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UCITA on legislative agenda in four states
(IDG) -- The legislatures of four states have added a controversial software licensing bill to their legislative calendars this year, indicating that the proposal, which last year passed in Maryland and Virginia, is picking up momentum. Arizona, Oklahoma, Delaware, and Texas are scheduled to take up the Uniform Computer Information Transactions Act (UCITA) in their current legislative sessions, and other states are being approached by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and asked to do the same, said Carlyle "Connie" Ring Jr., chairman of the NCCUSL's UCITA drafting committee. Ring laid out arguments in favor of UCITA during a panel discussion Wednesday sponsored by the Washington Legal Foundation that also featured opponents of UCITA. Meanwhile, the Virginia legislature took steps to firm up its UCITA law, which doesn't go into effect until July 1. The ongoing debate over legislation generally pits companies that distribute software and want to increase their control over the use of their products -- including large companies such as Microsoft and America Online -- against small businesses, programmers, libraries, and the insurance and banking industries. Supporters of UCITA say it is a necessary improvement in commercial contract law designed to bring uniformity to software licensing contracts and a common understanding of software licenses across the 50 states. But opponents say it turns back the clock on consumer protection law in favor of software vendors.
Opponents also argue that it would prohibit practices such as the reverse engineering of software, which programmers do to ensure that their applications are compatible, would take away the right to write a negative review of the software, and would give vendors the right to shut down a software program if licensing fees aren't paid or if there are other breaches of the contract. Charles Shafer, a professor at the University of Baltimore Law School, said UCITA is opposed by leading bar associations, the attorneys general of more than 20 states, and consumer groups, and he said NCCUSL and lobbyists for software vendors that support it are aggressively trying to get more states to adopt it. "They are in the process of applying a hard sell on many legislatures around the country, many of whom sign on before they know that there is this much opposition to it," Shafer said. But Ring said the process of promoting the bill is more routine, involving searches by NCCUSL commissioners for legislators willing to sponsor the bill. There is an urgent need for the bill to bring legal certainty to software contracts in order for the new economy to continue to function, he said. UCITA does not preempt U.S. copyright law, but UCITA is needed because U.S. copyright law is not comprehensive, Ring said. Most of the contract law rules in UCITA are default rules that only apply if the parties involved did not cover the issue in their contract and if the drafters included a protection for things that are "fundamental public policy," such as the lending of software by libraries, he said. Ring also said UCITA does not change any consumer protection rules. Douglas Koelemay, vice president of the Northern Virginia Technology Council, described UCITA as narrow in scope, and said that in Virginia, where the overwhelming majority of software companies supply custom-made software, it applies only when the businesses negotiating a contract agree that it applies. The delay of UCITA's effective date in Virginia was included in the Virginia bill so that the Joint Commission on Science and Technology, an advisory body composed of legislators and other individuals, would have a chance to consider amendments. A supplementary bill recommended by the commission is moving through the Virginia legislature now, and on Wednesday the Virginia House Committee on Science and Technology approved the bill for consideration by the full House. Mitchell Goldstein, director of the Joint Commission on Science and Technology, said the bill includes a number of substantive amendments. They include a provision that says Internet service providers are not parties to a contract that is concluded at a Web site they host, and another that says mass-market software licenses included in shrink-wrapped software have to be made available by the manufacturer, either at a Web site or in another form, before and after the consumer agrees to the contract, Goldstein said. The House has until Feb. 6 to complete its work on the bill. If approved, it will move to the Senate. Koelemay said that even before the commission's recommendations, a number of safeguards were added to UCITA before it passed the Virginia legislature last year, particularly on behalf of people who buy off-the-shelf software. These include the right to return software even if they have opened the shrink wrap. "It used to be that if [consumers] didn't agree [to the terms of a licensing agreement] and the shrink wrap was opened, too bad for you," Koelemay said. The change "is something the software industry has had to swallow." Consumers also benefit from an "implied warranty" that the software will work with their system, and from a "good faith defense against accidental clicking" if they download software and click through the license agreement without intending to enter into a contract with the vendor. "Those are important advances shouldn't be overlooked," Koelemay said. "Without UCITA those are things that for consumers don't exist now." But opponents say most of these provisions don't matter because the dominance of the Windows platform leaves people with no alternative to Microsoft's products. If a company is expanding its system and doesn't want to negotiate a contract or has no legal department to do so, it will have to accept Microsoft's licensing terms, said Jonathan Band, a partner at Morrison & Foerster in Washington. "This is not like buying a television or getting a credit card where there is a lot more competition," he said. Band said UCITA could be improved if, instead of default provisions that can be waived when a contract is negotiated, it included nonwaivable defaults so that companies wouldn't have to worry about litigation. There are areas where there should be a "bright line, a clear rule -- nonwaivable -- that this kind of activity is permitted," Band said. "Don't leave any vague and fuzzy notions that have to be litigated." RELATED STORIES: FTC to study software-licensing practices RELATED IDG.net STORIES: Debate opens on making e-commerce law consistent RELATED SITES: National Conference of Commissioners on Uniform State Laws | |||||||||||||||||||||||||||||||||||||||||||||||
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