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Now, UCITA ... Later, you don't

Industry Standard

March 7, 2000
Web posted at: 8:40 a.m. EST (1340 GMT)

(IDG) -- A controversial bill that proponents say gives predictability and uniformity to software licenses and that opponents say cedes far too much power to software vendors, has been sent to Virginia Gov. James S. Gillmore III for his expected signature, in what may be the first of a trend.

The Uniform Computer Information Transactions Act (UCITA), which covers topics such as shrink-wrapped licenses and vendor liability for defects, has been introduced in Maryland, Oklahoma and Illinois, while many other states are entertaining its adoption.

UCITA's growing phalanx of critics have issued a barrage of complaints against the statute that could, ironically, perhaps best be summarized in the words of legendary Virginian Thomas Jefferson: "The right to sell is one of the rights of property," "Nothing is ours, which another may deprive us of," "The only security of all is in a free press" and "The freedom of opinion and the reasonable maintenance of it is not a crime and ought not to occasion injury."

UCITA's long and complex journey began in 1988 as an amendment to the nationwide set of state laws governing commercial transactions, the Uniform Commercial Code (UCC). Its intent was to update the 50-year-old regulations to accommodate the world of software and the Internet.

However, the American Law Institute -- one of the two organizations that handle the UCC -- withdrew from the task last year after the "fundamental reforms" it called for went unheeded. The complaints leveled against UCITA boiled down to the increasing perception that the legislation contained draconian provisions to increase the profits and power of large commercial software and content publishers at the expense of smaller businesses as well as consumers.

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UCITA has since been criticized by 24 state attorneys general, the U.S. Federal Trade Commission, several leading computer-industry professional societies (such as the Association for Computing Machinery and the Institute of Electrical and Electronics Engineers), several software-trade groups (such as the Independent Computer Consultants Association and the Free Software Foundation), all five leading library associations, top intellectual-property associations (including the American Intellectual Property Law Association and the Committee of Copyright and Literary Property of the Association of the Bar of the City of New York), the Motion Picture Association of America, the National Association of Broadcasters, the Newspaper Association of America and every consumer-advocacy organization that has looked at the law.

One of the key provisions in UCITA is the transformation of what is now a sale -- such as buying a copy of the Windows 2000 operating-system software, or the e-book version of Stephen King's latest novel -- into a lease, with the leasing party (typically the software company) dictating the terms of a nonnegotiable license. Among other consequences, this legalistic sleight-of-hand allows a potential leasor to work around pre-existing consumer-protection laws, since many of those govern buyer-seller transactions.

Previous generations of intellectual property vendors have also attempted to legally alter the purchase of their wares -- books and record albums, specifically -- into a lease transaction with a legally-binding contract dictating their terms. But courts have consistently struck this down. And some of UCITA's critics, such as American Law Institute member Cem Kaner, point out that such provisions within UCITA -- if not UCITA itself -- may eventually be struck down too. However, that could be more than a decade (and several expensive lawsuits) away.

The National Conference of Commissions on Uniform State Laws adopted UCITA in July. The conference recommends commercial code law and sends it to the 50 states for their adoption. Only a handful of states have introduced the measure.

Large businesses, theoretically, should be able to negotiate contracts with vendors that protect and exclude provisions they don't want, say UCITA supporters. In these contracts, UCITA would apply only as a default rule in areas not covered by the contract.

"Parties in particular situations are always free to modify the contract," said Mark Uncapher, a VP at the Information Technology Association of America. "This is just a fail-safe or fallback set of provisions."

UCITA supporters argue the measure gives predictability and uniformity to software licenses. They are also telling early adopting states that UCITA may be a potential high-tech economy builder.

In the meantime, both UCITA's proponents -- such as Microsoft, America Online, Network Solutions and the Software & Information Industry Association -- and detractors will be duking it out in the court of public opinion.

One of the most hotly contested provisions of UCITA is the allowance of "contractual use restrictions"

One such restriction is a nondisclosure statement. That is, UCITA would enable software makers and distributors of digital content such as e-books, Web sites or CD-ROMs to subject their users to shrink-wrap or "click-through" provisions that prohibit any use of their material or reviews of their material without the content owner's permission.

"UCITA potentially affects the fair use of a wide variety of copyrighted works," writes the Copyright Committee of the New York Bar Association in its June 1999 report on the proposed legislation. "'Computer information,' UCITA's subject matter, includes fiction, history, poetry, databases, and any other text 'obtained from or through the use of a computer, or that is in digital or equivalent form capable of being processed by a computer.' For example, text on a CD-ROM could be shrink-wrapped and sold subject to a license such as this: 'Purchaser may not copy any portion of the contents without Publisher's written permission except for Purchaser's sole and exclusive personal use. Purchaser may not sell, lease, lend or otherwise transfer possession of this CD without Publisher's written permission.'

"The first sentence of this license effectively circumvents copyright's fair use doctrine and its requirement of substantial similarity to prove infringement. The second sentence circumvents copyright's first sale doctrine [i.e., the ability of an owner to sell or give his copy away]."

Another prima facie enforceable "contractual use restriction" allowed by UCITA is the prohibition against reverse engineering of software -- crucial for the GNU/Linux world as well as a Constitutionally protected practice for such applications as development of compatible software products and information security testing.

As Linux Today's Richard Stallman recently wrote, "[UCITA] applies to any sort of computer-readable information. Even if you use only free software, you are likely to read articles on your computer, and access databases. UCITA will allow the publishers to impose the most outrageous restrictions on you. They could change the license retroactively at any time, and force you to delete the material if you don't accept the change. They could even prohibit you from describing what you see as flaws in the material."

Furthermore, in Kaner's words, "UCITA section 816 allows software vendors to place disabling codes in software and to activate them remotely (such as by sending an e-mail) to shut down a customer's use of the product."

These and other complaints have led some skeptics to believe that such extreme provisions are so much fear-mongering and, even if they're true, would never come into widespread practice or pass Constitutional muster.

But, the law's opponents note, UCITA's well-funded supporters are counting on a complacent public uninterested in elaborate, arcane legislation at the state level.

As that famous Virginian founding father once wrote, "If once [the people] become inattentive to the public affairs, you and I, and Congress and Assemblies, Judges and Governors, shall all become wolves. It seems to be the law of our general nature, in spite of individual exceptions."



RELATED STORIES:
Opponents blast proposed U.S. software law
July 12, 1999
Internet industry group to focus on 'consumer protection'
June 28, 1999
U.S. committees approve encryption bill
June 25, 1999

RELATED IDG.net STORIES:
UCITA a licensing time bomb
(InfoWorld)
Uniform Computer Information Transaction Act: Blessing or blight?
(IDG.net)
ACM fears proposed law reduces quality, security
(IDG.net)
IT organizations lose out under new law
(InfoWorld)
We've lost this round in the fight against UCITA, but the battle is far from over
(InfoWorld)
Why are we protecting the software industry?
(CIO)
CIOs join fight to kill UCITA
(Computerworld)
E-BusinessWorld
(IDG.net)

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