Liability and Product Law

Who pays when AI causes harm, and under which law.

The EU's revised Product Liability Directive makes software and AI products under strict liability, and member states must transpose it by December 9, 2026. China's Hangzhou Internet Court went the other way in January 2026, holding generative AI is a service under fault-based liability.

Character.AI teen-harm suits settled, by state: Colorado 2; Florida 1; New York 1; Texas 1 CHARACTER.AI TEEN-HARM SUITS SETTLED, BY STATE Colorado 2 Florida 1 New York 1 Texas 1 SUITS, JAN 2026
EU transposition deadline
Dec 9, 2026
Character.AI suits settled
5
Beijing AI voice damages
RMB 250,000
Registry incidents
5

Evidence

Courts split on whether AI output is a product or a service

Developments: liability and Product Law
DateCaseCountryWhat happenedSource
Apr 2024Beijing Internet Court AI voice caseChinaUnauthorized AI voice clone violated personality rights; RMB 250,000 awardedSource
May 19, 2025Walters v. OpenAIUnited StatesSummary judgment for OpenAI on a defamation claim, relying on disclaimersSource
Aug 26, 2025Raine v. OpenAIUnited StatesWrongful death suit pleads strict product liability against ChatGPTSource
Jan 2026Garcia v. Character Technologies and four related suitsUnited StatesSettled after the court rejected the free-speech defense in May 2025Source
Jan 2026Hangzhou AI hallucination caseChinaAI's promise to pay did not bind the provider; generative AI is a serviceSource

Registry

Five registry incidents drew regulator or court action relevant to liability

Registry incidents linked to this page
IncidentDateRegulator or court action
Uber Test Vehicle Kills Pedestrian in TempeMar 2018Arizona suspended Uber's testing on March 26, 2018. Yavapai County declined to charge Uber in March 2019. NTSB adopted its findings on November 19, 2019. The backup operator pleaded guilty to endangerment in July 2023 and received three years of supervised probation.
Air Canada Chatbot Invents a Refund RuleNov 2022On February 14, 2024, the BC Civil Resolution Tribunal found negligent misrepresentation and ordered Air Canada to pay CA$812.02.
Cruise Robotaxi Drags a PedestrianOct 2023California DMV suspended Cruise's driverless permits on October 24, 2023. NHTSA fined Cruise $1.5 million on September 30, 2024, for incomplete crash reports. On November 14, 2024, Cruise admitted filing a false report and agreed to a $500,000 deferred prosecution agreement.
Packing Robot Kills a Worker in GoseongNov 2023Goseong police investigated, including questioning the on-site safety manager. No ministry action was found.
Tesla Recalls Autopilot After NHTSA InvestigationDec 2023NHTSA opened PE21-020 in August 2021, upgraded it to EA22-002 in June 2022 and closed it in April 2024 after reviewing 956 crashes, opening RQ24-009 on whether the fix worked. No penalty.

Rules

The EU chose strict liability; US courts and China apply fault

Key instruments: liability
RuleJurisdictionWhat it requiresStatus
Product Liability Directive 2024/2853EUStrict liability for software and AITranspose by Dec 9, 2026
AI Liability DirectiveEUFault-based AI claimsWithdrawn Oct 6, 2025
Colorado SB 26-189ColoradoFault-based allocation between developer and deployerEffective Jan 1, 2027
Section 230US federalNo appellate ruling yet on generative AI outputOpen question
ISO generative AI liability exclusionsUS insuranceExclude generative AI injury from general liabilityJan 2026 edition

Status colors: green in force, blue voluntary standard or framework, amber adopted and phasing in, gray draft or pending, red withdrawn.

Record

Page Record

Datasets
ai_governance_evidence.csv (5 rows); ai_rules.csv (245 rows); registry incidents (5 linked)
Key sources
Beijing Internet Court AI voice case
Walters v. OpenAI
Raine v. OpenAI
Garcia v. Character Technologies and four related suits
Hangzhou AI hallucination case
Last verified
October 2026