New EU Liability Regulations: Impacts for Battery Products

This article first appeared in Sedgwick Brand Protection — Recall Index 2024 Edition 1.

The new EU Product Liability Directive changes the burden of proof for battery-related and consumer electronics injury and damage claims

Existing liability rules for defective products in the EU are almost 40 years old. A substantial update to the regulations was proposed in September 2022 and is now making its way through the approval process. The new EU Product Liability Directive would result in big changes across the consumer electronics industry, specifically with regards to batteries.

New EU Product Liability Directive overview

The Product Liability Directive (PLD) has been published and came into force on Dec. 9, 2024. In its current version, new products placed on the market or put into service will need to comply after Dec. 9, 2026, however, existing legislation applies to products placed on the market before this date. Critically, the new directive states that a product that "does not provide the safety that a person is entitled to expect or that is required under Union or national law" will be considered "defective."

The new PLD changes the processes and requirements around the burden of proof for establishing "defectiveness" of a product. The directive covers several other areas including requirements for disclosure and discovery, both in relation to what must be disclosed but also how information should be presented in an "accessible" manner. In addition, the concept of and test for determining whether a product is "defective" and the inclusion of software and artificial intelligence (AI) technology into the definition of a "product" have been added. Finally, protections are given for claimants where they may face "excessive difficulty, in particular due to technical or scientific complexity, in proving the defectiveness of the product." In some cases, national courts may presume defectiveness if this "excessive difficulty" is present (amongst other considerations).

The scope of the types of economic operators that can be held liable, the kinds of damages that can be recovered, and the types of claims that can be made have all been expanded. In certain cases, the burden of proof has been reversed compared to the previous law.

Possible battery liability in the EU

Among all the components of a consumer electronics product, lithium-ion batteries present one of the largest potential hazards. Due to the batteries' widespread use and potential to cause damage and injury, manufacturers involved in the supply of products containing lithium-ion batteries will be more affected by new EU PLD legislation than some other types of economic operators.

Lithium-ion batteries in consumer electronics come in all shapes and sizes — from home energy storage systems and e-mobility products to wearable electronics and everything in between. The risks posed by batteries depend on not only the product design and manufacture but also the potential use cases and user interactions with the product.

The PLD considers "reasonably foreseeable use" as a factor in the consideration of liability. It is critical for manufacturers to assess what "reasonably foreseeable use" might be for a product and design the product accordingly. The use cases not only affect the safety considerations for the product design, but they also allow for an assessment of situations under which a product might pose a risk. In addition, products that do not conform to union safety standards or regulations may be presumed to be "defective."

There are a range of lithium-ion battery-powered products that have had high-profile reports of thermal incidents. E-bikes containing lithium-ion batteries reportedly caused multiple fatalities in both the U.S. and Europe, with the risks particularly prevalent when fires occur in small houses of multiple occupancy. Mobile devices have been reported to be involved in several thermal incidents on aircraft and are now restricted on many airlines. Vaping device batteries have resulted in multiple reported injuries due to lithium-ion battery thermal events with cells or devices in pockets or while being held. E-bikes have been reported to be the cause of fires on marine craft.

In addition to the complexities of use cases and environments where batteries may be found, battery aging is also a liability consideration. As batteries age, some potential risk factors associated with them can increase. Barring extensive testing, the effects of aging on the lithium-ion battery cells themselves can be unpredictable and depend on a number of factors, including the battery design, the usage history of the battery, and manufacturing variabilities. In addition, the electronics systems in consumer products may not be capable of comprehensive battery health assessments to detect the potential aging-related issues when a battery pack or cell is used. Battery management firmware or software may also now be considered as part of the "product" when assessing product failure or liability.

Other challenges include the fact that only new battery packs are typically tested for their ability to stand up to water and moisture. Under variable usage patterns or environments, the integrity of a battery pack's waterproof seal may fail over time from exposure to the elements or suboptimal storage conditions.

The PLD also places a higher burden on importers and authorized representatives working with manufacturers that are established outside the EU. The importers and representatives will be held liable for the imported products. It is therefore prudent to try to ensure that products imported or distributed meet relevant safety requirements. Modifications or repairs to products are also a major consideration for liability purposes.

Increased demands for product failure investigations may become necessary to determine whether lithium-ion battery failures are due to a product issue or a repair action.

EU PLD and the circular economy

A great deal of work has been directed into the EU Green Deal. One result has been the EU battery regulation, which includes battery replaceability requirements. The EU battery regulations entered into force Aug. 17, 2023, and have received substantial attention from all economic operators. Progress on drafting technical secondary legislation is ongoing.

The Green Deal has also brought about the EU's "Right to Repair" (R2R) legislation, which introduces product liability complexities for battery-operated products. While not specific to batteries, the R2R regulations have a larger potential safety impact for inherently hazardous products such as batteries. The exact implementation of the R2R requirements is a key consideration for liability concerns. The use of third-party components for products, particularly batteries, may result in challenges for OEMs. This is because the quality or compatibility of all possible third-party parts cannot be verified.

In addition, the replacement or repair process is subject to variability in quality and may result in less reliable or less safe products post-repair. Ensuring that a repaired product meets all the product's original safety and reliability requirements is challenging.

In the case of lithium-ion battery thermal failure, there is often substantial damage to or total destruction of the product that contained the battery. That makes assessing the root cause of the failure challenging. It also makes it difficult to assess whether modifications to a product were made before any incident. These aspects will become more critical after the implementation of the new PLD, as tampering with or abuse of the product will need to be identified for liability considerations.

Increased demands for product failure investigations may become necessary to determine whether lithium-ion battery failures are due to a product issue or a repair action. In the current draft of the PLD, the definition of "substantial" modifications may be a key consideration as to who may be held liable for injury or damage caused by a repaired product.

Conclusion

The new EU Product Liability Directive is likely to have a significant impact on economic operators. These changes place far greater requirements on product manufacturers, importers, distributors, and service providers to ensure that potential liability considerations are addressed.

Due to relatively high potential hazards, products containing batteries may be substantially affected by the PLD. The simultaneous push towards circular economies, including the repair and repurposing of products, generates another dimension to product safety, reliability, and liability considerations for any entities placing products on the EU market.