Torts and innovation

Michigan Law Review

Volumn 107, Issue 2, 2008, Pages 285-315

  Parchomovsky, Gideon ^a,b   Stein, Alex ^c,d  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

^b BAR ILAN UNIVERSITY   (Israel)

^c YALE UNIVERSITY   (United States)

^d YESHIVA UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

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EID: 56249103835     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (238)

1. See e.g., DAVID WARSH, KNOWLEDGE AND THE WEALTH OF NATIONS: A STORY OF ECONOMIC DISCOVERY (2006) (discussing the importance of innovation to economic growth).
2. This neglect is quite surprising considering the classic "rewards insight" of Steven Shavell & Tanguy van Ypersele, Rewards versus Intellectual Property Rights, 44 J.L. & ECON. 525 (2001).
3. Shavell and van Ypersele have established that, under certain conditions, paying innovators for their inventions would promote the incentive to innovate in a socially much better way than giving innovators intellectual property rights. This insight calls for elimination of any negative rewards that innovators receive from the legal system, and rules of tort liability skewed against innovators constitute a negative reward. See generally STEVEN SHAVELL, FOUNDATIONS OF ECONOMIC ANALYSIS OF LAW 177-99 (2004) (demonstrating how overbroad liability rules chill socially beneficial activities).
4. See infra Part I.
5. Courts' decisions about negligence routinely rely on proxies and evidentiary devices that include custom, the res ipsa loquitur rule, and accepted expert opinion. See, e.g., Twyman v. Twyman, 855 S.W.2d 619, 633 (Tex. 1993) (Hecht. J., concuning and dissenting) ("'The issue of negligence is seldom decided without guidance from some external source: custom, relevant statutes and regulations, evidentiary doctrines such as res ipsa loquitur, or expert testimony on alternatives.'"
6. (quoting Daniel Givelber. The Right to Minimum Social Decency and the Limits of Evenhandedness: Intentional Infliction of Emotional Distress by Outrageous Conduct, 82 COLUM. L. REV. 42, 56 (1982))).
7. See W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 39, at 243 (5th ed. 1984)
8. ("In its inception the [res ipsa loquitur] principle was nothing more than a reasonable conclusion, from the circumstances of an unusual accident, that it was probably the defendant's fault." (emphasis added)): see also id. at 244-48 (explaining that the res ipsa rule applies predominantly to unusual events).
9. See, e.g., Aderhold v. Lowe's Home Ctrs., Inc., 643 S.E.2d 811 (Ga. Ct. App. 2007) (denying res ipsa to a shopper struck by a box that fell from a shelf at a home improvement store).
10. The court noted that "the manner in which the boxes were stacked ... did not appear to be unusual or dangerous." Id. at 812.
11. For more details see infra notes 47-53 and accompanying text.
12. See, e.g., Hailey v. Otis Elevator Co., 636 A.2d 426, 428 (D.C. 1994) ("Given the power of res ipsa loquitur to satisfy without further proof the element of negligence and the consequent caution with which it should be applied, we think that where the plaintiff relies upon 'common knowledge' to invoke the doctrine, the fact that such events do not 'ordinarily' occur 'without negligence' must be based upon a widespread consensus of a common understanding." (emphasis added)).
13. For more details see infra notes 47-53 and accompanying text.
14. See infra notes 47-50 and accompanying text.
15. See infra notes 45-46. 57-58 and accompanying text.
16. The Daubert Trilogy, infra note 60, that applies in federal courts and with some modifications, in more than half of the states attenuates the anti-innovation bias only slightly.
17. See infra text accompanying notes 62-68.
18. This example is based on a true story one of us heard from a practicing physician. See also Edward P. Monico et al., The Impact Of Evidence-Based Medicine And Evolving Technology On The Standard Of Care In Emergency Medicine, 3(2) INTERNET J. LAW. HEALTHCARE & ETHICS (2005), http://www.ispub.com/ostia/ index.php?xmlFilePath=journals/ijlhe/vol3n2/evidence.xml ("[T]he customary [care] standard provides a safe haven for physicians who align themselves with the status quo regardless of whether or not this affiliation reflects the latest medical information.... [C]ustom may contribute to the tremendous delay between discovery of effective therapies and their routine use."). As an example of this phenomenon. Monico et al. cite physicians' general reluctance to perform ultrasound-guided central venous access - a novel procedure presently depressed by the custom rules.
19. Id.
20. We are aware of the possible argument that commercialization is not really part of the inventive process, among other things because it is usually not carried out by innovators. A typical innovator sells her invention to an entrepreneur and exits the scene. However, we chose to include the commercialization stage in the inventive process for two reasons. First, successful commercialization directly influences the return from innovation and thus affects the ex ante incentives to innovate. Second, the commercial success of the invention may bear on its patentability. In deciding whether an invention has satisfied the statutory non-obviousness requirement, courts often rely on the commercial success of the invention on the market. See, e.g., Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 17-18 (1966) ("Such secondary considerations as commercial success, long felt but unsolved needs, failure of others, etc., might be utilized to give light to the circumstances surrounding the origin of the subject matter sought to be patented. As indicia of obviousness or nonobviousness, these inquiries may have relevancy.").
21. For criticism, see Robert P. Merges, Commercial Success and Patent Standards: Economic Perspectives on Innovation, 76 CAL. L. REV. 803, 842-52 (1988).
22. See infra note 16 and sources cited therein;
23. see also infra notes 116-119 and accompanying text.
24. See infra Section III.B.
25. See DAN B. DOBBS. THE LAW OF TORTS § 8, at 12 (2000) (describing tort liability as premised on deviation from acceptable standards);
26. KEETON ET AL., supra note 5, § 1, at 6 (same).
27. See KEETON ET AL., supra note 5, § 33, at 193-96:
28. James A. Henderson, Jr., Process Constraint in Tort, 67 CORNELL L. REV. 901, 924 (1982) (calling courts' resort to customary standards "avoidance by delegation");
29. James A. Henderson, Jr. & John A. Siliciano, Universal Health Care and the Continued Reliance on Custom in Determining Medical Malpractice, 79 CORNELL L. REV. 1382 (1994) (explaining and analyzing the "customary care" standard for doctor-patient relationships);
30. Steven Hetcher, Creating Safe Social Norms in a Dangerous World, 73 S. CAL. L. REV. 1 (1999):
31. Steven Hetcher, The Jury's Out: Social Norms' Misunderstood Role in Negligence Law, 91 GEO. L.J. 633, 646-47 (2003) ("[J]uries do not engage in [abstract cost-benefit analysis], but instead draw from their diverse array of everyday norms and customs when providing concrete substance to the abstract reasonable person standard to render a decision on the issue of negligence.");
32. Fleming James, Jr. & David K. Sigerson, Particularizing Standards of Conduct in Negligence Trials. 5 VAND. L. REV. 697, 712-13 (1952) (underscoring the centrality and utility of courts' reliance on custom in determining negligence):
33. Patrick J. Kelley, Who Decides? Community Safety Conventions at the Heart of Tort Liability, 38 CLEV. ST. L. REV. 315, 353-63 (1990) (arguing that, instead of relying on cost-benefit analysis, negligence decisions based on the "reasonable person" standard use customs and community norms as a benchmark);
34. Clarence Morris, Custom and Negligence, 42 COLUM. L. REV. 1147 (1942) (underscoring the centrality and utility of courts' reliance on custom in determining negligence):
35. David G. Owen, Proving Negligence in Modern Products Liability Litigation. 36 ARIZ. ST. L.J. 1003, 1017 (2004) ("[W]hether a person who has caused harm to another acted or failed to act as similar persons customarily act in the same situation goes to the heart of negligence determinations.");
36. Stephen R. Perry, Responsibility for Outcomes, Risk, and the Law of Torts, in PHILOSOPHY AND THE LAW OF TORTS 72, 113-14 (Gerald J. Postema ed., 2001) (observing that harms that are actionable in torts result from deviations from a customarily accepted level of risk);
37. David A. Urban, Comment, Custom's Proper Role in Strict Products Liability Actions Based on Design Defect, 38 UCLA L. REV. 439, 440 (1990) (criticizing California courts' departure from the generally accepted custom-based ascertainment of product defects for leaving judges and juries "in a vacuum").
38. But see Richard A. Epstein, The Path to The T.J. Hooper: The Theory and History of Custom in the Law of Tort. 21 J. LEGAL STUD. 1 (1992) (criticizing modern courts' tendency to place cost-benefit analysis ahead of custom in ascribing liability in torts).
39. See DOBBS, supra note 15, § 164, at 396:
40. KEETON ET AL., supra note 5, § 33, at 193-96.
41. See DOBBS, supra note 15. § 164, at 397.
42. RESTATEMENT (SECOND) OF TORTS § 295A (1965);
43. see also FED. R. EVID. 406 (customs and routine practices admissible as evidence to prove action in conformity).
44. The comments to the Restatement clarify the relevance of custom: If the actor does what others do under like circumstances, there is at least a possible inference that he is conforming to the community standard of reasonable conduct; and if he does not do what others do, there is a possible inference that he is not so conforming.... [W]here there is nothing in the situation or in common experience to lead to the contrary conclusion, this inference may be so strong as to call for a directed verdict, one way or the other, on the issue of negligence. RESTATEMENT (SECOND) OF TORTS § 295A cmt. b. The Restatement further notes that "[a]ny such custom is ... not necessarily conclusive .... Customs which are entirely reasonable under the ordinary circumstances which give rise to them may become quite unreasonable in the light of a single fact in the particular case."
45. Id. § 295A cmt. c.
46. This practice has an obvious explanation: custom integrates the conventional wisdom - a decisional shortcut which is both easy and sensible to apply without generating much controversy over the court's decision. See DOBBS, supra note 15, § 164, at 395-96:
47. KEETON ET AL., supra note 5, § 33, at 193-94.
48. See RESTATEMENT (SECOND) OF TORTS § 295A cmt. b:
49. see also Owen, supra note 16, at 1038 ("A defendant's violation of a relevant safety standard set ... by the defendant's industry by custom ... ordinarily will go far in proving a plaintiff's negligence claim.").
50. This example is adapted from Sledd v. Washington Metropolitan Area Transit Authority, 439 A.2d 464 (D.C. 1981) (per curiam).
51. Id. at 469.
52. See id.
53. Id. (affirming grant of summary judgment on that basis).
54. RESTATEMENT (SECOND) OF TORTS § 295A cmt. b (1965):
55. DOBBS, supra note 15, § 164, at 396;
56. see also Bowan ex rel. Bowan v. Express Med. Transporters, Inc., 135 S.W.3d 452, 460 (Mo. Ct. App. 2004). reh'g and/or transfer denied (May 13, 2004).
57. RESTATEMENT (SECOND) OF TORTS § 295A cmt. b.
58. Judge Learned Hand observed that "in most cases reasonable prudence is in fact common prudence." The T.J. Hooper. 60 F.2d 737. 740 (2d. Cir. 1932);
59. see also Westinghouse Elec. Corp. v. Nutt. 407 A.2d 606, 610-12 (D.C. 1979).
60. See RESTATEMENT (SECOND) OF TORTS § 295A cmt. c.
61. See id. (noting that courts should disregard a custom resulting from a "deliberate disregard of a known risk").
62. See, e.g.. Adcock v. Brakegate, Ltd., 645 N.E.2d 888 (Ill. 1994) (affirming imposition of substantial liability in torts on Owens-Corning Fiberglass Corporation for conspiring with other asbestos manufacturers to conceal hazards of asbestos);
63. Owens-Corning Fiberglas Corp. v. Ballard, 749 So. 2d 483, 487 (Fla. 1999) (holding Owens-Corning liable for concealing dangers of asbestos while marketing asbestos-contaminated products).
64. See Owens-Corning, 749 So. 2d at 485 (stating that the jury assessed thirty-one million dollars in punitive damages against Owens-Corning);
65. DOBBS, supra note 15. § 381, at 1062-63.
66. See Owens-Corning, 749 So. 2d at 487 (describing extensive cover-up by Owens-Corning to avoid liability).
67. 189 U.S. 468 (1903).
68. 60 F.2d 737 (2d Cir. 1932).
69. Behymer. 189 U.S. at 470.
70. The T.J. Hooper, 60 F.2d at 740.
71. See id.
72. See Behymer, 189 U.S. at 469-70.
73. See The T.J. Hooper, 60 F.2d at 740.
74. Id.
75. See, e.g., Clayton P. Gillette & James E. Krier, Risk, Courts, and Agencies, 138 U. PA. L. REV. 1027. 1038-39 (1990) ("[F]irms with an earned reputation for safety can enjoy competitive advantages in product and labor markets.").
76. See RESTATEMENT (SECOND) OF TORTS § 328D (1965) ("It may be inferred that harm suffered by the plaintiff' is caused by negligence of the defendant when ... the event is of a kind which ordinarily does not occur in the absence of negligence ....").
77. For specifics and rationales of the res ipsa rule, see ARIEL PORAT & ALEX STEIN, TORT LIABILITY UNDER UNCERTAINTY 84-100 (2001).
78. See Frye v. United States, 293 F. 1013, 1014 (D.C. Cir. 1923) (conditioning the admissibility of expert evidence upon the "standing and scientific recognition" of its underlying scientific knowledge).
79. The Frye doctrine continues to apply in California, New York, and numerous other states. See, e.g., Parker v. Mobil Oil Corp.. 857 N.E.2d 1114, 1119-20 (N.Y. 2006) (reaffirming Frye's controlling status in New York law):
80. People v. Kelly, 549 P.2d 1240, 1244 (Cal. 1976) (adopting Frye's general acceptance standard in California law);
81. People v. Leahy, 882 P.2d 321, 324-31 (Cal. 1994) (reaffirming applicability of Kelly-Frye standards in California courts and declining to switch to Daubert);
82. see also Christian v. Gray, 65 P.3d 591, 595 n.2 (Okla. 2003) (listing Frye jurisdictions, Daubert jurisdictions, and undecided jurisdictions).
83. See DOBBS, supra note 15, § 154, at 370-71:
84. PORAT & STEIN, supra note 44, at 84.
85. PORAT & STEIN, supra note 44, at 88:
86. see also Ex parte Mobile Power and Light Co., 810 So.2d 756. 759 (Ala. 2001) (interpreting the "ordinary" condition of res ipsa as refening to "common knowledge and the experience of mankind"
87. (quoting Khirieh v. State Farm Mut. Auto. Ins. Co., 594 So.2d 1220. 1223 (Ala. 1992))).
88. See, e.g., Coalite, Inc. v. Aldridge. 229 So.2d 524, 533-34 (Ala. Ct. App. 1968) (approving application of res ipsa in an action for damages resulting from a coal mining company's blasting operations because the company failed to show alignment with the industry custom with respect to the amount of explosives used):
89. Darlington Corp. v. Finch. 149 S.E.2d 861, 861-62 (Ga. Ct. App. 1966) (denying res ipsa to a plaintiff injured by an elevator's closing doors when evidence showed that "[the elevator] had been installed in accord with the American Standard and Safety Code, sponsored by the American Institute of Architects, the National Bureau of Standards, and the American Society of Mechanical Engineers" and underwent routine inspections in the building):
90. Ursini v. Ky. Kingdom. Inc.. Nos. 2002-CA-00267-MR; 2002-CA-000560-MR; 2003 WL 1948872 *3 (Ky. Ct. App. Apr. 25, 2003) ("[The plaintiff] has failed to show that anything unusual happened during or immediately after the ride.... In the absence of proof that some out of the ordinary event occuned, [res ipsa loquitur] has no application.").
91. See, e.g., Buckelew v. Grossbard. 435 A.2d 1150, 1158 (N.J. 1981) ("We hold ... that expert testimony to the effect that the medical community recognizes that an event does not ordinarily occur in the absence of negligence may afford a sufficient basis for the application of the doctrine of res ipsa loquitur.").
92. See supra notes 23-26 and accompanying text.
93. See supra notes 23-28 and accompanying text.
94. See DOBBS, supra note 15, § 154. at 370-71.
95. For a telling example featuring a plaintiff crying for help, see Rabena v. City of New York, 556 N.Y.S.2d 807 (Civ. Ct. 1990) (dismissing a lawsuit lacking evidence that could identify the wrongdoer or the instrumentality that caused the injury brought by a mother of a mentally retarded child who was taken unharmed on a bus from home to school and returned home with a thigh injury).
96. For a newspaper report about the Z-bracket technology, see Anahad O'Connor & Tanzina Vega, Queens Elevator Accident Kills 2, Just After Similar Death at a Club, N. Y. TIMES, Feb. 5, 2007, at B1.
97. This new technology does not actually exist. We made it up for purposes of our example.
98. See DOBBS. supra note 15, § 164, at 397-98;
99. PORAT & STEIN, supra note 44, at 90.
100. Frye v. United States, 293 F. 1013, 1014 (D.C. Cir. 1923). As explained in 1 CHARLES TILFORD MCCORMICK ET AL., MCCORMICK ON EVIDENCE § 203, at 827 (Kenneth S. Broun ed., 6th ed. 2006), Frye's "general acceptance" standard requires the proponent of an expert's testimony to "show that the scientific community agrees that the principles or techniques on which the expert relies are capable of producing accurate information and conclusions." This requirement disqualifies expert testimony not aligning with conventional wisdom.
101. See id. at 828 (giving examples of novel scientific findings that "have fallen prey to [Frye's] influence").
102. The classic article on the subject attests that "[i]t is unresolved whether the Frye standard requires general acceptance of the scientific technique or of both the underlying principle and the technique applying it," Paul Giannelli, The Admissibility of Novel Scientific Evidence: Frye v. United States a Half Century Later, 80 COLUM. L. REV. 1.197, 12.12 (1980)
103. and that court decisions dealing with this issue are not uniform, id. at 1211-14.
104. This uncertainty originates from Frye's formulation that "while courts will go a long way in admitting expert testimony deduced from a wellrecognized scientific principle or discovery, the thing from which the deduction is made must be sufficiently established to have gained general acceptance in the particular field in which it belongs." Frye, 293 F. at 10.14 (emphasis added).
105. For a strict version of Frye, see Overton v. State, 976 So. 2d 536, 550 (Fla. 2007) ("In utilizing the Frye test, the burden is on the proponent of the evidence to prove the general acceptance of both the underlying scientific principle and the testing procedures used to apply that principle to the facts of the case at hand."
106. (quoting Ramirez v. State, 65.1 So. 2d 1164, 1168 (FIa. 1995)));
107. Parker v. Mobil Oil Corp., 857 N.E.2d 1114, 1119-20 (N.Y. 2006)
108. ("[T]he Frye test asks 'whether the accepted techniques, when properly performed, generate results accepted as reliable within the scientific community generally.'" (citation omitted)
109. (quoting People v. Wesley, 633 N.E.2d 451, 454 (N.Y. 1994) (emphasis added)));
110. State v. Gregory, 147 P.3d 1201, 1238 (Wash. 2006) ("Washington has adopted the Frye test for evaluating the admissibility of new scientific evidence.... Both the scientific theory underlying the evidence and the technique or methodology used to implement it must be generally accepted in the scientific community for evidence to be admissible under Frye."
111. (citing State v. Gore, 21 P.3d 262, 271-72 (Wash. 2001)));
112. Logerquist v. McVey, 1 P.3d 113, 133 (Ariz. 2000) (explaining that Frye blocks the admission of "novel scientific principles, formulae, or procedures developed by others");
113. Caldwell v. State, 393 S.E.2d 436, 44.1 (Ga. 1990) ("In many states, the test for admissibility of novel scientific evidence is whether the scientific principle or discovery supporting the evidence is sufficiently established to have gained general acceptance in the particular field in which it belongs. This is not the test in Georgia. ... We hold that it is proper for the trial judge to decide whether the procedure or technique in question has reached a scientific stage of verifiable certainty ...." (citations and internal quotation marks omitted));
114. People v. Kelly, 549 P.2d 1240, 1245 (Cal. 1976) ("The primary advantage ... of the Frye test lies in its essentially conservative nature. For a variety of reasons, Frye was deliberately intended to interpose a substantial obstacle to the unrestrained admission of evidence based upon new scientific principles.").
115. See also David L. Faigman, Admissibility Regimes: The "Opinion Rule" and Other Oddities and Exceptions to Scientific Evidence, The Scientific Revolution, and Common Sense, 36 SW. U. L. REV. 699, 701-02 (2008) ("Frye-like tests typically focus on whether experts from a particular field accept the empirical basis for the opinion .... A Frye test contemplates that judges need bring little or no knowledge of research methods to the admissibility decision. The test can be applied simply by counting the noses of members of the pertinent field. In contrast, Daubert requires judges to have fairly developed empirical sensibilities, since they must evaluate the methods and principles underlying the proffered expertise." (footnotes omitted));
116. Joseph. J. Ortego & James W. Weller, Products Liability and the Elements of Science: Admissibility of Expert Testimony in New York and Other Frye States, 4.1 TORT TRIAL & INS. PRAC. L.J. 83 (2005) (surveying Frye states' restrictions on the admissibility of novel scientific and technological knowledge).
117. For a relaxed version of Frye, see, for example, Grady v. Frito-Lay, Inc., 839 A.2d 1038, 1045 (Pa. 2003) ("[I]n applying the Frye rule, we have required and continue to require that the proponent of the evidence prove that the methodology an expert used is generally accepted by scientists in the relevant field as a method for arriving at the conclusion the expert will testify to at trial. This does not mean, however, that the proponent must prove that the scientific community has also generally accepted the expert's conclusion." (citations omitted)).
118. Sledd v. Washington Metro. Area Transit Auth., 439 A.2d 464, 469 (D.C. 1981) (per curiam), is a parallel example of an expert's failure to challenge conventional wisdom. There, the court dismissed the plaintiff's lawsuit summarily.
119. Cases forming this trilogy are Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993);
120. General Electric Co. v. Joiner, 522 U.S. 136 (1997);
121. and Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999). The trilogy substituted the Frye standard by a multifactor balancing test that requires the trial judge (1) to make sure that the methodology underlying the expert's testimony can be tested by other experts; (2) to consider whether this methodology underwent peer review and was published in the academic or professional literature after undergoing examination for possible flaws: (3) to take into account the error rate, actual or potential, that accompanies the expert's testimony and methodology: (4) to see whether this methodology attains acceptance in the relevant scientific or professional community: (5) to examine the expert's inferences from methodology to conclusions for the presence of analytical gaps; and, finally, (6) to look into the testimony's capacity to mislead or prejudice the jury.
122. For informative discussion of this test, see 1 MCCORMICK ET AL., supra note 57, § 203, at 831-33.
123. See Edward K. Cheng & Albert H. Yoon, Does Frye or Daubert Matter? A Study of Scientific Admissibility Standards, 91 VA. L. REV. 471 (2005) (demonstrating empirically, using a jurisdiction-removal criterion for ascertaining tort defendants' revealed preferences, that the shift from Frye to Daubert has brought about no real changes on the ground in state courts).
124. Daubert, 509 U.S. at 592-95.
125. Id. at 594.
126. Id. at 593-94.
127. David F. Horrobin. The Philosophical Basis of Peer Review and the Suppression of Innovation, 263 JAMA 1438 (1990) (arguing that peer review generally favors conventional wisdom and tends to suppress innovation).
128. Daubert. 509 U.S. at 593.
129. Id. at 594.
130. Cf. 1 MCCORMICK, supra note 57, § 203, at 832-33 (describing ways to gain acceptability in the general scientific community).
131. See David G. Owen. Proof of Product Defect, 93 KY. L.J. 1, 5-10 (2004) (documenting massive use of industry customs as a benchmark for determining design defects in product liability actions).
132. Industry customs affect predominantly products' designs. We therefore do not discuss here actions complaining about manufacturing defects or inadequate instructions and warnings. Cf. RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 2 (1998) (specifying three distinct categories of product liability: liability for defectively designed products, liability for manufacturing defects, and liability for inadequate instructions and warnings accompanying the product).
133. Note that industrial custom is not exactly the same as the "state of art" upon which manufacturers often rely in defending against product liability lawsuits. Custom is what manufacturers habitually do in producing the product. State of art refers to a general technological ability to make a safe product. See KEETON ET AL., supra note 5, § 99, at 701. Manufacturers may or may not customarily utilize the state-of-art technology.
134. Whether they do so or not is an empirical question. See Urban. Comment, supra note 16. at 440 n.4.
135. Owen, supra note 69, at 7-8.
136. Id. at 7.
137. See DAVID G. OWEN ET AL., 2 MADDEN & OWEN ON PRODUCTS LIABILITY § 27.6, at 823-28 (3rd ed. 2000).
138. Id. at 824-26.
139. Id. at 823-28.
140. For recent court decisions on that issue, see Moore ex rel. Moore v. Mississippi Valley Gas Co.. 863 So.2d 43. 46-47 (Miss. 2003) (defendant's evidence that its water heater conformed with industry standards defeated suit for hot water bums sustained by plaintiff);
141. and Alfred v. Caterpillar, Inc., 262 F.3d 1083, 1088 (10th Cir. 2001) (holding that failure of defendant's equipment to comply with industry standards evidences presence of a defect in the equipment, although it does not yet establish that the equipment was unreasonably dangerous to ordinary consumers).
142. See OWEN ET AL., supra note 73, at 823-28.
143. DOBBS, supra note 15. § 358, at 987;
144. see also Owen, supra note 69, at 5 ("The admissibility of customary industry standards [in product liability actions] derives from the use of this type of evidence for nearly two centuries in negligence law ....").
145. DOBBS. supranote 15. § 358, at 987.
146. See, e.g., Buell-Wilson v. Ford Motor Co.. 46 Cal. Rptr. 3d 147, 164 (Ct. App. 2006) ("A manufacturer cannot defend a product liability action with evidence it met its industry's customs or standards on safety.... [A]dmission of such evidence is reversible error." (citations omitted));
147. Grimshaw v. Ford Motor Co., 174 Cal. Rptr. 348. 378 (Ct. App. 1981) (noting that custom is irrelevant to California's risk-benefit test for design defects and consequently inadmissible as evidence);
148. Titus v. Bethlehem Steel Corp., 154 Cal. Rptr. 122, 126 (Ct. App. 1979) (stating that custom is inadmissible because defendant's compliance with custom does not shield him from strict liability for defective products).
149. See Buell-Wilson, 46 Cal. Rptr. 3d at 164:
150. see also Holloway v. J.B. Sys., Ltd., 609 F.2d 1069, 1073 (3d Cir. 1979) (holding that trade customs cannot be admitted into evidence under the Pennsylvania law of product liability).
151. For criticism of these rulings, see Urban, Comment, supra note 16, at 463-65.
152. See DOBBS. supra note 15, § 242, at 631-32.
153. See id. § 242, at 631-33;
154. see also Henderson & Siliciano, supra note 16, at 1382.
155. See DOBBS, supra note 15, § 242, at 633;
156. Henderson & Siliciano, supra note 16, at 1382;
157. see, e.g.. Franklin v. Gupta, 567 A.2d 524 (Md. Ct. Spec. App. 1990) (exemplifying the "customary care" standard in the medical malpractice law).
158. See Tunkl v. Regents of Univ. of Cal., 383 P.2d 441 (Cal. 1963) (voiding on public policy grounds an agreement incoiporating patient's waiver of tort suits for treatments falling below the "customary care" standard);
159. Porubiansky v. Emory Univ., 275 S.E.2d 163 (Ga. Ct. App. 1980) (same);
160. Meiman v. Rehab. Ctr., Inc., 444 S.W.2d 78 (Ky. 1969) (same):
161. Cudnik v. William Beaumont Hosp., 525 N.W.2d 891, 894-96 (Mich. Ct. App. 1994) (same);
162. Ash v. N.Y. Univ. Dental Ctr., 564 N.Y.S.2d 308 (App. Div. 1990) (same);
163. Dedely ex rel. Dedely v. Kings Highway Hosp. Ctr., Inc., 617 N.Y.S.2d 445 (Sup. Ct. 1994) (same);
164. Olson v. Molzen, 558 S.W.2d 429 (Tenn. 1977) (same);
165. see also Tatham v. Hoke, 469 F.Supp. 914 (W.D.N.C. 1979) (voiding on public policy grounds a $15,000 damage limitation for substandard treatment that appeared in patient's informedconsent form).
166. See cases cited supra note 84.
167. See cases cited supra note 84.
168. See Jones v. Chidester, 610 A.2d 964 (Pa. 1992) (articulating the "school of thought" rule as a complete defense against medical malpractice allegations);
169. DOBBS. supranote 15. § 242. at 633: LAWRENCE O. GOSTIN & PETER D. JACOBSON. LAW AND THE HEALTH SYSTEM 430 n.1 (2006);
170. Henderson & Siliciano, supra note 16, at 1382.
171. Note, however, that experimental treatments do not qualify as a "school of thought." Yates v. Univ. of W. Va. Bd. of Trs., 549 S.E.2d 681, 690 & n.14 (W. Va. 2001).
172. Also note that courts may scrutinize doctors' customs that determine the level of risk of injury or death to which a doctor may and may not expose her patient. See, e.g., Helling v. Carey. 519P.2d981 (Wash. 1974).
173. See DOBBS, supra note 15, § 242, at 633;
174. GOSTIN & JACOBSON, supra note 87, at 430;
175. James Gibson, Doctrinal Feedback and (Un)Reasonable Care (March 14, 2008) (unpublished manuscript, available at http://ssrn.com/abstract=1109170) (identifying the "doctrinal feedback" dynamic involving overcautious doctors whose excessive precautions against harm cyclically transform into legally binding customs);
176. cf. Philip G. Peters, Jr.. The Quiet Demise of Deference to Custom: Malpractice Law at the Millennium, 57 WASH & LEE L. REV. 163, 172-79 (2000) (demonstrating that some courts treat doctors' compliance with medical customs as strong but nondecisive evidence of due care).
177. See, e.g., Sullivan v. O'Connor, 296 N.E.2d 183 (Mass. 1973) (holding that such undertakings are valid and enforceable, subject to the "clear and convincing proof requirement for oral agreements to upscale the treatment).
178. See Baird v. Am. Med. Optics, 713 A.2d 1019, 1028 (N.J. 1998) (holding an experimental-treatment agreement valid upon ascertainment of patient's informed consent);
179. Estrada v. Jaques, 321 S.E.2d 240. 254 (N.C. Ct. App. 1984) (same).
180. See Lars Noah. Informed Consent and the Elusive Dichotomy Between Standard and Experimental Therapy. 28 AM. J.L. & MED. 361, 365-67. 375 (2002) (specifying, analyzing, and criticizing the "informed consent" requirements for experimental-treatment agreements).
181. See generally Peter H. Schuck. Rethinking Informed Consent, 103 YALE L.J. 899 (1994) (evaluating the existing requirements for "informed consent"). Note that providers of conventional medicine have no parallel obligation to inform patients about available experimental treatments.
182. See Moore v. Baker. 989 F.2d 1129, 1133 (11th Cir. 1993) ("The law requires disclosure only of those alternatives that are 'generally recognized and accepted by reasonably prudent physicians.' "
183. (quoting GA. CODE ANN. § 31-9-6.1(a)(5) (1991))).
184. The experimental treatment still needs to be performed adequately, though. Failure to do so would expose the doctor to liability for malpractice. See, e.g., Lenahan v. Univ. of Chi., 808 N.E.2d 1078. 1084-85 (Ill. App. 1 Dist. 2004) (holding that medical personnel must exercise reasonable care in administering experimental treatments and that a hospital can be held liable for its failure to supervise those who provide such treatments).
185. See RICHARD A. EPSTEIN, MORTAL PERIL: OUR INALIENABLE RIGHT TO HEALTH CARE? 6-8 (1997);
186. Richard A. Epstein. Medical Malpractice: The Case for Contract, 1976 AM. B. FOUND. RES. J. 87.
187. See DOBBS, supra note 15, § 242, at 631-32.
188. Some jurisdictions base informed consent actions on the torts of assault and battery. There, informed consent needs to be obtained only with respect to invasive treatments, as opposed to treatments that are merely therapeutic. Noah, supra note 91, at 365;
189. e.g., Morgan v. MacPnail. 704 A.2d617, 619-20(Pa. 1997).
190. This expanded ability originates from the courts' requirement that doctors tell patients that the treatment is experimental, that its risks and benefits are unknown, and that they have little or no experience with the treatment. See Estrada v. Jaques. 321 S.E.2d 240, 254-55 (N.C. Ct. App. 1984) (summarizing case law from several jurisdictions and interpreting patients' right to informed consent to include the entitlement to a full "experimental treatment" warning).
191. Apart from that, doctors need to inform the patient about the conventional alternatives to the proposed treatment, Noah, supra note 91, at 366, a requirement that sharply contrasts with the rule that expressly exempts conventional doctors from the duty to inform the patient about the experimental alternatives to their proposed treatment.
192. E.g., Moore. 989 F.2d at 1133. Courts also have underscored doctors' financial and career benefits from delivering experimental treatments as a reason for subjecting the patient's agreement to undergo such a treatment to heightened scrutiny.
193. Estrada, 321 S.E.2d at 255;
194. Darke v. Estate of Isner. 17 Mass. L. Rptr. 689 (Mass. Super. Ct. 2004).
195. Some courts even require doctors to reveal to the patient their success rate with the experimental treatment. See, e.g.. Gaston v. Hunter, 588 P.2d 326. 351 n.26 (Ariz. Ct. App. 1978) ("In the case of a new or unusual procedure, the individual physician's experience and 'track record' would seem even more important than when an established, common procedure is contemplated.").
196. These chilling effects will likely be exacerbated by the "doctrinal feedback" dynamic identified by Gibson, supra note 88.
197. See supra text accompanying notes 54-56.
198. See supra notes 73-78 and accompanying text.
199. Oren Bar-Gill & Gideon Parchomovsky, A Marketplace for Ideas?, 84 TEX. L. REV. 395, 398 (2005).
200. Cf. Mark Geistfeld, Products Liability, in 3 ENCYCLOPEDIA OF LAW AND ECONOMICS 347, 363 (Boudewijn Bouckaert & Gerrit De Geest eds., 2000). Professor Geistfeld argues that product liability motivates the development of novel safety technologies, which makes it welfareenhancing.
201. Id. As we explain in the text, however, custom rules give manufacturers a more attractive alternative: replication of conventional technologies.
202. This alternative is privately cheaper but socially costlier than investing in safety-focused R&D. Similarly, Professor Benjamin H. Barton claims that tort liability spurs innovation and uses anecdotal evidence of playground designs to substantiate this claim. Benjamin H. Barton, Tort Reform, Innovation, and Playground Design, 58 FLA. L. REV. 265 (2006). He too fails to acknowledge the perverse effects of the custom rales. As we explain in the text, those rules subsidize innovations falling within the accepted technological paradigm (as seems to be the case with Professor Barton's playgrounds) and tax paradigm-shifters.
203. See Mark A. Lemley, Rational Ignorance at the Patent Office, 95 NW. U. L. REV. 1495, 1507 (2001) ("[T]he total [estimated] number of patents litigated or licensed for a royalty (as opposed to a cross-license) is on the order of five percent of issued patents.").
204. For discussion of the factors that account for this phenomenon, see Gideon Parchomovsky & R. Polk Wagner, Patent Portfolios. 154 U. PA. L. REV. 1 (2005)
205. which lays out a general economic account of strategic patenting, and Robert P. Merges, One Hundred Years of Solicitude: Intellectual Property Law, 1900-2000. 88 CAL. L. REV. 2187, 2222 (2000), which discusses patenting aimed solely at blocking competition.
206. W. Kip Viscusi & Michael J. Moore, Product Liability, Research and Development, and Innovation, 101 J. POL. ECON. 161 (1993).
207. Id. at 164-66, 174, 182.
208. The study associates those payouts with the premiums firms paid insurers to obtain product liability coverage. It measures the intensity of the firms' efforts to innovate by associating it with the firms' expenditures on R&D. Id. at 169-72.
209. See id. at 164.
210. Id. at 164-66, 174.
211. Id.
212. For discussions of this study, see Susan Rose-Ackerman, Product Safety Regulation and the Law of Torts, in PRODUCT LIABILITY AND INNOVATION: MANAGING RISK IN AN UNCERTAIN ENVIRONMENT 151. 151 (1994);
213. Barton, supra note 100, at 278-80.
214. Additional studies can be found in THE LIABILITY MAZE: THE IMPACT OF LIABILITY LAW ON SAFETY AND INNOVATION (Peter W. Huber & Robert E. Litan eds., 1991), a collection of essays that examine empirically, but ultimately leave open, the question whether product liability chills innovation.
215. Cf. Johnson ex rel. Adler v. Kokemoor. 545 N.W.2d 495 (Wis. 1996) (holding that a doctor's failure to disclose his success rates to patient violated "informed consent");
216. Aaron D. Twerski & Neil B. Cohen, The Second Revolution in Informed Consent: Comparing Physicians to Each Other, 94 NW. U. L. REV. 1 (1999) (advocating general disclosure of doctors' success rates).
217. See Mark A. Hall. Law, Medicine, and Trust, 55 STAN. L. REV. 463. 487-97 (2002) (describing trust as a foundation of doctor-patient relationship);
218. Paul B. Miller & Charles Weijer, Fiduciary Obligation in Clinical Research, 34 J.L. MED. & ETHICS 424 (2006) (outlining doctors' general obligation to inform patients about conflicts of interest).
219. See Noah, supra note 91, at 366 ("[P]hysicians generally must disclose reasonable alternative courses of action to the patient.").
220. Cf. Moore v. Baker. 989 F.2d 1129, 1133 (11th Cir. 1993) (noting that doctors need not inform patients about experimental treatments).
221. See Noah, supra note 91, at 377-79 (questioning the wisdom of the heightened informedconsent requirements for experimental treatments).
222. See supra notes 51-56 and accompanying text.
223. O.W. HOLMES, JR., THE COMMON LAW 1 (Boston: Little, Brown, & Co., 1881).
224. This is what many rales of evidence actually do. See ALEX STEIN, FOUNDATIONS OF EVIDENCE LAW 141-71 (2005).
225. See Morris, supra note 16. at 1147-49.
226. See Henderson, supra note 16. at 923-24.
227. See generally Lucian Arye Bebchuk, Litigation and settlement under imperfect information, 15 RAND J. ECON. 404 (1984) (observing that parties' symmetrical information about trial's outcome promotes settlement and analyzing the nature and probability of settlements under asymmetrical information).
228. This point echoes Hayek's economic theory of information production. See Richard A. Posner, Hayek, Law, and Cognition, 1 N.YU. J. L. & LIBERTY 147 (2005) (expounding Hayek's theory of private and decentralized information production);
229. see also id. at 149-50 (attesting that, under Hayek's theory, legal sanctions should be used to enforce only abstract customs that set general frameworks for people's interactions).
230. A comparison with Federal Drag Administration ("FDA") review is instinctive. Under the accelerated, fee-based review system, it takes about a year on average for the FDA to give a premarket approval to a drug, both new and generic, while the average period for a pre-market approval of medical devices is five months. MICHELE SCHOONMAKER, CRS REPORT FOR CONGRESS, THE U.S. APPROVAL PROCESS FOR MEDICAL DEVICES: LEGISLATIVE ISSUES AND COMPARISON WITH THE DRUG MODEL 33 tbl. 2 (2005).
231. In a not so distant past, the average period for a new drug's non-expedited approval by FDA was eight and a half years. CTR. FOR DRUG EVALUATION AND RES., DEP'T OF HEALTH AND HUMAN SERV., THE CDER HANDBOOK 5 (rev., 1998).
232. For medical devices, the approval period ranged between "months or even several years." Theresa J. Pulley Radwan. Meeting the Objectives of the MDA: Implied Preemption of State Tort Claims by the Medical Device Amendments, 10 J.L. & HEALTH 343, 347 (1995-96).
233. Our two-year limit proposal accounts for the modern tendency to shorten the approval period, but is also mindful of four additional factors. First, the proposed review system is private and optional rather than state-imposed and compulsory. Second, proper scientific review of a novel technology may require lengthy experiments. Third, the FDA system, unlike ours, has no approval-by-default provision in the event of unduly delayed review. Finally, our equalizing-up mechanism effectively shields the innovator from liability in torts, while an FDA approval of a drug or medical device does not always have such effect. See Medtronic. Inc. v. Lohr, 518 U.S. 470 (1996) (holding in connection with medical devices that FDA approval pursuant to section 510 of the Food, Drug, and Cosmetic Act, as amended by the Medical Device Amendments of 1976, does not block tort actions in state courts for both negligence and product liability):
234. DAVID G. OWEN, PRODUCTS LIABILITY LAW § 8.10 at 558 & n.56 (2005) (attesting that drug manufacturers are liable for defective drags despite FDA's clearance and presenting relevant case-law).
235. But see Riegel v. Medtronic, Inc., 128 S. Ct. 999 (2008) (holding that when a medical device satisfies the FDA requirements for its pre-market approval, the manufacturer will defeat the tort action). Following this decision, the FDA may equalize-up the status of innovative medical devices. Whether it will do so often enough is an open question.
236. Eradication of the anti-innovation bias also can be achieved by substituting the fault-based doctrines of negligence and product liability with a no-fault regime of strict liability. This reform would do away with the custom rules, but in a radical and intensely controversial way that we avoid recommending. See James A. Henderson. Jr., Why Negligence Dominates Tort, 50 UCLA L. REV. 377 (2002) (analyzing problems that a transition from negligence to strict liability would engender). The federal preemption mechanism is another far-reaching alternative. This mechanism blocks tort actions complaining against technologies that comply with the safety standards set by the appropriate federal agency. The agency consequently can "equalize up" new technologies that are yet to become state-of-the-art.
237. See, e.g.. Riegel. 128 S.Ct. 999 (holding that requirements for premarket approval of medical devices, issued by FDA pursuant to section 510 of the Food, Drug, and Cosmetic Act, as amended by the Medical Device Amendments of 1976, preempt conflicting tort actions against manufacturers):
238. Geier v. Am. Honda Motor Co., 529 U.S. 861, 864-86 (2000) (holding that the DOT's Federal Motor Vehicle Safety Standards, promulgated under the National Traffic and Motor Vehicle Safety Act of 1966, preempt conflicting tort actions against car manufacturers).