QUESTIONS FOR PANELISTS: FTC High-Tech Warranty Forum
All Panelists 1. "Business models" are necessarily grounded in capitalist assumptions for which "commercial law" and "freedom of contract" principles are an appropriate context. However, balancing "public interests" are better achieved within the federal intellectual property framework (that seeks to balance rights of creators and users) and federal or state consumer protection provisions. How will the evolving "business models" ensure that consumers, educational institutions, and non-profit entities don't get the shaft? 2. In the old economy, we had sales taxes on goods to finance government services. In the new economy, will there by "service taxes"? Bill Ashworth 1. Why should you be able to conceal the terms of a "shrinkwrap" agreement from the purchaser until after the sale? 2. If it is not practical to put a license on a box, what is the barrier to presenting the terms via a hyperlink on a website prior to sale when the sale is online? Mark Bohannan 1. What are the long-term benefits of a pure service business model vs. traditional product/sale model? 2. With regard to the ASP distribution model, you mentioned various benefits that the consumer derives, such as security, functionality, etc. Yet nearly all commercial end-user licenses disavow all legal responsibility for actually providing such functionality. Given this state of affairs, how can a software user have confidence that the "thing" they pay to license will provide the functionality advertised by the company? 3. If your underlying assumption - that off-the-shelf sales of software to consumers are licenses, not sales of goods, - is correct, are software companies now incorrectly charging sales tax for such items? Should such transactions be exempt from sales tax? Carol Kunze 1. Why is pre-transaction disclosure of terms not possible? 2. Isn't there a fundamental difference between a license which purports to give consumers more rights than they might have under copyright law versus a license which seeks to limit the rights consumers have under the "fair use" doctrine? 3. You didn't mention who uses open source/free software, including 62% of the Internet web sites (by a recent survey) and the sorting operations of the U.S. Postal Service. Also, warranties are sold on free software. Also, known defects are posted on the Internet. 4. Why do you believe that distributing software for free is a sale (which is the potential trigger for Magnuson-Moss)? Even if the books or disks are sold, why couldn't that be segmented and treated differently than the software? 5. Isn't it possible to simply promise customers a replacement of the diskette if it breaks, without further giving a "written warranty" (per Mag-Moss § 2308) on the computer information? Surely the two are separable? 6. If warranties aren't appropriate for software, why does UCITA recognize them? 7. Does Red Hat make money? If so, how? If it makes money, why can't it afford to honor warranties?
All Panelists: 1. It has been reported on Slashdot that a recently-published book has its last 100 pages on a CD in a back pocket. The CD has a shrink-wrap license. Are we seeing an issue similar to that for embedded software now applying to paperback books? 2. The description of "licensing" as it is permitted under the copyright law vs. described by software industry is misleading. Under copyright law, users are entitled to a set of basic rights (first sale, fair use, exemptions, special rights for libraries) and they can license additional rights (drawing from "exclusive rights" of copyright owners) above and beyond. "Licensing," as presented by the software industry, extinguishes the floor established under copyright law and starts from ground zero. Is that fair? 3. Re' shrinkwrap terms: Is there any evidence (surveys, etc.) to suggest that a consumer's "right to return" a product upon seeing oppressive shrinkwrap terms is a practical or effective safeguard? Or do consumers just accept such terms to avoid the effort of overnight mail, etc.? 4. Please explain the portion of the Zeidenburg decision that defers completion of the sale from the time the money is paid until the time the license is accepted by the consumer? Why not make this clearer to consumers? Why not require that terms that would surprise consumers be disclosed prior to sale, even assuming that printing the entire license on the box would be impractical? 5. Now that music and books can be extracted from their original physical medium and widely distributed via the Internet in the same way that is true of software, is it industry's position that they should be licensed instead of sold as well? 6. Do you agree with David Mirchin's earlier comment that a license's prohibition on discussion of product reviews without licensor's consent would be unconscionable? 7. Isn't it now possible for licensors to select as their "choice of law" Maryland (or soon Virginia) in order to obtain the perceived advantages of UCITA? Is this likely to occur? Jean Braucher 1. If "first sale" are the minimum rights that must be given consumers, does this mean that a consumer could buy a database for the consumer price and subsequently resell it to a large commercial user, for less than the developer charges the commercial user? 2. Shouldn't small businesses, especially home-based businesses, be treated the same as consumers? They have the same problems of understanding as consumers. They are the same people. 3. Why advocate, or perpetuate, the legal fiction that consumers will "view warranty terms" at the "service desk"? Doesn't actual provision of terms with a right to "reject" by returning software provide the consumer with a more meaningful right than does "posting the terms on a web site" (who will log on prior to purchase?) or placing them in a binder in the front of a store?! 4. Consumers Union criticized software licenses for including terms which C.U. itself uses in its contracts. Why is it fair for C.U. to impose New York laws and forum on consumers, but not a software developer? Robert Holleyman, II 1. Your account of five kinds of licenses mentioned four that differ on scope of end use, but the fifth kind was characterized entirely by the method of obtaining licensees' assent. Is it coherent to describe shrinkwrap or clickwrap licenses as different from the first four? 2. How can you say that transfer restrictions are mostly in negotiated licenses, when I have several clickwrap products on my machine with transfer restrictions, including one that states that the sale of more than 50% of the stock of my company (a home-based business) constitutes a transfer? 3. You say that "licensing allows packaging in a way that is affordable." Why does licensing affect the price of the packaging? Do the license terms affect the packaging or the model of post-sale (transaction) disclosure of those terms? 4. Obviously, a single-use customer cannot buy one copy of software and then use it for an entire enterprise. This would violate copyright. Why are additional terms needed for a shrinkwrap? Why are these terms so complicated? Philip Koopman 1. Please comment on the use of free/open source software in embedded products. It is starting to happen. David Mirchin 1. How can you say that mass-market customers can comment to each other on products when existing licenses (and likely many future license terms under UCITA) prohibit publication of benchmarks and reviews (under a theory of trade secrecy)? 2. Why do you have to change your license so much that it is hard to store and track the changes? If you can't track them (as you say), how in the world can the consumer? 3. You say software must be licensed because it's "easy to copy." Surely no easier to copy than records/CDs. Must they be "licensed," too? Why/why not? 4. In relation to databases: If copyright provides no rights to database owners and no exceptions to such rights, then how can licenses control use of databases and exceptions for libraries and schools? Does licensing do anything to facilitate or hinder availability and use of databases?
Both Panelists 1. Embedded software has existed for a long time. Consumers don't currently receive multiple licenses. So why is it important that the FTC sort out this issue, which doesn't yet present itself in reality? 2. Does Mag-Moss apply to licenses of databases over the Internet or on a CD-ROM? 3. What is the current, real-life, failure in the minds of consumers for information/databases which requires FTC action now? What is the current, real-life, failure in the minds of consumers for software which requires FTC action now? 4. Doesn't the concept of "embedded computer information" and the fact that it will be indistinguishable from the good itself, cause it to be covered under MMWA? Does it make sense to apply MMWA to the "case" which holds the embedded software, but not the embedded software itself? Wouldn't this nullify MMWA altogether since all goods will have embedded software? (if software is not tangible personal property?) This would allow a complete end-run around MMWA for the future. Allen Hile (moderator) 1. If, instead of containing embedded information, a tangible product required the insertion of a floppy disk containing software, would the combined tangible product and software be subject to Mag-Moss? For instance, if instead of needing a key to start a car, a driver needed to insert a floppy disk, would Mag-Moss apply? Curtis R. Reitz 1. If "buyer's perception" governs, then isn't this a blurry distinction since the maker of a component could change the buyer's perception. The example is "Intel Inside," which advertises its processor. Would you say the Intel processor is a separate component? 2. Since copyright law requires expression of an idea that is fixed in a tangible medium, wouldn't it be fair to say if software or computer information is eligible for copyright, it is eligible for regulation under Magnuson-Moss (because it is "tangible")? 3. Since implied warranties can be disclaimed under UCITA, and because the disclaimer can be made post-sale in a clickwrap or shrinkwrap license, do consumers really get an added right under UCITA that doesn't exist under Article 2? 4. Prohibiting transfer of software per "first sale" rules is in the interest of software makers - whether embedded or not - because it removes the secondary market and thus forces more sales. Is this legal? 5. Why is the concept of "sale" (transfer of title for a price) so obnoxious for transactions in "computer information" and yet a long-standing practice with respect to books and non-electronic forms of information? 6. Don't you distinguish between functional software and "informational content," as in a book or an e-book? Functionality involves deterministic effects.
All Panelists 1. What about legalese and unstated (UCITA based) default provisions in the contracts? I know of very few people who understand that "self help" is an information security denial of service attack. 2. In the last year or two, the SEC has adopted a rule to protect sophisticated investors by requiring that prospectuses be written in plain and simple language. Is there any reason why unsophisticated consumers should not have that same protection regarding information products? 3. Are "take it or leave it" terms the only model for clickwrap transactions? Couldn't a clickwrap agreement offer a variety of choices of terms? For instance, with the advent of electronic-agent contracting, why couldn't there be a system in which a consumer selects a list of acceptable license terms, and if the terms fall within the licensors parameters, a contract will be formed. Or, couldn't another model be that a licensor offers different sets of terms for different prices - like for $100 more, Bulgaria won't be the forum for settling disputes? 4. What is the current, real-life, failure in the minds of consumers for information/databases which requires FTC action now? What is the current, real-life, failure in the minds of consumers for software which requires FTC action now? Brian Dengler 1. (For Brian Dengler, Robert Hillman & Jeffrey Rachlinski) Shouldn't "terms and conditions" be disclosed in an automatic pop-up message - rather than, say, a link or set of links? 2. If David Johnson is right that no Internet merchant would impose a remote forum for reputation reasons, why does AOL still have 25 million customers? (AOL tried to enforce such a clause in California and lost.) Robert A. Hillman 1. (For Brian Dengler, Robert Hillman & Jeffrey Rachlinski) Shouldn't "terms and conditions" be disclosed in an automatic pop-up message - rather than, say, a link or set of links? 2. (For Robert Hillman and David Johnson) Isn't the car analogy exactly the wrong one from Johnson's point of view? Opacity of software is the issue. David Johnson 1. When terms are presented post-sale, after a consumer has paid a fee, can a consumer reasonably be expected to reject terms and return software to a seller who won't provide a refund? 2. Gateway nonetheless litigated to try to uphold their ridiculous provision vs. consumers. What do you make of this? 3. Are you trying to say that a toaster or microwave with a variety of pre-programmed capabilities is any less functional than a software program that does printer or digital camera interfacing with limited options? 4. You say the user is "one click away from a competitor," but have you ever explored the cost and effort of changing? 5. (For Robert Hillman and David Johnson) Isn't the car analogy exactly the wrong one from Johnson's point of view? Opacity of software is the issue. 6. Your contention that software is different because software interacts with other software raises two issues: (1) Does all software have this interactive function? (Obviously, I am doubtful.) (2) If multiple software packages (or software and hardware) are sold by one supplier with an express or implied premise that they are compatible, what is the obligation? 7. Why is the unpredictability of the application of software conceptually different than the unpredictability of the "application" of an automobile? 8. You mentioned that there may be some terms that are "truly unconscionable." Under what circumstances might a choice of law term be truly unconscionable? Bruce H. Kobayashi 1. If choice of law clauses are enforceable, and licensors are likely to choose VA or MD, doesn't this undercut the likelihood that experimentation in the law will occur? 2. If uniformity in law is undesirable, then this would suggest that the FTC should not act with regard to software warranties, etc. until the states have had a chance to act. Would you agree? 3. Although the idea of a laboratory of ideas where UCITA is adopted in some states may seem reasonable on its face, how do you reconcile that with the liberal choice of law and forum provisions contained in UCITA? Since these provisions don't require any relationship between the parties (or the transaction) and the law or forum selected, won't all computer information transaction contracts select the law and forum of states that adopt UCITA? 4. Does NCCUSL have an ethics process comparable to that of the legislatures for whom they draft laws? Jeffrey J. Rachlinski 1. (For Brian Dengler, Robert Hillman & Jeffrey Rachlinski) Shouldn't "terms and conditions" be disclosed in an automatic pop-up message - rather than, say, a link or set of links? 2. Are you suggesting that state law or the FTC prescribe the equivalent of a nutrition label that identifies certain key license terms like: number of users permitted, choice of law, choice of forum, warranties, etc.?
All Panelists 1. Considering the fact that the process involved in developing UCITA was so open and thorough, why is the model act so controversial? Are the concerns expressed by businesses and consumers justified? Amelia Boss 1. Are you saying that UCITA inherited all the UCC 2(b) controversies? What was, and is, the relationship between 2(b) and UCITA? Mary Jo Dively 1. You state that UCITA adopts similar rules of contract formation as Article 2. But doesn't UCITA abandon Article 2's concept of "meeting of the minds," and replace it with the idea of "meaningful assent" - a standard that can be met by post-sale disclosure of terms? 2. Even though UCITA and Article 2 have similar warranty disclaimer provisions, can disclaimers be made post-sale under Article 2? 3. Does UCITA (unlike, I think, the UCC) permit disclaimer of damages to persons, e.g., not to commercial interests? For instance - medical/hospital software devices that fail and cause death - can such liability be disclaimed under UCITA, e.g., because it is a "license," not a "sale." 4. You said express warranties should be "bargained for." How do you bargain for express warranties in a click-wrap contract? 5. How many of the organizations that you listed as being participants in the drafting of UCITA (or UCC 2B) either walked away from the table (e.g., ABA) or lobbied NCCUSL until it excluded certain types of information from UCITA's coverage (e.g., MPAA)? 6. What is the evidence that the existing legal framework is impeding the growth of e-commerce in such a way as to necessitate UCITA's passage? Steven Sakamoto-Wengel: 1. Earlier today, Carol Kunze said that for Open Source software to flourish, developers needed to be able to disclaim warranties. Will Maryland's refusal to permit this have a negative impact on free software in Maryland?
All Panelists 1. Is the "right to return" the same as a "right to a refund?" 2. The comment to Section 112 states that "failure to provide a right to return when required does not invalidate the agreement." How is a right to return really a "right" for consumers? 3. If the consumer exercises this "right of return" upon seeing oppressive conditions, is the consumer entitled to a refund - e.g., for expensive FedEx mailing on a large package? If not, isn't this an unbalanced, coercive decision for consumers to have to make? 4. For all panelists: Follow up to question for Jean Braucher asserting that most software manufacturers will behave admirably: How many of you have actually read the license agreements for the most popular or widely used software products (e.g., Windows 98, browsers, games) before you clicked the "I Agree" button? Kumar Barve 1. (For Kumar Barve and Carlyle Ring) If, as you both indicate, UCITA has numerous consumer protections, why then are most consumer groups, the insurance industry (an interesting combination) and library groups, amongst others, so ardently opposed? Particularly the "consumer protections" or lack thereof? 2. (For Kumar Barve and Stephen Chow) We've heard a lot about how UCITA, interpreted in conjunction with a state's consumer protection law, balances the rights and obligations of software publishers and consumers. However, these consumer protection laws typically would not apply to businesses, especially small ones. What consideration was given to balancing the rights of commercial software licensees versus software publishers? 3. You state as a primary justification for passing UCITA that you want to "affirm the ability of licenses to protect business intellectual property rights." Doesn't federal copyright law appropriately protect a creator's rights in their copyrights? 4. Doesn't Maryland's UCITA retain the right of return model of meaningful assent? The right of return is completely meaningless since consumers often will not take software back after they are already committed to the deal and they have to buy another product and open it to compare terms. And if the retailer will not accept opened packages the consumer is burdened with the out-of-pocket expense of sending software back to the manufacturer and waiting several weeks for the check in the mail. 5. In adopting UCITA, Maryland amended its consumer protection laws to state that these laws would apply to computer information products. Since Maryland's "baby FTC Act" is premised on the concept of pre-sale disclosure, how does the "baby FTC Act" mesh with UCITA's approval of license terms provided to consumers post-sale? Jean Braucher 1. (For Carlyle Ring and Jean Braucher) Mr. Ring says that Section 105 preserves state consumer law, but isn't it true that it goes on to override state law requiring (1) that certain disclosures be conspicuous - as defined by state law; (2) that certain agreements be signed (instead of clicked on); and (3) that certain provisions be in writing, instead of the seller simply having to make some kind of a "record" of the transaction? 2. Granted that UCITA allows sellers to take advantage of consumers in a variety of ways, how big a practical problem is this? In a competitive environment, won't virtually all sellers behave themselves, and not exercise all the powers that UCITA grants them, for fear of seeing their customers take their business elsewhere? Stephen Y. Chow 1. (For Kumar Barve and Stephen Chow) We've heard a lot about how UCITA, interpreted in conjunction with a state's consumer protection law, balances the rights and obligations of software publishers and consumers. However, these consumer protection laws typically would not apply to businesses, especially small ones. What consideration was given to balancing the rights of commercial software licensees versus software publishers? Adam Cohn 1. If Vault v. Quaid said a state law cannot address reverse engineering because it is a federal copyright question, how can UCITA address it? Carlyle Ring 1. You say that express warranties can't be disclaimed, but doesn't UCITA make them easy to evade by limiting what will be treated as an express warranty? 2. (For Carlyle Ring and Jean Braucher) Mr. Ring says that Section 105 preserves state consumer law, but isn't it true that it goes on to override state law requiring (1) that certain disclosures be conspicuous - as defined by state law; (2) that certain agreements be signed (instead of clicked on); and (3) that certain provisions be in writing, instead of the seller simply having to make some kind of a "record" of the transaction? 3. (For Kumar Barve and Carlyle Ring) If, as you both indicate, UCITA has numerous consumer protections, why then are most consumer groups, the insurance industry (an interesting combination) and library groups, amongst others, so ardently opposed? Particularly the "consumer protections" or lack thereof? 4. If your prediction and depiction of software in the future is true (and there will be no tangible medium), doesn't that also argue against copyright protection for software since it must be "fixed in a tangible medium"? 5. You gave an example of a purchase consummated via the Internet from an airplane. How is this different from a telephone order purchase from an airplane? What evidence is there that current law is inadequate to handle such situations? Is it your contention that the growth of e-commerce has been impeded by the lack of UCITA? 6. People keep referring to what is in the UCITA comments. Why aren't more of the important issues addressed in the text itself? What legal effect do you think the comments have?
Larry Ribstein 1. Given your statements that (1) choice of forum and law clauses should be enforced; and (2) consumers will inform one another of unreasonable provisions - do you object to license terms that restrict comments by users? 2. "Politicians are reactive to their constituencies" - why should consumers from another state be subject to that law? 3. Re' choice of forum: Shouldn't consumers be able to rely on their home state's laws? Why should consumers bear the burden of becoming familiar with the laws of every state in the country? 4. How can "a few sophisticated consumers" work if those consumers are prohibited from disclosing their concerns to others by the license terms backed up by federal criminal law (the "no electronic theft act")?
All Panelists 1. Proponents of country-of-origin cite freedom of contract as an argument for upholding contracts. UCITA allows for post-transaction disclosure of choice of law. What is the justification of this? 2. I'm trying to understand the license restrictions on my use of WordPerfect Clip Art. Can any of you international legal experts tell me what "scandalous" means under Irish law? 3. UCITA permits a licensor to place choice of law and forum clauses in a license that is presented post-sale. Would such a choice of law or forum clause be enforceable in Europe? David Fares 1. Is there an accreditation process or way of verifying reputable online ADR services? Susan Grant 1. Could you discuss the issues raised by David Fares regarding the interest of small entrepreneurs in selecting the law and forum of their own jurisdiction to apply? Carina Tornblom 1. ADR is usually non-binding unless you mean arbitration. If the seller has imposed a near and ***, why should he become *** under ADR? If arbitration is invoked, what *** can ensure a panel of unbiased arbitrators (given that we hear complaints about biased arbitration in software transactions? 2. Is there a distinction in the Brussels or Rome regulations between goods delivered electronically or physically? 3. Are there specific conflicts between UCITA and international laws (especially European directives)? If so, what are they?
All Panelists 1. What is the copyright law preemption and how would it apply to UCITA? 2. Doesn't the Federal No Electronic Theft Act provide sufficient protection against people making multiple copies and giving them away?
Both Panelists: 1. A colleague of mine says "software release is the point at which all future bugs will be discovered." However, shouldn't a software provider be fully responsible for disclosing and being responsible for known bugs? Dr. Shirley Becker 1. The implementation and enforcement of a limited set of licenses would greatly inhibit the ability of software developers to choose license terms of their own preference. How would you reconcile such a system with licenses such as the GPL and the plethora of other free software licenses? Would this not strenuously inhibit the freedom of those developers to determine the disposition of their creative work? 2. What about saving information on user-signed warranties with version-control? Dr. Ben Shneiderman: 1. Why is there less tech research now as opposed to a decade ago on ridding software of bugs, etc.? What (besides money) could reverse this and help consumers and businesses if software glitches arise? Any other key trends you would like to mention? |