As software’s importance in modern life and business has grown, so has the responsibility on developers’ shoulders. Creating a reliable, well-functioning and original piece of programming is no longer simply a matter of competitiveness. Development today also carries significant legal implications. 

Types of Software Liability Concerns 

Software liabilities can stem from many areas. Developers must understand how they may be legally responsible for their products’ outcomes to remain compliant and avoid hefty penalties. 

Intellectual Property 

One of the most obvious legal software concerns is the issue of intellectual property (IP). While any original code is developers’ own IP, many programs borrow frameworks and tools from others. Up to 90% of modern software solutions use open-source resources, which can complicate ownership. 

Despite being open by definition, many open-source tools rely on proprietary expressions of this code. Consequently, formal disclosure or licensing may be necessary to use and profit from it. AI-generated code introduces additional concerns, as it may unintentionally take from open-source but licensed libraries.  

Data Privacy 

Any program that gathers or uses people’s information may also be liable under privacy regulations. These laws vary by location and scope but typically require software to instill proper protections against breaches and allow users to opt out of some data collection. 

California has the strictest privacy laws in the U.S. right now, but developers in other states may need to comply with them if they have Californian customers. Similar situations apply to other nations’ regulations, too. 

Cybersecurity 

Similarly, developers must ensure their software has sufficient cybersecurity protections. While user error accounts for many attacks, the fault can fall to developers if courts deem they did not meet a reasonable standard of protection. Regulations in this area will likely grow increasingly stringent as cybercrime becomes a more prominent issue. 

Software Reliability 

How well a program serves its intended purpose can also introduce liability concerns. For example, industrial control software that fails and leads to equipment damage could leave developers responsible for the fallout. 

What this category entails and how high the standards are vary by industry and use case. In general, developers should be careful to ensure their products are as functional as possible. 

Steps to Minimize Software Liability Risks 

Developers should take steps to minimize liability risks across all these categories. While specific measures vary between applications, here are five universal best practices to implement.  

1. Document Everything

One of the most important steps is to keep detailed records of the entire development process. Failure to prove how a business complied with given regulations can introduce transparency concerns. Considering how litigation through the False Claims Act has resulted in $44.7 billion in judgments for misleading practices, it is best to avoid these gaps. 

This documentation should include specific compliance steps developers take, what software libraries and tools they use and how they protect user data. Organizations should always review applicable regulations to see what other evidence they may need to compile to remain compliant. 

2. Standardize Contracts and Disclosures

Similarly, developers should use standard contract formats under whichever regulations apply to them. These may include end-user agreements, licensing documents, privacy policies and warranties. Standardization will make it easier to ensure documentation is legally sound and streamline the compliance process between different products. 

The same should apply to disclosures, such as those about what data a program collects. Many privacy regulations require such transparency, and it is best to include them even when laws do not mandate it, just to be safe. 

3. Test Software Thoroughly

Rigorous testing is crucial during development. Unpatched faults and glitches can lead to significant liability issues, especially when the problem concerns user safety. Consider how Tesla had to recall 158,000 models after a system error took important car features offline. 

While it is impossible to prevent every potential bug, the law generally requires companies to do all they can to address potential problems before a product’s launch. A DevSecOps approach can help by integrating regular testing into the development process, making it easier to find and fix issues.  

4. Maintain Ongoing Legal Research

Ongoing adjustment is also necessary. Laws and regulations change frequently — seven states passed data privacy legislation in 2023 alone — so developers must stay on top of regulatory changes to remain compliant. 

Partnering with legal experts is critical. Businesses should review their legal standings and emerging trends that may affect them at least once a year. Automated compliance software can help with this, but it is not a reliable replacement for human professionals. 

5. Consider Liability Coverage

Developers may want to see if liability insurance is necessary. While this coverage does not make organizations immune to legal challenges, it can mitigate the costs if an incident arises. Not every business has enough liability to warrant such insurance, but larger organizations or those dealing with particularly stringent laws may benefit from it. 

Developers Must Take Software Liability Seriously 

Software liability will only become more important as digitization increases. Developers must take the time today to review where they fall under applicable regulations and how they can minimize their legal risk. Failure to manage such issues before an incident can result in massive fines and penalties.