Law firm Mason Hayes & Curran (MHC) has warned that proposed changes to an EU directive on product liability could increase potential exposure for firms dealing with AI-enabled products.

The warning comes in MHC’s latest legal review, which highlights changes in EU consumer-protection and product-safety law.

The latest edition of the firm’s Products & Consumer Protection Review focuses on the proposed revision of the EU Product Liability Directive, which is aimed at modernising liability rules to include software and related services.

Public-facing systems

The review points out that the proposed changes mean that the directive will apply to most, if not all, consumer or public-facing systems.

“It will also apply to systems that are components of hardware that qualify as a physical ‘product’. Accordingly, consumer products and services delivered using AI-enabled technologies, such as wearable devices, chatbots and smart assistant apps, will be affected,” the MHC lawyers state.

The guide also explores emerging risks associated with AI chatbots and their potential for ‘hallucinations’.

Chatbots

The review cites a recent case in Canada, in which a tribunal found that an airline’s chatbot was not a separate legal entity and was instead deemed to be a source of information on the airline’s website.

Partner Brian McElligott writes that, under Irish law, “it is unlikely that a court would find that a chatbot was a separate entity from the chatbot’s operator”.

The review also looks at how the EU Data Act will affect connected devices and cloud services in Ireland.

Michaela Herron (MHC’s head of products) stated: “The first half of 2024 has brought notable changes and reforms impacting stakeholders in the consumer-products sector.”