Product liability in the age of AI — Proposal for a “two track” solution

Ann-Kristin Mayrhofer

Keywords

Civil Liability; Product Liability; Defect-based Liability; Strict Liability; Artificial Intelligence; Machine Learning.

Abstract

In 1985 the Council of the European Communities adopted the Directive 85/374/EEC to harmonise product liability within Europe. In 2024, this directive will most likely be replaced by a new Product Liability Directive designed to reflect the technical developments of the last 40 years. The new Directive contains some significant changes. However, regarding the overarching concept of product liability, it remains faithful to the old Directive: Manufacturers are still not liable for all damage caused by their products, but only for damage caused by a “defect” in a product. This defect-based approach is problematic. When it comes to new digital technologies, especially Artificial Intelligence, it is difficult for courts to assess a product’s defectiveness. Moreover, in many cases, the defect-based approach is insufficient to provide liability solutions that are both efficient and fair.
This paper seeks to lay the foundations for a more comprehensive reform: The current product liability for defective products should be complemented by a second “track” of product liability. In the case of particularly dangerous products, such as autonomous cars and medical devices, manufacturers should compensate victims regardless of whether their products are defective or not. Such “truly” strict liability could partially relieve courts of the burden of assessing a product’s defectiveness and would lead to fair and efficient prevention and distribution of damages. Damage costs would be allocated to manufacturers as the cheapest cost avoiders. In addition, the advantages and disadvantages of dangerous products would be more evenly distributed among manufacturers, users, consumers and “innocent bystanders”.
However, to avoid over-deterrence and stifling of innovations strict liability should be limited to particularly dangerous products. Legislators should introduce a general clause of truly strict liability, which would allow courts to assess whether a product is particularly dangerous or not. A general clause is preferable to a list of particularly dangerous products because it would provide for the flexibility needed to deal with rapidly developing technologies.

Table of contents

1. The defect-based approach of product liability and its limitations     
1.1. Objectives of liability law: Efficiency and Fairness
1.2. Difficulties of the defect-based approach   
1.3. Insufficiencies of the defect-based approach         
2. Truly strict liability as an appropriate complement to the defect-based approach     
2.1. Benefits and downsides of truly strict product liability       
2.2. Differentiated approach: A general clause of truly strict liability    
2.3. Justification of manufacturers’ truly strict liability  
3. Outlook: Follow-on questions of a “two track” solution of product liability    
Bibliography