The current German Product Liability Act (Produkthaftungsgesetz – ProdHaftG) originally entered into force on January 1, 1990, implementing the long-standing EU Directive 85/374/EEC to regulate manufacturer liability for defective products.

For over 30 years, product liability law in Europe remained virtually unchanged – until now. The EU has passed a comprehensive overhaul of its framework under Directive (EU) 2024/2853. As Germany prepares to absorb these rules into its domestic laws (ProdHaftG), the legal landscape for global businesses is shifting dramatically.

At Deutsche Recycling GmbH, we specialize in international environmental and product compliance. Below, we break down exactly what global exporters, non-EU manufacturers, and international distributors must know to safeguard their European market access.

Product Liability at a Glance

The revised framework introduces far-reaching changes that pierce the shield of offshore corporate structures. The most critical updates include:

Strict Liability for Non-EU Entities: If a manufacturer is located outside the European Union, the EU Importer, the Authorized Representative (EU-Bevollmächtigter), or even the Fulfillment Service Provider within the EU can be held fully liable for product defects.
Expansion to Software and AI: Product liability now explicitly covers standalone digital products, including Software-as-a-Service (SaaS), operating systems, cloud-based applications, and Artificial Intelligence (AI) models.
Broader Definition of “Damage”: Under the new rules, loss or corruption of data and medically recognized psychological health damage qualify as compensable losses alongside physical injury.
US-Style “Discovery” Rules: EU courts can now order manufacturers to disclose internal technical documents, test logs, and risk assessments to alleviate the “information asymmetry” faced by consumers.
Elimination of Liability Caps: The previous €85 million maximum liability cap for personal injury has been completely removed. Damages are now uncapped.
Circular Economy Risks: Strict safety standards apply to products containing recycled materials or those that have been refurbished and placed back on the market.

The new rules enter into force on December 9, 2026. Products placed on the EU market prior to this date fall under the legacy rules, meaning both frameworks will co-exist during a transitional period.

What Drives the Product Liability Act?

Since 1990, the law has imposed strict liability (Gefährdungshaftung) on manufacturers. This means an injured party does not need to prove negligence or corporate carelessness. They only need to establish that the product was defective and that it caused:

Personal injury or death
Property damage
Newly added digital/psychological damages (from Dec 2026 onwards)

The Definition of a “Product”:
The legal scope covers all movables, ranging from traditional consumer goods like toys and machinery to food products. Under the updated directive, standalone software and AI components are legally treated as physical products.

Shifting the Burden of Proof: Historically, the consumer carried the entire burden of proof. While they still must show that a defect exists, the new framework introduces massive evidentiary easements. If a case is highly technical, or if the manufacturer refuses to disclose design documents, the court may legally presume the product was defective, flipping the legal burden onto the exporter.

Who is the “Manufacturer” Under EU Law?

The EU’s primary goal is to ensure that European consumers always have a legal entity within the EU borders that they can sue. If you are a non-EU manufacturer, you are no longer out of reach.

Under the new regulations, “Manufacturer” status applies to:

The actual producer of the final good, a component, or a raw material.
Any company placing its brand name, trademark, or logo on the item (white-labeling).
The EU Importer / Fulfillment Center: If the manufacturer operates outside the EU, the legal liability automatically shifts down the supply chain to the entity importing the goods or managing the logistics within Europe.

Supply Chain Impact: International manufacturers will see their European B2B buyers demanding aggressive contract revisions, higher liability indemnity clauses, and proof of robust international product liability insurance before signing off on inventory purchases.

Restriction of Liability Exemptions

Because the safety of digital products must be maintained through ongoing updates, manufacturers will be held liable if a defect arises post-launch that could have been resolved by a software patch or update. This marks a massive tightening compared to legacy regulations, under which only the product’s condition at the time it was originally placed on the market mattered.

Furthermore, previous deductibles and liability caps (currently up to €85 million) will be completely abolished without exception.

Expanded Definition of “Damage”

Under the updated framework, compensable damages now include the loss or corruption of data. Additionally, medically recognized psychological health impairments have been introduced as a distinct, actionable category of damage.
Please note that data or property damages affecting items used exclusively for professional purposes remain excluded. The Product Liability Act continues to primarily protect individual natural persons as consumers, not businesses.

Burden Proof and Disclosure Mandates

Manufacturers will be legally mandated to disclose internal evidence. If a manufacturer fails to comply with a court order to disclose technical documentation, liability can be legally presumed automatically.
The framework introduces several statutory presumptions of defectiveness. A defect or infringement is legally presumed if binding safety requirements are unmet, an obvious malfunction is present, or if corporate evidence is withheld despite a judicial disclosure order.

Expansion of Liable Entities (The Supply Chain Cascade)

If the actual producer is located outside the EU and cannot be reached, the liability automatically cascades down the European supply chain.

To maximize the certainty that European consumers receive financial compensation, the law holds the following entities strictly liable in a structured hierarchy:

The EU Importer (Primary liability for non-EU goods)
The Authorized Representative (EU-Verantwortlicher)
The Fulfillment Service Provider
The Product Supplier
Under specific circumstances, even the Online Marketplace/Platform hosting the sale.

The Intersection of Global Supply Chains & The Circular Economy

As environmental compliance specialists, Deutsche Recycling GmbH closely tracks how these product liability updates intersect with the green transition. The EU is heavily regulating sustainable economic practices. For instance, the EU Battery Regulation mandates strict collection targets and minimum levels of recycled content for batteries entering the EU market.

But what happens if utilizing recycled components impacts the safety or structural integrity of a new product?

The updated law provides total clarity: Sustainability does not excuse defects.

International suppliers exporting to Europe must guarantee that components utilizing recycled polymers or metals meet identical safety and performance baselines as virgin raw materials.
Remanufactured or upgraded components will face strict traceability mandates to ensure accountability at every stage of the product lifecycle.

Extraterritorial Tech Liability: Software and AI

The inclusion of a software as a standalone product carries an aggressive extraterritorial reach. Even if your software developers, servers, and corporate headquarters are located entirely outside the EU, you face strict liability if the software is utilized by EU citizens and causes harm.

This encompasses system bugs that cause hardware fires, unpatched security vulnerabilities leading to catastrophic data loss, or faulty AI algorithms utilized in medical or industrial environments.

Building Bulletproof Corporate Compliance with the Product Liability Act

This profound reform of the Product Liability Act highlights that product safety is a core pillar of international corporate compliance. Non-EU companies that take proactive steps today will secure a vital competitive advantage in the European market.

Immediate action items for international exporters include auditing existing documentation and software update workflows, drastically revising B2B agreements with EU importers and fulfillment providers, and upgrading global product liability insurance coverage.

Because legacy and new frameworks overlap during the current transitional period, reviewing your European market-entry processes right now is essential. At Deutsche Recycling GmbH, we help international businesses seamlessly integrate these complex product liability mandates into their environmental and trade compliance strategies. Reach out to our cross-border compliance team today to secure your European operations.

FAQ: German Product Liability Act (ProdHaftG)

What exactly does the German Product Liability Act (ProdHaftG) regulate?

The Product Liability Act regulates the strict liability (Gefährdungshaftung) of manufacturers for damages caused to consumers by defective products – such as personal injury, health damage, and property damage. Strict liability means that the manufacturer is held liable even if there is no proof of personal negligence or corporate fault.

When does the new Product Liability Act enter into force?

The new Product Liability Act enters into force on December 9, 2026, aligning directly with the EU-wide implementation deadline for Directive (EU) 2024/2853. The updated rules apply to all products placed on the EU market or put into service on or after this specific date.

Does product liability apply to software and AI systems?

Yes. Under the new legal framework, software – including AI models, applications, and operating systems – is explicitly classified as an independent product. Manufacturers are strictly liable for damages resulting from software bugs, insecure automated updates, or unpatched digital vulnerabilities.

Who carries the burden of proof in an EU product liability case?

Fundamentally, the consumer must still prove that the product was defective. However, the introduction of the new manufacturer disclosure mandates and statutory legal presumptions will significantly lower the hurdle for consumers, allowing EU courts to assume a product is defective if corporate technical data is withheld.

What specific types of damages are covered under the Act?

The Act covers traditional personal injury, death, and specific consumer property damage. Moving forward, data loss/corruption and medically recognized psychological health impairments will also qualify as compensable damages, adapting consumer protection to modern digital environments. Purely financial or economic losses (reine Vermögensschäden) remain excluded from the scope of this Act.