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Torts and innovation.

Gideon Parchomovsky¹, Alex Stein

¹University of Pennsylvania Law School, Philadelphia, Pennsylvania and Bar-Ilan University School of Law, Israel.

Michigan Law Review

|November 27, 2008

Summary

Tort law, by using custom as a benchmark for liability, discourages innovation. This legal standard unfairly taxes new ideas while benefiting established technologies, hindering technological advancement.

Area of Science:

Law and Economics
Intellectual Property Law
Innovation Studies

Background:

Tort law, encompassing negligence, product liability, and medical malpractice, traditionally relies on established custom to determine liability.
This reliance on custom may inadvertently stifle the development and adoption of novel technologies.

Purpose of the Study:

To analyze the detrimental impact of tort law's reliance on custom on the process of innovation.
To identify how current legal standards create economic disincentives for innovators.

Main Methods:

Economic analysis of tort law principles.
Examination of the legal benchmark of "custom" in liability cases.
Comparative analysis of incentives for innovators versus technology replicators.

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Main Results:

Courts' adherence to custom as the standard for tort liability chills innovation.
This legal framework effectively taxes innovators while subsidizing those who replicate existing technologies.
The current system distorts the natural progression and direction of technological development.

Conclusions:

Modifying tort law to reduce reliance on custom is crucial for fostering innovation.
Proposed legal reforms aim to create a more favorable environment for the introduction of novel technologies.
Addressing this overlooked cost of tort law can unlock significant economic and societal benefits through enhanced innovation.