Every once in a while, personal injury lawyers come up with new ways to sue that can be real head scratchers. Courts usually weed out these theories, but they get through on occasion. This happened last year in Alabama, where the Alabama Supreme Court held that a company can be subject to liability, not for its own products, but for products entirely made and sold by its competitors. This theory for liability has been dubbed “innovator liability” because it is used primarily against companies that invent new products even though the plaintiffs in the cases are alleging that they have been harmed only by similar or “knock-off” products of other companies.
In May, the Alabama Legislature and Governor, in a swift bipartisan manner, overturned their state Supreme Court’s innovator liability ruling. Alabama’s policymakers appreciated that it makes no legal or economic sense for innovators to own the liability for an entire product line. In addition to being legally unprincipled, this liability theory punishes innovation, which could have devastating long-term impacts on consumers and businesses alike. The downsides of such liability are too great.