Containers Expo Blog Authors: Yeshim Deniz, Pat Romanski, Liz McMillan, Flint Brenton, Elizabeth White

Related Topics: Containers Expo Blog, Java IoT, Microsoft Cloud, Linux Containers, Apache

Containers Expo Blog: Article

Ready To Bet the Farm Your Software Has No Hidden Material Defects?

If imposed by the courts, the Principles would impose consumer-type protections on business software licenses

The software industry is, as they say, up to its ass in alligators and few, if any, players know they could be lunch.

Cast your mind back a few weeks to when the American Law Institute (ALI), which has far more clout than it deserves, came up with its Principles of the Law of Software Contracts, a bit of insanity that both Microsoft and the Linux Foundation, rare-if-never allies, joined in protesting (see www.slideshare.net/markradcliffe/microsoft-linux-foundation-letter1).

Their extraordinary alliance proved fruitless.

The IT Privacy and eCommerce Committee of the Association of Corporate Counsels, which represents 4,000 in-house counsels, also broken into a sweat (www.slideshare.net/markradcliffe/acc-itpec-letter-and-discussion-points-...).

See, these Principles dreamed up a new, unprecedented, “non-disclaimable” warranty meant to unrealistically guarantee that software has no hidden material defect.

This warranty, good for the life of the product, provides that licensors are liable for “hidden” material defects if they’re aware of them when the software is sold.

It isn’t found in any case law and incorporates new and difficult concepts like “hidden” and “material.” The notion of a “non-disclaimable” warranty is arguably inconsistent with existing laws, according to DLA Piper partner Mark Radcliffe, an IP and software licensing lawyer who’s trying to raise awareness of the threat.

He is, by the way, pro bono general counsel to the Open Source Initiative (OSI), the open source license arbiter.

If nothing else, he says, it’s likely to lead to significant litigation without any clear benefit to licensees, make software more expensive and simply remove some software from the market.

He suggests that universities may refuse to contribute code to either open source or commercial projects for fear of liability.

According to Radcliffe, the Principles seek to “clarify and unify the law of software transactions” given conflicting legal decisions and the mare’s nest of laws governing them, but the idealistic concepts they introduce – without seeking outside input – are overly prescriptive and defy 20 years of existing law.

Lawyers from DLA Piper and other firms expressed concern about the Principles and asked that approval be delayed to deal with these concerns, but the Principles were approved in May anyway without addressing these concerns.

Although ALI tinkered with the Principles, which are dangerous because naive courts – even outside the US – are likely to take direction from them, the minor changes made no significant difference.

If imposed by the courts, the Principles would impose consumer-type protections on business software licenses although the two are quite different because of the sophistication and negotiating leverage of business licensees coupled with businesses’ ability to enforce their rights. And businesses would be hamstrung in negotiating terms, their freedom of contract gone.

Radcliffe claims the Principles are a “solution searching for a problem” and a field day for litigators lured by glint of unlimited liability in a world where disclaimers, including direct and consequential damages, do not apply.

Radcliffe says lawyers dealing with software licensing need to understand key aspects of the Principles so they can consider their application to software licenses, but more importantly so they can assist the industry in responding to the Principles.

“Without a clear industry response to the Principles,” he says, “judges may incorrectly assume that the Principles define the law as it should be. The publication of a proposal for law reform should not substitute for the legislative process or have the effect of overriding established statutory authority.”

There’s no pending case, but Radcliffe says software licensors need to consider the possibility that courts will be influenced by the Principles.

He recommends that licensors read Chapter 3 of the Principles to understand the new approach to express warranties and implied warranties and determine if their licenses fall into the category of “Standard Form Transfer of Generally Available Software,” which usually applies to retail-type licenses.

The definition of “Standard Form Transfer of Generally Available Software” is “a transfer using a standard form of (1) a small number of copies of software to an end user or (2) the right to access software to a small number of end users if the software is generally available to the public under substantially the same standard terms” (Standard Form License) and ensure that you comply with the new Standard Form License obligations.

The Principles set the standard as to when a “reasonable” licensor would believe that the licensee intends to be bound. However, they also include a “safe harbor” to make such licenses enforceable, which requires the following:

a) make the Standard Form License available prior to the transfer of the software, preferably easily accessible from the home page.

b) ensure that the licensee has reasonable access to the Standard Form License prior to the payment (or completion of the transaction if no payment is received).

c) ensure that for electronic transactions, acknowledgement by the licensee at the end of the Standard Form License or adjacent to the Standard Form License or for Standard Form License attached to packaged software, the right to return the unopened package of the software within a reasonable period for a refund.

d) permit the licensee to store and reproduce a copy of the Standard Form License if only available electronically.

Other obligations applying to Standard Form Licenses include:

a) ensuring that the Standard Form License are “reasonably comprehensible” (in other word, that the terms can be understood by a reasonable person of average intelligence and education).

b) deleting any electronic disablement remedy.

c) deleting any advance agreement to modifications and implement a procedure to ensure that the licensee has a method of acknowledgement of the modification.

Radcliffe also says to consider how to implement these requirements in other sales situations, such as telephone sales.

Review disclaimers of implied warranties to ensure that they comply with the new standards imposed by the Principles (this issue is particularly important for the implied indemnity for IP infringement which requires that the disclaimer be in a record, conspicuous and employ clear language).

Review advertising and packaging to ensure that they don’t create an express warranty and review disclaimers and other remedies to ensure that they meet the new standards in the Principles.

Ensure that any use of “automatic disablement” (the use of electronic means to disable or materially impair the functionality of the software) isn’t used in “standard form transfer of generally available software” or consumer contracts and, if used, complies the new obligations in the Principles.

Maintain records of your license agreements and any modifications, particularly for Standard Form Licenses.

Consider implementing a method of disclosing the “material” bugs to comply with the new “non-disclaimable” warranty of no hidden material defects.

Review the limitation of liabilities and remedies to meet the new requirements in Section 4.

Radcliffe is working with a number of industry groups to respond to the Principles. To keep updated on these efforts, see www.linuxfoundation.org/principlesofsoftwarecontracts.

There’s a webinar on thee Principles at https://cc.callinfo.com/play?id=e0wjcw.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (0)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.

@ThingsExpo Stories
DevOpsSummit New York 2018, colocated with CloudEXPO | DXWorldEXPO New York 2018 will be held November 11-13, 2018, in New York City. Digital Transformation (DX) is a major focus with the introduction of DXWorldEXPO within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive over the long term. A total of 88% of Fortune 500 companies from a generation ago are now out of bus...
DXWordEXPO New York 2018, colocated with CloudEXPO New York 2018 will be held November 11-13, 2018, in New York City and will bring together Cloud Computing, FinTech and Blockchain, Digital Transformation, Big Data, Internet of Things, DevOps, AI, Machine Learning and WebRTC to one location.
Cloud Expo | DXWorld Expo have announced the conference tracks for Cloud Expo 2018. Cloud Expo will be held June 5-7, 2018, at the Javits Center in New York City, and November 6-8, 2018, at the Santa Clara Convention Center, Santa Clara, CA. Digital Transformation (DX) is a major focus with the introduction of DX Expo within the program. Successful transformation requires a laser focus on being data-driven and on using all the tools available that enable transformation if they plan to survive ov...
DXWorldEXPO LLC announced today that ICOHOLDER named "Media Sponsor" of Miami Blockchain Event by FinTechEXPO. ICOHOLDER give you detailed information and help the community to invest in the trusty projects. Miami Blockchain Event by FinTechEXPO has opened its Call for Papers. The two-day event will present 20 top Blockchain experts. All speaking inquiries which covers the following information can be submitted by email to [email protected] Miami Blockchain Event by FinTechEXPO also offers s...
DXWorldEXPO | CloudEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
Digital Transformation and Disruption, Amazon Style - What You Can Learn. Chris Kocher is a co-founder of Grey Heron, a management and strategic marketing consulting firm. He has 25+ years in both strategic and hands-on operating experience helping executives and investors build revenues and shareholder value. He has consulted with over 130 companies on innovating with new business models, product strategies and monetization. Chris has held management positions at HP and Symantec in addition to ...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
Enterprises have taken advantage of IoT to achieve important revenue and cost advantages. What is less apparent is how incumbent enterprises operating at scale have, following success with IoT, built analytic, operations management and software development capabilities - ranging from autonomous vehicles to manageable robotics installations. They have embraced these capabilities as if they were Silicon Valley startups.
Poor data quality and analytics drive down business value. In fact, Gartner estimated that the average financial impact of poor data quality on organizations is $9.7 million per year. But bad data is much more than a cost center. By eroding trust in information, analytics and the business decisions based on these, it is a serious impediment to digital transformation.
Predicting the future has never been more challenging - not because of the lack of data but because of the flood of ungoverned and risk laden information. Microsoft states that 2.5 exabytes of data are created every day. Expectations and reliance on data are being pushed to the limits, as demands around hybrid options continue to grow.
The standardization of container runtimes and images has sparked the creation of an almost overwhelming number of new open source projects that build on and otherwise work with these specifications. Of course, there's Kubernetes, which orchestrates and manages collections of containers. It was one of the first and best-known examples of projects that make containers truly useful for production use. However, more recently, the container ecosystem has truly exploded. A service mesh like Istio addr...
As IoT continues to increase momentum, so does the associated risk. Secure Device Lifecycle Management (DLM) is ranked as one of the most important technology areas of IoT. Driving this trend is the realization that secure support for IoT devices provides companies the ability to deliver high-quality, reliable, secure offerings faster, create new revenue streams, and reduce support costs, all while building a competitive advantage in their markets. In this session, we will use customer use cases...
Business professionals no longer wonder if they'll migrate to the cloud; it's now a matter of when. The cloud environment has proved to be a major force in transitioning to an agile business model that enables quick decisions and fast implementation that solidify customer relationships. And when the cloud is combined with the power of cognitive computing, it drives innovation and transformation that achieves astounding competitive advantage.
Digital Transformation: Preparing Cloud & IoT Security for the Age of Artificial Intelligence. As automation and artificial intelligence (AI) power solution development and delivery, many businesses need to build backend cloud capabilities. Well-poised organizations, marketing smart devices with AI and BlockChain capabilities prepare to refine compliance and regulatory capabilities in 2018. Volumes of health, financial, technical and privacy data, along with tightening compliance requirements by...
With 10 simultaneous tracks, keynotes, general sessions and targeted breakout classes, @CloudEXPO and DXWorldEXPO are two of the most important technology events of the year. Since its launch over eight years ago, @CloudEXPO and DXWorldEXPO have presented a rock star faculty as well as showcased hundreds of sponsors and exhibitors! In this blog post, we provide 7 tips on how, as part of our world-class faculty, you can deliver one of the most popular sessions at our events. But before reading...
The best way to leverage your Cloud Expo presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering Cloud Expo and @ThingsExpo will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at Cloud Expo. Product announcements during our show provide your company with the most reach through our targeted audiences.
The IoT Will Grow: In what might be the most obvious prediction of the decade, the IoT will continue to expand next year, with more and more devices coming online every single day. What isn’t so obvious about this prediction: where that growth will occur. The retail, healthcare, and industrial/supply chain industries will likely see the greatest growth. Forrester Research has predicted the IoT will become “the backbone” of customer value as it continues to grow. It is no surprise that retail is ...
Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settlement products to hedge funds and investment banks. After, he co-founded a revenue cycle management company where he learned about Bitcoin and eventually Ethereal. Andrew's role at ConsenSys Enterprise is a mul...
DXWorldEXPO LLC announced today that "Miami Blockchain Event by FinTechEXPO" has announced that its Call for Papers is now open. The two-day event will present 20 top Blockchain experts. All speaking inquiries which covers the following information can be submitted by email to [email protected] Financial enterprises in New York City, London, Singapore, and other world financial capitals are embracing a new generation of smart, automated FinTech that eliminates many cumbersome, slow, and expe...