|From: Rob Mandeville
Date: Thu, Sep 7, 2000 7:13 PM
Subject: Comments on software warranties
1. What warranty protections exist for consumers who purchase software and other computer information products and services?
Generally, there are no warranty protections. Software companies explicitly deny warranty protections, including a warranty that the software will work at all for its given purpose.
Some companies that give this disclaimer do act as if they have a warranty, however. For instance, a large accounting software company produced an income tax package with a bug in it. Said bug misrepresented some vital tax information, and produced erroneous returns.. When the bug was discovered, not only did they fix the bug and replace the software free of charge, but paid IRS penalties for anyone who produced a return using their software that had produced an erroneous return.
Other companies merely put bug fixes into a later revision of the software and expect you to buy new software to fix the problems in the old software (while getting all new problems). This is often referred to as the "software treadmill".
2. What expectations do consumers have about reliability of software and other computer information products and services? Are these expectations met?
The average consumer expects their software to work almost perfectly, the first time. They expect it to have the reliability of a car. They are often sorely disappointed. Computer veterans, however, often consider software reliability to be a hilarious oxymoron.
3. What remedies are typically available to consumers if software or another computer information product or service fails to perform as the consumer expected?
With most commercial software, the remedies are to complain to the vendor (and pray; this rarely works with any speed), use the internet to contact fellow users in the hope of finding a patch or a workaround, or buying a competing product. The latter option is quite expensive, not just due to the cost of the software, but because vendors work very hard to keep the competition from reading their file formats. This means that, if I decide to switch word processors, all of my word processor files get damaged if not lost--a tragedy if I am a professional author, for instance.
a. What warranty remedies are available to purchasers of such products and services?
There are no such warranty remedies. Caveat Emptor.
b. What remedies are supplied by state or federal law?
There appear to be no such remedies.
c. Do consumers seek to invoke these remedies, and if so, how often are they successful?
I have never seen a customer even attempt a warranty remedy. They feel that it will never work.
4. Are consumers able to comparison shop for different computer information products or services based on the terms of warranty coverage? Are consumers interested in doing so? Do manufacturers or sellers of software and other computer information products and services compete with each other on the basis of warranty coverage?
It appears that all major vendors disclaim all warranties, so there is no competition in this area. Consumers, especially corporate accounts, might be willing to pay extra for such warranties, considering that they often pay top dollar for tech support contracts.
5. Do the current protections encourage efficiency in the timing, selection, and amount of detail in information conveyed to consumers?
No. Software companies often hide the details, and even prevent others from reporting them. Many software licenses come with a clause that prevents the licensee from reviewing or benchmarking the software without the vendor's permission.
6. Do existing laws and industry practices protect consumers in the event that software and other computer information products or services are defective? How often does this occur?
I haven't seen any laws or practices protect consumers in this case. Defects are rampant in the software industry, largely because it is so new and because so many things are being done for the first time. By way of example, it is common knowledge that Windows 2000 shipped with over 65,000 known defects.
7. What developments are underway by private or public entities at the international, national, state, or local levels that would have an impact on consumers's rights in the context of transactions involving software or other computer information products and services?
The two pieces of legislation I know of for this would be UCITA and the DMCA. UCITA I discuss below. The DMCA is an extension to copyright law, and it allows the copyright holder to determine how people can use copyrighted products. Before the DMCA, a consumer had unlimited use rights, but had strict limitations on the right to copy. The use rights really change the nature of ownership: if you can't use something the way that you want to, is it truly yours? The DMCA is part of a trend of legislation to take ownership of these goods away from the consumer and back to the supplier; the effect is to disempower the consumer and change the balance of power from the people at large to corporations.
a. How would the proposed Uniform Computer Information Transactions Act (UCITA) affect consumers?
UCITA puts some standard software practices into law. Specifically, it removes any concept of warranty, truly enforces the license agreement, and even allows the vendor to shut down one's software without due process of law. This reduces the act of buying software to a contract where the customer gives up some money, plus some rights versus the vendor, and receives a limited ability to use software that may or may not work. This is a bad deal.
b. What role, if any, would be appropriate for the federal government with respect to protecting consumers who purchase software or other computer information products and services? What role, if any, would be appropriate for state and local government? Consumer groups? Private industry?
Software is still very new--while people have been writing it for half a century, only in the last fifteen years has it looked anything like it is today. Government intervention is more along the lines of a bull in a china shop.
Private industry is creating some interesting new developments in the realm of software quality. It is called "open source software", and Linux is its prime product. Open source software is copyrighted, but license is granted to give copies to others under certain conditions.These conditions are that the source code is given with the software (so that it can be improved), the copy license is preserved, and that the right to use the software remains unrestricted.
This has already improved the quality of open source software, and is expected to do so in the future. The improvement comes from the fact that anyone can improve it, rather than the priveleged few hired by the vendor company. Since every user of Linux is allowed to debug it, Linux has a realistic pool of defect-removing developers that dwarfs that of the largest software firms.
This also protects the consumer by allowing the construction of technical support vendors. If I buy a normal software package from one vendor, they have the source code (the "plans" to the software). They are the only ones able to fix a defect, so they hold a monopoly on technical support. They can charge what they want, and they are under little pressure to actually fix the defects. Where else are you going to go?
If I buy open source software (or just take a copy--it can be given away free), I have a copy of the source code, and so does anyone else who cares. Anyone with sufficient developer resources and the source code can set up shop as a technical support firm. If the vendor service is inadequate, I can hire another shop that may be better motivated to fix the defects that are causing me trouble.
I must note that any attempt to require all software to carry real warranties would crush the open source software movement. Open source software explicitly disclaims all warranties because people don't generally charge for it. If I (personally) have to add a warranty whenever I add a feature to Linux, I will not be able to afford to improve Linux. I would be taking on a tremendous possible liability, and making absolutely no economic gain. Requiring a warranty for all software licenses would leave open source software untouched, as it doesn't require licenses.
c. Are there international developments prompting uniformity of software or other computer information products and services?
8. What is the impact of characterizing a mass-market software transaction as a license as opposed to a sale of goods?
It is very disempowering to the consumer. Imagine if you bought other things as licenses. Cars are "bought" as licenses--that is the nature of a lease. You are granted use of the car, given certain restrictions, but it is owned by the finance company. Many people, including myself, find this overly restrictive, so we purchase the car outright. In software, there is no choice.
a. What is the rationale for such a characterization?
Imagine buying a TV "license" rather than a set. You get a TV set, but it isn't yours--it's licensed to you. You have the right to use it to watch cable. You don't have the right to set up a sattelite feed, to play video tapes on it, et cetera. That would require another license.
Most people don't notice the difference. Many technical people do, and for a very specific reason. Software developers and similar people have a habit of taking things they own and "kitbashing" them together to make something else. People regularly modify their car for speed, handling or style. Techies will try to rig their computer up to the house, so that it turns lights on and off. This ability lets us innovate more, because we habitually do so. Licenses expressly forbid us from doing so. The right to rip something you own apart and turn it into something new is very dear to the techies that are buying a lot of this stuff.
b. What are the legal implications of this characterization?
It greatly changes the balance of rights and power from the consumer to the vendor. Copyright, and even the constitutional clause that allows copyright, is very limited in its scope. The entire scope of copyright law is to give authors just enough incentive to invent. Given that our economy is tech-driven, and that Greenspan is trying like crazy to keep our economy from overheating, it appears that the software authors have pleny of incentive already.
The concept of a license changes the playing field. It says that the vendor has all the rights and only gives a little bit to the consumer.
c. How does this affect consumers?
Often, license restrictions require customers to buy the same stuff over and over again. Software licenses often do not allow the user to move the software to another computer, but you have to replace the computer every few years. Unlike goods, there is no possibility of resale--if I don't need the software anymore, I can't sell it or give it to anyone else (even if I destroy all my copies).
d. To what extent, if any, should software transactions be treated differently from transactions involving other intellectual property, such as the sale of compact discs, videocassettes, and printed books?
Software should be sold as a copy of copyrighted material, similar to CDs, video tapes, and books. I must enter a caveat here concerning the digital video disc or DVD. The DVDs tend to be sold as software, rather than as copyrighted goods. That is, you are only given a license to see "The Matrix", rather than a copy of "The Matrix".
e. Are some types of products involving intellectual property better suited to be distributed to consumers in license transactions as opposed to a sale of goods? Why?
I don't believe that licenses should be allowed for intellectual property proper. That is, when I buy a software package, I should own a copy of the software, not just a license to run it. Linceses come into play where the vendor is providing a distributed service. For example, I don't own a copy of the day-trading web site, I have a license to use that site. This makes sense because the actual software is not given--it is run on the vendor's own machines.
9. To what extent, if any, do mass market licenses for software typically create express warranties?
As far as I can tell, they don't.
10. To what extent, if any, do implied warranties arise in the context of mass market licenses for software?
Companies often act as if they had warranties when a large problem asserts itself and they need to save face. I earlier described an accounting package as an example of this.
11. To what extent, if any, do mass market licenses for software typically disclaim express or implied warranties?
They disclaim all warranty as to the usability of the software. They often do warrant that the software is on the installation media. I actually remember the following clause in a software package: "the installation floppies are black, and are warranted to remain so for thirty days after purchase. If they change color within that time, contact us for a full refund."
12.How are consumers affected by the use of "shrinkwrap" or "clickwrap" licenses in mass market purchases of software?
This is very devious. When I go to a store and purchase a box, I can normally assume that I have full ownership over the contents of that box. The box is mine. Then, during installation, a license agreement comes up, to get me to sign away my use rights to what I just bought!
It is interesting to note that these license terms are never advertised on the box, or anywhere that I can find them before making the purchase. By the way, this has the impact of removing the license terms from a customer's criteria for making a purchase.
In a very real way, software licenses are false advertisement: the box promises you a copy of some software, and then the agreement tells you that the copy isn't yours.
a. How are these licenses treated under existing law - that is, to what extent are these licenses enforceable?
I have never seen it tested in court. People often joke about ways to get around them--there are ways of installing software by hand without being presented with the license screen, and one can have a minor (who cannot enter into agreements) click the button.
Clickwrap licenses are likely more legal than shrinkwrap licenses. What is this "I agree to the terms by ripping this plastic?"
b. What types of terms are typically included in a software license?
They note that you have a license, and not a copy. They deny you the right to publish benchmarks, the right to have recourse in the case of a defect, and the right to change the product to fit your own needs or to learn from it.
c. What types license of terms are beneficial to consumers? What types of terms may cause consumer harm? What legal recourse do consumers have in such circumstances?
I have never seen a license term beneficial to a consumer. The clause that denies that you own a copy is the most harmful one. I know of no legal recourse.
d. To what extent are the terms of shrinkwrap or clickwrap licenses currently available to interested consumers prior to purchase?
They aren't published everywhere.
e. What is the impact of license terms mandating certain types of alternative dispute resolution, such as arbitration? How frequently, if at all, are such terms enforced by licensors?
Again, it is very disserving that this information is not known prior to purpose. I don't know how often the terms are enforced.
f. Do shrinkwrap or clickwrap licences discourage firms from competing on the basis of licensing terms? If so, which terms would be more likely to change if there were full prior sale disclosure? Why?
Companies do not compete on the basis of licensing terms, because said terms are unavailable until after purchase. Warranties might change if there were disclosure, as would dispute resolution clauses.
13. What role, if any, does the Magnuson-Moss Warranty Act play in the marketing, sale, or licensing of software or other computer information products or services to consumers?
I am not familiar with this act, so I am not answering the sub-questions.
14. Recent proposed revisions to UCC Article 2 (sale of goods) suggest that post-sale disclosure of terms may become acceptable in the sale of goods context. What would be the costs and benefits of applying a licensing model to goods covered by UCC Article 2? Does this suggest the importation of a licensing model into such sales of goods? If so, what effect, if any, will this have on consumers?
The licensing model is just generally bad. By selling licenses, one is not selling products, and thus the ownership of goods by the populace is restricted. Ownership is a true form of power, and this country is based upon the concept of giving the power to the populace. The license model shifts the power to the vending corporations
15. What should be the primary focus and scope of the Commission's initial public forum on "Warranty Protection for High-Tech Products and Services?"
Guaranteeing warranty protection may not be in the best interests of the country. Software is very low-quality, compared to other goods, and the market forces show that the consumers want it that way. That is, they'd rather have more features than fewer defects. The license issue is the scary one.
16. Which interests should be represented at the Commission's initial public forum on "Warranty Protection for High-Tech Products and Services?"
The software transaction is very lopsided, moving power towards the vendor. By limiting or eliminating the ability to sell licenses, and requiring that a sale of software be treated as a sale of a copyrighted item, the balance of power is restored.