Torts v. Technology: Accommodating Disruptive Innovation

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James A. Henderson, Jr.

Given that the American legal system supports markets that make technological advancement economically feasible and thus attractive to investors, it may be said that our law generally encourages the development of innovative, albeit sometimes unavoidably dangerous, technology. Specific examples abound. Thus, the rule of limited shareholder liability encourages innovative risk-taking. And some specialized areas appear even more self- consciously to promote innovation; in this regard, intellectual property law deserves high marks for making the effort, whatever may be said for its bottom-line results. By contrast tort law, whether or not its central objective is deterrence, carries the potential for discouraging creative technological innovation. Indeed, observers have criticized the American system of products liability on precisely that basis and have argued that it contributes significantly to placing our business firms at a disadvantage in global competition. This Article takes issue with such criticisms. Properly understood, American tort law contains a number of features that are accommodative of, rather than pointedly antagonistic toward, disruptive technological innovation. Thus, our liability rules allow innovating firms to avoid exposure to potentially existential liability for latent, unknowable risks associated with new technology, thereby comparing favorably with the relevant portions of foreign liability law. It follows that no compelling reasons exist to believe that our tort system significantly disadvantages American firms in their efforts to compete globally.

Tort law’s accommodation of innovation may be viewed as part of a broader set of circumstances in which tort embraces risk-taking in order to promote individual and social values that the system considers appropriate. Most fundamentally, retention of negligence as the ubiquitous liability standard reflects a willingness to allow actors to make reasonable risk- benefit trade-offs that harm others without necessarily incurring tort liability. Within the negligence system, the stubborn persistence of the quasi- contractual concept of assumption-of-the-risk (in spite of efforts to merge it into the concept of contributory negligence/comparative fault) reflects a willingness to allow competent actors to take responsibility for choosing to run substantial risks of harm to achieve their individual objectives. And even within the American tort system’s bastion of consumer protection—our system of products liability—the no-duty rule denying claims that attack entire categories of products for being defectively designed reflects the normative judgment that the products liability system should allow individuals to use and consume even highly risky product categories—e.g., trampolines and tobacco—if those products are properly marketed and reflect consumers’ considered preferences. Thus, although the focus in this Article is on tort law’s apparent willingness to allow substantial breathing room for technological innovation, the analysis has relevance to the broader subject of tort law’s responses to other forms of beneficial risk-taking.

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