J.H.

Information Law;

 

IN 1973, A WORLD AIRWAYS AIRcraft slammed into a mountain in Alaska, killing all seven people aboard. The pilot had been relying on a chart for such crucial information as the landing approach. The chart was based on flawed data that was provided by the Federal Aviation Administration.

The airline and the passengers' families sued the federal government and Jeppesen Sanderson Inc., a chart-making subsidiary of The Times Mirror Co. The government settled out of court after the trial, but Jeppesen lost, and appealed all the way to the U.S. Supreme Court. In February, the Court refused to hear the case, letting stand a lower court's decision that could affect all companies that distribute or use information.

During the trial, Jeppesen argued that it was merely republishing government data. But the Court ruled that Jeppesen's chart was a product and that strict liability applied to it. Under strict liability, a company that makes a defective product is liable whether or not it was negligent. "This will stifle creative uses of information, one of the country's future economic hopes," predicts Peter Marx, a Boston lawyer and general counsel of the Information Industry Association.

Brokering and selling information is a fast-growing, $11-billion industry, comprised of over 1,200 companies, most of which post annual sales of less than $1 million. Few could have survived the $17-million verdict against Jeppesen. If other courts rule in a similar manner, companies that generate their own information may suddenly find themselves strictly liable for mistakes.

Chilling effects may also reach companies that, like Jeppesen, incorporate information from other sources into their products. For instance, a financial adviser who makes recommendations based on faulty data from the Securities and Exchange Commission might be liable. "Information is being integrated into more business practices and into the making of more products," says William Gruber, president of Research & Planning Inc., a consulting firm. "Every technology entrepreneur could be hurt if venture capitalists start thinking that a company using information is an unpredictable risk."