ALI Asked to Reconsider Proposed Principles of Software Contracts by Linux Foundation and Microsoft

How do you know when a proposed software contract principle is really broken? When the Linux Foundation and Microsoft have their respective legal departments sit down and pen a joint letter asking it be reconsidered. ZDNet's Mary-Jo Foley has written a nice, legalese-free summation of the story.

In short, the American Law Institute (ALI) has proposed some guiding principles for judges, lawyers and other legal professionals working with software-related cases to aid in settling software licensing issues. Given how quickly everything about software delivery and production changes, this in and of itself is a decent enough idea. The problem is one particular principle, a policy calling for a non-disclaimable "implied warranty of no material hidden defects." Both the Linux Foundation and Microsoft say this is a disadvantage all around -- discriminating and subtlely changing between various licensing, business, and distribution models.

It's less likely to guide then, it would seem, than it is to confuse. Also at issue is the idea that that particular principle, as it stands, does not reflect any existing commercial law and it's unclear why software would be treated differently from any other saleable good. Equally disturbing is that it seems "no material hidden defect" means exactly that -- no fraudulent concealment, misrepresentation, or presumably, knowledge of defect is required for the software distributor to be liable.

Both sides of the licensing fence agree this particular part of the proposed guidelines is flawed -- and that's a pretty strong indication that it honest to goodness is. It's obvious, as well, that some sort of guidelines and standards need to be available -- and frequently reviewed and re-worked -- to aid judges unfamiliar with the legalities and intricacies of software licensing and development methods. The American Law Institute will be voting on the draft this week.