Oh, my sainted aunt! Microsoft and the Linux Foundation, the epicenter of the movement that wants to destroy Microsoft, have sent a joint letter to the American Law Institute (ALI) protesting its draft Principles of the Law of Software Contracts meant to guide judges in interpreting licensing agreements.

The hereditary enemies figure they’ll get ALI’s attention by doing the unthinkable and complain together in the name of all software developers everywhere.

In a blog Microsoft deputy general counsel Horacio Gutierrez said, “While the Principles reflect a lot of hard work and thought by the ALI, Microsoft and the Linux Foundation believe that certain provisions do not reflect existing law and could disrupt the well-functioning software market for businesses and consumers, as well as create uncertainty for software developers.”

The letter itself mentions added litigation risks too.

According to Linux Foundation CEO Jim Zemlin, ALI’s Principles “interfere with the natural operation of open source licenses and commercial licenses as well by creating implied warranties that could result in a tremendous amount of unnecessary litigation, which would undermine the sharing of technology.”

The twosome wants to delay adoption of the Principles this week ostensibly to give interested parties like software developers, distributors and users a crack at sticking their two cents in the debate.

Apparently ALI ran up its Principles with nary an input from the industry, a point that irks Zimlin, who says, “In order to participate in this process you need to be a member. You have to pay a fee to access material, and there is no public review prior to publication. This is why we decided to participate in drafting this open letter.”

The letter faults the Principles for lacking flexibility in licensing models and for seeking to impose mandatory licensing rules.

The pair says it’s particularly concerned with ALI’s attempt to impose a non-disclaimable implied warranty on software that there are no material hidden defects in the stuff.

They say such a warranty doesn’t reflect existing commercial law or public policy, adding that “the exclusion from this warranty for software provided free-of-charge does not address these concerns vis-à-vis open source software.”

Free is not free as in free beer, they basically tell the ALI, pointing out that “one can download an Ubuntu distribution free-of-charge over the Internet. But one can also buy Ubuntu on a CD or DVD. Thus, the warranty may or may not apply to the exact same software distribution depending upon how the recipient obtains it.”

They also complain – thinking perhaps of Google – that “the exclusion discriminates among business models. Software provided free-of-charge, but for which the provider receives revenue via related delivery of advertising, appears to benefit from the exclusion. Meanwhile, it is unclear under the Principles whether a company that does not charge for the software itself but for related services and support is deemed to have received payment for the software – the commentary is silent on this point.”

The pair also objects to free-of-charge software being excluded from any implied indemnity for IP infringement, calling it an emphasis of form over function.

They say making the implied warranty disclaimable would be consistent with existing law and cover individual contributors to open source projects, most of which disclaim warranties and provide code “as is.”

Gutierrez’s blog will take you to the letter, which both he and Linux Foundation counsel Karen Copenhaver signed. See http://microsoftontheissues.com/cs/blogs/mscorp/archive/2009/05/17/different-business-models-common-concerns.aspx.