The Internet of Things Webinar Series: Product Liability in Europe

by Hogan Lovells

On April 11, 2018, Hogan Lovells hosted another installment in its 2018 webinar series on emerging issues involving the Internet of Things (IoT). This webinar focused on product liability in Europe.

New connected products are hitting the market at an unprecedented rate, so staying aligned with the evolving regulatory and legal issues is more important than ever. With the opportunity to hear from those with direct and versatile industry experience, this session promises an insightful and comprehensive look at the most important legal issues, questions, and solutions surrounding product liability.

Valerie Kenyon started the webinar by highlighting the product liability rules applicable to IoT in the EU.  She started with an overview of the Product Liability Directive, and then moved to a consideration of how the directive is being reviewed to see whether it is “fit for purpose” in the future.  Hogan Lovells is very actively involved in the Product Liability Directive consultation and is doing a great deal of work in the context of liability for emerging technologies.

Tobias Faber then went through some practical real-life examples coming from the energy and infrastructure sector. Tobias discussed two cased studies covering a predictive maintenance contract model for gas-fired power plants and a smart factory example from the manufacturing industry which leveraged Artificial Intelligence (AI) to deliver Batch-size 1 productions. One conclusion drawn by these examples is that many traditional business models will be disrupted and are transforming to a more serviced based model which is already common within the IT-industry (Infrastructure as a Service, IaaS). Tobias also touched on the legal challenges of contract conclusion by AI and the liability regime within the new business models.

Sebastian Polly afterwards talked about Over-the-air (OTA) software updates. OTA software updates allow a company (manufacturer, supplier, service provider, etc.) to remotely/wirelessly access and change the programming of its products when it is already with others (customers, users, etc.). Numerous chances but also legal challenges come along OTA software updates. In particular, they are a new way to identify and monitor safety-relevant activities (e.g. big data). Also, they are an option to directly reach potentially affected persons (e.g. by sending a warning) or to effectively and swiftly solve potential product issues (e.g. by reprogramming certain features). In doing so, OTA software updates might even become legally required (e.g. to meet reasonable safety expectations). Moreover, OTA capabilities might lead to a duty to collect and diligently assess certain data (e.g. on safety-relevant activities). Besides, a company might need somebody’s consent to launch an OTA software update.

Christine Gateau then highlighted the European Parliament’s resolution dated 4 July 2017 asking the European Commission, member states and producers to consider ways to promote longer product lifespans and tackle obsolescence for tangible goods and software. This resolution also encourages the establishment of “minimum resistance criteria” for different product categories, to cover robustness, reparability and upgradeability and proposes an EU-level definition of planned obsolescence.

Finally, with the entry into force of the General Data Protection Regulation, the producer of a connected object is more likely to face dual liability rules. Indeed, the producer of a connected object which would also be the data controller of the data processed by the said object, could face both the strict liability rules set forth by the PLD and the liability rules provided by the GDPR.

For a full recording of the webinar, please click here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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