The reason there have not been any lawsuits against vendors is because of license agreements -- every software license I've ever read, including the GPL, disclaims all warranties, liability, etc. It's not clear to me that that would stand up with a consumer plaintiff, as opposed to a business; that hasn't been litigated. I tried to get around that problem for the moot court by looking at third parties who were injured by a problem in a software package they hadn't licensed -- think Slammer, for example, which took out the Internet for everyone.
Yes, I think this is the only way it will work. Plaintiffs that are not subject to the EULA will have to sue the manufacturer of vulnerable software installed on remote systems that attack their site. Otherwise, the liability waivers they signed make it much harder. Of course, interestingly, automobile manufacturers cannot get around having to build cars that meet safety standards regardless of waivers customers may sign. Perhaps what we need first is a consortium to agree on a set of standards for software security followed by someone like Ralph Nader doing the "Unsafe at any clockspeed" campaign.
The issue of liability based on operational practices is untested. As I concluded in that book chapter from 1994, I (and the attorneys who helped me (a lot) with it) felt that there may very well be cause for a lawsuit. However, to the best of my knowledge there have been no court rulings on this issue. Unless and until that happens, we're just guessing. I'll give two short quotes that illustrate why I'm concerned. This one is from a standard textbook on tort law:
Yep... I think that is true. However, unless and until someone steps up and actually does it (and frankly, I think the effective strategy here would be coordinating a large number of injured parties in small offices and residences to sue in small claims court at roughly the same time), all we'll be able to do is guess.
The standard of conduct imposed by the law is an external one, based upon what society demands generally of its members, rather than upon the actor's personal morality or individual sense of right and wrong. A failure to conform to the standard is negligence, therefore, even if it is due to clumsiness, stupidity, forgetfulness, an excitable temperament, or even sheer ignorance. An honest blunder, or a mistaken belief that no damage will result, may absolve the actor from moral blame, but the harm to others is still as great, and the actor's individual standards must give way in this area of the law to those of the public. In other words, society may require of a person not to be awkward or a fool.
So, does that mean that if most of society is ignorant enough to tolerate insecure buggy software, we must accept that as the standard for software performance? That is an unfortunately low barrier indeed for a profession like software development. In general, professional liability is different from general civil liability. Once money changes hands, you have a much greater "duty to care" about the potential harm caused by your "product" than an individual citizen. For example, a guy that pours gasoline into his gopher holes and lights it is an idiot. However, as long as everything he blows up is his own and he harms noone else, he's still just an idiot, but, not liable. However, if he packages gas cans and matches together and sells them with instructions as a "Gopher Eradication Kit", he gets to be liable for the damage to all the houses of all the people dumb enough to use his product, and, any neighbors unfortunate enough to live within the blast radii. Let's face it, some software vendors are selling the moral equivalent of a minivan with no seatbelts and no airbags.
The second, a quote from a 1932 (U.S.) Court of Appeals opinion, was for a case where some barges sank because the tugboat pulling them had no radio receivers, and hence didn't know the weather forecast:
Indeed in most cases reasonable prudence is in face common prudence; but strictly it is never its measure; a whole calling may have unduly lagged in the adoption of new and available devices. It may never set its own tests, however persuasive be its usages. Courts must in the end say what is required; there are precautions so imperative that even their universal disregard will not excuse their omission. ... But here there was no custom at all as to receiving sets; some had them, some did not; the most that can be urged is that they had not yet become general. Certainly in such a case we need not pause; when some have thought a device necessary, at least we may say that they were right, and the others too slack. ... We hold [against] the tugs therefore because [if] they had been properly equipped, they would have got the Arlington [weather] reports. The injury was a direct consequence of this unseaworthiness.
Again, though, this has never been litigated for ISP-type issues.
Those will be interesting cases as well if they are ever tested, but, I think they will actually be more complex than injured third parties suing software VENDORS over vulnerable software which later caused harm. Again, I think that the David v. Goliath nature of the majority of injured parties v. software vendors means that a large highly visible class action or high-profile suit is unlikely to meet with much success. However, given the relatively low risks associated with filing in small claims court in most jurisdictions and extremely low filing costs associated, I think it would be very interesting to see a coordinated attack of this nature played out in the small claims courts across the country. Even if the software vendors were able to win each and every case, the costs of fighting them would be impressive and would send a pretty clear message that we, as a society, are fed up and won't take it any more. Owen