As regular readers know, we bloggers have been following the issue of whether software of various sorts – electronic bytes – is a “product” for product liability purposes. It’s a longstanding issue, since the current Restatements of Torts specifically defines a “product” as something “tangible,” which arrays of electrons are not. “A product is tangible personal property distributed commercially for use or consumption.” Restatement (Third) of Torts: Products Liability §19(a) (1998). However, this same section also states that “[o]ther items, such as . . . electricity” can be considered “products when the context of their distribution and use is sufficiently analogous to the distribution and use of tangible personal property.” Id.
As for “computer software,” Restatement §19 found “no cases on point” except “dictum” in Winter v. G.P. Putnam’s Sons, 938 F.2d 1033, 1035 (9th Cir. 1991) (“Computer software that fails to yield the result for which it was designed may be another.”). Restatement §19, Reporters’ Notes. Winter’s holding, however, was the opposite – “declin[ing] to expand products liability law to embrace the ideas and expression,” found, in that case, in a book. 939 F.2d at 1036. These Reporters’ Notes also mention the Uniform Commercial Code, but subsequently, in 2005, the UCC was amended and now defines “goods” only as including “a computer program embedded in goods.” U.C.C. §9-102(44). For UCC purposes, “software” is now considered a “general intangible,” not a “good.” Id. §9-102(42).
The definitions of “goods” and “software” are also mutually exclusive. Computer programs usually constitute “software,” and, as such, are not “goods” as this Article uses the terms. However, under the circumstances specified in the definition of “goods,” computer programs embedded in goods are part of the “goods” and are not “software.”
U.C.C. §9-102, Commentary, at 4(a). See also Uniform Computer & Information Technology Act of 2002 §102(a)(35) (likewise defining “information” − as opposed to “goods” − as including “computer programs”).
In terms of post-Restatement case law, recently Quinteros v. InnoGames, 2022 WL 898560 (W.D. Wash. March 28, 2022), directly considered this issue where the plaintiff alleged addiction to an “online video game” and economic losses from purchasing “in-game currency.” Id. at *1. Among the plaintiff’s multiple liability theories was a products liability claim that the game’s “unfair practices and cheating . . ., and attempting to cause a medical condition” – presumably addiction in its users – implicates “a broader public interest of protecting the public from predatory companies.” Id. at *7. Quinteros “agree[d] that [the game] as pled in this case is not a product under the” Washington State product liability statute. Id.
[O]nline games are not subject to Washington’s products liability law. [The statute] defines “Product” as “any object possessing intrinsic value, capable of delivery either as an assembled whole or as a component part or parts, and produced for introduction into trade or commerce.” [The game] is software as a service, not an “object,” hence Plaintiff’s product liability claim must fail as a matter of law.
Id. Plaintiff sought reconsideration, and lost again. Quinteros v. InnoGames, 2022 WL 953507, at *2 (W.D. Wash. March 30, 2022) (“The Court will not consider new argument related to Plaintiff’s product liability claim” and “[i]n any event, Plaintiff has failed to demonstrate manifest error”).
For its holding, Quinteros cited the aforementioned Restatement §19, and several cases. Sanders v. Acclaim Entertainment, Inc., 188 F. Supp.2d 1264, 1278-79 (D. Colo. 2002) (computer games are not products for strict liability purposes); Wilson v. Midway Games, Inc., 198 F. Supp.2d 167, 173 (D. Conn. 2002) (interactive “virtual reality technology” is not a “[product] for the purposes of strict products liability”); James v. Meow Media, Inc., 90 F. Supp.2d 798, 810 (W.D. Ky. 2000) (“[w]hile computer source codes and programs are construed as ‘tangible property’ for tax purposes and as ‘goods’ for UCC purposes, these classifications do not indicate that intangible thoughts, ideas, and messages contained in computer video games, movies, or internet materials should be treated as products for purposes of strict liability”), aff’d, 300 F.3d 683, 700-01 (6th Cir. 2002) (software makers and website operators do not deal in “products”).
We have previously discussed Rodgers v. Christie, 795 F. Appx. 878, 880 (3d Cir. 2020), which held that artificial intelligence software “is neither ‘tangible personal property’ nor remotely ‘analogous to’ it” to qualify as a product for product liability purposes. Id. at 880 (following Restatement §19):
[The program] is an “algorithm” or “formula” using various factors to estimate [the likelihood of a result]. . . . [I]nformation, guidance, ideas, and recommendations are not “product[s]” under the Third Restatement, both as a definitional matter and because extending strict liability to the distribution of ideas would raise serious First Amendment concerns.
Id. at 880 (citation and quotation marks omitted). Strict liability under the New Jersey product liability statute “applies only to defective products, not to anything that causes harm or fails to achieve its purpose.” Id.
Similarly, in Intellect Art Multimedia, Inc. v. Milewski, 2009 WL 2915273 (N.Y. Sup. Sept. 11, 2009) (in table at, 899 N.Y.S.2d 60), the court refused to find a website to be a “product” for strict liability purposes:
[P]laintiff has failed to demonstrate that, as a matter of law, the . . . website is a product so that [defendant] should be held strictly liable for any “injury” caused thereby. Although plaintiff argues that the national trend is moving towards a more expansive definition of the term “product” in products liability analysis, this court is not persuaded that this website in the context of plaintiff’s claims is a “product” which would otherwise trigger the imposition of strict liability.
Id. at *7.
A few non-product liability cases are also worth mentioning. ClearCorrect Operating, LLC v. International Trade Commission, 810 F.3d 1283 (Fed. Cir. 2015), held that 3D printing digital files are not “material” things for purposes of the Tariff Act of 1930 (19 U.S.C. §1337). ClearCorrect held that digital files were not “articles” because articles must be “material things.” Id. at 1296. Therefore the statute did not apply, meaning that no administrative authority existed to stop their importation. Id. at 1293-94. Reconsideration was denied because “[t]he panel majority was correct in interpreting the word ‘articles’ . . . to mean ‘material things.’” ClearCorrect Operating, LLC v. International Trade Commission, 819 F.3d 1334, 1336-37 (Fed. Cir. 2016). The extensive discussion in ClearCorrect suggests that, by analogy, that digital files such as those used in 3D printing may not themselves be “products.”
A similar ruling that computer code was not a “good” occurred in United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012). Aleynikov held that proprietary computer source code was not stolen “goods,” “wares,” or “merchandise” as required by the 1948 National Stolen Property Act (18 U.S.C. §2314), “[b]ased on the substantial weight of the case law, as well as the ordinary meaning of the words.” Id. 676 F.3d at 73-74. Purely intellectual property was outside the statute, which required “some tangible property must be taken from the owner for there to be deemed a ‘good’ that is ‘stolen’.” Id. at 77.
Also, in America Online, Inc. v. St. Paul Mercury Insurance Co., 347 F.3d 89 (4th Cir. 2003), computer software was not considered “tangible personal property” for purposes of an insurance claim. Rather, “[i]nstructions to the computer and the data and information processed by it are abstract ideas in the minds of the programmer and the user.” Id. at 95. Such “instructions, data, and information are abstract and intangible, and damage to them is not physical damage to tangible property.” Id. at 96. Accord Cash & Carry America, Inc. v. Roof Solutions, Inc., 117 A.3d 52, 65 (Md. App. 2015) (following AOL).
Recent litigation over social media that allegedly encourages people to drive at recklessly high speeds has so far avoided the question of what is a “product” by pursuing claims solely in negligence, not strict liability. Lemmon v. Snap, Inc., 995 F.3d 1085, 1092-93 (9th Cir. 2021) (asserting negligent design under Restatement (Second) of Torts §398 (1965); repeatedly referring to a social media application as a “product”); Maynard v. Snapchat, Inc., ___ S.E.2d ___, 2022 WL 779733, at *4 (Ga. March 15, 2022) (plaintiffs “pursued only a negligence theory of design defect”; also repeatedly referring to the same application as a “product”). Cf. Grossman v. Rockaway Township, 2019 WL 2649153, at *15 (N.J. Super. Law Div. June 10, 2019) (dismissing on other grounds but finding “no facts alleged that would support the theory that [the social media site’s] actions qualify or constitute a product under the Product Liability Act”). Other social media cases are more or less the same, with the viability of product liability allegations not addressed. See Doe v. Twitter, Inc., 555 F. Supp.3d 889, 929-30 (N.D. Cal. Aug. 19, 2021) (not reaching question of whether social media is a product; dismissing action for other reasons); Williams v. Apple, Inc., 2020 WL 1296843, at *2-4 (S.D. Tex. March 24, 2020) (product liability claims involving cell phone software update dismissed for multiple other reasons; status of update as a “product” not addressed); Herrick v. Grindr, L.L.C., 306 F. Supp.3d 579, 592 n.9 (S.D.N.Y. 2018) (“not address[ing the website’s] argument that it is not a ‘product’ for purposes of products liability” given dismissal for other reasons), aff’d, 765 F. Appx. 586 (2d Cir. 2019).
On the other side of the ledger, in Hardin v. PDX, Inc., 173 Cal. Rptr.3d 397 (Cal. App. 2014), a case which for other reasons garnered our booby prize as the firth worst case of that year, a claim against a company that had supplied publishing software to a pharmacy that allegedly generated an incomplete drug “monograph” (purportedly omitting a boxed warning) a survived a motion to dismiss under California’s notoriously lax pleading standards:
[Defendant] also asserts that [plaintiff] cannot prevail on her products liability theory as a matter of law because [it] distributes drug information, and information is not a product for purposes of product liability claims. But [plaintiff’s] theory is that [defendant’s] software program, not the information it produces, is the defective product. [Defendant] has not argued, let alone shown, that [plaintiff] cannot prevail under that theory. Maybe so, but at this early juncture we cannot so conclude. [To survive a demurrer] causes of action need only be shown to have minimal merit.
Id. at 407 (citations and quotation marks omitted). As mentioned in our previous post, however, the primary claim at issue in Hardin involved negligent undertaking, id. at 404-05.
The Louisiana Supreme Court has held computer software to be “corporeal property” for purposes of taxation. South Central Bell Telephone Co. v. Barthelemy, 643 So.2d 1240, 1244 (La. 1994) (“we hold that computer software at issue in this case constitutes corporeal property under our civilian concept of that term”). This definition has bled over into product liability, since the Louisiana product liability statute defines product as “a corporeal movable.” La. Stat. §9:2800.53. See Schafer v. State Farm Fire & Casualty Co., 507 F. Supp.2d 587, 600-01 (E.D. La. 2007) (based on South Central Bell, a computer “program may be a product for the purposes of the LPLA”) (footnote omitted).
Also in Louisiana, in Corley v. Stryker Corp., a physical product – a medical device – was “designed and manufactured from patient-specific 3D imaging data . . . and the use of proprietary 3D imaging software.” 2014 WL 3375596, at *1 (Mag. W.D. La. May 27, 2014), adopted, 2014 WL 3125990 (W.D. La. July 3, 2014). On a motion to dismiss, the court concluded that not only the physical implant, but also the defendant’s “software used in creating” it, was “a necessary part” of the “product” as a whole, and therefore was subject to strict liability as a component part even though, physically, the software was entirely separate from the device. Id. at *4.
That’s what we’ve found so far looking at this fascinating question. Most cases continue to follow the Restatement and the UCC to hold that computer software is not a “product” for product liability purposes. So far, anyway, this precedent has led most plaintiffs to pursue software companies under negligence, rather than strict liability, theories of liability.