Legal soundness comes to open source distribution

Rod Dixon rod at
Tue Aug 6 06:26:08 UTC 2002

This is not intended as legal advice. I wanted to point out a case that has
been recently reported, and might have helpful implications for those who
use disclaimers in their licenses.

I am unsure if the litigation against AOL (and its software bugs) has been
discussed here, but the cases may have some relevance to the discussion on
the use of disclaimers in open source licenses. There are 2 cases related to
the litigation: AOL's users are suing the company in Florida and AOL is
suing its insurer in Virginia. (In re America Online Inc., Version 5.0
Software Litigation, No. 00-1341-MD-GOLD (S.D.FL.). AOL'ers sued AOL
claiming that the online service's software version 5.0 caused users'
computers to "crash."

For whatever reason, AOL's insurer refused to pay any liability on
successful claims because software-based computer crashes do not constitute
tangible property damage, which is the only type of damages the insurer
agreed to cover. (This must have shocked AOL, of course.) The Virginia court
reportedly agreed and opined that where software causes a computer to crash,
the crash, the loss of computer use, and the accompanying destruction of
data are "intangible" losses. Denominating the losses as "intangible" rather
than "tangible" is significant in states that follow the common law rule
that bars consumer claims of economic loss related to computer use (i.e.
under tort theories); in these states, the claimant may recover only for
losses based on contract theory.

The case in Florida is still pending, but the Virginia court opined that the
consumers' claims are barred because only intangible losses were alleged
(i.e. no contract theory claims). Although there is reason to view the
Virginia court's decision with some caution, it does provide some
perspective on this disclaimer issue. First, some states may cabin software
off in an intangible loss least under circumstances similar to
software-caused computer crashes. Second, in these states, claimants will
not be successful in tort-based claims (see above), and contract-based
claims will be subject to contract terms, which would include the disclaimer
provision in the license.  This looks like a particularly good development
for open source developers whose disclaimers are appropriately drafted
(albeit, not very good thing for consumers of software).

Rod Dixon
Visiting Assistant Professor of Law
Rutgers University Law School - Camden
rod at
My papers on the Social Science Research Network (SSRN) are available
through the following url:

> John Cowan writes:
>  > Russell Nelson scripsit:
>  >
>  > > Imagine, if you will, that a large
>  > > proprietary software firm (or consortium) wishes to destroy open
>  > > source software.  If they can require that all software come with a
>  > > warranty, the job is done -- time will cook the soup.
>  >
>  > Only if they are willing to shoot off their own feet.  No software
>  > product I know of, Open Source or proprietary, does anything but
>  > disclaim every conceivable warranty.
> Depends on how desperate they get.  They just *might* be willing to
> shoot off their own feet, if they think they can live without feet.
> --
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