As the software infrastructure has been going through chaos, reporters (and others) have been called me several times to ask what our legal rights are now and whether we should all be able to sue Microsoft (or other vendors who ship defective software or software that fails in normal use).
Unfortunately, software customer rights have eroded dramatically over the last ten years. Ten years ago, the United States Court of Appeals for the Third Circuit flatly rejected a software publisher’s attempts to enforce contract terms that it didn’t make available to the customer until after the customer ordered the software, paid for it, and took delivery. Citing sections of Uniform Commercial Code’s Article 2 (Law of Sales) that every law student works through in tedious detail in their contracts class, the Court said that the contract for sale is formed when the customer agrees to pay and the seller agrees to deliver the product. Terms presented later are proposals for modification to the contract. The customer has the right to keep the product and use it under the original terms, and refuse to accept the new, seller favorable terms. Other courts (such as the United States Court of Appeals for the First Circuit) cited this case as representative of the mainstream interpretation of Article 2. Under this decision, and several decisions before it, shrinkwrapped contracts and clickwrapped contracts (the ones you have to click “OK” to in order to install the product) would be largely unenforceable.
The software publishing community started aggressively trying to rewrite contract law in about 1988, after the United States Court of Appeal for the Fifth Circuit rejected a shrinkwrapped restriction on reverse engineering. That effort resulted in the Uniform Computer Information Transactions Act and a string of court decisions, starting in 1995, that make it almost impossible to hold a software company liable for defects in its product (unless the defect results in injury or death)– even defects that it knew about when it shipped the product — and also very difficult to hold a mass-market seller liable for false claims about its product. (For background, see InfoWorld and Kaner’s Software Engineering & UCITA in the section on Forcing Products Liability Suits into Arbitration).
So what should we do about this? There are some strong feelings to hold companies fully accountable for losses caused by their products’ defects.
I’d rather stand back from the current crisis, consider the legal debates over the last 10 years, and make some modest suggestions that could go a long way toward restoring integrity and trust — and consumer confidence, consumer excitement, and sales — in this stalled marketplace.
1. Let the customer see the contract before the sale. It should be easy for customers of mass-market software products and computer information contracts to compare the contract terms for a product, or for competing products, before they download, use, or pay for a product. (NOTE: This is not a radical principle. American buyers of all types of consumer products that cost more than $15 are entitled to see the contract (at a minimum, the warranties in the contract) before the sale).
2. Disclose known defects. The software company or service provider must disclose the defects that it knows about to potential customers, in a way that is likely to be understood by a typical member of the market for that product or service.
3. The product (or information service) must live up to the manufacturer’s and seller’s claims. A statement by the vendor (manufacturer or seller) about the product that is intended to describe the product to potential customers is a warranty, a promise that the product will work as described. Warranties by sellers are defined in UCC Article 2 Section 313. Manufacturer liability is clarified (manufacturers are liable for claims they make in ads and in the manual) in a set of clarifying amendments to Article 2 that have now been approved by the Permanent Editorial Board for the UCC, which will be probably introduced in state legislatures starting early in 2004. In addition, it is a deceptive trade practice in most states (perhaps all) to make claims about the product that are incorrect and make the product more attractive. For example, under the Uniform Deceptive Trade Practices Act, Section 2(5) it is unlawfully deceptive to represent “that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have.” UCITA was designed to pull software out of the scope of laws like this, which it did by defining software transactions as neither goods nor services but licenses. We should get rid of this cleverly created ambiguity.
4. User has right to see and approve all transfers of information from her computer. Before an application transmits any data from the user’s computer, the user should have the ability to see what’s being sent. If the message is encrypted, the user should be shown an unencrypted version. On seeing the message, the user should be able to refuse to send it. This may cause the application to cancel a transaction (such as a sale that depends on transmission of a valid credit card number), but transmission of data from the user’s machine without the user’s knowledge or in spite of the user’s refusal should be prosecutable as computer tampering.
5. A software vendor may not block customer from accessing his own data without court approval.
6. A software vendor may not prematurely terminate a license without court approval. The issue of vendor self-help (early termination of a software contract without a supporting court order) was debated at great length through the UCITA process. To turn off a customer’s access to software that runs on the customer’s machine, the vendor should get an injunction (a court order). However, perhaps a vendor should be able to deny a customer access to software running on the vendor’s machine without getting an injunction (though the unfairly-terminated customer should be allowed to get a court order to restore its access.)
7. Mass-market customers may criticize products, publish benchmark study results, and make fair use of a product. Some software licenses bar the customer from publishing criticisms of the product, or publishing comparisons of this product with others or using screenshots or product graphics to satirize or disparage the product or the company. Under the Copyright Act, you are allowed to reproduce part of a copyrighted work in order to criticize it, comment on it, teach from it, and so on. Software publishers shouldn’t be able to use “license” contracts to bar their mass-market customers from the type of free speech that the Federal laws (including the Copyright Act) have consistently protected.
8. The user may reverse engineer the software. Software licenses routinely ban reverse engineering, but American courts routinely say that reverse engineering is fair use, permissible under the Copyright Act. Recently, California courts have started enforcing no-reverse-engineering bans in software licenses. This is a big problem. Software publishers claim that reverse engineering is a way to steal their work. There are many legitimate, important uses of reverse engineering, such as exposing security holes in the software, exposing and fixing bugs (that the manufacturer might not fix because it is unwilling, unable, or no longer in business), exposing copyright violations or fraudulent claims by the manufacturer, or achieving interoperability (making the product work with another product or device). These benefit or protect the customer but do not help anyone unfairly compete with the manufacturer.
9. Mass-market software should be transferrable. Under the First Sale Doctrine, someone who buys a copyrighted product (like a book) can lend it, sell it, or give it away without having to get permission of the original publisher or author. Similarly, if you buy a car, you don’t have to get the car manufacturer’s permission to lend, sell, or donate your car. UCITA Section 503(2)allows mass-market software publishers to take away their customers’ rights to transfer software that they’ve paid for. It should not.
10. When software is embedded in a product, the law governing the product should govern the software. Think of the software that controls the fuel injectors in a car. Should the car manufacturer be allowed to license this software instead of supplying it under the basic contract for the sale of the car? (Paper 1) (Paper 2). Under extended pressure from the software industry, the Article 2 amendments specify that software (information) is not “goods” and so is not within the scope of Article 2, even though courts have been consistently applying Article 2 to packaged software transactions since 1970. In the 48 states that have not adopted UCITA, this amendment would mean that there is no law in that state that governs transactions in software. The courts would have to reason by analogy, either to UCITA or to UCC 2 or to something else. When a product includes both hardware (the car) and software (the fuel injector software, braking software, etc.), amended Article 2 allows the court to apply Article 2 to the hardware and other law to the software. Thus different warranty rules could apply and even though you could sell your car used without paying a fee to the manufacturer, you might not be able to transfer the car’s software without paying that fee. Vendors should not be able to play these kinds of games. “Embedded software” is itself a highly ambiguous term. In those cases in which it is unclear whether software is embedded or not, the law should treate the software as embedded.