European Commission consults about liability challenges in the context of the IoT and autonomous systems

On January 10th, the European Commission launched two public consultations which notably deal with issues related to liability for products and services coming out of Internet of Things (IoT) technologies and autonomous systems. Indeed, the Commission has published a consultation on “Building the European data economy” and another consultation on its Product Liability Directive (Directive 85/374, as modified by Directive 1999/34). The consultation period will run until 26 April 2017 and will help shape the future policy agenda. It will feed into possible Commission's initiatives in 2017.   Public Consultation on liability of the producer for damage caused by a defective product   As part of this consultation, the Commission wants to gather evidence for a proper assessment of the adequacy of the Product Liability Directive to respond to IoT and autonomous systems (including robotics) liability challenges. Consequently, the Commission is seeking to identify gaps or overlaps in its scope and possible shortcomings in its application to innovative technological developments. To this aim, the Commission identifies potential obstacles for the application of current regulation, such as difficulty to allocate liability in case of products interacting with other products or services (e.g. a smartphone malfunctioning because of an app downloaded from the internet), or the fact that liability without fault is not appropriate for some innovative products. Besides, the Commission raises some proposals, to gather feedbacks from contributors, among which:
  • allocating liability not necessarily to the producer, but to the entity best positioned in the value chain to avoid accidents;
  • making possible for data providers, providers of software, applications and algorithms to be held liable;
  • removing the obligation for the injured party to prove the defect or yet the causal link to obtain compensation;
  • introducing special exemptions from the general liability framework for innovative products under experimentation.
Clarification of current rules could go through either publication of guidelines, a revision of the directive, or even a new dedicated legislation.   Public consultation on Building the European data economy   This consultation deals with various topics, among which issues related to liability for products and services coming out of IoT technologies and autonomous systems. Hence, the scope of reflection is not limited to defective products. Producers are invited to share their experience (potential damages, problems in not knowing in which category to classify the device in order to comply with a specific liability regime, subscription to a specific insurance…), but also to give their opinion on possible options and ways forward. The Commission also makes some suggestions, in particular:
  • a risk management approach in which the party who is best placed to minimise or avoid the realisation of the risk (e.g. the manufacturer of the IoT device, or the software designer);
  • creation of a liability cap, i.e. an upper bound to the compensation of damages;
  • adoption of best practices guidelines and/or expected care and safety standards that, if fulfilled, would automatically exclude/limit liability;
  • mandatory cyber insurance;
  • standard certification or test bedding for algorithm based services.
It may be recalled that the European Parliament has just adopted a report drafted by the Legal Affairs Committee which calls for EU-wide rules for the fast-evolving field of robotics in order to settle issues such as liability for accidents involving driverless cars. the report of the Committee on Legal Affairs on robotics on 16 February. In this context, MEPs call for European rules on liability. These consultations provide an opportunity for stakeholders to contribute to the European Commission’s reflection, by giving their views on some major issues for years to come. It is thus essential for industries to be mobilized on these matters in order to build a framework suitable for innovation.

Georgie Courtois, Partner

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