Subject: Who's running your business?
From: "Stephen J. Turnbull" <turnbull@sk.tsukuba.ac.jp>
Date: Tue, 30 May 2000 11:06:43 +0900 (JST)

I don't really want to push the libertarian argument; I wrote a longer
rant specifically on the libertarian stuff, available on request.  The
point here is specific to the charter of FSB: "how are FSBs different
from other Bs?"  I think it is interesting and important to point out
that w.r.t. liability law, there is no reason for them to be treated
specially.

>>>>> "rn" == Russell Nelson <nelson@crynwr.com> writes:

    rn> People sell defective products all the time.  I try to open a
    rn> can of beans with a screwdriver, and cut a gash in my
    rn> countertop.  Whose fault is that?

    rn> [...]

    rn> It would be interesting to hear if anyone has had or has
    rn> chosen to face that issue.

What do you think the huge body of case law concerning "tort" is?
Grimm's Fairy Tales?

It is true that "free software" is different from everything else in
business.  _In some dimensions_, the most important one being the
deliberate renunciation of one legal, and in many people's eyes (but
not, eg, rms's) ethical, means of financing the costs of doing
business.

That does not make those financial costs or the business's
responsibility to pay them any different from any other business---
_including those costs that are related to product liability issues_.
(Granted, the issues of fact in software may be more complex or novel
than in medicine--- maybe---or hardware.  Still, I bet the courts will
assert that the law applies and go ahead and do their best to
interpret it in light of the facts determined.)

    rn> Perhaps if we can establish a standard contract for free
    rn> software liability, we can avoid having one forced down our
    rn> throats.

Why not just take the workable[1] one that has been worked out over
several centuries by the tort courts?  Those transactions costs have
been paid!  Why do you want to pay them _again_, including the many
people who will be hurt without redress because the contracts are
poorly (or deceptively) written?

That standard contract exists, and is known as the "implied warrantees
required by law."  I don't have any problem with the disclaimer in the
GPL for "free beer" software, but if you take money for it, you have a
contract (implicitly), and that contract is governed by the law.  The
disclaimer in the GPL will protect the copyright holder (if different
from the vendor), but not the vendor, in court.  If the customer
chooses to pass on the product, the warranties and liability implied
may change, but likely won't disappear (attractive nuisances etc).

What?  That liability scares you?  Well, then, increase your revenues
and hire a programmer to fix dangerous bugs and retain a lawyer in
case[sic] you don't fix them all.  You can't afford them, because your
product is free software and highly competitive?  A crying shame,
isn't it, the high failure rate among businesses....

You are conducting a business, aren't you?

There is, of course, one difference of free software vs. other
products.  If there is a dangerous bug, then the free software
containing it could be a plague (viral license or not).  That's
unthinkably large liability for a small business, isn't it?

It is _not_ unthinkable!  We are all plenty happy to accept (on behalf
of the movement) the credit for the contagion of equally large
benefits.  It is of course human, but nonetheless inconsistent, to
want to avoid the blame for the bad side.  Nor is it clear that by
setting the software free we are behaving ethically to disclaim _all_
liability.  Who should know the software better than its author?  If
the author provides incomplete documentation about the hazards
involved ("this software can erase your system and melt your CPU"
clearly is a frivolous statement), isn't the author responsible for
damages?

Note that if you assign the liability by default to consumers, many
will choose not to buy, especially early in the product life cycle,
because they have no idea which warranties to demand.  Insurers will
specify and sell the warranties they know how to quantify, but do not
necessarily have a large incentive to seek out new warrantable
liabilities (if the customer decides a fair premium for the new loss
is too great, that implies that it is optimal to refuse both the
software and the insurance, and both software vendor and insurer lose
a sale).  On the other hand, if you specify that the _vendor_ bears
liability by default, it is the expert who has the incentive to seek
out and understand new liabilities.


Footnotes: 
[1]  If you don't like the current state of tort law, I suggest you
review the history, and consider what doing all that again would
require.  Are you sure you don't want to start from where we are today?

-- 
University of Tsukuba                Tennodai 1-1-1 Tsukuba 305-8573 JAPAN
Institute of Policy and Planning Sciences       Tel/fax: +81 (298) 53-5091
_________________  _________________  _________________  _________________
What are those straight lines for?  "XEmacs rules."