Friday, November 14, 2008
Parchomovsky & Stein on Torts and Innovation
Gideon Parchomovsky (Penn) and Alex Stein (Cardozo) have recently posted "Torts and Innovation" on NELLCO. The article will come out shortly in Michigan Law Review (107 Mich. L. Rev. 205 (2008)). You can find the link here. Here is the abstract:
This Essay exposes and analyzes a hitherto overlooked cost of the current design of tort law: its adverse effect on innovation. Tort liability for negligence, defective products, and medical malpractice is determined by reference to custom. We demonstrate that courts’ reliance on custom and conventional technologies as the benchmark of liability chills innovation and distorts its path. Specifically, the recourse to custom taxes innovators and subsidizes replicators of conventional technologies. We explore the causes and consequences of this phenomenon and propose two possible ways to modify tort law in order to make it more welcoming to innovation.
A very interesting piece. Their two proposals are (1) to move to a pure cost-benefit system, rather than looking at custom, or (2) to have special boards of industry experts designate some innovations for privileged status that would be equal to custom. These review boards would be optional and private. Whether they would be subject to capture and whether courts would be well placed to trust them (or whether this privileged status would become the subject of dueling experts) remain open questions, noted but not fully resolved by the authors.