Page - 47 - in Austrian Law Journal, Volume 1/2019

ALJ 2019 Digital Single Market – towards Smart Regulations 47 question as well as other questions related to smart products are not explicitly addressed by existing liability law.66 The fact that there is still no European legislative act addressing questions of liability for smart products contrasts sharply with the fact that the EU is actually a pioneer in terms of product liability. As early as 1985, the EU adopted the Product Liability Directive,67 covering the liability of the producer for damage caused by the defectiveness of his products. Obviously, more than thirty years ago the European legislator had a different concept of a “product” in mind than we can find today. Therefore, the question arises whether the Product Liability Directive also provides appropriate answers to the challenges posed by smart products, which are able to be updated or even update themselves. As a starting point, the fundamental question must be raised whether software is a product in the meaning of Art. 2 of the Product Liability Directive at all.68 If so, what are the legal consequences if, for example, a self-driving vehicle does not recognize an obstacle and collides with it? Is the software producer liable according to the Product Liability Directive besides the end producer? If so, is he also liable if the car owner did not carry out software updates correctly? What are the consequences if the software has been used in a different way than intended by the software producer? Does it make a difference whether the software has been downloaded or has only been used via the internet, while the program remains in the cloud? Not all these questions are new. The issue of whether software is a product within the meaning of the Directive (or national product liability laws of the Member States) has been a matter of discussion for some time.69 Under the Austrian Product Liability Act (in German: Produkthaftungsgesetz; abbreviated PHG), a product is any movable corporeal thing, including energy;70 in contrast to this, the Product Liability Directive does not contain the requirement of corporality.71 One reading of this was that only software on a physical medium (USB flash-drive, CD) is a product in the meaning of the PHG.72 This interpretation has been criticised because, when considering the intended purpose of product liability law to create an appropriate distribution “of 66 On this topic cf. Weber, Liability in the Internet of Things, 6 JOURNAL OF EUROPEAN CONSUMER AND MARKET LAW 207 (2017); Schmon, Product Liability of Emerging Digital Technologies, 3 ZEITSCHRIFT FÜR INTERNATIONALES WIRTSCHAFTSRECHT 254 (2018). 67 Council Directive 85/374/EEC of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products [1985] OJ L210/29. 68 According to Art. 2 of the Directive 85/474/EEC product means all movables, except for primary agricultural products and game, even though incorporated into another movable or into an immovable. 69 Cf. Andreewitch, Anmerkungen zum Produkthaftungsgesetz, 43 ÖSTERREICHISCHE JURISTENZEITUNG 225 (1988); Denkmaier, 30 Jahre PHG – Software als Produkt?, in DIGITALE TRANSFORMATION IM WIRTSCHAFTS- UND STEUERRECHT 52 (Felten, Kofler, Mayrhofer, Perner and Tumpel ed., 2019); Ennsgraber, Software als körperliche und unkörperliche Sache, in INTERNET OF THINGS 599 (Schweighofer, Kummer and Saarenpää ed., 2019; Whittaker, European Product Liability and Intellectual Products, 105 THE LAW QUARTERLY REVIEW 125 (1989); Bauer, Produkthaftung für Software nach geltendem und künftigem deutschen Recht (Teil 2), PRODUKTHAFTPFLICHT INTERNATIONAL 99 (1989); Welser and Vcelouch, Haftung für mangelnde „Jahr 2000-Tauglichkeit“ von Hard- und Software, 9 ECOLEX 829 (1998); Horwath, Software – ein Produkt?, 11 ECOLEX 784 (2000); Fairgrieve and Rajneri, Is Software a Product under the Product Liability Directive?, 4 ZEITSCHRIFT FÜR INTERNATIONALES WIRTSCHAFTSRECHT 24 (2019). 70 Sec 4 PHG. 71 According to Art. 2 of the Directive 85/374/EEC, any movable object is considered a product. 72 RABL, PRODUKTHAFTUNGSGESETZ Sec 4, at para 57 (2017); Oechsler, Sec 2 ProdHaftG, in KOMMENTAR ZUM BÜRGERLICHEN GESETZBUCH, para 65 (Staudinger ed., 2018).