The Software License Unveiled

reviewed by Erica Johnstone

This book will persuade you to question the assumption that complex legislative software licenses are desirable or inevitable. Formerly a lawyer with Covington & Burling in Washington, D.C., Douglas Phillips writes about this technical subject with humor and ease, as someone who has been in the trenches representing software licensors and licensees for decades. He ably traces the evolution of software licensing to explain why the status quo is so convoluted. Along the way, he systematically refutes claims that legislation by license is a good thing and convincingly points toward a better, more efficient way of distributing software in the future. He also provides a user-friendly summary of the court decisions that have led to the privatization of copyright law.

In Part I, Phillips explains the current state of affairs: When clicking through to download software, almost no one reads the license text. Yet, acceptance of the end user license agreement (EULA) is a required step for installing most proprietary software. So, users click on "Agree" and move on, without understanding exactly what it is they've agreed to. The consequences for intellectual property law are profound.

Even when a license is justified as a matter of freedom of contract, Phillips argues, this transaction has not promoted efficiency, competition, or a desirable outcome. Instead, he contends, the EULA produces a "lemon license" - lacking flexibility in use rights and leading software companies to underinvest in their products' reliability due to the exculpatory terms of the license. Virtually all software licenses disclaim every implied warranty to the maximum extent permitted by the law, and further limit liability for express warranties to, at most, the price of the product. Accordingly, "[t]o the extent legal risk influences the software provider's investment in product reliability," Phillips reasons, "the effect is to provide little or no incentive for such investment."

The author does not confine his critique to the proprietary EULA. He also challenges the "copyleft" regime, arguing that free and open-source software licenses, such as the GNU General Public License (GPL), are often as lengthy and complex as a proprietary EULA. Moreover, the "strings attached" conditions of the GPL limit distribution to a particular model that inhibits the kind of proprietary investments that gave rise to the Internet itself.

Phillips writes persuasively in Part II about ways to improve the situation, such as adding language to the Copyright Act to clarify rights surrounding the product and digital copies of it. Finally, he advocates for a hybrid open-source and proprietary licensing model, wherein "open source and proprietary licensing for the same or related software should be permitted to co-exist and even to co-apply." Phillips asserts that such measures would foster software development for needed projects, and maximize software flexibility, reliability, and usability for software users.

Copyright lawyers, software professionals, and policymakers will find this book useful, informative, and easy to read, unlike the typical EULA.

Erica Johnstone is a partner with Ridder, Costa & Johnstone, a San Francisco law firm focusing on intellectual property, Internet, and privacy law.

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