In an era of rapid technological advancement, individuals and companies alike are compelled to implement new technologies with greater frequency than ever before, with a growing focus on autonomous technologies that supplement—or completely supplant—human engagement. As industries become more reliant on autonomous technologies, we may begin to see legal trends shifting a greater share of the burden of ensuring safe and adequate functionality, and the liabilities related thereto, from the product user to the product supply chain, including the software developers who create these novel and complex technologies.
It follows that courts are likely to be tasked with considering existing product liability laws and how software fits into this scheme. Courts historically have not addressed the narrow question as to whether software qualifies as a “product” for purposes of product liability jurisprudence. Traditionally, although this area of the law has categorically included the hardware, i.e., the physical product itself, it has otherwise remained agnostic about software.
However, the recent decision in Holbrook v. Prodomax Automation Limited, No. 1:17-cv-219, 2021 U.S. Dist. LEXIS 178325 (W.D. Mich. Sept. 20, 2021), represents a shift in this thinking. In Holbrook, the family of a factory employee sued the assembly line designer based on the alleged faulty programming of the assembly line that led to the employees death. With respect to the product liability claim, the court found that, because the software was an “integral” and “essential” part of the assembly line, the software was a product and the assembly line designer could be held liable for injury arising from its use.Although this case appears to be the first of its kind, Holbrook very well might represent a growing trend of the attribution of product liabilities to software. Accordingly, counsel for software developers or other businesses implementing software in its operations or end-product should consider having targeted conversations regarding client risk profiles and, with an eye towards an increase in future lawsuits, the adequacy of their insurance programs to absorb increased risk.
General liability policies may provide coverage for costs and liabilities associated with a product liability lawsuit where this lawsuit involves accidental bodily injury or property damage, which product liability lawsuits often do. Although general liability policies may provide a safety net for costs and damages related to such a lawsuit, depending on a business’s exposure—particularly in the wake of Holbrook—product liability insurance, often referred to as “products completed operations” or “completed operations hazard” coverage, is specifically tailored to liabilities attributable to product liability lawsuits.
Another source of potential coverage is cyber insurance. As autonomous technologies becomes more integrated in the gamut of products and processes, it is increasingly possible that cyber-attacks will compromise software that is otherwise performing safely and as-intended such that user safety is compromised or property damaged. If this is the case, businesses should look to their cyber insurance as potentially responsive.
The aforementioned types of coverage are merely examples—there are certainly other potential avenues to coverage for product liabilities. Regardless of the specifics of clients’ existing insurance programs, attorneys should consider having targeted discussions regarding this potentially growing legal trend, adjustments to insurance programs, and strategy and best practices if product liability litigation and/or related coverage litigation becomes a reality.
