                               ON THE LEGAL FRONT

A product liability suit which may have far-reaching implications, and which 
will be heard next February, was recently filed against Lotus Development 
Corp., producers of the popular Lotus 1-2-3 integrated software package.  James 
A.  Cummings Inc., a Florida constructions company, claims that a bid prepared 
using Lotus' Symphony program was erroneous owing to an error in the package's 
programming that resulted in a $250,000 loss for his company.  If the court 
finds in favor of Cummings it will establish a precedent whereby the software 
publisher is liable for more than the value of a blank disk, and may open a 
floodgate of similar suits.  The problem has been brewing for many years.  Too 
many people have purchased software that does not come close to doing what was 
claimed in advertising.  Certainly they should have more redress than a blank 
disk.  On the other side of the argument, it is impossible to test, in advance, 
all the unforseen uses for a program product.  

Currently the Illinois shrink wrap law frees the software writer from any 
responsibility other than having readable code.  Software purchased in Illinois 
does not have to work; it only has to be readable by the computer.  A judgement 
against Lotus might cause greater pressure on Illinois law makers to change 
their law.  A similar action in the form of a test case is underway in 
Louisiana.  

In response to the increasing number of liability suits, Adapso, a Washington 
based trade group, is attempting to organize product liability insurance for 
software vendors.  Aimed at major claims in the nature of one or two million 
dollars, the new program is designed to fit with other programs for smaller 
claims.  

The liability problem was recently addressed in the California Senate.  
Assembly Bill 1507 would guarantee the performance and reliability of hardware 
and software products for up to six months after sale.  In addition it severly 
restricts warranty dislaimers.  Recently, to avoid bringing the bill to the 
senate floor, an agreement was made with industry organizations.  This is to 
give the industry a year in order to police itself.  Another move was made by a 
number of separate software testing groups who combined in order to promote 
industry standards for software testing.  This resulted in the establishment of 
ISTA (Independent Software Testing Association).  

Each month the problem of liability and standards becomes more involved as new 
players enter the argument.  Courts are ruling that the "as is warranty" (the 
warranty that covers most hardware and software currently) is no warranty 
because it fails in its essential purpose.  Consequently, each month there is 
greater governmental involvement in the microcomputer industry.  From the FCC 
enforcing RF emission standards for computer equipment to legislatures and 
courts changing the legal environment, the industry is moving further away from 
its early free-for-all, wildcat days.  This legal turmoil is what can be 
expected of a relatively new industry which has significant economic impact.  
The early developers may someday be looked upon as the early flyers with their 
leather helmets and long white scarfs.  Stability is probably a good thing for 
the micro industry.  No one can deny that there are abuses in the industry nor 
that changes need to be made.  It is rational to expect some regulation, but we 
hope that it does not kill innovation.  

In another legal matter, Senator Robert Dole, Republican from Kansas, is       
pushing a bill that would put the seven regional telephone companies under     
regulation of the FCC, freeing them from the restrictions of the Modified  
Final Judgement of 1982 that broke up  AT&T.  This would allow the seven dwarfs 
to go into the long distance business in competition with AT&T, Sprint, and the 
others.  It would also free them to go into the equipment business, making 
their own computers and telephones, and might mean new regional and national 
computer telecommunication networks like CompuServe with a node in every town.
