Increasing Legal Certainty Through Cross-National Validity Within Global Software Market

[2014-06-02] The Internet has revolutionized the software industry. A single software market is emerging, independent of national borders, where products and services are digitally distributed. But the legal framework for software transfers is not geographically independent; relevant underlying law varies substantially between different legal systems. A new dissertation in legal science from Umeå University, Sweden, demonstrates the legal difficulties with this emerging market, but also proposes solutions to such problems.

The legal scholar Jan Leidö has examined cross-national validity of certain standard software license agreements under American and German law. The United States and the European Union collectively dominate the single software market. Within the EU, Germany is the most relevant legal system, and many conclusions reached under German law can be extended to the entire EU. Due to the importance of these markets, cross-national validity under American and German law is of major importance for all software companies acting within this emerging market.
“Software companies and users are drawn to this emerging market and its new possibilities. But this market creates new and difficult legal requirements for the parties,” says Jan Leidö.

The study identifies many current issues, caused by inter alia inherent limits of law, such as the dissolution of geographical boundaries leading to legal rules with unclear legal scope, rapid technical and business development, as well as the legal complexity in this area of law. Other current issues are caused by fundamental differences between German and American law in relevant aspects, from basic questions to more detailed questions. A third category of issues is caused by problematic legal, technical, and business-related choices made by transferors. This currently leads to a number of legal problems with formation, substantive content, and interpretation of software license agreements on a cross-national level. As a result, this causes increasing legal and practical problems for the industry and individual transferors.

“The industry and individual software companies need to start thinking about how legally to handle this emerging market and legally to secure their future,” says Jan Leidö.

Improving cross-national validity is becoming increasingly important for a number of reasons, such as active litigation in the field, especially between commercial companies, as well as increasing external pressure to improve cross-national validity. Such external pressure comes inter alia from lawmakers and consumer organizations in different countries, legal mechanisms and institutions in different countries that effectively require legal compliance, as well as market reactions to problematic software license agreements. The need to improve cross-national validity will likely increase further when transferors and transferees in developing countries become increasingly active within the single market, making the legal framework increasingly diversified. Improved cross-national validity will improve legal certainty for the industry and individual transferors, which by extension will also improve the legal position of transferees.

Different solutions

To improve cross-national validity and realize the single software market, Jan Leidö’s dissertation gives major and minor suggestions to improve software license agreements and business models. With relatively simple means it is possible to improve the validity of software license agreement formation and modification. Through more substantial improvements it is possible to improve cross-national validity of the substantive content of software license agreements and avoid cross-national problems with interpretation. To simplify matters, the thesis gives different solutions and suggestions adapted to different business models and technical solutions.

Regarding the defense:

On Thursday June 5, Jan Leidö, Department of Law, will defend his thesis entitled Realizing the Single Software Market: Cross-National Validity of Software License Agreements. Opponent: Professor Lee A. Bygrave, Faculty of Law, Oslo University.

The defense will be held at 10.15 am, at Umeå University, room S205h (Social Sciences Building).

For more information, please contact:

Mr. Jan Leidö
Department of Law, Umeå University
SE-901 87 Umeå
Tel.: +46 90 786 58 92

See more information about the dissertation

The dissertation is published by Iustus förlag and will be available during the week of June 2. For more information and order, contact customer support at Iustus förlag:

Editor: Maja Bonta

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Umeå University Faculty of Social Sciences