[Fwd: Germany]

Ravicher, Daniel B. DRavicher at brobeck.com
Sun Jan 28 09:44:13 UTC 2001

> -----Original Message-----
> From: David Johnson [mailto:david at usermode.org]
> Sent: Saturday, January 27, 2001 3:20 PM
> To: Angelo Schneider; license-discuss at opensource.org
> Subject: Re: [Fwd: Germany]
> On Saturday 27 January 2001 07:48 am, Angelo Schneider wrote:
>>  AND sure we have more than one leg to stand on. The same is true in the
>>  united states. Of course you have implied warranties. Or do you think
>>  you can say: "Here is software, I have written it. Pay me some dollars
>>  and you may use it. But I OWN it, still. Nope, I'm not liable if it
>>  hurts your computer :-)"
> It is my own private opinion, and IANAL, that all commercial software
> have the basic warranty of fitness of merchantibility. Even commercial
> Source Software should be warrantied. If the seller wishes to absolve
> of all warranty and liability, this should be made explicitly clear to the

> buyer at the time of purchase.

A few thoughts from someone who has passed the Bar for the wonderful state
of NY.  First, there is no, nor can there ever be any, meaningful
distinction between commerical and non-commerical software.  It's all
involved in commerce, just at different points of the stream (far upstream
is education and research and far downstream is product purchased by end
users).  Note that the Supreme Court has in the 1st Amendment arena tried to
distinguish the rights of commerical versus non-commercial speech and
they've only gotten themselves into a pretzel by trying to draw distinctions
which provide no guidance.  

And, you are right, default rule is that sales of goods (software probably
included) do come with warranties.  And your intuition is also right, that
they are always disclaimed or absolved explicitly at the time of purchase.
This used to mean simply telling the purchasor in writing that they are
getting no warranties with the softaware, but because some judge thought
this wasn't "explicit enough", now this language has to be in ALL CAPS.  [To
which my response is, if people aren't going to read the warranty disclaimer
which is part of every single license agreement such that we have to make it
ALL CAPS, what does that say about the importance of the other parts of the
license agreement?  Can we assume that since the rest of the license isn't
in ALL CAPS the purchasor won't read it?  This means, eventually, the entire
license will have to be in ALL CAPS and thus we're back to the starting
point with the warranty disclaimer not being explicit enough.]

Second point, software companies should be able to sell whatever they want
for what ever price they want and with or without any warranties they want.
IF I want to sell BS Office without any warranty and you want to sell MS
Office with warranties, then let us compete in the market.  If consumers
want warranties, they'll pay a premium for your product and I'll lose
business.  If they don't then you'll lose profit by providing warranties for
product you have to sell at the same price I do.  In reality, the difference
in price between our products will be approximately the market's valuation
of those extra warranties that you provide (assuming the Office program you
and I sell are exactly alike).  When courts come in and regulate the
marketplace and tell consumers what they are not allowed to buy, it only
causes societal waste by preventing goods from moving to their highest
valued user.  This societal waste raises costs for everyone involved.

To make my point, assume that I want to sell you my 1971 Pinto with rust
stains.  I value the car at $100 because I now live in manhattan and don't
need it.  You are a Pinto afficianato and this car will round out your
collection.  As such you value my Pinto at $1000.  If the government was
going to come in and say "NO SELLING OF PINTOS WITHOUT A WARRANTY," I'd
never sell it to you because the cost of insurance to cover the warranty I
have to give you costs $1200.  So, I get stuck keeping this car that you
want because the government has regulated the market instead of stayed out
of it and assumed educated consumers.  Under this scenaio without govermnet
regulation, you and I could chat and I'd say that there's no warranty and
you'd say you don't care because you ain't goin' to drive the stinkin' car
anyways.  Now, admittedly, this is just me and you, but I could come up with
an example in much larger commerce which describes the same sort of
"Transaction doesn't happen because government prevents people from buying
what they want," scenario.

> Non-commercial software is a complete different matter. And this warranty 
> should be provided by the seller, and have no repercussions to the author 
> (unless the author is the seller) or any contributors. If I buy a
> I want recourse if the bristles fall out in a week. Likewise, I want the 
> software I have paid money for to actually do what it says it is going to

If there are two toothbrushes on the counter, one for $1 and one for $10,
the former with no warranty and the latter with a warranty, which would you
buy?  Should the government say that you don't even have the option to buy
the former because "Gosh darn it, when people buy toothbrushes the bristles
shouldn't fall out in a week."  Or, should we assume that the consumer might
be smart enough to remember that last time she bought a $1 toothbrush the
bristles fell out after a week, thus she ain't goin' to buy no stinkin' $1
toothbrush anymore?  Without any government sticking it's nose in, the
market place (yes, I assume informed and educated consumers) will regulate
itself because the $1 toothbrush company will go out of business because
it's bristles fall out in a week.  Not only is this self regulation just as
good as the government regulation, it's preferred because it makes the price
of all toothbrushes less because no extra taxes have to be paid to subsidize
the government passing and enforcing needless laws.

Now, for software.  Let's assume that I have a program which everyone in the
world could benefit from.  Big busness wants to license it with warranties
because they've got money at stake.  Fine, I sell it to them for $5.  But,
assume the school down the block wants the program to teach it's advance
computer class, but they can't afford $5.  In fact, they can only afford $1.
Well, if I sell them the same thing I sold the Big Business (warranties
included), then I'm going to run a loss.  [Note, I could just raise the cost
to big business to subsidize the school's warranties, but then a competitor
of mine who doesn't sell to schools will be able to undercut my price to Big
Business and I go out of business.]  However, I can sell the school the
progrm without warranties for $1 and stay in business.  Is it really better
to have the government force me to sell to the school (or non-profit
organization or small business or the government itself) with warranties?

> In the Open Source community we have grown to accept free and modifiable 
> source code as a matter of fact. The next step for the software industry
> take is to begin treating our products just as every other industry treats

> theirs: as merchantable goods. Offer a warranty as a matter of course for
> bits you sell. A 100% return policy is a tiny burden to bear, and if it 
> becomes standard for commercial Open Source, the proprietary side would
> be shamed into following.

If people really want 100% return policy, then let two companies exist, one
which offers it and one which doesn't and let the market prove its desire
for that extra cost.  I like your enthusiasm regarding shaming the
proprietary companies into taking certain actions, but I would guess they
care only about profit and share value, which shame doesn't seem to impact
nowadays.  If consumers are happy buying software without warranties, then
let them.  If consumers want (i.e. are willing ot pay for, not just gripe
about) warranties or return policies, then a company will soon arrive to
supply that unfulfilled demand.

Dan Ravicher
1633 Broadway, 47th Floor
New York, NY 10019
p. 212-315-8032
dravicher at brobeck.com

> -- 
> David Johnson
> ___________________
> http://www.usermode.org

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