November 28, 2003

Rating EULAs

Edward Felten talks about creating a EULA rating service. In comments I already spilled the beans on my four odd years of mentally tinkering with just such a service (EF's got the basics down but his variant won't work for legal reasons, among others). The problems facing such a service are threefold.

1. Jurisdiction: EULA's routinely have clauses that are legal some places, illegal in others, and unenforceable in still others. To provide a proper rating, you need to know the relevant jurisdiction so you know what laws apply. If you're going to go ballistic over disclaimers of warranties, as long as your jurisdiction doesn't allow them any EULA language to the contrary is just meaningless.
2. Practicing law without a license: You can bet that any such service will either have lawyers on staff or get hauled into court for practicing law without a license. Jurisdiction rules here too. If you're going to be stepping on toes with poor ratings for big company licenses lawsuits over your recommendations are inevitable. Essentially you're giving legal advice. Depending on the relevant jurisdiction, this may or may not be illegal.
3. Financing: How are you going to pay for all this? Legal advice is expensive to give. Licenses change frequently and you have to check EULA's even for bug fixes and service packs (Microsoft, for one, does change legal contracts at the service pack/bug fix level).

If you provide the service on a subscription basis and generate a subscriber profile based on questionnaires that gets the subscriber's opinions on EULA clauses, you can combine that with a database of relevant law and automatically evaluate the majority of contract clauses.

The steps would be like this

Break down EULA into clauses and categorize them
For each clause check to see if state or local law voids or modifies the clause
Check against subscriber profile to see whether the clause is permissible.

At the end, you should have five figures in your summary.

Total clauses: The number of EULA contract clauses
Green clauses: The number of clauses which are either voided by law or are set in profile as permissible.
Yellow clauses: The number of clauses which are either modified by law or are set in profile as to be examined individually
Red clauses: The number of clauses which are set in profile as inadmissible.
White clauses: The number of clauses which are not addressed by existing profile and need individual examination.

This traffic light setting is intuitive and gives enough information to quickly and properly evaluate a contract's boilerplate, standard clauses. The more custom contracts would still have the need for individual legal attention though the results could be fed back into your profile so you don't have to pay twice or even pay once for custom contract boilerplate.

Since the service could also serve as a contract repository, horror stories like this would no longer need to happen. The market for this service is companies and individuals serious about legal compliance and who don't want to lose control of their systems due to contracts they never read or understood.

So why am I not running this business (it could be modeled as either profit or nonprofit)? I never found the right support team (need a talented lawyer to organize the legal analysis part) and I never had the cash.

Posted by TMLutas at November 28, 2003 01:27 PM