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The major part of the Year 2000 problem stems from the rollover which occurs in two digit year signifiers commonly used by computers. When computers were a new technology, and disk space was phenomenally expensive by today's standards, it made sense to record dates using only the last two numbers-- 96 to signify 1996. The extra digits were expensive to store, and the programmers who wrote programs to handle this data did not anticipate their software would be around at the turn of the century. Thus, use of two digit years became a standard practice. Unfortunately, this shortcut is still used in some modern software, and a good deal of the older software has lasted a lot longer than anticipated, as well.
What does this mean? If you add one year to 1999, most computers will think the year is 1900, not 2000. That January, 2000, paycheck that the payroll computer is supposed to print and send to you may be a long time coming.
If it is any consolation, the computer which controls your car ignition system may have crashed, thus not allowing you to drive to work to find that your check has not arrived. Even if you find another way to get to work, your pass card may not admit you into the office.
While some computers may only handle all date or duration related activities improperly, many computers or software packages will simply stop working. Mainframes. Networks. Desktop machines. Even embedded controllers in items one does not normally think of as being computerized. Invoice systems will not print invoices (because they will not be due for another hundred years). Systems that calculate mortgages may just become confused and crash. Records tagged with a date containing the year "00" may be automatically deleted or archived by some types of software. Your set-back thermostat may not even heat your office properly (January 1, 2000 is a Saturday, and January 1, 1900 was a Monday).
This is, in part, a software problem. A study by the consulting firm the Gartner Group found that 90% of all applications will suffer from the Year 2000 problem. The MITRE Corporation estimates that it will cost between $1.02 and $8.52 per line of computer code to identify and fix all potential "Millennium Bug" problems. For an organization such as the Department of Defense, which uses approximately 358 million lines of software code, it could cost somewhere between $358 million and $3 billion to avoid system crashes or errors. The Gartner Group estimates that for a medium sized corporation it will only cost about $3.6-$4.8 million to fix its software.
The Year 2000 problem is also a hardware problem. In addition to software failures, many computers cannot handle dates past December 31, 1999. Try this (if you are brave-- do NOT try this if you are running "beta test" software):
In some cases, the error may originate from the system software, but in many cases the date problem comes from the software embedded in the computer's "BIOS" chip. In this case, the chip will need to be replaced (the 1980 date is contained in the BIOS chip-- since DOS was not in use before 1980, any system date before 1980 may be treated by a DOS machine as an error, such as dates after 1999 missing the century digits, and thus the clock resets to 1980).
Even if your computer passes this date rollover test, it may still not be compliant-- there are other tests that may indicate related problems.
The Year 2000 problem is also "systemic." Two year date problems may pervade an entire system, not just computers. For instance, many systems use "embedded date codes" or "stealth dates" (where a date is used as part of another number that is not called a date)-- such as most state and federal court cases, which are numbered with a two digit year identifier. Many paper forms only will have two spaces to use for inserting the appropriate year. Screen designs or printed reports may not be able to display the century, even if the software or computer could process the information. Even after you fix all of your hardware and software, if date information is part of your records, every individual record may need to be changed in order to add century information.
There are other Year 2000 problems as well. For example, many computers will decide a year is a leap year simply if it is divisible by 4. However, this is only part of the rule for determining when a leap year occurs. Years divisible by 100 are not leap years, unless the year is also divisible by 400. Thus, the Year 2000 is a leap year, though the Year 1900 was not.
What does all of this mean in terms of the law? This is a unique technological problem in that it will occur, and at a specific known day and time. It is not a random event which cannot easily be addressed in advance.
If you are handling software or hardware contracts, representations and warranties as to Year 2000 compliance may be called for (draft language proposed for certain government contracts can be found on the Internet at http://www.army.mil/army-y2k/osd_Y2K/y2kfnl.htm, as well as at the excellent Year 2000 Information Center at http://www.year2000.com/).
An audit will need to be performed of all of your computer systems and software to determine where there are Year 2000 compliance problems that need to be fixed. In some cases, this will mean replacing or repairing hardware, though in other cases it will mean replacing software. Custom software will likely need to be modified, which raises potential copyright problems. The copyright status and licensing terms of any such software will need to be investigated.
In the case of software that cannot be modified under its licensing terms, vendors may need to be contacted (many vendors are already working on or have Millennium Bug cures). This is especially true in the Seventh Circuit in light of ProCD v. Zeidenberg which supports the proposition that even "shrink wrap" licenses are enforceable, even against claims that your use of the software is a fair one as permitted by the Copyright Act (17 U.S.C. Section 107).
In the case of some software or hardware issues, vendors may be subject to tort liability for not selling Year 2000 compliant materials, in cases where such compliance is necessary. Warranties and disclaimers in such software and hardware contracts will need to be examined, by both vendors and purchasers. Furthermore, any maintenance agreements will need to be examined to see if they will cover Year 2000 compliance issues.
Organizations that exchange data with other organizations will need to examine not only their own systems, but will also need to examine the systems of other companies with which they exchange data. Otherwise, once a system and its data are fixed, it may become "infected" by "corrupt" data provided by other organizations. Any agreements with outside data providers should be examined to see how they address these sorts of "defects."
In the world of mergers and acquisitions, Year 2000 problems are a potential multi-million dollar liability which may need to be addressed. It is best to make sure such a liability is not a surprise. Furthermore, due to the impact the Millennium Bug may have on many companies' operations, it may need to be addressed in certain Securities and Exchange Commission filings, and in other notices. Certain auditing standards may also mandate disclosures regarding the scope of the problem that a corporation faces.
These issues are just a sampling of potential concerns surrounding the Year 2000 problem. Some companies are already having Year 2000 related problems as they work with future dates (for example, drivers licenses which expire in the year 00). Awareness of this problem is increasing, but the deadline is drawing closer every day. Studies have shown that nearly one out of six senior executives surveyed in North America are unaware of the Millennium Bug, and that 50% of all companies with this software problem will not become Year 2000 compliant in time. Other studies show worse results. This may produce a lot of shareholders, suppliers, customers, employees, etc. who may start 2000 in a particularly litigious mood when the Millennium Bug welcomes them into the new century.