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

From: Declan McCullagh (declanat_private)
Date: Tue Jan 15 2002 - 00:25:25 PST

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    Previous messages:
    
    "A defense of Borland's license saying auditors may inspect your PC"
    http://www.politechbot.com/p-03029.html
    
    ---
    
    Date: Mon, 14 Jan 2002 14:45:01 -0800
    To: declanat_private
    From: James Bryce Clark <jamie.clarkat_private>
    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    copy:  the doctrine of first use has not yet been repealed, in spite of 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.clarkat_private    jbcat_private
    ~~ This message is neither legal advice nor a binding signature.  Ask me why.
    
    ---
    
    
    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 <rfornoat_private>
    To: <declanat_private>, <politechat_private>
    
     > From: "Schultz, Mark F" <Mark.F.Schultzat_private>
     >
     > 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
    
    ---
    
    From: "Newbury" <newburyat_private>
    To: "declanat_private" <declanat_private>
    Date: Mon, 14 Jan 02 17:12:28 -0500
    Reply-To: "Newbury, Geoff" <newburyat_private>
    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)
    
    ---
    
    Date: Mon, 14 Jan 2002 11:21:53 -0800
    From: zman <zmanat_private>
    Subject: Re: FC: A defense of Borland's license saying auditors may inspect
      your PC
    X-Sender: zmanat_private
    To: declanat_private
    
    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
    
    ---
    
    To: declanat_private
    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.sat_private>
    
    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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