Does Software Law Matter?

As this is my first blog, I really had to give this some thought, especially as lawyers are pretty new to blogs. As the title suggests, I am going to discuss why software law matters! I am also going to discuss this from the perspective of a Boston venture capital firm and expansion stage software companies. Ok, so here we go. 

 

So what is software law? Well the wiki definition is really not what I am thinking about link. Software law on this blog will be more about the important legal issues affecting software companies as they grow and are then eventually sold through a company exit strategy (i.e. mainly expansion stage software companies). I plan to discuss licensing/drafting issues, IP protection, software development and sales/marketing issues, HR issues, other regulatory issues and some fun topics too. What is really interesting about software law though, is that it is relatively new. The law associated with goods and services has been around for hundreds of years, but in relation to software, the law is relatively new and quite frankly it is still being created (most of the issues have only really been developed/addressed in the last 15 years). Ok that is the extent of the history lesson; so let’s discuss something more interesting.

What I find fascinating about the software law legal model is that the cost of replacement goods is essentially zero. So if there is a very significant legal dispute, the parties may consider more licenses or an extension to their existing software licenses as a negotiated solution to that dispute. Of course, this will not work if the customer really does not want the software or if there are revenue recognition issues, but often it can be worked out. This is really different in the tangible world. For example, say you bought a new car and it turned out to be a lemon. The cost to the manufacturer of replacing the car is quite considerable, if at the end of the dispute they need to provide you with a new car. So, what I am saying here is in certain situations there is a great way to resolve disputes without going to court/involving the legal process; I suggest that this is a good thing.

 

Ok, next time I will discuss something more exciting, as a lot of very interesting software law issues arise every week.