FC: Lawyers, lawyers, and (yes) more lawyers on Borland flap

[Declan McCullagh <declan () well com>]

Previous messages:

"A defense of Borland's license saying auditors may inspect your PC"
http://www.politechbot.com/p-03029.html

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Date: Mon, 14 Jan 2002 14:45:01 -0800
To: declan () well com
From: James Bryce Clark <jamie.clark () mmiec com>
Subject: Re: FC: License-drafting lawyer replies on Borland

Another point of view from the evil lawyer sector.   I agree with Mark 
Schultz' statements about the way the world is.  But I don't draw the same 
conclusions from those facts.

First, when there is compelling evidence of infringement, Mark is correct 
that a software company can initiate a criminal suit, without needing the 
civil law rights supplied by an audit covenant.  However, as OJ knows, it 
is easier to win civil than criminal cases, which have higher standards of 
evidence.  That decrement might be very significant if, as I suspect, some 
BSA inquiries are enabled by one affidavit from one disgruntled 
recently-fired employee.

Second, BSA are not "peskier" than lawyers.  BSA are lawyers, leveraging 
the age-old economic fact that it is cheaper per-head to modify behavior 
with threatening letters than with actual lawsuits.   Sort of the Litigator 
of Damocles.   Threats have several other advantages over lawsuits:

One is that some users are more likely to cave to a threat than a lawsuit.

Another is that, in the unlikely case that someone is trigger-happy, 
lawyers are more likely to get sued or disbarred for filing baseless 
lawsuits than for sending baseless threat letters.

Another is that you can seek more, in a settlement, than the law might 
entitle you to receive in a lawsuit.  In a copyright lawsuit, a defendant 
might adequately defend by showing that he obtained a second hand 
copy:  the doctrine of first use has not yet been repealed, in spite of 
yeoman efforts to do so (see UCITA, DMCA, etc.).  But in a settlement, a 
software company might demand sale receipts as the only proof sufficient to 
stay their wrath.  You see, they want you to buy new software.

Mark's final point is that the market will decide.  I agree 
strongly.   Consumer and small-business users are becoming more 
data-use-savvy.   Practices that might have been unremarkable in 1995 --

      -- Snitchbots sending undetected software use data, and God knows 
what else, over TCP/IP data squirts undisclosed to the operator,
      -- 
You-will-let-us-into-your-bedroom-to-look-at-your-hard-drive-at-any-time 
clauses in contracts,
      --  Customer relationships composed mostly of legal threats, and 
free of manuals, warranties or customer assistance,
      --  Proprietary data architectures that lock in software users into 
indentured servitude, by creating a prohibitive cost of re-conversion away 
from the app,

-- are becoming more understood and less acceptable in the 
marketplace.  The fun question is whether that knowledge will promulgate so 
widely among purchasers as to give open source apps an economic edge.

(By way of viewpoint disclosure, I am general counsel of a company that 
sells software.   There are lots of nice software companies whose principal 
revenue sources do not include harvesting lawsuits.  When I was in private 
corporate practice, I handled BSA inquiries for clients, and the BSA 
lawyers I dealt with were perfectly pleasant, moderately reasonable, and 
willing to back off when backing off was warranted.)

~~ James Bryce Clark
~~ VP and General Counsel, McLure-Moynihan Inc.
~~ Chair, ABA Business Law Subcommittee on Electronic Commerce
~~ 1 818 597 9475   jamie.clark () mmiec com    jbc () lawyer com
~~ This message is neither legal advice nor a binding signature.  Ask me why.

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Date: Mon, 14 Jan 2002 13:23:26 -0500
Subject: Re: FC: License-drafting lawyer replies on Borland move: It's
        entirely common
From: Richard Forno <rforno () infowarrior org>
To: <declan () well com>, <politech () politechbot com>

> From: "Schultz, Mark F" <Mark.F.Schultz () BakerNet com>
>
> As for the Constitution prohibiting this, sigh.  When will people learn that
> the Constitution restrains government action (sometimes all too feebly), and
> not private action?

The same could be said for the Constitution serving as a good example of how
those leading our nation - by the elected process or the business process -
should act. Schultz is correct - business are free to contend that the
status quo for dealing with customers in anything having to do with
intellectual property protection is "guilty until proven guiltier"

What strikes me as particularly sinister is Borland's lack of non-disclosure
language...so, I'm just going to allow an untrusted third party rifle
through my company's information assets without any sort of NDA guarantee,
looking for anything they think is 'related' to their software license
compliance audit? I don't think so.......

rick
infowarrior.org

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From: "Newbury" <newbury () mandamus org>
To: "declan () well com" <declan () well com>
Date: Mon, 14 Jan 02 17:12:28 -0500
Reply-To: "Newbury, Geoff" <newbury () mandamus org>
Subject: Re: FC: A defense of Borland's license saying auditors may inspect 
your PC

The "License" depends upon its characterization as such. In fact, its a 
'shrink-wrap' whatever.
Case law in some states, including California says that these are, in fact, 
sales. The position in Ontario is still unclear, but I would
strongly argued, if ever retained to do so, that these are sales. The 
supposed License is unlimited in time without further payment
and no reporting or other requirements are placed on the "licensee".

If these are sales, the "audit" clause cannot apply, as there is no 
'license'... although presumably in that case, you *could* be in
breach of copyright if you have copied the software onto 12 different 
machines.....

In and of itself, the audit clause is problematic, because "the correct 
amounts owed under this License" were clearly paid at the
original 'purchase/licensing.. The only thing that they can be searching 
for are copies being used which are NOT licensed, in which
case the correct amount was paid for the Licensed copy!

(..Unless, the unlikely case is that the first License allows you to make 
and run multiple copies, provided you pay certain amounts
for the extra copies..)

Don't think so.

These things are a scourge which should be sanctioned.

R. Geoffrey  Newbury

YIAAL
 (Yes I am a Lawyer)

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Date: Mon, 14 Jan 2002 11:21:53 -0800
From: zman <zman () sunset net>
Subject: Re: FC: A defense of Borland's license saying auditors may inspect
 your PC
X-Sender: zman () pop3 sunset net
To: declan () well com

Declan,
First I must thank you for your fine job of hosting the Politechbot.com
newsletter.
In regards to Borderland's license Audit Clause, for the author of the
freshmeat piece, I do not believe that the contract calls for the
forfeiture of a 4th amendment requirement of a warrant to let
Botderland's "goon squads" into ones facilities or our homes.
As for your arguments of a contract, a waiver of a constitutional right
must be knowingly and intelligently waived, and generally in writing, or
it will have no legal effect.
Borderland can have that clause in the contract, but it in no way waives
ones 4th or 5th Amendment Rights.
The biggest problem we face is peoples lack of understanding as to what
their rights are and how to exercise them.
Zeke

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To: declan () well com
Date: Mon, 14 Jan 2002 16:41:46 -0500
Subject: Re: Borland's license saying auditors may inspect your PC
Message-ID: <20020114.170835.-44507807.3.terry.s () juno com>

This whole new Borland audit provision impresses me as onerous, but not
unlike a standard contract provision most manufacturing and construction
corporations have been facing for many years.  Commercial liability and
completed operations insurance policies are usually written with a
specific rate, but a provisional premium based on estimated levels of
business, subject to audit after the fact and premium adjustment to match
actual completed business or production.

A contract agreement to allow Borland to audit doesn't enable Borland to
audit.  At best it allows Borland to sue if it's denied access to audit,
while site owners could have Borland auditors arrested for trespassing or
other nuisance charges if they try to force their way into private
property.  Some interesting issues arise in businesses which may do
military secret work, especially if Borland is told to come back with
auditors with government security clearances and proof thereof, and after
doing so to then prove a need to know.  Also possible are issues of how
Borland will ensure if they audit church systems, medical systems, or
legal systems, that they don't potentially or actually inspect
confidential records, a step beyond nondisclosure agreements which might
address similar but lesser issues in research or manufacturing
environments.

What remains is a mix of ethical paradigm issues as to what the industry
will tolerate or get away doing, balanced by whether this auditable
licensing makes sense.  In insurance, it does, in that there is a fairly
direct corrolation between auditable details and assumed insured risks,
some of which are not definable any other practical way.  With software,
is there a comparable paradigm, or alternate ways of accomplishing honest
license utilization?  Is this new licensing direction more abusive of
customers than serving legitimate interests of Borland or Microsoft?  I
see strong reasons for vendors to think such schemes solve existing
intellectual property rights problems, and for user communities concerned
with privacy invasions to loudly and proudly respond with a vehement,
"Fuck You".

Terry

One man's vulgarity is another's lyric. - Justice John M. Harlan, Cohen
v. California (1971)

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