[License-discuss] Reconsidering the "unless required by applicable law" clauses on warranties and limitations of liability

[Mike Milinkovich]

All,

To add to the topic that Brian raised here initially, I think that the 
impending changes to Europe's Product Liability Act need to be 
understood by everyone publishing code under open source licenses. I've 
written an article on those changes 
<https://eclipse-foundation.blog/2023/03/10/product-liability-directive-more-bad-news-for-open-source/>[1], 
and I think I've done a pretty reasonable job identifying what's coming. 
In short, exposure to liability claims is going to increase in Europe, 
regardless of what is in the licenses. I can't really say by how much 
since I've been advised that to a certain degree this is European law 
catching up with some of the member states, such as Germany.

I would also hazard a guess that we will see similar legislative changes 
coming in the US based on the Biden administration's recent National 
Cybersecurity Strategy. But one could hope that the drafting will be 
clearer and put more of the burden on the parties monetizing open source 
than seems to be the case with the PLD.

[1] 
https://eclipse-foundation.blog/2023/03/10/product-liability-directive-more-bad-news-for-open-source/

On 2023-02-17 12:42 p.m., Brian Behlendorf wrote:
>
> (speaking personally)
>
> The Apache license 2.0, sections 7 and 8 say:
>
>   7. Disclaimer of Warranty. Unless required by applicable law or agreed
>   to in writing, Licensor provides the Work (and each Contributor 
> provides
>   its Contributions) on an "AS IS" BASIS, WITHOUT WARRANTIES OR 
> CONDITIONS
>   OF ANY KIND, either express or implied, including, without limitation,
>   any warranties or conditions of TITLE, NON-INFRINGEMENT,
>   MERCHANTABILITY, or FITNESS FOR A PARTICULAR PURPOSE. You are solely
>   responsible for determining the appropriateness of using or
>   redistributing the Work and assume any risks associated with Your
>   exercise of permissions under this License.
>
>   8. Limitation of Liability. In no event and under no legal theory,
>   whether in tort (including negligence), contract, or otherwise, unless
>   required by applicable law (such as deliberate and grossly negligent
>   acts) or agreed to in writing, shall any Contributor be liable to You
>   for damages, including any direct, indirect, special, incidental, or
>   consequential damages of any character arising as a result of this
>   License or out of the use or inability to use the Work (including but
>   not limited to damages for loss of goodwill, work stoppage, computer
>   failure or malfunction, or any and all other commercial damages or
>   losses), even if such Contributor has been advised of the possibility
>   of such damages.
>
> This are the "use at your own risk" clauses that allow everyone, from 
> volunteer individuals to large corporations, to be reassured that this 
> gift of open source software sitting in front of the recipient is 
> properly understood to be a gift, and not a promise. It puts the onus 
> on the recipient to be sure that the software is fit for purpose to 
> whatever their own standards are, and if they can't, they should not 
> use the software.
>
> At the time of drafting the AL2 license, I believe the justification 
> for having "unless required by applicable law" phrases on each were 
> that it was typical legal boilerplate; more optimistically it could be 
> seen as a polite nod to the wide array of viewpoints in different 
> jurisdictions as to what can actually be dislaimed in a software 
> copyright license, and that perspectives were likely to shift over 
> time and the hope was that open source usage could be universal enough 
> to shift it in its favor. However, it has resulted in organizations 
> confusingly believing that in those jurisdictions where warranties and 
> liability can not be entirely waived, that the rights in the license 
> are still conferred regardless, and that whatever baseline warranties, 
> liabilities, and resulting support would be inferred are allowed and 
> even expected.
>
> This results not just in "free riding" - where naive organizations 
> simply use open source code straight from the source without paying 
> for a support agreement, yet expect support. We saw this when 
> companies with no prior engagement with the Log4J developers flooded 
> that team with demands for attestations on their part that they'd 
> fixed all the bugs and it was defect free. The nerve.
>
> This has also put individuals and organizations publishing open source 
> code at the risk of fines and other sanctions in jurisdictions where 
> such limitations are not only weak, they are under direct attack by 
> perhaps well intentioned regulations like the EU's Cyber Resiliance 
> Act. I'm sure you've all followed the drama but two excellent blog 
> posts on this matter are:
>
> https://blog.nlnetlabs.nl/open-source-software-vs-the-cyber-resilience-act/ 
>
> https://eclipse-foundation.blog/2023/01/15/european-cyber-resiliency-act-potential-impact-on-the-eclipse-foundation/ 
>
>
> Amendments to the proposed CRA are being sought to limit its damage 
> upon the OSS community, but I worry that its base premise (that 
> warranties/liabiliies can not be waived, and thus even non-EU 
> publishers of source code could be found subject to its fines) and 
> theory of incentives (put all the burdens on the software publisher; 
> the market will sort out the resulting effect on supply/demand and 
> prices) to be wholly broken. The erosion of those disclaimers is a 
> systematic threat to what makes OSS work, and even if we achieve a 
> negotiated battle to limit those compromises today, it only shifts the 
> goalposts for next season's compromises.
>
> I'd like to propose that the stewards of licenses approved by the OSI 
> and in major use consider two adjustments to their licenses:
>
> 1) Removal of the "unless required by law" terms in the Disclaimer of 
> Warranty and Limitation of Liability clauses
>
> 2) Explicit text added that clarifies that if any part of such 
> sections can not be honored by the recipient, the recipients' rights 
> granted under this license are terminated.
>
> If I give a child some candy, and they come to expect candy every time 
> they see me, I'm going to stop giving them candy, on principle.
>
> IANAL so I won't try to draft the above, but I'd wager $1 that such 
> text could even be made GPL compatible.
>
> This community is extraordinarily generous with its gifts and many 
> corporations and governments have been able to free ride off the back 
> of that generosity with very few actually returning value in any form. 
> Clarity on this point would not only help reaffirm the implicit social 
> contract underlying the incredible engine of creativity and economic 
> power that OSS has become, it would remind recipients of the value of 
> working with vendors or other service providers who are able to assume 
> that kind of warranty and liability service for a fee.
>
> Thoughts?
>
> Brian
>
>
>
>
>
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