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18/11/2022

Relationship between AI Directive and Product Liability Directive

The revised Product Liability Directive modernises the existing EU-level strict product liability regime and will apply to claims against the manufacturer for damage caused by defective products; material losses due to loss of life, damage to health or property and data loss; and is limited to claims made by private individuals.

The new AI Liability Directive makes a targeted reform of national fault-based liability regimes and will apply to claims against any person for fault that influenced the AI system which caused the damage; any type of damage covered under national law (including resulting from discrimination or breach of fundamental rights like privacy); and claims made by any natural or legal person.

As regards alleviations to the burden of proof, the two Directives introduce similar tools (right to disclosure of evidence, rebuttable presumptions) and use similar wording to ensure consistency, regardless of the compensation route chosen.

Relationship with the Artificial Intelligence Act
The AI Act and the AI Liability Directive are two sides of the same coin: they apply at different moments and reinforce each other. Safety-oriented rules aim primarily to reduce risks and prevent damages, but those risks will never be eliminated entirely. Liability provisions are needed to ensure that, in the event that a risk materialises in damage, compensation is effective and realistic. While the AI Act aims at preventing damage, the AI Liability Directive lays down a safety-net for compensation in the event of damage.

The AI Liability Directive uses the same definitions as the AI Act, keeps the distinction between high-risk/non-high risk AI, recognises the documentation and transparency requirements of the AI Act by making them operational for liability through the right to disclosure of information, and incentivises providers/users of AI-systems to comply with their obligations under the AI Act. The Directive will apply to damage caused by AI systems, irrespective if they are high-risk or not according to AI Act.

Taken from European Commission

18/11/2022

The buzz around AI-based technology has been increasing in recent years, creating excitement for the future. The uncertainty around liability is one of the major barriers to its wider adoption. Businesses struggle to predict how existing liability rules will be applied to AI, and where they fit within the liability framework making it difficult to insure themselves against that risk. On the flip side, the barriers to claiming legal compensation when something goes wrong makes it difficult for consumers to trust and engage with these new technologies. Modernisation of the legal framework has been needed for some time now to address the liability challenges posed by AI technology and these new proposals for the EU come after a long period of debate.

Alongside its proposal for an updated Product Liability Directive, the European Commission has also published a proposal for a new Directive on adapting non-contractual civil liability rules to AI systems.

This AI Liability Directive aims to create certainty around liability for damage caused by AI-enabled products and services. This is proposed new EU law and post-Brexit will not be implemented in the UK. It will, however, impact those businesses operating in the European market and placing AI systems on the EU market.

The proposal provides for two main measures:
- a presumption of causality establishing a causal link between the failure of an AI system and the damage caused
- access to information about specific high-risk AI systems.

Legal framework on AI
European Commission aims to address the risks generated by specific uses of AI through a set of complementary, proportionate and flexible rules. These rules will also provide Europe with a leading role in setting the global gold standard.

This framework gives AI developers, deployers and users the clarity they need by intervening only in those cases that existing national and EU legislations do not cover. The legal framework for AI proposes a clear, easy to understand approach, based on four different levels of risk: unacceptable risk, high risk, limited risk, and minimal risk.

Taken from "Taylor Wassing news" and European Commission

03/11/2022

For nearly 40 years, the Product Liability Directive (PLD) has provided a legal safety net for citizens to claim compensation when they suffer damage caused by defective products.

However, the PLD dates back to 1985 and does not cover categories of products emerging from new digital technologies, like smart products and artificial intelligence (AI). Similarly, the current rules are unclear about how to determine who would be liable for defective software updates, defective machine learning algorithms or defective digital services that are essential for a product to operate. The current rules are silent on who is liable when a business substantially modifies a product that is already on the market or when a product has been directly imported from outside the Union by a consumer. This makes it difficult for businesses to assess the risks of marketing innovative products and leaves victims of damages without the possibility of compensation for an increasing number of products. The revision of the PLD will ensure that the new rules for product liability are adapted to new types of products to the benefit of both businesses and consumers.

2. What products will be covered by the revised rules?

The revised product liability rules will apply to all products, from garden chairs to cancer medicines, from agricultural products to advanced machinery but also to software updates. Like other products, defective software and AI systems could also cause harm, for example if they are embedded in, a cleaning robot, or placed on the market as a digital product in its own right, like a medical health app for a smartphone. The new PLD makes explicit that injured people can claim compensation if software or AI systems cause damage.

The new rules also consider products stemming from circular economy business, namely business models in which products are modified or upgraded. The proposal creates the legal clarity that industry needs in order to embrace circular business models. The rules of the PLD (including the possible presumptions) would apply to remanufacturers and other businesses that substantially modify products in case these products cause damage to a person, unless they show that the defect relates to an unmodified part of the product.

3. How do the new rules ensure a better protection for consumers?

The new rules allow people to claim compensation for harm caused by a defective product, including personal injury, damage to their property or data loss. People can also claim compensation if the property that was damaged was used for professional as well as private purposes, such as a company cargo bike or home office equipment. To reflect the fact that product safety can be affected by software updates, upgrades and digital services; people will now also be able to claim compensation when these are defective and cause harm.

The new rules also help to put people claiming compensation on an equal footing with manufacturers, by requiring manufacturers to disclose information and by alleviating the burden of proof in complex cases, e.g. certain cases involving pharmaceuticals or AI.

Taken from European Commission

02/11/2022

Inadequate Product Manuals and Instructions May Lead to Manufacturer or Seller Liability for Resulting Injuries.

Products liability based on improper manuals or instructions can arise in either of two circumstances: when foreseeable risks could have been prevented by proper instructions or warnings, but the warnings were not given; or when the warnings or instructions themselves, when followed, caused the injuries.

A manufacturer or seller generally has no duty to include in its manual or instructions warning about open and obvious dangers, but they do have a duty to warn about hazards that could arise from any misuse or alteration of the product that is foreseeable.

A manufacturer’s duty to warn continues even after the sale of the product. In other words, if a product maker or seller becomes aware, post-sale, that a product has a previously unknown potential to cause injury, it must, if possible, communicate that information to the persons who should be warned. This duty may exist only if the users are not aware of the risk, and the same defenses may apply as those, relating to time-of-sale instructions.

Although a manufacturer may escape liability for injuries resulting from its otherwise safe product if it provided an appropriate product manual and gave proper instructions, but the user failed to heed them, a manufacturer cannot evade responsibility for an unsafe product by warning the user, no matter how extensive the warnings given. If an unsafe product can be made safe, the manufacturer must make it safe, and product manuals and instructions alone will not suffice to make an otherwise defective product safe.

31/10/2022

Design Defects Supporting Products Liability Claims

Design defect cases focus on flaws and errors in a product's design that make it unreasonably dangerous to consumers. If a product has a design defect, all products of the same type have the same defect. This is in contrast to a manufacturing defect, which is created once or up to a few times during the production of a batch. Unlike other types of products liability cases, which can be brought against a seller or assembler, a design defect case is usually only brought against the manufacturer responsible for the design of the product at issue.
What Does a Plaintiff Have to Prove in a Design Defect Case?

A manufacturer's liability for design defects arises when a plaintiff is able to show the product posed a foreseeable risk of danger to a consumer using it for its intended purpose.

Jurisdictions have different approaches to each other:
- a plaintiff must show that it was practically and economically feasible for the manufacturer to adopt a safer design (sometimes called the “risk-utility” test).
- it is not enough to simply show a design defect. The plaintiff must also show that it was possible for the manufacturer to adopt a reasonable alternative design.
- a plaintiff must show that the product posed a risk greater than what the ordinary consumer would expect.

Some jurisdictions follow the consumer expectations test, rather than the alternative design test. The consumer expectation test asks whether a product poses a risk of danger that exceeds what the ordinary consumer would expect. The arguments in those jurisdictions often hinge on who the "ordinary consumer" is.

When a product has a design defect, the plaintiff most often sues on the basis of negligence or strict liability. The negligence cause of action will allege that the manufacturer knew or should have known of the risk associated with the design. A plaintiff has a stronger argument if he or she can show that an alternative design would not have reduced profits significantly. A strict liability cause of action alleges that the manufacturer placed a defective product posing an unreasonable risk of danger into the stream of commerce.

Taken from "Justia".

31/10/2022

Defects - Instructions For Use

A claim based on a failure to warn does not assert that the product has any physical flaws. Instead, a plaintiff bringing this claim alleges that the manufacturer failed to provide adequate warnings or instructions about the safe use of the product, and they were injured due to the undisclosed risk. If they prevail, they can receive damages for economic and non-economic losses, ranging from their medical costs and lost income to their pain and suffering and lost enjoyment of life.

Sometimes a warning does not appear on a product. A manufacturer might put a warning on the packaging for the product or in a manual. Depending on the situation, this may not be good enough to avoid liability. If a likely user of the product will not see the packaging or the manual, they would not see the warning either. In these cases, the manufacturer might need to put the warning on the product directly to ensure that it is visible to people who would face the risk. While some products are complex and technical, a manufacturer also has a duty to convey the warning in language that the typical user would understand.

Taken from "Justia"

30/10/2022

Evolving safety issues in the automotive industry

Very recently, European Union (EU) type-approval law has taken a quantum leap forward in terms of vehicle safety. As of 6 July 2022, Regulation (EU) 2019/2144 regarding the general safety of motor vehicles and the protection of vehicle occupants and vulnerable road users is mandatory in all EU member states. With certain transition periods, in future all motor vehicles will have to be equipped with additional safety-relevant features, such as advanced emergency braking systems, intelligent speed assistance, emergency lane‐keeping systems, driver drowsiness and attention warning, advanced driver distraction warning and reversing detection. These safety systems are considered to have a high potential to considerably reduce casualty numbers. What is more, the requirements specified in UN Regulations 155 and 156 will become an indispensable part of the type-approval process going forward. These global technical regulations set demanding standards for manufacturers when it comes to establishing and maintaining processes for combatting cyber risks and updating vehicle software.

Taken from "Financial Worldwide"

29/10/2022

The value of a proactive legal risk management policy for retail companies.

Successful retailers interact with their customers in countless ways. When customers come through their doors, they interact with employees, products and the retail space itself. Retailers also increasingly interact with their customers online, where they collect and analyse information about their customers, and communicate with them both about ongoing transactions and the possibility of future sales. The resulting complexity makes the retail sector an exciting and challenging place to do business, but it also means the legal risks facing retailers are equally complex and require proactive and sophisticated risk management strategies.

Key areas of risk for retailers:

Product risk.This includes risks associated with products that may be dangerous or cause injury; compliance risks associated with the sales of regulated products; and more general product quality issues that may require early communication with distributors.

Information management risk.Retailers often collect and mine large amounts of information about customers and potential customers, including through sophisticated reward programs and in-house credit programs. There are significant compliance risks associated with the use of such data and potential civil or regulatory liability for privacy and anti-spam breaches.

Employee risk.Effectively managing employees, including their hiring, training, supervision and discipline, is key to mitigating litigation risk, both in relation to the employees themselves and in defending against claims made regarding employee conduct.

Personal injury and property risk.Given the square footage controlled by retailers, it is essential that they manage risks associated with their property, including the risk of personal injury involving customers or employees, and special risks to the premises.

Loss prevention risk. While it is obvious that retailers must manage loss prevention effectively to reduce preventable losses and ‘shrink’, an effective approach to loss prevention must also recognise and manage the risks associated with policies that may unfairly treat employees or customers, for example, in cases of suspected theft or fraud.

Benefits of proactive risk management:
Investing in the development of proactive approaches to risk management can not only prevent many legal risks from materialising, but can also mitigate the costs and damage when they do. Proactive risk management not only ensures technical legal compliance, but in the event of disputes will enhance credibility, prevent escalation and preserve key evidence. Since much of risk management depends on effectively developing relationships with outside counsel, insurers, regulators and partners in the supply chain, retailers can quickly develop a reputation for corporate citizenship that may go a long way in the event of serious litigation or regulatory charges.

Taken from "Financier Worldwide"

22/10/2022

Taken from European Union Aviation Safety Agency

22/10/2022

The Civil Aviation Authority of Singapore (CAAS) and the European Union Aviation Safety Agency (EASA) have signed a Memorandum of Understanding (MOU) to collaborate on urban air mobility to support the development, deployment and safe operation of vertical take-off and landing (VTOL) aircraft.
The agreement was signed on October 18, 2022, on the side-lines of the inaugural European Union–Asia Symposium on Unmanned Aircraft Systems and Urban Air Mobility.

Under the MOU, CAAS and EASA will collaborate in the following three areas:
- Development of Regulatory Standards
- Outreach / strategies for outreach to relevant stakeholders on urban air mobility including educational outreach to the public and the industry.
- Conferences and Other Activities.

Taken from EASA

09/10/2022

Annual Safety Recommendations Review produced by the European Union Aviation Safety Agency (EASA), provides an overview of the safety recommendations that have been addressed to EASA in 2021 (available via Link below).

This annual review aims at providing feedback on the follow-up given to safety recommendations in the context of openness, transparency and accountability that characterises European Public Administration.
Apart from its safety-related informative character, this review is also expected to provide relevant information related to safety concerns raised, for both EASA and its stakeholders, including the European public.

Taken from EASA
https://www.easa.europa.eu/en/document-library/general-publications/annual-safety-recommendations-review-2022

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