International Comparative Legal Guides’ fourth edition of its Digital Health guide

There is a somewhat old saw in product liability law that “law lags science; it does not lead it.”1 In the rapidly changing field of digital health, including the increasing use of software in a wide range of medical devices, law definitely lags science. While the United States Food and Drug Administration (“FDA”) has issued a range of guidance documents intended to help fit digital health and software within the larger regulatory scheme for medical devices, technological advances, including artificial intelligence (“AI”), are setting a brutal pace – with product liability law changing at a comparatively glacial pace. The resulting gap is creating an exponential increase in technical, legal, and regulatory debt – some of which will most likely end up rooted in novel product liability concerns.

Authors: Gerard M. Stegmaier Jamie L. Lanphear Michael Rubayo

At its core, product liability law applies to products and software has generally been considered a service or intangible, not a product.2 One consequence has been that companies that develop and sell software to the public, or companies that use software in a product that is sold to the public, have managed their possible liability for injuries or loss primarily through contractual provisions. Software is typically licensed (rarely sold) and under particular terms that include limit or cap liability, disclaim most, if not all, warranties, prevent third party beneficiaries, and contain aggressive force majeure provisions in efforts that have mostly shielded software developers from liability arising out of or relating to the performance (or non performance) of their code.

Further, software is increasingly distributed and licensed in a form that does not represent its final version and often the purveyors expressly disclaim that they are not selling software at all but rather providing access to a “service.” Software is often updated and changed during its lifecycle and the ability to license and distribute non-finalised programming allows for software developers to take on “technical debt.” Technical debt refers to a practice of prioritising delivery of a software program or feature as quickly as possible instead of as perfectly as possible.3 When developing software for digital health companies or for use in or as a medical device, the technical debt may compound into regulatory or legal risks as the relationship between product liability law and the law of software licensing and development, as practised, seem increasingly at odds with software being recently recognised as a product by more than one court, including in connection with electronic health records software.

Because of the significance of these issues, we seek to explain the basics of product liability law, FDA’s regulation of medical devices, and recent legal developments in the context of traditional software development and risk allocation. We aim to aid software developers in digital health and those that advise them in anticipating, preparing for, and responding to this potentially rapidly changing liability landscape.

To continue reading this chapter, please click to view the PDF linked in the "Attachments" section below the footnotes. Alternatively, you can visit the International Comparative Legal Guides (ICLG) website, where this chapter was first published in ICLG – Digital Health.

  1. Rosen v. Ciba-Geig y Corp., 78 F.3d 316, 319 (7th Cir. 1996) (Posner, J.).
  2. “A product is tangible personal property distributed commercially for use or consumption.” Restatement (Third) of Torts: Products Liability §19(a) (1998). At the time of this statement, the discussion included the comment that “Under the [Uniform Commercial Code], software that is mass-marketed is considered a good. However, software that was developed specifically for the customer is a service.” After the Uniform Commercial Code was amended in 2005, however, it defined “software” as a “general intangible,” not a “good.” Id. §9-102(42); see also U.C.C. §9 102, Commentary, at 4(a); Uniform Computer & Information Technology Act of 2002 §102(a)(35) (likewise defining “information”—as opposed to “goods”—as including “computer programs”).
  3. Technical Debt, Product Plan.