Massachusetts could be the fifth US state to hit out at
a law concerning software transactions after a legislative
committee held a hearing this week.
The Uniform Computer Information Transactions Act (UCITA) was
originally conceived to bring uniformity and certainty to the rules
which apply to software transactions.
However, UCITA, according to opponents, sets default contract
terms that favour software companies and frees them of liability
for any software problems. Supporters say companies are free to
negotiate terms and conditions, and they have attempted,
unsuccessfully, to ease concerns by removing some controversial
provisions, such as "self-help", which would have allowed a
software supplier to disable a system during a dispute.
Only two states, Virginia in 2001 and Maryland in 2000, have
enacted the model legislation, while four states have adopted
anti-UCITA measures. UCITA's progress toward state-by-state
adoption appears, for now, to be stalled.
John McCabe, an official at the Chicago-based National
Conference of Commissioners on Uniform State Laws (NCCUSL), which
sponsors uniform laws, said a UCITA adoption bill is pending in the
District of Columbia.
The measures adopted by the four anti-UCITA states - Iowa, North
Carolina, West Virginia and Vermont - consist of "bomb-shelter"
legislation, which is intended to prevent a software company from
applying UCITA law provisions on residents in a bomb-shelter
state.
The Massachusetts Joint Committee on Commerce and Labor held a
hearing on the anti-UCITA bill on Monday, although no action was
taken, a committee spokesperson said.
UCITA's opponents, who include library and consumer protection
groups, many state attorneys general and some large software
users, have claimed they succeeded in preventing UCITA's adoption
in Oklahoma and Nevada this year. Despite those successes, however,
they say UCITA remains a threat.
Carlyle Ring, chairman of the NCCUSL's UCITA drafting committee,
said proponents will continue to press for state-by-state adoption.
He argued that companies need a uniform set of rules to conduct
internet transactions, and if the states don't adopt these rules,
Congress will.
"The real issue is whether the states are going to work this out
among themselves," he said.
Ring attributed the lack of state adoptions to the 18-month
withdrawal of UCITA, under an agreement with the American Bar
Association, which reviewed the UCITA and ultimately took no action
on it after a special bar committee criticised the measure.
The pitfalls of UCITA
One-sided 'shrinkwrap' terms These will make
many manifestly unfair terms enforceable in situations where today
a judge would be free to ignore them.
Remote disabling of software UCITA's "electronic
self help" and "automatic restraints" provisions give software
publishers the right to surreptitiously include time bombs and
backdoors in their software, exposing customers to enormous
security risks.
Increased legal costs UCITA creates a host of
surprising outcomes under its default rules, forcing customers to
bring in the lawyers for what otherwise could be a handshake
agreement.
E-commerce impact UCITA's vendor-friendly rules
for e-commerce will conflict with efforts to bring order to the
internet, creating less uniformity of law rather than more and
exacerbating consumer distrust.
Software industry competition Disclaimed
warranties and other protections for the software industry provide
disincentives for companies to improve product quality and
encourage the premature release of buggy products.
Bug disclosures UCITA offers protection from
lawsuits to software publishers that knowingly distribute software
with bugs, even if they hide the knowledge from users who suffer
major damage as a result.
Sneakwrap modifications UCITA allows publishers
and on-line services to materially modify terms of an existing
relationship by posting changes on their Web site, changes that are
unlikely to be noticed by many users.
Scope of law UCITA threatens to bring its
anti-consumer rules to a variety of industries beyond software and
even beyond high-tech fields.
Freedom of information UCITA helps make it
possible for commercial entities to erect barriers against free
exchange of information through libraries and academic institutions
and even to put restrictions on criticism of their products.
Transfer of ownership Common shrinkwrap licence
terms prohibiting all transfers of ownership in a copy would become
enforceable under UCITA, undercutting basic principles of copyright
law and possibly forcing companies to repurchase software they
already have after corporate acquisitions, mergers, or
restructuring.
Reverse engineering UCITA could allow software
publishers to outlaw all forms of reverse engineering, even when
it's done only for reasons of interoperability.
No pre-sale access to terms Software publishers
are still allowed to take the traditional "terms inside the box"
approach, denying customers opportunity to review terms before they
buy, even in the case of online sales where providing the terms
would be easy.
Patrick Thibodeau writes
for Computerworld