eBlue, Sacra Blue Online Magazine
Feb 2003 — Issue 247
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by Bill Wood



From PC Alamode, May 2002, Alamo PC Organization

Bill Wood is an Assistant City Attorney, in the San Antonio City Attorneys Office. He practices real estate and technology law for the city and can be reached at <bmswood@swbell.net>. Previous articles have been pasted at <http:// www.alamopc.org/>. These articles are for general education only and are not intended as specific legal advice. He is not in private practice and is not soliciting clients. No attorney/client relationship is intended. Therefore, anyone concerned about any legal questions covered by these articles should consult a private attorney that is familiar with the field. These articles are solely the personal opinion of the author. Your comments and ideas for future articles are always welcome.

Sometimes You Cannot See the Problem

Over the last ten years or so I have negotiated dozens of technology contracts. Some of the contracts were small, some very large. They range from licenses for security systems to operating systems for large mainframe computers. I live in a world where my paranoia is a requirement. But then again, they are out to get me (and my client)!

There is another good reason why I don't sleep at night. I represent a governmental entity and the news media is quick to point out any problems with our contracts. Fear of seeing my name in the paper also motivates me to look harder at what I can't see. That means asking questions.

I was fortunate early on in my career to attend a seminar in which one lecturer suggested that the lawyer for the buyer of most technology products should include a provision by which the vendor warrants that there are no hidden features or routines. What you do not see can be the problem. If the buyer doesn't ask, most sellers won't tell that, along with the advertised features, there are other elements at work. In many cases those routines are perfectly acceptable. The point is that my client should be the one to make that judgment.

Just as a random example, I found this provision in an old EarthLink license.

Earthlink does not warrant that the Service will be Uninterrupted or Error free or that any Information, Software or Other Material accessible via the Service is Free of Viruses, Worms, Trojan Horses, or Other Harmful Components. Earthlink makes no Express or Implied Warranties, Representations or Endorsements including, but not limited to, Warranties of Title, Non-infringement or Implied Warranties of Merchantability or Fitness for a particular purpose regarding any Merchandise, Information or Service Provided through Earthlink or on the Internet Generally. No Advice or Information given by Earthlink, its Employees, Affiliates or Contractors shall create a Warranty.

Consequently, it is up to the buyer to find out what is under the hood. If the buyer has the bargaining power, it can get the vendor to modify the disclaimer. I usually try to insert the following provisions in the contract:

CONTRACTOR warrants that the code and software under this agreement does not contain any undisclosed features or functions that would impair or might impair the use of the equipment, code or software. Specifically, but without limiting the previous representation, CONTRACTOR warrants there is no "Trojan Horse," lock, "time bomb," backdoor or similar routine.

The vendor will almost always tell you whether or not anything else is included when confronted with that clause.

In most cases the features are there for a legitimate purpose. The vendor may be working on new features that will be "turned on" in the next release of the software or it may be present to assist the technical support personnel. In other cases the software program may consist of many modules. Each buyer is allowed to license and activate only the modules it actually needs. Guess what? The buyer is given the entire program with all of the modules anyway because it just makes more sense for the vendor to only distribute one, complete version. Later, if the buyer wants to activate new modules, a simple command turns them on because the software is already installed.

However, a troubling trend has evolved that makes it more difficult for average consumers and others more knowledgeable to find out what is under that hood. Face it; most of us do not have the clout to get a major technology vendor to change its license terms. We cannot examine the code without violating the reverse engineering terms in the license agreement. Most of us could not understand the program code anyway. In most cases we have to rely upon test reports and industry publications to spread the word about features.

Closer to home, we need to be able to read the opinions of the reviewers in this magazine. Yes, they are the personal opinions of the article's author. Yes, the author may be wrong. The point is that either way, the prospective purchaser has more information and can ask better questions before buying the product. If the reviewer is wrong, the vendor has every right to rebut the statements. In the end, we have educated consumers and improved products. The savvy vendor will take it as an opportunity to make a sale, not file lawsuits that seek to restrict information about the product.

Unfortunately, vendors have taken steps to restrict what can be written about technology without violating licenses. Recently, the New York Attorney General filed suit against Network Associates regarding a provision in a license that attempted to restrict what could be written about independent test results. According to Ed Foster's Gripe Line column in a March, 2002 edition of InfoWorld, the clause in question was, "The customer shall not disclose the results of any benchmark test to any third party... and will not publish reviews of the product without prior consent from Network Associates."

Years ago a major stereo manufacturer, Bose, sued Consumer's Union, the organization that publishes Consumer's Reports. The crux of the claim was that the reviewer damaged the reputation of the manufacturer because the article indicated that the sounds from the stereo system moved "about" the room. Obviously, that was an impression. In fact, the court found that the statement was literally false because nothing moved and that the author probably knew it was false. The case made it all the way to the Supreme Court. The result was that since Bose, the manufacturer, did not prove actual malice, the statement, though wrong, was protected by the First Amendment of the United States Constitution.

There is a major distinction between the Bose case and reviews of software. Software is licensed, not sold. Stereo systems are typically sold. The difference is that you agree to limit your use of software by agreeing to the terms of the license. If you owned it, like Consumer's Union owned the stereo system, you could use it almost any way you want. However, no one is really sure how the Court will rule if a reviewer is sued for violation of the contractual promise not to publish test results or reviews without the vendor's prior consent.

Sometimes you can't see the problem because it is buried in the programming code. Other times it is buried in the license.

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Brian Smither

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