Addressing Year 2000 legal issues
Nearly everyone associated with the information technology industry now knows about the Year 2000 Problem. Much has been written about the technical and managerial issues. But government officials must also deal with critical legal problems in addressing the issue.
Given the substantial sums needed for software/system repair, allocating responsibility for Year 2000 conversion costs is paramount. If the systems were developed internally, the agency may have no choice but to bear the costs. But if they were purchased, the vendor may share some responsibility for Year 2000 compliance. To allocate responsibility, the parties must review their contract and the warranties and disclaimers it includes.
Warranties typical of systems/software contracts may be express (specifically stating what features and functionality the customer will receive) or implied by law. Relevant questions include:
* Is Year 2000 non-compliance a “defect” covered by an express or implied warranty?
* Are Year 2000 issues covered directly or indirectly in the product specifications?
* Is the warranty still in effect?
* Have the warranties been disclaimed; if so, can the remedies provided be attacked as failing their essential purpose?
Government officials should carefully examine any specifications to uncover express, although perhaps unintentional, warranties, for Year 2000 compliance. Do they describe features or functions involving date handling and date-driven calculations or otherwise indicate that these functions will operate without error in the future? Second, they should examine the contract to determine which warranties remain in effect ?
The statute of limitations in these situations is typically four years from the time of delivery. Consequently, it is necessary to know whether the limitations period has been shortened contractually.
Third, government officials must discover whether the vendor is bound by a maintenance contract to an extended warranty. And finally, they must know whether the vendor categorizes Year 2000 compliance as correcting errors covered by maintenance or as enhancements requiring a separate agreement.
Care must be taken in retaining third parties to implement Year 2000 solutions. Government officials should:
* Determine who owns any software that will require analysis and conversion. If it was developed internally, the agency is generally free to hire a third-party solution provider;
* Scrutinize the contract to determine whether third-party maintenance will violate its terms; and
* Take care not to infringe the developer’s rights (if the copyright is not held by the agency). Under U.S. law, the copyright owner has the exclusive right to make copies and derivatives. Third-party modifications could be considered unauthorized derivatives.
If license or copyright considerations prevent the hiring of a third party, the agency may be able to get “patches” directly from the vendor. If these are unavailable, permission may be sought from the vendor to use an outside service.
If the vendor does not offer Year 2000 fixes and refuses to grant permission for self-help, agencies may choose to use outside services anyway and risk being sued for copyright violation. In these cases, the agency may be able to invoke successfully the “fair use” defense.
Hasty decisions to buy external solutions or to sign away warranty rights may be costly. To avoid further complicating an already complex situation, users and vendors must act with caution.