Ucita

The UCTIA, or the Uniform Computer Information Transaction Act, is a proposed state contract law that was developed to govern transactions in computer information products (UCITA Online). It was primarily drafted with the intent to create a clear and uniform set of rules to regulate such product areas as computer software, software licensing, online databases and online software access contracts or e-books, and other transactions in computer information. It took five-year period from 1996 to 1999 for the National Conference of Commissioners on Uniform State Laws (NCCUSL) to draft the law and present it to the public hearings and to state legislatures for enactment. The role of NCCUSL in drafting and recommending model laws to promote uniformity in state law lies in the determining the areas of the law that would benefit from uniformity. The basis for drafting UCITA was a call from the American Law Institute for fundamental revisions in the Article 2B of Uniform Commercial Code (UCC) in respect to significant controversy over imbalance and lack of fairness to software users and treatment of customer rights (UCITA Online). Although the original intent was to amend the most well-known uniform law, the NCCUSL renamed the UCC2B amendment to UCITA and allowed it to proceed as a stand-alone act. The UCITA enactment found strong support from software vendors and interested parties that included Software Information Industry Association, Computer Software Industry Association, Silicon Valley Software Industry Coalition, and Business Software Alliance consisting of 14 members, among which Microsoft Corp, Lotus Development Corp, and Adobe Systems Inc. However, the UCITA enactment also found strong opposition from consumer groups and public organizations as well as from Attorneys General of many states. Therefore, the need to review the provisions of the UCITA and arguments in favor of and against the enactment of the new uniformity law arises as the revision might shade the light to the reasons why majority of states have failed to accept the law and even proceeded with defensive state legislature. In order to elucidate on argument for and against the enactment of the Uniform Computer Information Transaction Act, the purpose and major provisions of the law are discussed further. The major purpose of the UCITA was to bring the same uniformity and certainty to the regulations in application to information technology transactions, which are applied to the sale of goods according to the Uniform Commercial Code – UCC (UCITA Online). Particularly, the challenge of the UCITA was to clarify and codify the regulations as for fair use, reverse engineering, consumer warranties and protection, shrink-wrap licenses, their duration and transferability. The UCC failed to adequately cover for these software transactions and provided for the need to develop the UCITA, which approves the validity of software licenses on general basis. As practicing attorney, Alan Fisch, stated “[F]ew disagree tha he current Uniform Commercial Code is ill-suited for use with licensing and other intangible transactions,” whereas the UCITA allows for software licensing, including browse-wrap and shrink-wrap agreements, as long as users are given a chance to return the software in case the license terms are proved to be disagreeable or objectionable. Since the publishers and large software producers are the primary proponents and supporters of the UCITA, their major points in favor of the law go in line with peculiarities of e-business and may be summarize as follows. The first concern of the UCITA supporters is the issue of clear guidelines in framing end-user license agreements in a uniform way across all the states, which has resulted from the growth in e-business and e-commerce that have outdated current contract laws that deal with intellectual property in every separate state (Kabay). The existing practice of conflict resolution between end-users and software producers is in accordance with civil court proceedings of separate states, which discourages small e-commerce businesses from expanding into interstate commerce due to increased costs and varying jurisdictions across the United States. The proponents of the UCITA, therefore, claim that uniformity and standardization under the UCITA will benefit small e-commerce businesses as well as software producers with reduced costs and more certainty over transaction regulations. Furthermore, the UCITA will provide software and information-content vendors with a possibility to choose the law and venue for legal disputes in regard to end-user licensing agreements based on the vendor’s choice of jurisdiction state (Kabay). Second argument presented by the supporters of the UCITA concerns the return policies under shrink-wrap and click-wrap end-user licensing agreements. Thus, whereas shrink-wrap EULAs are included inside actual packages purchased and received by consumers, the non-negotiable click-wrap EULAs are enforced under the UCITA and displayed at the moment of purchase transaction, which then provides the end-user with a period to assess the purchase and return the software product at full refund if the end-user licensing terms are found to be unsatisfying or objectionable (Kabay). Another argument in favor of the UCITA presented by the software developers and producers concerns the “perfect tender” rule for commercial licenses. Under the “perfect tender” rule in accordance to Article 2 of the Uniform Commercial Code, the delivered goods need to be in full conformance to the contract. However, software products are recognized to be a kind of products that “cannot be made perfect and almost always will have a bug” (SIIA). The perfect tender rule is eliminated by the UCITA and is replaced by a substantial conformance standard, which allow software and information publishers to explicitly disclaim responsibilities for the damaged that resulted from defective software or inaccurate information content (Kabay). However, as proponents argue, such freedom within substantial conformance standard for software and information-content products will allow software vendors to take greater risks associated with more innovations and, consequently, result in better products and greater value to the end-users (SIIA). Furthermore, under the UCITA the user interface is explicitly excluded in regard to as a part of a computer program, which is stated in the Official Comment 10 on Section 102 that reads:  “As used in this Act, 'computer program' refers to functional and operating aspects of a digital or similar system, whereas 'informational content' refers to material that communicates to a person” (UCITA). Also the enactment of the UCITA across all the states would provide the software and information-content vendors with a greater control over their products and licenses due to establishment of a framework for enforcing contractual limitations on use of covered products. The framework allows software and information-content vendors to include and enforce restrained rules on commercial purchasers of their products. Thus, as SIIA Summary of Benefits underlines that “if a license agreement is for a certain term, it is not a breach of the contract for the licensor to put something in the software that prevents use of the software after the term expires.” Similarly the rules apply to the number of users for a product license (SIIA) and even evidence of purchaser’s criticism of the product purchased or referrals to the products of a competitor software vendor (UCITA, Official Comment 3 on Section 105). According to Priscilla A. Walter, one of the major benefits of UCITA legislation lies in its potential in attracting high-tech businesses to the states that adopt the law. As she states in her article, “benefits (of UCITA) could include helping to foster e-commerce within the state and becoming a magnet for emerging companies seeking an e-commerce-friendly location” (Walter). Thus, among other protections for software and information-content vendors, the UCITA, according to Kabay, grants them “rigid enforcement of shrink-wrapped licenses, which the buyer may even not see until after the software has been purchased; banning reverse engineering of proprietary software; allowing vendors to shut down software remotely if they suspect a violation of the licensing terms; and easier disclaimer of written warranties” (Kabay). However, the UCITA is considered to be extremely controversial namely due to the many benefits it provides for software and information-content vendors. The opponents of the UCITA claim that the law “gives software manufacturers and information services an unfair advantage and leaves consumers with very little recourse when they find themselves with bad software” (CPSR), which is completely contrary to the statement of Carlyle “Connie” Ring, the chairman of the NCCUSL, who asserts that "UCITA provides (consumers) protections equal to or more than current law" (Toft). The opponents include an impressively large list of organizations that comprises of Association for Computing Machinery (ACM), Independent Computer Consultants Association (ICCA), Institute of Electrical and Electronics Engineers (IEEE), Software Engineering Institute (SEI), Consumers Union, Consumer Federation of America, the Federal Trade Commission staff, Free Software Foundation (FSF), the American Law Institute, the Attorneys General of over 20 states, and many others. Some of the organizations as ALI, for example, were originally in favor of the UCITA, though changed their standing after reviewing the provisions of the Act in a greater detail and concern. One of the most active opponents of the Act are Americans for Fair Electronic Commerce Transactions (AFFECT) and American Libraries Association (ALA), who constantly support specific action against the UCITA at their websites. The major arguments against the UCITA include bias in favor of software industry, poor drafting of the Act as well as claims that the UCITA will actually increase the costs f doing business; upset the copyright’s law balance, and ignore the consensus of interested parties involved in the drafting process (AFFECT). The bias of the UCITA in favor of software and information-content vendors, according to AFFECT, CPSR, Kabay, and others, is based on the provisions that in a dispute or conflict over license rights the law expressly authorizes software producers to remotely shut down even organization’s mission-critical software without any court approval. Allowing vendors to disclose details of “shrink-wrap” or “click-on” agreements after the software is actually purchased makes it difficult not only to challenge unfair one-sided provisions of the agreement (AFFECT), but also impedes comparison shopping for individuals (Kabay). Furthermore, Heller in his article proposes a concern that under UCITA “a vendor can make a ‘take it or leave’ offer to a consumer with no bargaining power, which is particularly true for legal information, where the commercial market is dominated by two (or arguably three) major [software] publishers. Terms that are negotiable in the competitive world of "goods" become, in a non-competitive world, de facto industry standards” (Heller, 2001). The bias in favor of software industry is also to a great extent grounded on the provisions that allow software producers to change the term unilaterally and at the same time make it easier for software vendors to avoid the lawsuits for breaching contracts (Kabay; AFFECT, CPSR). Besides, according to the UCITA opponents, the law protects the software vendors against the wrath of consumers confronted with bugs and design flaws (Kabay), whereas eases the procedures of requiring additional license fee payments from end-user as well as leave the end user holding the bag if the licensed software infringes on a third party's intellectual property rights (AFFECT). Among other arguments against the UCITA is an anticipation that the Act will result in increased costs of doing business from software consumer side, which will be reflected in higher asset management, legal and contract negotiation costs for organizations that make significant use of software and other information technologies. The argument that has led researchers, librarians and legal scholars to oppose the UCITA is the imbalance imposed on the interest of the public in the free flow of information and the protection of the protection of software programs and other computer information creators’ rights (AFFECT). Whereas under the first sale doctrine of the Copyright Law the owner of a copy of work is enabled to give or sell the copy to another individual or institution like library, under UCITA the transfer of goods or a copy of product from licensee to another individual or institution may be freely prohibited by the licensor (Heller, 2001). In such a way, the UCITA deprives the individuals an opportunity to gift or lend software or information-content products to third parties even in cases when individuals have completely exhausted the use of the products for personal purposes and no longer need them and third parties might be struggling in attempts to acquire the costly product. In addition, there have been concerns in regard to the inability of existing laws to provide protection for software licensed products and computer transactions that would be enforced by the UCITA. However, the critics of the Act insist that the UCITA is far more complex and poorly drafted, which implies more uncertainty and confusion instead of providing greater predictability in the law regulating computer information transaction. The opponents of the UCITA affirm that existing uniform laws provide adequate mechanism to protect consumers as well as software and information-content vendors. Furthermore, it is suggested that “it is too early to create special laws in this area as not enough cases have been tried in court yet, and many in the legal community lack understanding of the subject” (Toft). Due to great opposition, the UCITA has been adopted only in two states – Virginia and Maryland, whereas attempts to pass the Act in other states have been defeated and even counter-acted with “bomb-shelter” laws. In this respect, the UCITA has failed in Arizona, Colorado, District of Columbia, Texas, Utah and Nevada, while Iowa, Massachusetts, Vermont, North Carolina and West Virginia have passed or enacted “bomb-shelter” laws to protect their consumers from having UCITA invoked against them (ALA 2003; ____). The last, but not least, point that prevents UCITA from being passed in the number of states is the actions by the AFFECT aimed at making sure the key state officials don’t commit to backing the law’s passage without full understanding of what it really is and backed up with lobbyist attempts that favor only software and information-content producers’ interest. Bibliography Heller, James S. UCITA: Still Crazy After All These Years, and Still Not Ready for Prime Time, 8 RICH. J.L. & TECH. 5 (Fall 2001) at  http://www.jolt.richmond.edu/v8i1/article5.html. Toft D. (July 12, 1999) Opponents blast proposed U.S. software lawhttp://edition.cnn.com/TECH/computing/9907/12/ucita.idg/index.html UCITA Online (2010). A Commercial Code for the Information Age' http://www.ucitaonline.com/ AFFECT. What is UCITA' Americans For Fair Electronic Commerce Transactions. http://www.ucita.com/what.html CPSR. UCITA Fact Sheet. Computer Professionals for Social Responsibility. last updated April 10th by Lawrence Hecht http://cpsr.org/prevsite/program/UCITA/ucita-fact.html/  Ashworth C (April 2003) UCITA Flash Report. American Library Association Washington Office. http://www.ala.org/ala/issuesadvocacy/copyright/ucita/0403flash.pdf Foster E. UCITA running on empty. InfoWorld 2 July 2001 http://books.google.com/books'id=9zgEAAAAMBAJ&pg=PA42&lpg=PA42&dq=why+most+states+have+failed+to+pass+ucita&source=bl&ots=AXjLrB6GwR&sig=os3q8SlUjkjsbU-1G7q7sCb3BLs&hl=uk&ei=fGWiTK77DonBswaQyMyKBQ&sa=X&oi=book_result&ct=result&resnum=4&ved=0CCEQ6AEwAw#v=onepage&q&f=false Kabay M.E. UCITA: A Wolf in Wolf's Clothing. http://www.acm.org/ubiquity/views/m_kabay_8.html Software & Information Industry Association, Summary of Benefits - Uniform Computer Information Transactions Act. (May 11, 2000) http://www.siia.net/sharedcontent/govt/issues/ucita/summary.html. Penn Law. Uniform Computer transactions act (UCITA). NCCUSL's Comments on UCITA. http://www.law.upenn.edu/bll/archives/ulc/ucita/ucita600c.htm Priscilla A. Walter, UCITA: Establishing a Legal Infrastructure for E-Commerce, DrinkerBiddle.com, 2000, at 2, available athttp://www.drinkerbiddle.com/files/Publication/2a3765c9-cb95-4295-b1d7-940942157b98/Presentation/PublicationAttachment/1ebc303d-9496-471f-a341-63a52037f6c6/UCITA2.pdf