Update: Reform of product liability adopted - New liability and litigation risks for companies!

1st level:

• manufacturer and 
  quasi-manufacturer
• manufacturer of a component, where that component has been integrated into, or inter-connected with the product within the manufacturer’s control and has caused the product to be defective
• any natural or legal person that substantially modifies a product outside the manufacturer’s control and thereafter makes it available on the market

2nd level, in the case of a manufacturer established outside the EU:

• importer of the product/component
• authorised representative of the manufacturer (in terms of product safety law)
• subsidiary: fulfilment service provider (Storage, packing and shipping service provider)

3rd level, in the case that none of the above economic operators can be identified:

• distributor
• provider of online platforms

(Art. 8) 

“‚Product‘ means all movables, even if integrated into, or inter-connected with, another movable or an immovable; it includes electricity, digital manufacturing files, raw materials and software.“
(Art. 4 no. (1))
I.e., an explicit extension of the product concept to:

• digital manufacturing files 
  (esp. files for 3D printing)
• raw materials (e.g., gas and water)
• any software, including stand-alone software and AI systems (except free and open-source software) 

The central condition for liability is a product defect. A product is defective when it does not provide the safety which a person is entitled to expect, taking all circumstances into account, including: 

• presentation of the product
• use to which it could reasonably be expected that the product would be put
• time when the product was put into circulation
  (Art. 6 Directive 85/374/EEC; Section 3 ProdHaftG) 

Amendment of the list of the relevant circumstances, among others:

• effect on the product of any ability to continue to learn or acquire new features after the product is placed on the market (e.g., AI systems)
• in case of smart products, where the manufacturer retains control over the product after placing the product on the market, the moment in time when the product left the manufacturer’s control will be relevant, i.e., not just the moment in time when the product was placed on the market (e.g., updates)
• reasonably foreseeable effect on the product of other products that can be expected to be used together with the product, including by means of inter-connection
• relevant product safety requirements, including safety-relevant cybersecurity requirements
• any recall of the product or any other relevant intervention relating to product safety by a competent market surveillance authority
• specific needs of the group of users for whose use the product is intended 
  (e.g., life-sustaining medical devices)
• in case of products whose very purpose is to prevent damage, any failure to fulfil that purpose (e.g., smoke detectors)

(Art. 7) 

The producer shall be liable for damage caused by a defect in his product.“
(Art. 1 Directive 85/374/EEC)

• Included are damages caused by death or by personal injuries, and 
• damage to, or destruction of any item of property other than the defective product itself, provided that the item of property is of a type ordinarily intended for private use or consumption, and was used by the injured person mainly for his own private use or consumption.
  (Art. 9 Directive 85/374/EEC) 

• Clarification that personal injury includes medically recognised damage to psychological health
• Extension to damage caused by the destruction or corruption of data that are not used for professional purposes (e.g. costs for rescuing or restoring data
• Retention of the exemption of damages to the product itself, even if damaged by integrated or inter-connected components
• No compensation for damage to, or destruction of any property only, if the property is used exclusively for professional purposes

(Art. 6) 

• Maximum amount for damage resulting from personal injury of at least EUR 70 million
  (Art. 16 Directive 85/374/EEC; 
  e.g., in Germany: maximum amount of EUR 85 million, cf. Section 10 ProdHaftG)
• Threshold of EUR 500 for damage to or destruction of property
  (Art. 9 lit. b) Directive 85/374/EEC; Section 11 ProdHaftG)
• Exemption from liability for products that were neither manufactured by the producer for sale or any form of distribution for economic purpose nor manufactured or distributed by him in the course of his business 
  (Art. 7 lit. c) Directive 85/374/EEC; Section 1 para. 2 no. 3 ProdHaftG) 

• No maximum amount for damage resulting from personal injury 
  
  
• No threshold for damage to or destruction of property
  
  
• No exemption from liability for placing products on the market outside business activity

(Further exemptions from liability: Art. 11)  

• Standard limitation period of 3 years beginning from the day on which the injured party becomes aware of the damage, or should reasonably have become aware
  (Art. 10 Directive 85/374/EEC; Section 12 ProdHaftG)
• Expiry period of 10 years from putting a product into circulation
  (Art. 11 Directive 85/374/EEC; Section 13 ProdHaftG)

• In principle: Continuation of the standard limitation period of 3 years from the injured party’s knowledge
  (Art. 16 para. 1)
  
  
• Continuation of the expiry period of 10 years from placing the product on the market or putting it into service resp. making the product available or putting it into service following its substantial modification (Art. 17 para. 1)
• Possible prolongation of the expiry period to 25 years for latent health damages where proceedings could not have been initiated within the expiry period 
  (Art. 17 para. 2) 

• Conditions: Successful request by the claimant before a national court; presentation of facts and evidence sufficient to support the “plausibility” of the claim
• Consequences: Obligation to disclose all relevant evidence as far as the court deems necessary and proportionate

(Art. 9) 

Principle: The claimant is required to prove the damage, the defect and the causal relationship between defect and damage.

(Art. 4 Directive 85/374/EEC; Section 1 para. 4 ProdHaftG) 

Substantial simplifications of the burden of proof for claimants, among other things:

• Presumption of defectiveness when in breach of the obligation to disclose evidence.
• Presumption of causality for typical damages, if defectiveness has been established.
• In complex cases: Presumption of defectiveness and/or causality if the claimant can demonstrate likelihood.

(Art. 10 para. 2-5)