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Re: BitTorrent Open Source License (Proposed Changes)

On 8/1/05, Michael Poole <mdpoole@troilus.org> wrote:
> The law that creates the warranty also allows its disclaimer; it
> allows a developer to refuse the cost that the law incurs.  In that
> way, the disclaimer reverts the cost balance to its state in the
> absense of the law.  This is distinct from a choice-of-venue clause,
> which creates a new cost that did not exist before the license
> existed.  The licensee's cost under choice-of-venue also did not exist
> before the law describing personal jurisdiction.

That is neither (AIUI, IANAL, TINLA) how implied warranty works nor
how choice of venue works.  Implied warranties such as
"merchantability" and "fitness for a particular purpose", in
common-law systems at least, are originally judicially created; in
most states of the US they are now codified, along with standards of
disclaimer, in the portion of commercial code modeled on UCC
2314-2317.  But in some states (conspicuously California) there are
additional statutes governing implied warranty elsewhere in the code,
such as the Song-Beverly Consumer Warranty Act (
http://caselaw.lp.findlaw.com/cacodes/civ/1792-1795.7.html ).

It is not true that some language in a form contract reliably "allows
a developer to refuse the cost that the law incurs."  The relevant
statutes simply provide a minimum quality standard for attempts to
disclaim warranty in a given contract of sale, and courts are
perfectly capable of ruling that such language is too inconspicuous,
or accompanied by language or conduct indicating that it is not
binding on end users (IMHO clearly the case for the GPL), and hence
allowing a breach-of-warranty suit to go forward.

The Song-Beverly example is very interesting because it seems to be a
favorite for class-action suits and comes with a duty of indemnity
between manufacturer and seller.  Not to be alarmist or anything, but
this could easily bankrupt Debian.  Suppose Rip-And-Burn, Inc. sells
Debian-based in-car playback equipment for ripped DVDs.  They obtain
no patent licenses and don't do a good enough job on notice of
warranty disclaimer.  DTS sues them for patent infringement, obtains
their customer list, and sends cease-and-desist letters to all of
their customers.  A customer in California can probably turn around
and sue Rip-And-Burn for breach of implied warranty of merchantability
under Song-Beverly, get a class certified, and claim that the box is
now essentially valueless to all its owners because there is no less
reason to fear Dolby (AC-3) and Thomson (MP3) than DTS.

Either the customer or Rip-And-Burn can pull Debian into the suit,
demanding that it indemnify as the "manufacturer" of the audio decoder
libraries (especially libdts, which upstream has pulled, leaving
Debian the most conspicuous supplier).  Anybody care to run the
numbers on Debian's probable liability to the class, including
attorneys' fees and costs of litigation?  Did I mention that I know of
several companies in California who are building exactly such products
(though I don't know whether any of them are using Debian or treating
patents so cavalierly)?

Anyway, as to personal jurisdiction -- this is a legal principle lost
in the mists of time, adapted in modern times to fit the realities of
commerce without personal contact.  A "choice of venue" clause is not
dispositive even in a negotiated contract -- see 28 U.S.C. 1404(a) and
Stewart Organization v. Ricoh (1988) -- and a "choice of law" clause,
together with a "long arm" statute, can contribute to the exercise of
personal jurisdiction in the licensor's home state over a licensor who
has never been there -- see Burger King v. Rudzewicz (1985).

But there isn't that much for a licensee to fear here; mere language
in a form contract may or may not oblige the offeree to _bring_ suit
in the specified forum (compare Carnival Cruise v. Shute (1991)
against Lauro Lines v. Chasser (1989)), but is unlikely to satisfy a
"minimum contacts" standard and put her at risk of _being_ sued in a
forum which would not otherwise have personal jurisdiction over her. 
If anything, it makes it harder for the offeror to sue _anywhere_ on a
claim that is not pure tort, since the offeree may not have enough
contact with the named forum to be sued there but may be protected
elsewhere by the offeror's covenant not to sue outside the named
forum.  I haven't researched all the ins and outs of this, and in
particular the combination of a forum selection clause in a copyright
license with a patent infringement claim is potentially explosive --
but if you're distributing code licensed from the holder of a
presumptively valid patent, and relying on jurisdictional niceties to
protect you from accusations of infringing that patent, you're an

You might think that contract language would only affect actions for
breach of contract, but statutory and contractual causes of action are
so tangled together nowadays that a "forum selection" clause can
sometimes be used to block even securities fraud and antitrust claims,
at least when the designated forum is international arbitration; see
Scherk v. Alberto-Culver (1974) and Mitsubishi v. Soler (1985). 
Following Scherk forward, it looks to me like an arbitration clause is
a much bigger deal even than I imagined -- it can be used to block a
wide range of statutory claims, and the absence of adequate mechanisms
for pre-trial discovery and for review of findings of fact make
arbitration a truly pathetic substitute for courtroom handling of
statutory torts.  If you want to pick one kind of clause to forbid in
Debian-approved licenses, compulsory arbitration is a good one.

In sum, trying to shoehorn any of the warranty / liability / breach of
contract calculus into a box marked "fee", in order to test it against
DFSG #1, is almost as silly as calling it "discrimination" for the
purposes of #5 or #6.  This is all about risk management, and where
the risks are not routine, I agree with Sean that relying on risk
assessment by a self-selected crew of ideologues with brazen contempt
for real-world law and no fiduciary relationship to anyone is not too
swift -- whether or not they have law degrees (or university chairs in
law and legal history).  Not all debian-legal participants deserve to
be tarred with that brush, but the ones who do are numerous enough and
loud enough to give me pause.

- Michael

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