Subject: RE: Legal soundness comes to open source distribution
From: "Lawrence E. Rosen" <lrosen@rosenlaw.com>
Date: Sat, 3 Aug 2002 12:17:10 -0700

Bruce, are you going to respond to any of my other comments besides my
expression of bafflement?  Or are you going to simply blame me for the
confusion and lack of legal understanding on the part of *some* of the
leaders of the open source community about whether licenses are
contracts?  I invite you to address directly my argument that the MPL
(and similar licenses) is clearly, obviously, without question or doubt,
a contract and not merely a copyright license.  

The case you cited, Specht, et al. v. Netscape, et al., does not deal
with the issue of warranty.  The decision addresses a preliminary
matter, specifically whether a license that contains an arbitration
clause can be enforced against licensees.  That is a very important
issue, for if arbitration can be compelled, the licensor may be able to
dramatically reduce its costs and its risks of litigation before an
uneducated jury.  Many of my clients (licensors and licensees alike)
demand an arbitration clause in their licenses for the simple reasons of
cost avoidance and risk reduction.  

Arbitration is not available for copyright disputes; it is a contract
provision.  The courts have always ruled (most recently in a California
Supreme Court case relating to employment contracts containing
arbitration clauses) that arbitration provisions are favored and will be
enforced against plaintiffs, but only if the plaintiff can be shown to
have assented to the arbitration clause in a contract.  I have myself
litigated cases where the validity of an arbitration clause was the
principal issue.  Once that issue was resolved, the case settled because
one or the other party wanted to minimize any further risk of loss.  

In Specht, the court first analyzed whether a contract was formed.  This
question was decided under state law even though the court had
jurisdiction based on a federal question.  Which state law to apply was
itself a complicated issue, because the licensees were in multiple
jurisdictions.  The court decided to apply California contract law to
that question.  I believe that this means that a similar court, faced
with a federal question of copyright infringement for which the defense
of "license" is raised, would have to determine, as a preliminary
matter, under state law, whether a contract (license) was formed, long
before it addressed any copyright issues.  That is how the Sun v.
Microsoft case was resolved, by the way, although contract formation
questions were not relevant to that decision.

Once the court concluded that it was going to apply California contract
law, it then proceeded to the key (for us) issue of whether the
licensees assented to the contract through click-wrap procedures.  The
court held that Netscape's procedures were inadequate to establish
assent through click-wrap and that a contract was therefore not formed.
Therefore, the arbitration clause of the contract could not be enforced
and Netscape could not compel arbitration.

I've not spoken to Netscape's attorneys about this case but I presume
there were high-level meetings about this in which the lawyers and
website administrators were instructed to clean up their procedures to
ensure click-wrap assent by licensees before their software could be
downloaded.  

Here's another example of the importance of click-wrap.  I have told
Sun's attorneys that their previous procedures for obtaining click-wrap
assent to their restrictive Java specification licenses were defective.
(My arguments are similar to those raised by the defendants in Specht.)
I therefore argue that Sun cannot restrict the open source community
from implementing open source programs by attempting to enforce those
license restrictions on Sun's specifications.  

As to your entirely separate issue, whether the OSD should contain a
provision to prevent restrictions on use, I want to address that
separately.  When non-lawyers smash complex issues together in one
email, they obviously get confused.  

/Larry

> -----Original Message-----
> From: Bruce Perens [mailto:bruce@perens.com] 
> Sent: Saturday, August 03, 2002 10:58 AM
> To: Lawrence E. Rosen
> Cc: 'Brian Behlendorf'; license-discuss@opensource.org
> Subject: Re: Legal soundness comes to open source distribution
> 
> 
> > Is there a reference of some sort for this?
> 
> It's the case at 
> http://www.nysd.uscourts.gov/courtweb/pdf/D02NYSC/01-07482.PDF
>  . IMO it's not all that germane to warranty disclaimer, and 
> I'm not buying the chain of extrapolation that leads from 
> this case to the conclusion that click-wrap might be necessary.
> 
> > It's about the only solid reason I see to need to go beyond 
> copyright 
> > law.
> 
> It's not about copyright law at all. The warranty obligation 
> does not follow the copyright. It's about:
> 
> 1. Is a simple warranty disclaimer that does not require agreement
>    adequate? 
> 
> 2. How do you need to present the warranty disclaimer?
> 
> 3. Do you really need a contract that other parties actually 
> agree to in
>    some way, for example by clicking "yes"? It's reasonably 
> clear that you
>    need one if you want someone else to indemnify you. It's 
> not nearly so
>    clear that you need one if you simply want to disclaim warranties.
> 
> > Agreed.  That's why I think we need to amend the OSD so that it
> > clearly states that a license must not restrict use, 
> > modification, or redistribution of the software.
> 
> I agree that there should be no restrictions on use, 
> modification, or distribution _other_than_those_ necessary to 
> implement the goals of Open Source, such as disclaiming the 
> warranty, preserving the copyright statement, mandating 
> source distribution when the licensor chooses that option, 
> and mandating transmission of the license to all parties. A 
> simple "no restrictions" equates to public domain.
> 
> Larry Rosen:
> > I am baffled by everyone's confusion and philosophical rantings.
>  
> That's distressing. This is your own community, or should be, 
> since you claim to represent them. If they are confused, 
> shouldn't you blame your presentation of the issue? If they 
> are philosophical, and you didn't expect that, could it be 
> that you've lost touch with them?
> 
> So far, I see some significantly better alternatives than 
> click-through. The very first should be a set of guidelines 
> for distributions and other environments where free software 
> is installed that would cause them to inform the user that:
> 
> 	1) There are licenses.
> 	2) They disclaim warranties.
> 	3) This is how you view the licenses.
> 	4) This is how you look at the source code to perform your own
> 	   due diligence.
> 	
> In the case of a distribution, most of them already do this 
> at distribution install time. Debian does display a 
> click-through warranty disclaimer when you install it. It 
> also has a login message disclaiming warranties, but only on 
> the text login. Obviously, this needs to be beefed up.
> 
> In the case of package installers on something other than a 
> Linux distribution, where we have less control of the 
> enivronment, perhaps click-through is appropriate, but I 
> still would oppose allowing it to be a license requirement. A 
> license that requires it is going to cause us no end of 
> trouble with the environments where we can deal with the 
> problem more easily.
> 
> 	Thanks
> 
> 	Bruce
> --
> license-discuss archive is at http://crynwr.com/cgi-bin/ezmlm-cgi?3
> 

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