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Clifford Chance

Clifford Chance

Tech Group Insights

Global. Integrated. Tech Expertise.

Smart products, artificial intelligence and manufacturers liability

Businesses have to assess whether or not they are sufficiently protected against liability risks arising from smart products.

'Smart products' are tangible objects characterised by: "increasing level of complexity and variety of ecosystems, actors and value chains; autonomy in decision making and actuating; generation, processing and reliance of big volumes of data; and openness to software extensions, updates and patches after the products have been put into circulation".

From self-driving cars to smart factories incorporating machine-to-machine communication and smart supply chains, smart products are able to act autonomously allowing for an economical and flexible production of goods.

The increasing degree of autonomy facilitated by AI has many advantages but also gives rise to previously unknown risks. Autonomous and interconnected products are increasingly becoming harder to control and can make independent and sometimes unforeseeable decisions when interacting with their environment. The unforeseeability of AI is very much a feature rather than a bug.

Smart products and AI are likely to cause a paradigm shift in terms of the rule of law and traditional liability regimes which typically attach liability to a person (legal or natural), rather than an autonomous system.