Insights and Analysis
AI-washing – when AI hype becomes a litigation risk
The new Product Liability Directive (EU 2024/2853 – PLD 2024) marks a profound shift in the European liability landscape, strengthening a system based on the liability without fault on the part of economic operators, considered by the lawmakers as “the sole means of adequately addressing the problem of fair apportionment of risk inherent in modern technological production”. One of its most notable changes versus the current version of the directive (PLD 1985) is the presumption introduced by Article 7 PLD 2024, according to which the defectiveness of a product can be interfered, among others, from “any recall of the product or any other relevant intervention relating to product safety by a competent authority or by an economic operator”. This provision represents a significant departure from the traditional burden of proof model and places additional burdens on economic operators in managing recall operations, which may be seen as trigger of potential claims.
In this landscape, the new Regulation 2023/988 on general product safety (GPSR), entered into force on 13 December 2024, imposes on economic operators clear obligations in order to ensure “high level of consumer protection” (art. 1 GPSR), in accordance with “the precautionary principle” (art. 2.5 GPSR). In particular, in case of dangerous product, the manufacturer shall immediately, among others, “take the corrective measures necessary to bring in an effective manner the product into conformity, including a withdrawal or recall, as appropriate” (art. 9.8 GPRSR).
To close the loop, the Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers has significantly expanded the range of tools available to consumer associations across the EU in case of product liability issues, making the use of injunctive measures even more attractive. In this respect, for instance, the qualified entity shall not be required to prove: (a) actual loss or damage on the part of the individual consumers affected by the infringement; or (b) intent or negligence on the part of the trader” (art 8 Directive (EU) 2020/1828). For a qualified entity to seek an injunctive measure, individual consumers shall not be required to express their wish to be represented by that qualified entity.
All these provisions will likely determine an increasing recourse to representative actions, in order to force manufacturers to adopt corrective measure and remedies in line with the high standard set by GPSR and other sectoral laws governing product safety. In some EU countries such trend is already evident.
In recent years, Italy has been witnessing a significant increase in collective actions - both injunctive and compensatory - brought by consumer associations against manufacturers of mass market goods.
Such initiatives, often started in response to recall campaigns launched by manufacturers, aim to obtain the adoption of additional corrective measures and/or further remedies beyond those offered by the manufacturers. In this respect, the use of injunctive relief is proving particularly effective, as courts are vested with particularly broad intervention powers, which, in some cases, even overlap with the prerogatives of the related market surveillance authorities. As a result, we are witnessing numerous decisions – issued after a quick and very summary evidentiary phase - in which manufacturers have been ordered to adopt far reaching measures, requiring significant financial efforts to comply with, under threat of substantial daily penalties.
Should this trend be confirmed in the near future, it may become increasingly necessary to develop a preventive and continuous channel of communication with consumer associations, so to give life to a cooperative approach which could help identifying in advance the potential issues with consumers and prevent collective actions.
Germany's product liability landscape is undergoing significant transformation, particularly at the intersection with collective redress mechanisms. While product liability claims have traditionally been pursued through individual or mass litigation, recent regulatory changes and evolving litigation strategies may reshape the legal environment.
Since the introduction of the Consumer Rights Enforcement Act (Verbraucherrechtedurchsetzungsgesetz, VDuG), qualified entities have brought 11 redress actions in the collective interest of consumers under the new law. However, unlike some other EU member states, there have been no redress actions specifically targeting product liability for personal injury to date. Nevertheless, product liability claims are generally covered by the broad scope of the VDuG.
Also in Germany, qualified entities can apply for (preliminary) injunctions. Injunctive actions can be brought for infringements of laws protecting consumers. The relevant non-exclusive list of provisions includes, inter alia, the provisions of the Medicinal Products Act that regulate the relationship between businesses and consumers, the provisions of the Product Liability Act, provisions of the Product Safety Act and the provisions of Chapter II of Regulation (EU) 2017/745 on medical devices. A qualified consumer association in Germany can thus bring a motion to prohibit the distribution of an unsafe product and may also demand the removal of products already on the market, where provisions for the protection of consumers are infringed. Of course, the consumer association must prove all elements of such a claim.
Currently, most product liability-related litigation still occurs as individual or bundled claims, with health insurance funds playing a significant and active role especially in the life sciences sector. Notable collective actions with a product focus include motions for declaratory judgment based in tort law against automotive companies. Current consumer association actions, as reflected in the public register, predominantly concern technology, social media, subscription/streaming services, and the energy sector, with a strong focus on data protection enforcement.
Changes coming with the implementation of PLD 2024 reinforce the claimant's position and reduce the financial risks associated with joining collective actions. Notable among these are substantial evidentiary facilitations for claimants, extensive disclosure obligations for defendants, the abolition of the previous deductible amounting to €500 and the elimination of the liability limit.
Taken together, the PLD, the GPSR and the Representative Actions Directive create an environment in which product safety, regulatory strategy, and litigation risk are no longer separate domains but deeply interconnected. All these provisions clearly highlight the need for manufacturers – in the near future - to assure, at a production stage, a meticulous control of their production processes – for instance avoiding the launch of products that have not been adequately tested - and of the entire distribution chain. Moreover, in case of recall measures, manufacturers will need to adopt more integrated risk assessment models, ensuring that recall decisions are supported by robust scientific evidence and transparent communication strategies, in order to reduce as much as possible the risk of collective initiatives.
Authored by Matthias Schweiger, Christian Di Mauro, Paolo Lani, and Lena Bauer.