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(1) In order to improve the proper functioning of the internal market, it is necessary to ensure that competition is not distorted and that the movement of goods is not obstructed. Council Directive 85/374/EEC lays down common rules on liability for defective products with the aim of removing divergences between the legal systems of Member States that may distort competition and affect the movement of goods within the internal market. Greater harmonisation of the common rules on liability for defective products laid down in that Directive would further contribute to the achievement of those objectives, while entailing an increased degree of protection of consumers’ and other natural persons’ health or property.

(2) Liability without fault on the part of economic operators remains the sole means of adequately addressing the problem of fair apportionment of risk inherent in modern technological production.

(8) In order to create a genuine internal market with a high and uniform level of protection of consumers and other natural persons, and to reflect the case law of the Court of Justice of the European Union, Member States should not, in respect of matters within the scope of this Directive, maintain or introduce provisions that are more stringent or less stringent than those laid down in this Directive.

(9) Under the national law of Member States, an injured person could have a claim for damages on the basis of contractual liability or on grounds of non-contractual liability that does not involve the manufacturer’s liability for the defectiveness of a product as established in this Directive. This concerns for example liability based on a warranty or on fault or strict liability of operators for damage caused by the properties of an organism resulting from genetic engineering. Such national law provisions, which serve to attain, inter alia, the objective of effective protection of consumers and other natural persons, should remain unaffected by this Directive.

(10) In certain Member States, injured persons are entitled to make claims for damage caused by pharmaceutical products under a special national liability system, with the result that effective protection of natural persons in the pharmaceutical sector is already achieved. The right to make such claims should remain unaffected by this Directive. Furthermore, amendments to such special liability systems should not be precluded as long as they do not undermine the effectiveness of the system of liability provided for in this Directive or its objectives.

(11) Compensation schemes outside the context of liability regimes, such as national health systems, social security schemes or insurance schemes, fall outside the scope of this Directive and should therefore not be precluded. For example, some Member States have schemes in place to provide compensation in respect of pharmaceutical products that cause harm without being defective.

(12) Decision No 768/2008/EC of the European Parliament and of the Council lays down common principles and reference provisions intended to apply in all sectoral product legislation. In order to ensure consistency with that Decision, certain provisions of this Directive, in particular the definitions, should be aligned therewith.

(13) Products in the digital age can be tangible or intangible. Software, such as operating systems, firmware, computer programs, applications or AI systems, is increasingly common on the market and plays an increasingly important role for product safety. Software is capable of being placed on the market as a standalone product or can subsequently be integrated into other products as a component, and it is capable of causing damage through its execution. In the interest of legal certainty, it should be clarified in this Directive that software is a product for the purposes of applying no-fault liability, irrespective of the mode of its supply or usage, and therefore irrespective of whether the software is stored on a device, accessed through a communication network or cloud technologies, or supplied through a software-as-a-service model. Information is not, however, to be considered a product, and product liability rules should therefore not apply to the content of digital files, such as media files or e-books or the mere source code of software. A developer or producer of software, including AI system providers within the meaning of Regulation (EU) 2024/1689 of the European Parliament and of the Council , should be treated as a manufacturer.

(14) Free and open-source software, whereby the source code is openly shared and users can freely access, use, modify and redistribute the software or modified versions thereof, can contribute to research and innovation on the market. Such software is subject to licences that allow anyone the freedom to run, copy, distribute, study, change and improve the software. In order not to hamper innovation or research, this Directive should not apply to free and open-source software developed or supplied outside the course of a commercial activity, since products so developed or supplied are by definition not placed on the market. Developing or contributing to such software should not be understood as making it available on the market. Providing such software on open repositories should not be considered as making it available on the market, unless that occurs in the course of a commercial activity. In principle, the supply of free and open-source software by non-profit organisations should not be considered as taking place in a business-related context, unless such supply occurs in the course of a commercial activity. However, where software is supplied in exchange for a price, or for personal data used other than exclusively for improving the security, compatibility or interoperability of the software, and is therefore supplied in the course of a commercial activity, this Directive should apply.

(15) Where free and open-source software supplied outside the course of a commercial activity is subsequently integrated by a manufacturer as a component into a product in the course of a commercial activity and is thereby placed on the market, it should be possible to hold that manufacturer liable for damage caused by the defectiveness of such software but not the manufacturer of the software because the manufacturer of the software would not have fulfilled the conditions of placing a product or component on the market.

(18) Related services and other components, including software updates and upgrades, should be considered to be within the manufacturer’s control where they are integrated into, or inter-connected with, a product, or supplied, by the manufacturer or where the manufacturer authorises or consents to their integration, inter-connection or supply by a third party, for example where the manufacturer of a smart home appliance consents to the provision by a third party of software updates for the manufacturer’s appliance or where a manufacturer presents a related service or component as part of the product even though it is supplied by a third party. A manufacturer should not be considered to have consented to integration or inter-connection merely by providing for the technical possibility of integration or inter-connection or by recommending certain brands or by not prohibiting potential related services or components.

(19) Once a product has been placed on the market, it should be considered to remain within the manufacturer’s control where the manufacturer retains the ability to supply software updates or upgrades itself or via a third party.

(20) In recognition of the growing relevance and value of intangible assets, the destruction or corruption of data, such as digital files deleted from a hard drive, should also be compensated for, including the cost of recovering or restoring those data. The protection of natural persons necessitates compensation being available for material losses resulting not only from death or personal injury, such as funeral or medical expenses or lost income, and from damage to property, but also for destruction or corruption of data. Destruction or corruption of data does not automatically result in a material loss if the victim is able to retrieve the data at no cost, such as where a back-up of the data exists or the data can be downloaded again, or an economic operator restores or recreates temporarily unavailable data, for example in a virtual environment. Destruction or corruption of data is distinct from data leaks or breaches of data protection rules, and, consequently, compensation for infringements of Regulation (EU) 2016/679 or (EU) 2018/1725 of the European Parliament and of the Council or Directive 2002/58/EC or (EU) 2016/680 of the European Parliament and of the Council is not affected by this Directive.

(21) In the interest of legal certainty, this Directive should clarify that personal injury includes medically recognised and medically certified damage to psychological health that affects the victim’s general state of health and could require therapy or medical treatment, taking into account, inter alia, the International Classification of Diseases of the World Health Organization.

(22) In line with this Directive’s objective of making compensation available only to natural persons, damage to property used exclusively for professional purposes should not be compensated under this Directive. In order to address a potential risk of litigation in an excessive number of cases, the destruction or corruption of data that are used for professional purposes, even if not exclusively so, should not be compensated for under this Directive.