Product Liability & Safety 2021

The new Product Liability & Safety 2021 guide features 12 high-profile jurisdictions. The guide provides the latest legal information on the penalties for breaching product safety obligations, time limits for claims, rules for disclosure of documents, appeal mechanisms, class actions, and crisis management in light of the COVID-19 pandemic.

Last Updated: June 24, 2021

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Cooley LLP is an international law firm with its roots in Silicon Valley that has a reputation for being the leading firm for the world’s most innovative companies. Its international product liability and safety team has market-leading experience in managing regulatory investigations, litigation, product recalls, risk assessments and international compliance in complex, fast-moving and highly regulated industries, including life sciences, cosmetics and consumer products.


”Modern Product Liability”

The risk landscape for product manufacturers internationally is changing rapidly. The procedures and practices of the past for managing product liability risks are not necessarily optimal for addressing the issues that face companies today, the issues that we would term “Modern Product Liability”. As a result, companies that wish to thrive need to adapt.

So what is “Modern Product Liability”? To us, it is the recognition that companies’ liabilities in the world of products go way beyond what has been traditionally seen as product liability. Companies that manufacture and sell products are accountable for the safety and performance of those products. These accountabilities now manifest themselves through regulatory compliance obligations, responsibilities to engage with consumers and with regulators, and, ultimately, through litigation systems and other redress mechanisms. That is the scope of “product liability” in the modern world, and the consequences for not embracing and managing the full range of risks can be devastating for the ambitions of a business.

It is also important to bear in mind that as markets are rapidly evolving, and the definition of a product is ever widened, the stakeholders are changing. The impact of product liability is affecting a wider range of businesses than ever.

In particular, the impact of new technologies is driving change. After many years of policy discussions about the challenges of new technologies, and general agreement that it has been a struggle for regulation to keep pace, there is a real sense now that we are moving into a period of substantial regulatory reform and regulator engagement. The unveiling in April 2021 by the European Commission of its proposed regulation for artificial intelligence, a world first in this field, is a clear sign of this, especially with the strong emphasis on product safety considerations reflected in that proposal.

The risks of “Modern Product Liability” are global. They arise across the world, and the changes internationally are happening at an increasing pace. The increasing work of international organisations such as the OECD, the United Nations, ASEAN, and the International Consumer Products Health and Safety Organization (ICPHSO) in the field of product safety demonstrates the growing importance of this area internationally.

As the world emerges from the COVID-19 pandemic, it is expected that the pace of change will further increase. These considerations have important implications for businesses, which need to anticipate and respond to the challenges.

Especially as regulation becomes more complex and more onerous around the world, companies are struggling to find practical ways to stay abreast of requirements and effectively manage risk. There is no "magic wand" solution to this current dilemma, although solutions are being developed to help companies manage it in a sustainable way.

This guide is a valuable resource to help companies manage the international risks that arise from this changing liability and regulatory landscape. It highlights the current state of liability laws and applicable procedures; it explains the key features of the product safety regulatory landscape in individual jurisdictions, highlighting the areas of greatest risk; and it provides insight into what the future might hold and what changes might be on the horizon. And understanding what is on the horizon is increasingly important for those managing modern product liability issues – the impact of future changes can be significant and can require months and years of planning to accommodate.

As you work through the chapters, you will start to discern certain trends and patterns in the laws. You will also see marked differences. Companies need to navigate this increasingly complex world of product law, and to find practical solutions to manage risks whilst meeting business demands to simplify product specifications, consolidate supply chains and get products to market quickly. In order to do so effectively, it can be important to take a step back and look for the global trends, and to try to understand why these trends exist.

New technologies driving legal reform

As highlighted above, there is an increasing focus, amongst policymakers and regulators around the world, on whether existing liability and regulatory regimes are fit for purpose when it comes to new technologies. To complicate matters, consensus on the right solutions still proves to be elusive. In some areas, such as autonomous vehicles, it is clear that at least some regulatory reform is required in order to accommodate the technology and enable societies to take advantage of the potential benefits. In other areas, the need for change is much less clear – are the risks sufficiently addressed in existing legislation, or do the risks go beyond what was ever envisaged when that legislation was drafted?

For example, regulators and policymakers are concerned that technologies such as artificial intelligence and machine learning, the internet of things and connected products, autonomous machines and robotics, and 3D printing might give rise to risks that existing rules cannot accommodate.

These issues are being actively grappled with in various forums around the world – including within the European Commission, the OECD and the United Nations – as well as by national governments all around the world.

This uncertainty itself creates risks for companies that are developing and deploying these technologies. There is still an opportunity for businesses to take the lead and develop principles that can help to ensure that the need for overly restrictive regulation is avoided. However, there are currently concerns that there is not yet sufficient international collaboration and consensus on the right way forward. This is an area for companies to watch closely, especially as we now move into a period when the policy discussions turn into tangible regulatory reform and new legislation.

Global solutions needed for global risks

The increasing globalisation of markets presents tremendous opportunities for product manufacturers and sellers. The development of a more accessible global market has also meant that there are greater opportunities for communication between stakeholders.

Consumers and other stakeholders around the world are now in constant contact with each other, sharing information and opinions about their product experiences. Through social media, online reviews and general access to news media internationally, information about product risks travels very quickly around the world, especially when major brand names are involved.

Moreover, regulators around the world are more connected than ever to these information sources, as well as benefiting from the development of systems that facilitate the sharing of information between authorities, such as those that exist within the European space, within the Organization of American States, and within the OECD.

All of this means that companies need to take a new approach to managing their product risks. It is no longer acceptable to try to manage risks on a local, national or regional basis. Product risks that may affect the reputation of a company and its products need to be managed at a global level.

Companies are increasingly aware of this. As a result, to the same extent that they have traditionally managed product compliance and product liability at a regional level, they are now tending to bring responsibility more and more back to HQ level. This trend is expected to continue as the challenges and the risks involved continue to increase.

Online sales and e-commerce

New marketing techniques and distribution models are, themselves, giving rise to issues of product liability and product compliance.

The rapid emergence of e-commerce across almost all product sectors has also caught the attention of policymakers and regulators.

Again, there is much discussion internationally about whether these new marketing models are appropriately dealt with under existing regimes, and many jurisdictions have seen legal reforms implemented or proposed specifically addressing the perceived risks here. Certainly, in most major markets around the world, we have seen the development of consumer protection laws that specifically relate to e-commerce. This will continue as markets and marketing models continue to evolve.

We are also seeing the emergence of voluntary initiatives to help address the specific issues presented by online sales; for example, through the “Product Safety Pledge” initiated by the European Commission, subsequently replicated in some other countries, and now promoted by the OECD.

New marketing models also give rise to new opportunities for companies to connect with their consumers. This means that there are new opportunities to manage risks, but also new risks of liability if those opportunities are not used.

The expanding concept of safety

Basic concepts of "safety" are changing around the world. Product liability regimes and especially product safety regimes have traditionally focused on risk of physical injury and, to a lesser extent, risks of property damage. However, the concept of safety is growing and companies are having to adapt their own compliance and risk management systems accordingly.

Increasingly, the concept of a safe product in various contexts takes into account concepts of environmental protection, data privacy and even (albeit tangentially) energy efficiency. It also, more and more, needs to account for both "end-of-life" safety and concepts of "foreseeable misuse" as well as intended use. These are all challenging issues for product manufacturers.

A new focus on enforcement

Whilst many countries around the world have had robust laws and regulations in place to help ensure product safety for some time, it has been a common feature in most parts of the world that enforcement has been sporadic or ineffective. This has been well recognised in many countries, where concerns are raised about the lack of funding allocated by governments to product safety enforcement.

This issue has been raised more prominently in the eyes of the public in recent years through some high-profile international regulatory scandals that have caused some to lose faith not just in companies, but in regulators too.

We are now in a world where we are seeing greater emphasis amongst policymakers and regulators on finding more effective ways to enforce laws and regulations. In some cases, this involves empowering consumers and other claimants to bring claims more effectively against companies; in others, ensuring enforcement agencies have better resources, not only in terms of funding but also in terms of powers and information.

This is an important factor that is set to significantly alter the risks being managed by international product manufacturers and suppliers moving forward.

Resources for managing changing risks

The increasing complexity and risks of the product law world are a significant source of new challenges for product manufacturers and suppliers that seek to take advantage of global markets. The costs of failing to understand, anticipate and manage the risks can be high, as many high-profile brands have discovered in recent years.

On the other hand, these developments also create opportunities.

The development of rules and regulations, together with the emergence of more active enforcement agencies, can help to ensure a level playing field and stable markets for companies that have an interest in ensuring they comply with the rules. Companies with valuable brand names and reputations to protect, and that pride themselves on delivering good customer experience, can be especially exposed when marketing their products in markets that have few controls where players take advantage of lack of regulation. Proportionate laws, fairly and effectively enforced, can help companies to fully realise the benefits of their investments and manage their risks.

The key is for companies to find those practical ways to keep abreast of the changes, understand their implications and develop systems that are fit for the future.

This guide, authored by experts in their field around the world, is part of the toolkit that companies can use to help them on that path.

Authors



Cooley LLP is an international law firm with its roots in Silicon Valley that has a reputation for being the leading firm for the world’s most innovative companies. Its international product liability and safety team has market-leading experience in managing regulatory investigations, litigation, product recalls, risk assessments and international compliance in complex, fast-moving and highly regulated industries, including life sciences, cosmetics and consumer products.