“LONDON, May 21 (Reuters) – A computer coding error led Moody’s Investors Service to assign incorrect triple-A ratings to a complex debt product that came to mark the peak of the credit boom, the Financial Times said on Wednesday. (see www.forbes.com/reuters/feeds/reuters/2008/05/21/2008-05-21T075644Z_01_L21551923_RTRIDST_0_MOODYS-CPDOS.html. For more, see blogs.spectrum.ieee.org/riskfactor/2008/05/moodys_rating_bug_gives_credit.html and www.ft.com/cms/s/0/0c82561a-2697-11dd-9c95-000077b07658.html?nclick_check=1 or just search for Moody’s software error.
This is the kind of stuff David Pels and I expected when we fought the Uniform Computer Information Transactions Act (UCITA) back in the 1990’s. UCITA was written as a shield for large software publishers, consulting firms, and other information publishers. It virtually wiped out liability for defects in information-industry products or services, expanded intellectual property rights well beyond what the Copyright Act and the patent laws provide, and helped companies find ways to expand their power to block reverse engineering of products to check for functional or security defects and to publicly report those defects.
UCITA was ultimately adopted only in Virginia and Maryland, rejected in all other American states, but largely imported into most states by judicial rulings (a fine example of “judicial activism”–imposing rules on a state even after its legislators rejected them. People who still whine about left-wing judicial activism are still stuck in the 1970’s).
David Pels and I wrote a book, “Bad Software” on the law of software quality circa 1998. It provides a striking contrast between software customers’ rights in the 1990s and the vastly-reduced rights we have come to expect today, along with some background on the UCITA legislation (UCITA was then called “Article 2B”–as part of a failed effort to add a new Article to the Uniform Commercial Code). John Wiley originally published Bad Software, but they have let me post a free copy at the web. You can find it at http://www.badsoftware.com/wiki/