Articles

TORT LIABILITY FOR SOFTWARE DEVELOPERS: A LAW & ECONOMICS PERSPECTIVE

Byline:

T. Randolph Beard, PhD, George S. Ford, PhD, Thomas M. Koutsky, Esq., Lawrence J. Spiwak, Esq.

Abstract:

This article explores the economic rationale for applying product liability law to computer software. As demonstrated in the article, a well-designed liability regime must place liability upon all parties who economically control the risks of accidents. Accordingly, this article finds that strict liability may be appropriate for certain types of “intrinsic” software, but not for other types of software requiring that the customer be actively involved in the selection, operation and maintenance thereof. The authors show that for this type of “extrinsic” software, a strict liability rule is unlikely to be economically optimal and, therefore, choosing a generic liability regime applicable to all forms of software is ill-advised. Instead, a more nuanced approach is required to achieve a desirable policy outcome.

Author Footnote:

T. Randolph Beard,PhD is a Senior Fellow at The Phoenix Center for Advanced Legal & Economic Public Policy Studies and Professor of Economics, Auburn University. George S. Ford, PhD is a Chief Economist at The Phoenix Center for Advanced Legal & Economic Public Policy Studies. Thomas M. Koutsky, Esq. is a Resident Scholar at The Phoenix Center for Advanced Legal & Economic Public Policy Studies. Lawrence J. Spiwak, Esq. is the President of The Phoenix Center for Advanced Legal & Economic Public Policy Studies. The views expressed in this article are the authors’ alone and do not represent the views of the Phoenix Center, its Adjunct Fellows, or any of its individual Editorial Advisory Board members. A version of this article originally appeared as Phoenix Center Policy Paper. No. 27.

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