Illinois Widens Reach of Product Liability for a New Generation of Products and Sellers

The most significant product liability developments now taking shape in Illinois are two pending legislative initiatives, each aimed at one of two threshold questions that have historically allowed defendants to limit or avoid exposure: what counts as a product, and who counts as a seller. One is directed at conversational AI, the other at online marketplaces. Together they reach manufacturers, distributors, and platform operators that have not traditionally regarded themselves as classic product defendants.

For companies that design, distribute, or sell goods into Illinois, these proposals matter even while they remain pending. They indicate where Illinois law is heading. They also build on an existing Illinois framework that heavily favours consumers. That preference has not gone unnoticed: a number of businesses have left the state in recent years, with the litigation climate and the absence of tort reform among the factors commonly cited. The pending bills would not so much create new exposure as extend existing liability to categories of defendant that have assumed they were outside its reach.

For a defendant, these trends are best understood together rather than as separate developments. The product-versus-service distinction, the innocent-seller dismissal, and the challenge to personal jurisdiction have each given product defendants a pathway to dismissal. These emerging trends are likely to narrow defendants’ ability to exit a case on procedural grounds.

Conversational AI Enters the Strict Liability Framework

Illinois has positioned itself among the first states that would treat conversational AI as a product subject to strict liability rather than as a mere service. Illinois House Bill 5044, the Chatbot Provider Liability Act, would deem chatbots to be products for the purpose of strict liability. It would impose on any chatbot provider a duty to ensure that its system does not cause injury. The definition of provider is deliberately broad. It reaches anyone who creates, distributes, or makes a chatbot available. The duty attaches regardless of whether the provider exercised reasonable care, and regardless of whether it had any direct contractual relationship with the injured user.

The remedies the bill contemplates are as significant as the liability standard. A harmed user could recover actual damages and obtain injunctive relief. The user could also recover attorney’s fees and costs. Fee-shifting changes the economics of individual claims and makes a far wider range of disputes worth pursuing. That is why the bill warrants attention even though it has since been re-referred to the House Rules Committee, the customary signal that a measure has stalled for the session. The momentum has shifted to the Senate. Two companion measures there, Illinois Senate Bills 3502 and 3590, each styled an Artificial Intelligence Product Liability Act, remained active well after the House bill stalled, advancing to a third-reading deadline in the spring 2026 session.

Senate Bill 3590 approaches the subject through the familiar vocabulary of product defect. It would authorise product liability actions against the developer of an AI system for defective design, for inadequate instructions or warnings, and for failure to conform to an express warranty, and it would treat a deployer as a developer where the deployer makes a material and substantial change to the product or intentionally misuses it, contrary to an express warranty, in a way that proximately causes harm. The bill presses further on the burden of proof: a deployer of a high-impact system that fails to conduct documented testing and risk management would face a rebuttable presumption that the product is defective.

These bills target a premise the technology sector has relied upon for years: that software is a service rather than a product. On that view, an “as-is” disclaimer and the ordinary negligence standard govern any dispute over a software output. However, strict liability removes that premise entirely. Once a chatbot is classified as a product, the provider’s care in designing and distributing it becomes irrelevant to liability. The absence of a contract with the user also ceases to be a defence. The classification is what matters, and these bills make that classification by statute.

The reach of this approach extends well beyond the small number of widely known developers that train large models. Under settled Illinois principles, strict liability extends to a component supplier whose part renders a finished product unreasonably dangerous. Consider a manufacturer that embeds a third party’s language model into its own product. If these bills were to become law in their current form, that manufacturer would inherit design-defect exposure for the behaviour of a component it did not build and may not fully understand. As large language models spread across consumer goods, customer-service systems, and connected devices, the number of potential defendants grows accordingly.

Courts in other jurisdictions are beginning to test whether an AI system is a product or instead a form of protected expression. The Illinois proposals would resolve that debate by statute. For the manufacturer, the practical conclusion is that the product-versus-service line can no longer be treated as a reliable defence. The defensible posture is to build a contemporaneous safety-by-design record and to scrutinise the warnings and use restrictions that accompany any AI feature. Counsel should also allocate risk expressly and in writing with model vendors. Constitutional and pre-emption arguments are worth preserving as well, though they cannot carry the defence alone.

Online Marketplaces and the Passive-Intermediary Defence

The second expansion targets the other threshold question, which is who qualifies as a seller answerable in strict liability. Under Section 2-621 of the Illinois Code of Civil Procedure, sometimes called the distributor’s statute or innocent-seller provision, a non-manufacturer defendant such as a distributor or retailer can ordinarily secure dismissal from a strict liability claim. It does so by certifying the identity of the manufacturer. The rationale is that the manufacturer is the proper party to answer for a defect in design or manufacture. This affidavit procedure has long ranked among the most valuable tools available to downstream defendants. It lets them exit a case before the burden of discovery falls on them.

That dismissal, however, has never been as automatic as it is sometimes assumed to be. The affidavit does not protect a seller in several situations: where the manufacturer cannot be identified or lies beyond the reach of the court, where the seller had actual knowledge of the defect, or where the seller exercised significant control over the product’s design. In cross-border online retail, those exceptions increasingly consume the rule. The actual manufacturer of a product sourced through an online marketplace is frequently a foreign entity. Such an entity often cannot be served with process or made to satisfy a judgment.

Illinois Senate Bill 1671 would address that reality directly. It would amend Section 2-621 to eliminate the innocent-seller dismissal for participants in the online marketplace ecosystem whenever the product at issue was manufactured outside the United States. In place of that dismissal, the bill would impose joint and several liability on the retail seller, on the marketplace platform itself, and on high-volume third-party sellers, alongside the foreign manufacturer. Joint and several liability means that any one of them may be required to satisfy the entire judgment.

For now, the bill remains stalled. It was introduced in 2025 and referred to the Senate Assignments Committee, where it has seen no further action. It has gathered several co-sponsors but has not advanced to a substantive committee, so its near-term enactment is far from certain.

Much of this exposure, however, does not depend on the bill at all. Under existing law, the innocent-seller dismissal is already unavailable when the foreign manufacturer cannot be identified or served, and that describes a large share of the goods sold through online marketplaces today. The bill addresses a gap in online commerce. The reality is that the entity primarily responsible for a defective product is often the entity least amenable to suit.

This proposal does not arise in a vacuum either. At the federal level, the Consumer Product Safety Commission has already determined that Amazon functions as a distributor of the third-party goods it stores and ships through its fulfilment programme. That classification places the operator within the supply chain rather than outside it, and it is operative now, independent of any state legislation. Senate Bill 1671 would carry a comparable judgment into private strict liability and joint and several exposure, but the direction it reflects is already visible in current federal practice.

Many businesses import foreign goods or host third-party merchants who do. For them, the appropriate response is to treat their current indemnity and insurance arrangements as inadequate to the exposure they now face. Some measures that warrant re-examination include the following.

• Securing enforceable indemnity agreements from suppliers that maintain a genuine domestic presence, supported by certificates of insurance and additional-insured status. Indemnity from a foreign manufacturer that cannot be reached in an Illinois court is worth very little.
• Tightening vendor vetting and demanding documented product-safety and compliance records before goods enter the distribution channel.
• Reassessing whether routing foreign-sourced product through Illinois channels remains commercially sensible, given the joint and several liability the bill would attach to that decision.

Wider Jurisdiction Magnifies the New Exposure

These expansions would arrive in a legal environment that has already shifted toward broader exposure. The interaction between the new measures and the existing law is what should most concern manufacturers and distributors. A challenge to personal jurisdiction has been one of the most reliable defences available to out-of-state manufacturers.

In August 2025, Senate Bill 328 was enacted as Public Act 104-0352 and took immediate effect, establishing consent-by-registration general jurisdiction. A foreign corporation that registers to do business in Illinois is now deemed to have consented to general jurisdiction in cases alleging injury from exposure to a toxic substance. The same is true of a corporation that transacts business in the state without registering. The consent applies so long as at least one co-defendant is otherwise subject to jurisdiction in Illinois. Illinois thereby became the second state, after Pennsylvania, to adopt such a statute. It builds on the United States Supreme Court’s 2023 decision in Mallory v Norfolk Southern Railway Co.

Consent-by-registration removes that defence for registered defendants that fall within the statute’s scope. Although the statute is framed in terms of toxic exposure, it would be a mistake to read it as a toxic tort measure alone. The provision turns on the alleged injury mechanism, namely exposure to a substance the law defines as toxic, rather than on the legal theory pleaded. A strict liability claim, a failure-to-warn claim, and a negligent-design claim each fall within the statute so long as the alleged injury runs through such an exposure.

In practice, the distinction between toxic and product cases is largely artificial. Exposure claims involving substances such as asbestos, PFAS, and food or pharmaceutical additives are overwhelmingly litigated as design-defect and failure-to-warn matters against the manufacturers and distributors of products alleged to contain, carry, or emit hazardous substances. Because the statute defines a toxic substance broadly, reaching essentially any non-radioactive substance capable of producing injury through ingestion, inhalation, or absorption through the skin, its scope extends to a large share of ordinary consumer and industrial product litigation, from cosmetics and cleaning products to food flavourings, coatings, and leachable plastics. Naming an Illinois retailer, distributor, or installer is enough to satisfy the co-defendant requirement, so that condition does little to narrow the statute’s practical reach. The expansion also lands on forums already among the nation’s busiest for exposure litigation, since Cook, Madison, and St Clair Counties draw heavy volumes of asbestos filings and the infant-formula mass tort is concentrated in Illinois.

The reach is not unlimited, and the boundary matters for the conventional products docket. Because the statute is specific to exposure, a purely mechanical or traumatic injury claim, such as a crush injury from industrial equipment or a vehicle collision, remains governed by ordinary jurisdictional analysis. The dividing line is chemical or biological exposure on the one hand and physical, kinetic harm on the other.

The law is already drawing constitutional challenge. The objections include the manner of its passage and its compatibility with due process. Its extension to companies that merely transact business without registering is its most exposed feature. Defendants should preserve those objections, but they should not structure their litigation on the expectation that a court will set the statute aside.

The statute also forces a deliberate decision that did not previously require much thought, namely whether to register in Illinois at all. Registration now carries a jurisdictional cost that it did not formerly impose. A company should weigh that cost against the commercial benefits of registration rather than treating registration as a routine administrative step. Declining to do business in Illinois would be a difficult decision, particularly as other states may enact similar laws and leave few alternatives.

Punitive Damages Are Recoverable in Wrongful Death and Survival Claims

Damages have moved in the same direction. In 2023, Illinois removed its longstanding bar on the recovery of punitive damages in wrongful death and survival actions. The nature of wrongful death and survival claims lends itself to highly subjective non-economic damages awards. Allowing punitive damages in these cases creates real financial exposure for defendants. However, these damages are not available as of right. A plaintiff cannot plead them in the initial complaint and must instead seek leave to add the claim by motion, and courts are directed to evaluate such requests carefully given the financial exposure they present.

The Statute of Repose Limits Long-Tail Exposure

Under Illinois law, the statute of repose is governed by Section 13-213 of the Code of Civil Procedure (735 ILCS 5/13-213), which establishes an outer time limit within which a product liability action based on strict liability in tort must be commenced. Such an action must be filed within the earlier of:

• 12 years from the date of the first sale, lease, or delivery of possession of the product by a seller; or
• ten years from the date of the first sale, lease, or delivery of possession of the product to its initial user, consumer, or other non-seller.

If one of these repose periods expires before the action is brought, the claim is barred against all such sellers.

What Manufacturers and Distributors Should Anticipate

For any company in the chain of distribution, the takeaway is that effective risk management must shift earlier in time. The emphasis should move away from courtroom defences that are becoming less reliable and towards the contractual, insurance, registration, and design-record decisions that are made long before any claim is filed. The AI bills are likely to return in some form even if the current versions stall. Companies that embed AI into their products should not wait for enactment. They should treat the behaviour of those systems as a product-safety matter now. Additionally, as more retail consumers purchase goods online, the marketplace bill responds to a durable problem in cross-border commerce that will not resolve itself. Even in the absence of passage, the existing exceptions to the innocent-seller dismissal and the federal regulatory posture point in the same direction.

The companies best positioned will be those that read the pending bills and the enacted statutes together as a consistent signal about where Illinois product liability is heading. They will adjust their supply contracts, insurance coverage, registration decisions, and product-safety documentation now, while doing so is still a matter of planning rather than litigation.