someone said they hadn't seen this ... >X-Sender: [EMAIL PROTECTED] >Mime-Version: 1.0 >Date: Mon, 4 May 1998 23:51:37 -0700 >To: [EMAIL PROTECTED], [EMAIL PROTECTED] >From: "Kathy E. Gill" <[EMAIL PROTECTED]> >X-Loop: [EMAIL PROTECTED] >Reply-To: [EMAIL PROTECTED] >Subject: WC:>: FWD: A Bad Law for Bad Software >X-MIME-Autoconverted: from quoted-printable to 8bit by mail1.halcyon.com >id XAA16778 >Status: > >THIS IS IMPORTANT ... almost as important as the OT law was -- well, more >so in that it affects more people ... please read on .... contact me if >you're interested in a grassroots lobbying effort. > > >>[More detail on the bizarre draft now under consideration of Article 2B of >>the Uniform Commercial Code, which (once adopted by the states) sets the >>default rules for sales of software in the US. Forwarded by permission. >>I have taken the liberty of reformatting the message and editing out most >>of the MIME markup.] >> >>=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= >>This message was forwarded through the Red Rock Eater News Service (RRE). >>Send any replies to the original author, listed in the From: field below. >>You are welcome to send the message along to others but please do not use >>the "redirect" command. For information on RRE, including instructions >>for (un)subscribing, send an empty message to [EMAIL PROTECTED] >>=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= >> >>Date: Fri, 01 May 1998 12:17:28 -0500 >>From: Cem Kaner <[EMAIL PROTECTED]> >>Subject: A Bad Law for Bad Software >> >>The Uniform Commercial Code is the dominant commercial law in the US. It >>is also much of the basis of the Convention for the International Sales >>of Goods. We're drawing to the end of a many year process of writing a >>large (currently 217 page) amendment to the UCC that will cover all >>contracts for the development, sale, documentation, licensing, support, >>or maintenance of software, and for the licensing of most other types of >>information (movies, cable tv, etc.) >> >>I've been active in the process for the last 2.5 years. Other software >>developers and software quality advocates who have come with me to >>these meetings include Watts Humphrey, James Bach, Doug Hoffman, Brian >>Lawrence, Melora Svoboda, David Pels, Sharon Marsh Roberts, Clark >>Turner, and other people whose names (I'm sorry) I forget at the moment. >> >>I started out favoring the adoption of a uniform software law -- I still >>think we need one. But I don't think that this one will develop into a >>law that I can support. I could use help figuring out how to fight this >>thing, state by state. I am not an experienced politician and very much >>inexperienced as a lobbyist. Your advice and your support (I'm asking >>for help, not money) would be welcome. >> >>A letter to your state's governor and or to your state legislator >>would be useful. Such letters will be especially useful before July 15, >>1998, but if you don't see this memo until after that, send a letter >>anyway. The May/June/July letters will put pressure on the Article >>2B drafting committee to clean up its act before submitting a bill to >>the state legislatures. Later letters will influence the legislatures >>in terms of whether they'll adopt the bill (or even consider it). >>The organization drafting Article 2B is prestigious and politically >>effective. This is a serious effort. Without serious opposition, Article >>2B will become law. For more information on the 2B process, see Kaner, >>C. & B. Lawrence (1997). UCC Changes Pose Problems for Developers. IEEE >>Software, March/April, 139-142, or Kaner, C. (1996). Uniform Commercial >>Code Article 2B: A new law of software quality. Software QA, 3, #2, 10. >>Available at >><http://www.badsoftware.com/uccsqa.htm>www.badsoftware.com/uccsqa.htm. >> >>The next meeting of the 2B drafting committee will be May 1-3 in >>St. Louis. After that, there is a national UCC meeting in Cleveland >>at the end of July. That might be the last open-to-the-public meeting >>(it's the last one currently scheduled). Some private meetings are >>scheduled for the fall, followed by a scheduled introduction into state >>legislatures in January, 1999. >> >>-- Cem Kaner >> >>++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ >> >> >>This memo includes my speaker's notes from my talk at the Conference >>on the Impact of Article 2B of the UCC on the Future of Transactions >>in Information and Electronic Commerce at UC Berkeley, Center for Law >>& Technology, April 25, 1998. >> >>The remarks were accompanied by four handouts: >> >>-- Kaner & Paglia (1997) (Consumer Issues & Article 2B, included here as >>Appendix A) >> >>Paglia works for Ralph Nader, but he and I have worked incredibly hard >>to develop a position that would not harm the software publishing >>industry. My biggest challenge over the first 2 years that I worked on >>2B lay in explaining the inherent difficulties of the software industry >>to consumer protection advocates, in a way that would encourage them to >>avoid making demands that would unfairly burden the industry. This >>letter shows that progress. >> >>In comparison, check out the recommendations made by the IEEE. >><http://www.softwareindustry.org/issues/guide/docs/ieee2b.html>http://www.Soft >>w >>areIndustry.org/issues/guide/docs/ieee2b.html >>Some of these map onto Paglia's and my recommendations, while others are >>distinct. At this point, the Article 2B committee has accepted none of >>them and rejected or expressly refused to vote on 4 of them. One is >>still under discussion. >> >>-- Kaner (1998) (Article 2B and Quality/Costs Analysis, included here as >>Appendix B) >> >>-- portions of McAfee's license for Viruscan (quoted in the text) >>and >> >>-- Kaner (1998) (Bad Software--Who is Liable, Invited Address to the >>American Society for Quality, May 1998. Available from the author. >>To request it, send a note to [EMAIL PROTECTED]) >> >>Additional papers of mine are available at http://www.badsoftware.com. >> >>Before I go to the talk, which was written for lawyers, here's some >>background. >> >>++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ >> >> >>SUMMARY >> >>This talk makes two points: >> >>1. This bill is so biased against small customers that it will become a >>public embarrassment for ALI (the American Law Institute) and NCCUSL >>(National Conference of Commissioners on Uniform State Laws) if it >>reaches the legislatures. >> >>2. In its zeal to protect the worst software publishers from >>consequences arising from their worst products, Article 2B will change >>the economics of mass market software publishing as a whole. The effect >>will be increasing pressure on publishers, especially mid-size >>publishers, to ship product prematurely. And let the customers eat the >>cost. This is bad policy and it will damage our industry severely over >>the long term. >> >>________________________________________________ >> >>I favor the adoption of a uniform law for software. I've invested a huge >>amount of time and money over the past 2.5 years trying to improve 2B so >>that it could become a uniform law for software. My legal client base is >>dominated by small developers and authors. My technical client base >>includes several large publishers. I live in this industry and I want >>laws that will do well by it. >> >>I've made ongoing attempts to propose or to broker compromises to >>strengthen this bill. Another speaker referred critically to attempts to >>turn Article 2B into a "Uniform Consumer Code." Before you form a >>judgment, please read Todd Paglia's and my paper on the consumer >>position. (Paglia represents Ralph Nader's Consumer Project on >>Technology.) These points are hardly extremist demands. It has taken me >>a tremendous amount of work with the consumer protection community to >>come up with a balanced set of proposals--characterizing them as >>extremist doesn't help the negotiations go forward. >> >>A speaker earlier today talked at length about the need for a more >>apppropriate implied warranty of merchantability. I agree. Bob >>Gomulkiewicz (Microsoft's lawyer) and I worked together on the warranty >>of merchantability. Our goal was to write something that consumers could >>support and that Microsoft would actually be willing to offer. WE >>SUCCEEDED. >> >>It wasn't easy. It took a long time. I don't know about Bob's efforts >>with his constituency. I worked with mine on it, on and off, over a >>period of one and a half years. >> >>Now, when I say we succeeded, I mean that Bob and I came up with a >>proposal that we both signed and that we jointly submitted to the >>Article 2B drafting committee nearly a year ago. >> >>You can find a modified version of our proposal--and I don't think that >>either of us did the modifying--in the March 1998 Article 2B draft, in >>the Reporter's Notes to the Implied Warranty of Merchantability. >> >>The Committee finally considered that proposal last month. I corrected >>the revision in the discussion. The Committee chose not to vote on the >>proposal, even in the face of repeated advice that if they left the >>current implied warranty alone, no sane software publisher would provide >>it. >> >>The Committee chose not to vote on that compromise. It chose not to vote >>on another compromise (Paglia/Nader's motion on documentation, which the >>Software Publishers Association was willing to live with), and it has >>chosen to not vote on, or to reject, several other proposals that I and >>others have made in the spirit of compromise and accommodation for all >>sides. >> >>People at this conference have asked whether consumer advocates have >>attended the Drafting Committee meetings. Yes we have. And we have >>succeeded in getting some of the worst pieces of 2B out. But in terms of >>positive changes to balance out the major shifts from Article 2 to >>Article 2B, we have achieved nothing. My average is 0.000, even on >>compromise proposals. I don't know of a way to make progress with this >>Committee. >> >>I'd love to expand on that, but I've set aside the rest of my time for >>this talk for a discussion of law and economics, in particular about the >>economics of defective software. So let's move to that now. >> >>Software publishers are under constant pressure to ship products >>quickly, whether they're any good or not. One of the pressure factors is >>the problem of path dependence, all those network effects. The first >>company to market with an idea is the one most likely to become >>dominant. Later products in the same category, such as the fifth or >>sixth on the scene, are unlikely to catch any measurable market share >>even if they're much better. That creates a constant risk vs. risk >>tradeoff. >> >>Against this pressure to ship early is the risk of shipping a product >>with serious defects, and of facing serious costs associated with the >>defects. The quality control community calls these external failure >>costs--the costs associated with putting a defective product into your >>customer's hands. >> >>The economics of quality are driven by a balance of costs of investment >>in making a good product against the risk of external failure costs. >> >>Article 2B drives external failure costs down, independently of product >>quality. It keeps these costs low even when quality declines. That >>distorts the risk/benefit analysis because you have less pressure to >>improve the product. >> >>Let's look at these costs more carefully: >> >>EXTERNAL FAILURE COSTS can be categorized as (see Appendix B): >> >>-- Customer support costs >>-- Lost sales >>-- Legal costs. >> >>On the customer support side, we find that software publishers can >>charge for support. $3 per minute is a common charge. Suppose that a >>publisher ships a product with hundreds of known bugs -- this is >>common. They don't document them. They include the 2B-permitted warranty >>disclaimers and damage limitations. >> >>Now suppose that you pay $50 for this program, that you get bit by some >>of these known bugs, and you lose time and money as a result. Eventually >>you call for support. You pay $3 per minute, eventually racking up $100 >>in support charges. Eventually the publisher agrees to give you a >>refund. You get $50. Congratulations. You still lose the $100 >>because these are excluded incidental expenses. Even if the publisher >>knew about the defect when it sold the software, you will have to pay >>for the support for this defect. >> >>Not many statutes invite companies to make a profit center out of their >>defects. 2B is special. >> >>I've repeatedly proposed a rule that doesn't allow companies to exclude >>incidental expenses (such as the cost of making phone calls for support) >>that are caused by genuine defects. The proposal has gone nowhere. >> >>Now let's consider lost sales by looking at a couple of competition >>examples. >> >>First, Article 2B lets publishers hide their terms inside the box. It >>lets the online seller wait before telling you the terms of the deal >>until after you've downloaded the software and paid for it and started >>installing it. So when you buy it, you don't know it'll cost you $3 a >>minute for support. Or that someone else charges $2. >> >>One of the publisher's lawyers told us yesterday that the product people >>buy is not the software. Nope. Instead, he said, "the product is the >>license." When software customers go shopping for a word processor, they >>aren't shopping for a product that will do wordprocessing things for >>them, they're shopping for a bundle of rights. OK, if the product is the >>license, then we should understand that 2B puts software publishers in >>the business of selling grab bags. You never know what you're going to >>get until after you buy it. And you don't know what's in the competing >>grab bags. For a law that relies on competition to police the market, >>you'd think it would foster free disclosure of information, not help >>publishers prevent it. >> >>One of the publisher's lawyers said that they want customers to know the >>terms of software licenses. Of course they do. That's why they tell you >>those terms very precisely. But they only tell you after the sale, when >>it is nearly impossible to check the terms of competing licenses. >> >>You'd think that the federal Magnuson-Moss Warranty Improvement >>Act would require publishers to reveal their warranties and other >>significant terms before the sale, at least for consumer goods. But >>under 2B, the customer only buys a license, not goods. Mag-Moss and many >>of the state-level consumer protection statutes, apply specifically to >>sales of goods. Publisher's lawyers will therefore argue that it doesn't >>apply to software. Courts routinely find that packaged software is goods >>today. But that goes away under 2B. We've all heard that Article 2B >>doesn't override any consumer protection laws. And it doesn't. Any >>consumer protection laws that used to apply to sales of licenses will >>still apply to licenses. Any consumer protection laws that apply to >>sales of goods will still apply to goods--we just take software out of >>the list of goods, which is where the most famous consumer protection >>laws apply. If this isn't what's intended in 2B, and I've been >>repeatedly told that it is not what's intended, we can fix it easily >>enough by saying in the statute that packaged software is intended to be >>treated as "goods" for the purpose of consumer protection laws. Paglia >>and I have made that proposal. It has gotten nowhere. >> >>Publishers also get to create use restrictions. 2B's definition of >>contractual use restrictions includes nondisclosure agreements. Let's >>look at nondisclosure terms from a significant and reputable publisher. >> >> - "The customer shall not disclose the results of any benchmark test >>to any third party without McAfee's prior written approval." >> >> - "The customers will not publish reviews of the product without >>prior consent from McAfee." >> >>How do you get competition if information doesn't and can't flow freely >>in the market? If you don't have this type of information flow, how many >>sales will a company lose because of bad software? >> >>Today, such clauses seem ludicrous. One of 2B's proponents told us that >>clauses like this would be entirely unenforceable, and that federal >>courts would stike them from contracts. But isn't that what used to be >>said about the post-sale warranty disclaimer, that the customer couldn't >>see before the sale? Who would have thought that this could be called >>"conspicuous" and would be binding? No court has ever said that a >>company could get away with this and many have rejected it. But 2B makes >>this black letter law. These licenses are full of ludicrous terms and 2B >>has given effect to a remarkable number of them. The justification for >>this is "common practice in the industry." So how many licenses like >>McAfee's will it take before mass-market nondisclosure terms are >>validated as common practice in the industry? >> >>Fair use restrictions should be banned from the start, not permitted >>under 2B unless a federal court declares them unenforceable. And >>remember, >> >>TO GET THESE TERMS DECLARED UNENFORCEABLE, >>THE CONSUMER HAS TO SPEND A FORTUNE IN COURT. >> >>Federal rules are based on the U.S. Constitution, which allows Congress >>to create patent and copyright rights in order to promote the >>development of the arts and sciences. There is a balance between the >>property rights of the artists and inventors and the purpose behind >>creating those rights, which is to encourage the development of >>intellectual material that can be used by all of us. >> >>Article 2B calls itself "neutral" on these issues of conflict between >>aggressive licensing practice and federal intellectual property law. But >>it creates a presumption that restrictive clauses are valid. It resets >>customer rights to zero and says, "Hey, we're neutral. If you can win >>your rights back in federal court, you just go ahead." >> >>Some people say that "unconscionability" will protect consumers from >>these and many other abuses. The Article 2 drafting committee looked at >>the actual use of unconscionability in UCC cases since 1980. They found >>that about 12 contracts that had been declared unconscionable. This >>doctrine is not actively enforced. Surely a judge will find it hard to >>declare practices unconscionable that are widespread and specifically >>authorized by statute. >> >>And again remember -- unconscionability is a judicial remedy. You want >>something declared unconscionable, you go to court. That's not cheap, >>it's not fast, and it's fact specific. We heard an excellent idea >>yesterday--a new and broader version of unconscionability. Contract >>clauses would sort themselves into three bins--green bins (approved and >>valid), red bins (courts will routinely strike them from the contract or >>cancel the contract) and yellow bins (not yet settled). I like the idea >>and I like the thinking behind it. But it will take years--and much >>worse, it requires the steady accumulation of precedent setting court >>decisions. Gateway 2000 v. Hill teaches us that some courts will enforce >>compulsory arbitration clauses in mass market licenses even when the >>arbitration costs are excessive and the cause of action involves >>widespread public interest (in this case, alleged consumer fraud). How >>will be assured of the steady pace of development of the common law that >>would be required to make this new unconscionability provision fair? >> >>And this takes us to the final area of concern as far as external >>failure costs--legal expense. 2B drops Article 2's notion of the minimum >>adequate remedy and it drops Article 2's statement of policy that courts >>should administer remedies liberally to put the nonbreaching party in >>the position it would have been in had the other party performed its >>duties under the contract. This policy is abandoned in favor of a >>stated policy of freedom (for the seller) of contract. 2B lets >>publishers declare that customers are entitled to no damages--just a >>rescission (refund in which you return the merchandise). 2B lets >>publishers choose their forum (where they can be sued) in ways that make >>it way too expensive to bring a suit. There is new limiting language on >>the choice of forum in the latest drafts of 2B but don't be fooled by >>it--it comes directly from a line of cases starting with Carnival Cruise >>Lines v. Shute --all of them cases that made consumers travel across the >>country or out of the country to sue. >> >>In creating a new law for software, Article 2B is stepping into >>territory that involves passionate debates in every software company >>during almost every software release. When can we ship? What is our >>minimum quality to ship? How much do we have to invest in processes to >>improve quality and customer satisfaction? Article 2B is putting its >>position into these debates, in a fundamentally important way, without >>considering the effects on good practice in good companies. The results >>will not be favorable. >> >>++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ >> >>APPENDIX A >> >>CONSUMER ISSUES AND ARTICLE 2B >>Cem Kaner & Todd Paglia >>ORIGINAL DRAFT SENT TO ALI, DECEMBER 5, 1997 >> >>I am submitting this to the ALI on behalf of Todd Paglia of Ralph >>Nader's Consumer Project on Technology and myself. >> >>It is our understanding that the ALI is interested in hearing a short >>list of proposed changes to Article 2B that would make it more palatable >>to consumers and small business customers. We are submitting this >>prioritized list in that spirit. >> >>We are deeply concerned about Article 2B. We believe that it is >>seriously flawed, and that little has been done to correct its biases >>despite strong and detailed opposition from consumer and small business >>representatives. Our concerns run deeper than the 12 items listed in >>this memo. We are, for example, fundamentally in opposition to the >>position taken by the drafting committee that it is desirable to >>simultaneously recognize the validity and respectability of adhesion >>contracts and to declare that they should be completely unregulated on >>the grounds of freedom (for the drafter) of contract. We believe that >>the committee is giving software publishers significantly more power to >>set their terms than they have under current law, and we see no public >>interest in support of this. >> >>Here is our list. >> >>1. Consequential damages >> >>Article 2B makes it easy for the mass-market software publisher to >>escape liability for incidental and consequential damages. We understand >>the policy tradeoffs inherent in this, but protest that this is >>outrageous in an adhesion contract when it is applied to a defect that >>was known to the licensor at the time of sale or was not known only >>because of gross negligence on the part of the licensor. >> >>Depending on the balance of the rest of the draft, we are willing to >>consider a reversal of the default rule for consequentials, eliminating >>them (unless provided for in the contract) except when the damage was >>caused by a known defect or a defect that was not known only because of >>gross negligence on the part of the licensor. >> >>We are also willing to see a cap on these non-excludable consequential >>damages in the mass-market. Kaner has suggested a maximum per license of >>$500 or five times the license fee, whichever is greater. This will >>probably not fully compensate the customer, but it will provide a needed >>incentive for publishers to fix their more serious defects. >> >>We are also willing to see an exclusion of consequentials for a known >>defect if, at or before the time of contracting, the licensor supplies >>to the licensee a record that: >> >> - Describes the defect in a way that is understandable to a typical >>member of the market for this product, >> >> - Explains how to work around the defect, in a way that is >>understandable to a typical member of the market for this product, >> >> - Explains how to avoid the defect, in a way that is understandable to >>a typical member of the market for this product, >> >> - and that explains how to recover from the defect, in a way that is >>understandable to a typical member of the market for this product. >> >>When dealing with an industry that ships products with known defects as a >>matter of course, customers should at least be given a fair chance to >>mitigate >>their losses. >> >>2. Choice of forum >> >>The effect of Article 2B will be to provide small customers with no >>forum for their disputes with a publisher. We recommend that if (a) the >>contract is mass-market and (b) the amount in controversy is within the >>customer's home state's small claims court jurisdictional limit, then >>the customer can bring an action in his home state or, if he cannot >>obtain personal jurisdiction over the defendant in his home state, then >>anywhere where he can obtain jurisdiction over the defendant. The >>adhesion contract can specify a choice of forum, and it will be enforced >>if the amount in controversy (aggregated over all plaintiffs, in a class >>action suit) is greater than the small claims court jurisdictional >>limit. >> >>3. Express warranty >> >>We recommend: Statements, descriptions or affirmations of fact in the >>hard copy or online documentation or on the packaging or in other >>statements made by the publisher to the public at large should be >>express warranties, whether or not the licensee was aware of their >>content at the time of contracting. Our rationale for including >>statements made to the public at large is that these are restated in >>trade publications that circulate widely to the general public. They >>become part of the basis of the bargain in fact, but the chain from the >>public statement through the magazine to the customer is too hard to >>prove. >> >>4. Intellectual property >> >>Mass market licenses should not be allowed to include prohibitions >>against reverse engineering, decompilation, and other similar use >>restrictions. Nor should they be allowed to declare the observable >>behavior of the product a trade secret and they should not be able to >>impose restrictions that conflict with the first sale doctrine. >> >>We agree that a publisher can and should be able to impose restrictions >>in a license that go beyond those available to a seller of goods (books >>or merchandise containing patented technology) but it should not be >>allowed to do so in adhesion-contract-based transactions conducted in >>the mass market. >> >>We propose: >> >>A term restricting the use of a mass-market product is not valid in a >>mass-market license unless it (a) would be an enforceable term in a >>contract for the sale of the product or (b) is a conspicuous restriction >>on the number of times the product can be used, the length of time that >>the product is licensed for, or the number of people who can >>simultaneously use the product. >> >>5. Incidental damages >> >>Many of the incidental damages involved in mass-market software are >>imposed by the publisher or as a consequence of delays created by the >>publisher. For example, the Software Support Professionals Association >>reports that it takes, on average, 30 minutes for a customer to reach an >>appropriate person to ask about a problem with a software product. Most >>of the rest of the time is spent sitting on hold, burning through long >>distance charges. Many publishers now charge complaining customers a fee >>per minute or per call and some charge the fee even if the customer is >>reporting or complaining about a defect that was known to the publisher >>at the time of the sale. >> >>We recommend: A mass-market publisher should not be able to exclude >>incidental expenses that are incurred in reporting the defect, in >>returning the defective product, or in seeking support from the >>publisher for the defect or its consequences. >> >>6. Consumer protection >> >>Under the Magnuson-Moss Warranty Improvement Act and the associated FTC >>regulations, customers are entitled to see the warranty of any goods >>sold for $15 or more. As the Software Publishers Association's own >>Model PC Software License Agreement (and Explanatory Comments) states >>(p. 35), =93It is reasonable to assume that software purchased for home >>computer use would be covered by the Act.=94 >> >>Yet software customers are rarely able to see the warranties provided >>with software until after the sale. This makes it difficult for >>individuals and reporters to compare the extent to which competing >>companies will stand behind their products. Article 2B characterizes >>mass-market sales of software as licenses, which might not be covered by >>the Magnuson-Moss Act, and blesses the practice of refusing to allow >>customers to see the contracts until after the sale is complete. >> >>We recommend: Warranty rules and other consumer protections should be >>the same for mass market software products and goods. >> >>Article 2B should explicitly state that, for purposes of state statutes >>and other state law concerning contracts for consumer goods, and for >>purposes of all other consumer protection statutes of the state, a mass >>market license is a =93good.=94 Also, Article 2B should state that the >>provisions of the Magnuson-Moss Act apply to mass market software, to >>the extent that other state law does not cover the same area. >> >>7. Material breach >> >>A breach should be considered material if it would be material under the >>Restatement of Contracts or if the breach caused or may cause >>substantial harm to the aggrieved party, including imposing costs that >>exceed the contract value. >> >>8. Mitigation of damages >> >>2B-707 requires the customer to maintain backup systems just in case of >>breach of contract by the software publisher. The customer cannot >>recover compensation for losses that could have been avoided if the >>customer regularly backed up her data. There are many ways that any >>prudent person can protect herself against the possibility of breach of >>contract by any other party. The point of a contract, though, is that it >>lays out the duty of the publisher to not breach. The customer should >>not have to spend time, effort and money on defensive steps, before a >>breach, to minimize the damages that will be incurred if the publisher >>should happen to breach. >> >>It is frequently reported that individuals and small businesses rarely >>back up their hard disks. At a Law Practice Management session at the >>August 1997 ABA meeting in San Francisco, only half the attendees >>reported that they backed up their hard disks. This might not be wise on >>their part but it is the current situation. Why should the law grant >>contract-breaching publishers a special deal by requiring a higher >>standard of self-protective care from customers than customers currently >>afford themselves today? >> >>The requirement in 2B-707 that customers must back up their data should >>be struck. >> >>9. Internet rules >> >>Customers who purchase a product or license over the Internet or through >>some other electronic transaction shall have the same rights as if they >>purchased or licensed it by any other means. >> >>10. Electronic Commerce--attribution >> >>2b-116(a) unfairly allocates risk of loss onto customers. If the >>security of the customer's computer is compromised, then messages can be >>sent that appear to be coming from the customer but do not. The customer >>has to prove non-negligence to avoid paying for all of the losses caused >>by the ensuing fraudulent transactions. The overall security of the >>system, however, is heavily under control of the other parties (see >>Kaner, Article 2B is Fundamentally Unfair to Mass Market Software >>Customers, submitted to ALI for the October meeting and available at >>http://www.badsoftware.com/ali.htm). This risk allocation is >>inappropriate for this emerging technology. Kaner recommends that the >>presumption that a message came from the apparent sender be very weak, a >>bursting bubble. >> >>A more traditional consumer requirement would be a limit on consumer >>liability, to $50 or $100. >> >>11.Electronic commerce - risk of error >> >>2B-117's restriction to consumers is too narrow. The problem is that >>user errors are heavily determined by the designer of the system, and >>the system design is fully under the control of the seller. Computer >>systems are not fully familiar to the average customer, whether that >>person is a consumer, a lawyer, or another non-software-merchant. 2B >>should provide the seller with reliance damages in the event of an error >>by the customer, but should otherwise allow the mistake-making customer >>to escape liability. >> >>12. Arbitration clause >> >>A compulsory arbitration clause in a mass market license should not be >>binding if the dispute involves fraud or defects that could threaten the >>health or safety of customers or the general public. >> >>A compulsory arbitration clause in a mass-market license should not be >>binding unless it provides for arbitration in the home state of the >>customer. >> >>Yours truly, >> >>Cem Kaner signing on behalf of himself and Todd Paglia, Esq. >> >>++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ >> >>Appendix B >>ARTICLE 2B AND QUALITY/COST ANALYSIS >>Presented at The Impact of Article 2B conference, Berkeley, CA, April, 1998. >>This summarizes Bad SoftwareWho is Liable?, provided in your conference >>materials. >> >>Businesses spend fortunes on quality-related costs. Traditionally, >>quality engineers categorize these: >> >>-- Prevention costs: costs of avoiding making defects, e.g. worker >>training. >> >>-- Appraisal costs: costs of finding defects pre-sale, e.g. inspections. >> >>-- Internal failure costs: costs caused pre-sale by defects, e.g. scrap >>and rework. >> >>-- External failure costs: costs caused by defects in products that have >>reached the customer, e.g. cost of handling customer complaint calls. >> >>Note that these are all costs of the seller. There are also externalized >>costs, costs paid by the customer and not by the seller. Customer costs >>are partially and indirectly reflected when they bounce back as external >>failure costs. >> >>External failure costs include: >> >>-- Customer support costs >> >>-- Lost sales >> >>-- Legal costs. >> >>Article 2B is a multi-pronged assault on external failure costs. It >>drives these costs way down in mass-market cases, and keeps them low >>even when quality declines. This reduces the economic pressure on >>software publishers to improve their products, resulting, I believe, in >>a weaker domestic industry over the long term. And, of course, in >>crummier products. The table on the next page provides examples of the >>costs that are driven down. Article 2B authorizes these measures, and in >>this world of you-can't-see-the-terms-until-after-you-buy-it >>contracting, we should expect to routinely see terms like these. >> >>Here are examples of 2B's impacts on the 3 classes of external failure >>costs: >> >>CUSTOMER SUPPORT >>Reduce net support costs and obligations >> >>-- Charge customers for all calls for support, even for defects. No >>refund for these calls even if the customer returns the software. >>2B-703(a)(2) allows refund of purchase price after return of the >>software as the sole remedy. >> >>-- No implied warranties. 2B 406 allows post-sale disclaimer with no >>opportunity pre-sale for customer to discover the disclaimer. CAPS make >>the post-sale disclaimer =93conspicuous. >> >>--Goods-based consumer protection laws (such as Magnuson-Moss and >>California's Song-Beverly Act) become inapplicable because their scope >>is goods and 2B transactions are transactions in an intangible (a >>license to use IP). >> >>--No duty to mass-market customers or consumers (only to big customers) >>to cure defects. 2B-605. >> >>--Lesser right to a refund. (Perfect tender rule available only to mass >>market. 2B material breach definition is much more publisher-friendly >>than Restatement of Contracts'. See 2B-109.) >> >> >>LOST SALES >>Reduce effects of competition >> >>--No pre-sale disclosure of terms, so there's no competition on >>quality-related promises. 2B-208. >> >>--License agreements prohibit disclosure of details of the product, >>including banning writing magazine reviews without publisher's >>permission. Some publishers already have such terms, though they >>probably don't work in mass-market today. 2B-102(12) includes >>nondisclosure in =93contractual use restrictions=94, which are deemed as >>OK in contracts. >> >>--No reverse engineering (harder to compete, and harder to do 3rd party >>maintenance). (Use restriction.) >> >>-- No reverse engineering for interoperability, to make two products >>compatible. (This is just another use restriction.) >> >> >>LEGAL RISKS >>Reduce probability and cost of lawsuits >> >>--Seller chooses its favorite state or country, for its choice of >>law. 2B-107. >> >>--Seller chooses its favorite forum. 2B-108 (but choice can't be >>=93unfair & unjust=94 as term is used in Carnival Cruise Lines. This >>line of cases has provided little or no consumer protection.) >> >>--No damages. Rescission is the only remedy, and rescission doesn't >>include repayment of fees for =93support=94 (such as the call to ask for >>a refund.) 2B-703(a)(2) >> >>--Eliminates the concept of the =93minimum adequate remedy=94 which was >>an influential comment in Article 2. >> >>-- Eliminates the Article 2 policy section saying that aggrieved party >>should be entitled to full recovery. >> >>-- There are, of course, no damage limitations available to mass market >>customer with respect to vendor's recovery from the customer. Vendor >>is exclusive definer of what constitutes a breach on the customer's >>part. >> >>++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++ >> >>For more details on 2B and mass-market customers: >> >>-- Kaner, C. (1997a). What is a Serious Bug? Defining a "Material >>Breach" of a Software License Agreement. (unpublished.) Meeting of the >>NCCUSL Article 2B Drafting Committee, Redwood City, CA, January 10-12, >>1997. (abbreviated version, Software QA, 3, #6.) Available at >><http://www.badsoftware.com/uccdefect.htm>http://www.badsoftware.com/uccdef >>ect.htm. >> >>-- Kaner, C. (1997b). Remedies Provisions of Article 2B. (unpublished.) >>Meeting of the NCCUSL Article 2B Drafting Committee, Redwood City, CA, >>January 10-12, 1997. Available at >><http://www.badsoftware.com/uccrem.htm>http://www.badsoftware.com/uccrem.htm. >> >>-- Kaner, C. (1997j) Restricting Competition in the Software Industry: >>Impact of the Pending Revisions to the Uniform Commercial >>Code. Proceedings of Ralph Nader's conference, Appraising Microsoft, >>Washington, DC, November, 14, 1997. Available at >><http://www.badsoftware.com/nader.htm>http://www.badsoftware.com/nader.htm. >> >>-- Kaner, C. & T. Paglia, (1997) Letter to American Law Institute >>outlining the consumer community's priorities for its Executive >>Council meeting, December, 1997. (unpublished.) (Included here as >>Appendix A) >> >>-- Kaner, C. & D. Pels (1997). Article 2B and Software Customer >>Dissatisfaction. (unpublished.) Meeting of the National Conference of >>Commissioners on Uniform State Laws' Article 2B Drafting Committee, >>Cincinnati, OH, May 30, 1997. A shorter version of this paper, for the >>software community, was published as Software Customer Dissatisfaction, >>Software QA, 4, #3, 24. Available at >><http://www.badsoftware.com/stats.htm>http://www.badsoftware.com/stats.htm. >> >>____________________________________________________________________ >>Cem Kaner, J.D., Ph.D. Attorney at Law >>P.O. Box 1200 Santa Clara, CA 95052 408-244-7000 >>Author (with Falk & Nguyen) of TESTING COMPUTER SOFTWARE (2nd Ed, VNR) >> >>This e-mail communication should not be interpreted as legal advice >>or a legal opinion. The transmission of this e-mail communication >>does not create an attorney-client relationship between me and you. >>Do not act or rely upon law-related information in this communication >>without seeking the advice of an attorney. Finally, nothing in this >>message should be interpreted as a "digital signature" or "electronic >>signature" that can create binding commercial transactions. >> > >=============================== >Kathy E. Gill, Guide - http://agriculture.miningco.com/ >Publisher, eNetDigest - http://www.enetdigest.com/ >WWW design � writing � training - http://www.dotparagon.com/ > >You must be the change you wish to see in the world. - Gandhi > > > >__________________________________________________________________________ >To send mail to web-consultants, use the address: [EMAIL PROTECTED] >For usage, send e-mail with "HELP" body to [EMAIL PROTECTED] >Digest subscribers, use the address:[EMAIL PROTECTED] >Visit The Web Consultants Web Site At http://just4u.com/webconsultants > =============================== Kathy E. Gill, Guide - http://agriculture.miningco.com/ Publisher, eNetDigest - http://www.enetdigest.com/ WWW design � writing � training - http://www.dotparagon.com/ You must be the change you wish to see in the world. - Gandhi ____________________________________________________________________ -------------------------------------------------------------------- Join The Web Consultants Association : Register on our web site Now Web Consultants Web Site : http://just4u.com/webconsultants If you lose the instructions All subscription/unsubscribing can be done directly from our website for all our lists. ---------------------------------------------------------------------
