digital products, the evidence to be disclosed should be delivered in an easily accessible and easily understandable manner. / 1a Directive (EU) 2016/943 of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure (OJ L 157, 15.6.2016, p. 1).

RemovedRecital 31 a (new): (31a) This Directive should not affect national law relating to the pre-trial disclosure of evidence.

RemovedRecital 32: (32) In respect of trade secrets within the meaning of Directive (EU) 2016/943, national courts should be empowered to take all necessary measures to ensure their confidentiality during and after the proceedings, while achieving a fair and proportionate balance between the interest of the trade-secret holder to secrecy and the interest of the injured person. This should include at least measures to restrict access to documents containing trade secrets or alleged trade secrets and access to hearings to a limited number of people, or allowing access to redacted documents or transcripts of hearings. When deciding on such measures, national courts should take into account: (i) the need to ensure the right to an effective remedy and to a fair trial; (ii) the legitimate interests of the parties, including the amount of damage, and, where appropriate, of third parties; and (iii) any potential harm for either of the parties, and, where appropriate, for third parties, resulting from the granting or rejection of such measures. / (deleted)

RemovedRecital 33: (33) It is also necessary to alleviate the claimant’s burden of proof provided that certain conditions are fulfilled. Rebuttable presumptions of fact are a common mechanism for alleviating a claimant’s evidential difficulties, and allow a court to base the existence of defectiveness or causal link on the presence of another fact that has been proven, while preserving the rights of the defendant. In order to provide an incentive to comply with the obligation to disclose information, national courts should presume the defectiveness of a product where a defendant fails to comply with such an obligation. Many legislative and mandatory safety requirements have been adopted in order to protect consumers and the public from the risk of harm, including under Regulation (EU) 2023/988. In order to reinforce the close relationship between product safety rules and liability rules, non-compliance with such requirements should also result in a presumption of defectiveness. This includes cases in which a product is not equipped with the means to log information about the operation of the product as required under Union or national law. The same should apply in the case of obvious malfunction, such as a glass bottle that explodes in the course of normal use, since it is unnecessarily burdensome to require a claimant to prove defectiveness when the circumstances are such that its existence is undisputed.