Class Warfare and Bad Software
Mark Weller
Recently, a class action suit was filed in a Pennsylvania court against Corel Corporation, Canada's leading software developer. In Fishbein vs. Corel, the plaintiff is seeking to represent users of CORELDraw 3.0, 4.0 and 5.0, claiming that Corel did not sufficiently test these products before they were shipped.
For many, particularly those frustrated by the lack of software testing, this legal action may seem like a vindication. Finally, it would seem, someone is standing up for the little guy, defending him against unfeeling software giants. This assumes, however, that the marketplace has failed to punish companies that send software out to consumers without properly testing it, and this is simply not true, not even in the case of Corel.
The software industry as a whole is a very volatile one precisely because of the high expectations of consumers. If one were to factor out the few big software success stories, the history of software development involves constant change as new projects are developed and new bankruptcies occur. It is a tough business, and consumers have little tolerance for companies that produce software that does not live up to its claims.
When the news came out that Corel's latest version of COREL-Draw had "bugs," the immediate effect was a mass sell-off of Corel stock, on both the TSE and NASDAQ exchanges. Corel was forced to respond to unsatisfied customers by offering software patches and by processing refunds. In the end, having released an unpopular product, Corel was led by the market to respond quickly to its customers and its investors-it suffered in the marketplace for its error. Although there may be many upset consumers, and understandably so, Corel's actions to address their concerns has helped to restore the value of its stock. So the market did its job.
However, even if the market was somehow failing, it still does not make sense for these kinds of disputes to be settled by a class action suit. If the matter is one of an unfulfilled contract, that of course has a place in court, but the whole idea of class action is quite different.
In a class action, the accused party is charged with having committed an offense against a class of people. In the suit against Corel, the key rationale of the case is that the consumers suffered financial loss due to the untested software-financial losses for which the software company is liable. This is despite the fact that Corel indicates on its products that they are not liable for losses suffered by individuals or companies who use their products. Corel is still liable, says the suit, because it failed to meet a minimum product standard that the consumer should be able to expect from any company. In addition, Fishbein vs. Corel alleges that the Corel warranty is not even valid in the state of Pennsylvania. So, even though Corel informed consumers of the risks, it no longer matters because the contract is not valid. So much for contracts; by this logic a contract between a consumer and a supplier is only binding on a single party: the supplier.
There is no excuse for the lack of planning and testing that software companies often demon-strate in the premature shipping of new products. However, rather than driving these companies into bankruptcy through an arbitrary court process, society should rely on the market actions of their actual and potential customers and investors to punish them. It is through this market discipline that better products and better procedures will be developed, and poorly performing firms driven out of the market.
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