The New EU Directive on Liability for Defective Products (Directive (EU) 2024/ 2853) (PLD) modernises the current EU legislation to bring it up to date with the ever-evolving digital environment we live in and, in doing so, introduces amendments to how product liability claims are regulated in the EU.
One particularly significant change is the extended disclosure burden. Such a burden is well known to those operating in English or Irish jurisdictions, which have long had onerous (and expensive) disclosure processes. However, until now, many other member states still have very limited rules regarding the disclosure of evidence.
For those economic operators (manufacturers, producers, importers, etc) of 'products' (as broadly defined in the PLD) in the EU market, new disclosure requirements will apply under the new PLD and member state courts will have little sympathy for those who have failed to prepare accordingly.
We set out below why this burden is particularly difficult for multi-national life sciences businesses and explain the steps you should be taking now to mitigate against potential court sanctions for failure to disclose relevant evidence.
What is disclosure?
Disclosure is the provision of relevant documents to the other parties in litigation. In the UK, 'documents' will be defined broadly and come in many forms, both digital or hard copy, including emails, social media chats, text messages, voicemail, videos, handwritten notes and Word or Excel documents. It also extends to metadata and other embedded data which is not typically visible on screen or in print. The new PLD specifies that it could include documents which the defendant has to newly create by compiling or classifying the available evidence.
What disclosure is required under the PLD?
The requirements are set out in Article 9 of the PLD which in short requires:
- Both claimants and defendants to disclose any relevant evidence at their disposal if the claimant makes a sufficiently plausible case for damages.
- Disclosure to the extent it is necessary and proportionate to do so under national law.
- Courts to consider the legitimate interests of all parties involved in any relevant litigation under the PLD (including third parties) when determining what is necessary and proportionate. This may include the disclosure of confidential information and trade secrets, but courts are required to take specific measures necessary to preserve the confidentiality of such documents in the proceedings as well as those documents which are subject to legal professional privilege (where such a concept exists in particular jurisdictions). There appear to be no such protections for intellectual property.
- Any disclosed evidence to be presented in an easily accessible and understandable manner.
Rebuttable presumption of defect for inadequate disclosure
Compliance with Article 9 is important and if the defendant fails to meet disclosure obligations and disclose relevant evidence, a rebuttable presumption may be triggered by the court that the product is defective (Article 10(2)(a)).
How each member state court will determine when the rebuttable presumption will apply is yet unknown (mere technical breaches vs missing key information). However, given that the PLD is designed to remove obstacles for claimants seeking compensation for defective products, a failure to disclose may result in life sciences companies having the burden of proof to explain why a defect does not exist. This will be particularly difficult given the technical and scientific complexity of many of the industry's products.
Be prepared
The importance of having aligned document retention policies in place across jurisdictions and document repositories, and having key individuals aware (and in control) over relevant documentation, can therefore not be overstated. Without alignment and understanding, disclosure will turn into a time consuming and costly process and shortcuts can no longer be taken given the rebuttable presumption sanction now available.
To mitigate against this risk, we recommend that life sciences companies:
- Ensure documentation is held on centralised platforms which can be accessed by more than one employee, not easily deleted and backed up as appropriate on alternative servers, particularly in light of potential cyber attacks. Important documents should not be stored on personal laptops or phones which could be destroyed or lost.
- Review (and update as necessary) current data retention and management policies to ensure they meet the necessary limitation periods for the jurisdictions you operate in.
- Ensure employees understand, and comply with, such documentation policies and conduct regular training sessions to the extent necessary.
- Review your supply chain to ensure your third party suppliers (such as part/material suppliers or testing houses) are also taking steps to comply with the new disclosure requirements and include any appropriate warranties and remedies in agreements with them.
- Develop a protocol (and an understood strategy) on how to deal with disclosure requests to ensure documents are not inadvertently missed or disclosed and that the confidentiality or privilege of information is preserved.
Disclosure steps at the outset of litigation
If you are ultimately faced with PLD-governed litigation, both for purposes of disclosure (and to ensure employees don’t inadvertently delete helpful documents) you should immediately consider:
- Identifying potentially relevant documents which are under your control and ensure document hold processes are in place to preserve those documents in their current form and location
- Identifying potentially relevant documents which are not currently in your control (ie those held by third parties/agents) and, if so, speak to them as soon as possible
- If you are a defendant, consider whether the claimant does have a plausible claim and, if not, whether there is scope to push back on the basis that their approach is a fishing expedition for documents
- Informing relevant employees to exercise caution in their communications in respect of this matter, internally and with third parties, as these communications/newly created documents may not be covered by privilege and may therefore be disclosable in due course if they met the disclosure test as set out in Article 9.
