As I mentioned a few weeks ago and now recently reported by Concurring Opinions, the American Law Institute recently approved the final version of the Principles of the Law of Software Contracts.
If any particular state adopts these rules, I will probably recommend what commenter Sean Hogle recommended – the addition of yet another disclaimer.
I’ve not done this before, but given that I just got off vacation and have an inbox that would scare most people, I thought a few tidbits of things passing my desk might be of interest to you:
The Ideological History of the Supreme Court of the United States
A White Paper on Insurance Coverage for Cyber Security Losses (e-mail required)
The Applicator on “Chiseling on Demand”
Thirty Interview Questions You Can’t Ask and Thirty Sneaky, Legal Alternatives to Get the Same Info (hat tip to D.C. Toedt)
Filed under: law
Ever wonder why you spend the bulk of your time inserting contract language for this warranty or that limitation of liability… only to get to the end of the agreement and then disclaim a few large bodies of law, such as the UCC or UCITA? If you’ve not had the pleasure of attending law school, do you know what the UCC really is – how it came to be the guiding force behind commercial transactions? Would you be shocked to learn that UCITA is deemed by some states to be so awful that they’ve enacted so-called “bomb shelter” legislation so as to prevent its application within its borders?
I won’t bore you on the whole history of the UCC, or UCITA for that matter. What you need to know is the basics. These two bodies of law are “models” – written by extremely gifted legal professionals and designed to “harmonize” behavior between the states. This is important because where Federal law doesn’t tread, each state can act independently. When commercial transactions are involved, Federal law perks up and starts to notice, as the Commerce Clause of the US Constitution tries to keep commerce flowing between and among states. The Commerce Clause is the reason why UPS or FedEx can ship from one end of the country to the other… and why you don’t have UPS-Indiana competing with a UPS-Illinois. But states don’t like the Federal government leveraging the Commerce Clause on them – so they try to work out basic rules that can apply to transactions uniformily. Hence the “U” in each of the above two models. It stands for “Uniform” – with the intent that each state (perhaps with slight modification) will enact a form of the model laws so as to create a smooth playing field when dealing with issues that involve more than one state.
Commerce isn’t the only playing field of course (criminal law, for example, is another area where folks attempt harmonization). But it’s a biggie. And commercial transactions involving software have somehow seemed to be confounding for quite some time. As better explained here, the UCC was modified in the 90’s to try to include software (the UCC was originally written for hard goods). That really didn’t work out so well, and they tried again with UCITA. For a variety of reasons (most notably, the feeling by buyers that UCITA was severly biased towards software publishers), lobbying efforts were successful in blocking the passage of UCITA in almost every state – and, as noted previously, several states even passed laws which prohibited UCITA’s application in their state. It was seen as one of the largest failures of its kind.
But the American Law Institute doesn’t seem to know how to call it quits. They’re trying again with the release of the Principles of the Law of Software Contracts. As I understand it, Principles are less than models (ie: no “U”). However, I’m just not sure that they’re even needed now. Software licensee’s and licensor’s have been chomping at the contractual issues now for almost 40 years. I don’t believe that the Principles are necessary – and by the time they’d even gain traction, some new software licensing model will invariably come out and introduce some wrinkle not previously covered by the existing Principles.
So while I applaud the ALI for working on this effort, I just don’t know that it’s worth their time. Because remember, even if these Principles are followed by someone, they don’t have to be (they’re not designed to be enacted into law, merely serve as guideposts). But even if they WERE law, they can be completely disclaimed. Which means that panicky articles like this are also not really true.
Douglas Gries over at Dymond Reagor Colville wrote an excellent piece on his blog about using contracts as value added business tools. I couldn’t agree more.
I joke a lot about contracts being for the divorce, not the marriage. But the reason that this joke is accurate is that the contract is (supposedly) the best piece of material you have to review when a relationship starts to go bad. The contract represents the world as the lovers saw it at the beginning of the relationship – full of possibility and promise, and perhaps a little bit of caution, too. Because of this, it’s a great document to review when you’re trying to repair damage and correct behaviors.
Unfortunately, too many agreements aren’t written in a way that actually gets at the intent of the parties. Instead, they’re filled with lots of appropriate terms and conditions – legal phrases and jargon. Which is fine, but when you’re trying to reconstruct each parties’ intent, falls flat.
In the old days, this was resolved with a lot of “Whereas, Now Therefore” clauses at the beginning of the agreement. You would use the Whereas statements to highlight the background of the relationship and the Now Therefore to indicate that the contract was the resulting action of the Whereases. But I think even well-crafted Whereas statements don’t get to the real heart of the matter.
So sometimes, I’ll try something a little different. A “Purpose” statement. Near the top. Right under the introduction about who the parties are, but before Section 1. The purpose is to lay out what is happening and why the contract is being signed. It can be as simple as “The parties are creating this agreement to provide the base terms and conditions for the vendor to provide service to the client.” or it can be super-specific: “The vendor is going to provide xx software to accomplish yy tasks along with zz support/training/installation services, as more fully described herein and in any attached SOWs.”
This type of purpose statement helps a subsequent reviewer (the divorce attorney, if you will), figure out some of the initial intentions and what a particular contract is trying to do. Sounds silly, perhaps, but I just reviewed a few dozen contracts in the last few days – and not one of them told me what the product or service was. Which meant that I had to try to figure it out based on what I knew the vendor offered – or based on clues left throughout the agreement. Not easy and not fun. But it made the review more challenging because I needed to know the scope of the offering before I knew what things to potentially look for or add to each agreement to cover the associated risks.
Oh, and if you think that cover sheets, memos or other documentation created at the time the contract is negotiated will explain it – well, perhaps it will. But you’ve got two problems with it: 1) it almost never makes its way with the contract; and 2) you can’t rely on it from an evidentiary perspective (we’re going to avoid the conversation about parol evidence here, but you might be interested to learn more).
I saw this the other day:
Sunset Seedless grape package
and I’ve been thinking about the implications… is it really possible to add this type of condition? I think I agree with Madisonian’s evaluation of the situation, assuming that the grapes are patented. But what if they’re not patented? Can you restrict usage of a purchased good? Thoughts would be appreciated. 🙂
From boingboing.
Meredith Miller, over on ContractsProf Blog, posted part of a review of an extremely interesting case the other day from the EFF‘s Michael Kwun.
I won’t attempt a rehashing of the analysis – the original is good enough. But I will summarize. In the case, the Federal Circuit Court drew a distinction between conditions (those things you must to do HAVE whatever the license is for) and covenants (those things your promise to do WITH whatever the license is for). The result was a tick in the positive column for open source licensing proponents.
But the underlying argument may have some unforeseen aftereffects in the EULA realm. Really interesting… and another issue to pay attention to in the future.
Wired Magazine has posted an article by Jennifer Granick regarding a few California cases (state and federal) where the judge has decided that the terms of the EULA aren’t as ironclad as they have been for the last 12 years. Generally speaking, the state court ruled that the terms of an EULA are generally procedurally unconscionable, meaning that they’re going to be seen as contracts of adhesion… and the federal court ruled that vendor’s can’t change the terms of an agreement without providing the customer with notice of the change (ie: simple continued use of a service doesn’t automatically mean you’re bound to the change). Jennifer does a great job of explaining the logic.
Given the title of the article, Courts Turn Against Abusive Clickwrap Contracts, it would appear that Wired is attempting to sensationalize just a little. The truth is that the courts’ rulings aren’t that surprising (even if they came from California, a state known to be a little “fringe” about their opinions). The courts are applying some general contract priciples to EULA’s… which vendors have been lucky enough to avoid for the last decade. It’s about time.
I suppose it was bound to happen eventually, but a federal judge just ordered Google to turn over the viewing logs for YouTube (your usernames, IP addresses, etc) as part of the current Viacom v YouTube and Google litigation. The EFF is fighting this, of course.
But, this doesn’t bode particularly well for privacy and the use of SaaS-type computing (ie: putting your data into someone else’s hands for whatever reason) given the way in which the court interpreted existing law.
Thanks for the notice to: Unit Structures, ZDNet, and Gizmodo.
PS. Deleting your account at this point might not help… but I would definitely recommend re-evaluating what you have as your YouTube (and other services’) username and if you use your real names in the profile information. Just a thought.
I mention it from time to time, but I don’t usually dwell on the fact that I went to law school. It was a fine education, and I had a good experience (no “hiding the book” type stuff – besides, doesn’t everyone realize if you’re the only one with the answer, everyone’s going to know it was you who hid the book?). But I am not licensed to practice, I don’t/can’t advertise myself as an attorney… and I’m extremely satisfied both with the education received and with my career choice.
Apparently, people are going to law schools in droves these days (even when there aren’t the jobs to support them once they come out). So when folks ask for my advice about applying and/or attending law school, I usually give some sort of pithy comment about making sure you really want to go – intended not to discourage, but to make sure you’re in the right frame of mind to spend up to $150,000 and mostly cloister yourself for 3 years.
I was kinda’ amused to see a CBS Sports columnist commenting on going to law school. But Clay’s got it right (except for #14 – Go Valpo!)… even if he comes across a little bitter.
So, if you’re thinking about law school… give the column a read. Your ultimate decision to apply and/or attend is obviously up to you. But I will say this. If you’re a contracts person like I am… and you love it, there’s no must-have exclusive knowledge waiting for you in law school. Having the degree is an advantage in certain cases – but many of the best contract negotiators, reviewers and drafters have music, English and philosophy degrees, if that.
What they do all have in common is a thirst for understanding what they do and a desire to constantly improve. Law school won’t give you that – you have to come that way. 😉
I believe in technology licensing… I really do.
I also believe that we’re going to eventually need an overhaul of our intellectual property system on a global scale.
Why, you ask? Simple.
NET(net), Inc. 