Boldly (Not Going) Where We Have Gone Before: The Principles of the Law of Software Contracts

Abstract

The American Law Institute’s Principles of the Law of Software Contracts (“Principles”) is the latest in a long line of attempts to regularize contract law in the irregular subject matter of software and software contracts. Neither federal courts by applying state law nor state courts have been able to fix the law governing software contracting into any stable regime of contract law so courts have had to inconsistently apply the state common law of contracts, Article 2 of the Uniform Commercial Code, of the Uniform Computer Information Transactions Act (UCITA), either directly or by analogy, in whole or in part. This article contends that the Principles may be one of the founding documents for an eventual federal common law or statutory law of software contracting. Unfortunately as articulated, the Principles would largely be state law, so the Principles cannot authoritatively define its relationship as a body of contract law with federal law intellectual property law in order to meet the needs of both consumers and the software industry. There is no reason that the jurisdiction that eventually adopts the Principles needs to be either a state legislature or a state court. If the goal of the Principles is to establish a comprehensive rubric to inform and guide the orderly development of the contract law governing software transactions then either the federal courts must abjure the legal fiction that they are merely applying existing state contract law and then to openly develop a federal common law of contract governing software or in deference to Erie retain the fig leaf of being mere scriveners of state law interpretation, and then confront thorny issues of federal preemption and inconsistent state laws governing commercial or consumer transactions for intellectual property rights that are theoretically supposed to be uniform in all fifty states.