Expanded product liability from the end of 2026
Draft bill to amend product liability law
The new Product Liability Directive, which comprehensively modernises European product liability law, has been in force since December 2024. The Directive has to be transposed into national law by the Member States by 9 December 2026.
To this end, in September 2025, the Federal Ministry of Justice and Consumer Protection (BMJV) presented a draft bill for the modernisation of product liability law, which aims to completely revise the German Product Liability Act and adapt it to the new EU requirements. Due to the fundamentally fully-harmonised nature of the Product Liability Directive, the draft bill essentially provides for a one-to-one transposition of the Directive.
The revised German Product Liability Act is due to enter into force on 9 December 2026 and will apply to all products placed on the market or put into service from that date onwards. Products that have already been placed on the market before this date will continue to be governed by the previous provisions.
Software as a product; liability also in case of significant changes to a product and defective (or missing) software updates
One of the most significant changes is the explicit classification of software (including AI systems) as a product. In order to remain adaptable to future technical developments, the draft intentionally refrains from defining the term "software". Only non-commercially developed and supplied open source software is to be excluded from product liability.
Another new development is that significant changes to products (such as upcycling) will, in the future, give rise to liability for the modified product. Since manufacturers of networked devices are often able to continue to exercise control over their products after they have been placed on the market, they may also be held liable for defects caused after the products have been placed on the market, for example through software updates or upgrades, or as a result of security-related updates not being carried out.
Product liability also applies to fulfilment service providers and platform operators
Based on the current legal situation, not only the actual manufacturer of a product but also the so-called "quasi-manufacturers" and, under certain conditions, importers and even distributors may be held liable for defective products. In future, fulfilment service providers and online platform providers will also be held liable (on a subsidiary basis) if neither the manufacturer nor the importer is based in the EU and no EU-based company has been appointed by the manufacturer.
Loss of private data as recoverable damage, deductible and maximum liability limits will be removed
In addition, damage to data not used for professional purposes will be compensable in future and the previous deductible for injured parties in the event of property damage as well as the previous maximum liability limit in cases of personal injury will no longer apply.
Still no liability for development risks
The German draft bill does not make use of the option provided for in the Directive to waive the exclusion of liability for development risks. In this respect, German law therefore continues to apply the principle that the manufacturer is not liable for product defects that were not apparent at the time the product was placed on the market.
Comprehensive changes to the rules of evidence: discovery in product liability law and shifts in the burden of proof
Far-reaching changes are imminent with regard to the law of evidence: In certain cases, an obligation to disclose evidence (similar to "discovery", which to date has been known primarily in the United States) is to be included in product liability law, a concept previously unknown in German law.
If a claimant has presented facts and evidence that make a claim for damages sufficiently plausible, the court may oblige the defendant to disclose relevant evidence that is within its control. A business-friendly aspect of the German transposition of the Directive is that information qualifying as a trade secret within the meaning of the German Trade Secrets Act can be protected separately in accordance with the provisions set out therein.
In addition, new regulations easing the burden of proof are expected to make it easier for injured parties to enforce their claims: In particular, legal presumptions for the defectiveness of the product will apply if the defendant does not fulfil its obligation to disclose. A product defect will also be presumed if the product violates mandatory product safety requirements or if an obvious malfunction was the cause. Causality will be presumed if the damage suffered is typically attributable to the defect in question. Furthermore, in technically complex cases, an assessment of probabilities will suffice in future instead of providing full proof. For companies, this means an increased liability risk and a more challenging defence in product liability cases.
Timely preparation is crucial
In view of the upcoming changes to the rules of evidence in particular, manufacturers and all other potentially (newly) affected economic operators are advised to review their internal processes in light of the expected changes and, if necessary, adapt them in order to be best prepared for any expanded liability risks.
In many cases, this is likely to include a critical review of previous communication and documentation practices in connection with potential liability cases. In order to adequately protect sensitive company information in an emergency, appropriate confidentiality measures should be taken in good time to ensure that the information is classified as a trade secret.
