UCITA opponents slow software licensing law

Opponents of the controversial UCITA software licensing law in the US appear to have succeeded in stalling the bill in states...

Opponents of the controversial UCITA software licensing law in the US appear to have succeeded in stalling the bill in states where it is being considered this year.

This has robbed the vendor-backed measure of the early momentum it gained last year, following relatively quick adoptions in Maryland and Virginia.

But both sides in the battle, which pits technology vendors against some of their corporate customers, say they're now preparing for a long campaign over the Uniform Computer Information Transactions Act (UCITA).

"Is the fight over? No!" declared Gordon Pence, an attorney at Illinois-based construction equipment giant Caterpillar, which is opposing passage of UCITA by state legislatures. "We did really well this year, stopping it in all the states where it was introduced. But I don't think the pro-UCITA contingency is going to give up."

UCITA has been introduced this year in Arizona, Illinois, Texas, Maine, New Hampshire, Oregon and New Jersey, plus the District of Columbia. Opponents are particularly pleased about stopping UCITA in Texas, which was seen as a key battleground state because of its size and the concentration of big companies there on both the user and vendor sides.

The opposition in Texas "just came from everywhere . . . It was basically hi-tech against everyone else," said Celeste May, general counsel to John Corona, a Republican state senator who sponsored the Texas version of UCITA.

About two-thirds of the state legislatures have completed their work for the year, making UCITA's passage in any state this year unlikely, said Carol Ashworth, who is heading an anti-UCITA effort at the American Library Association's office in Washington. But Washington mayor Anthony Williams has backed UCITA, and the outcome there remains to be seen.

John Palafoutas, a senior vice president at the AeA, a technology industry trade group, said the legislative showing this year "proves the old adage that it's easier to stop something than to pass something". The Washington-based AeA is a supporter of UCITA.

Palafoutas attributed the hesitancy of states to adopt UCITA to the length and complexity of the proposed law, but he was surprised by the intensity of the opposition. "I didn't expect it to be this impassioned," he said. "In the long term, we're going to do okay on it. It's complex, and it's going to take us some time."

"We're just beginning," agreed Randy Roth, director of corporate purchasing at The Principal Financial Group, a UCITA opponent in Iowa. "This was the first year where each party trenched in, and now we're going to go at it for a while."

Even in Texas, UCITA isn't completely dead. An effort will be made by supporters there to create an interim study commission to examine the proposed law and to possibly reintroduce it when the state legislature - which only has sessions every other year - meets again in 2003.

In New Hampshire, another state where UCITA has made little progress so far, supporters also aren't giving up. State senator Lou D'Allesandro, a Democrat who sponsored the bill, said he plans to bring it up again in the autumn. "I think there is a recognition that we need it," he said. "It's just a case of how we refine it."

UCITA was drafted two years ago by the Chicago-based National Conference of Commissioners on Uniform State Laws and sent to 50 states for their consideration, as part of an effort to develop uniform commercial laws to ease interstate commerce. Adoption by the states of these uniform laws can typically take many years.

The legislation sets a series of default rules for software licensing transactions, but the rules have garnered significant opposition from consumer groups and many corporate users. The opponents, who set up a group called Americans for Fair Electronic Commerce Transactions earlier this year, claim that UCITA is too favourable to software vendors.

For example, they charge that the law would give vendors the ability to limit their liability, prohibit reverse-engineering and shut down software remotely in some instances. But UCITA backers argue that the measure has been misunderstood and that corporate users would still be free to negotiate their own contract terms.

UCITA has also given rise to a legislative countermeasure called a "bomb shelter." States that approve this legislation essentially give users the right to dispute a software contract under their home state's law and not the law specified in the contract itself. Iowa and West Virginia have already adopted the bill, and it has also been introduced in states such as Oregon, New York and Michigan.

In addition, the state attorneys general in Kansas and Oklahoma are attempting to modify UCITA. But that effort isn't winning support from UCITA opponents, who see it as a vendor-backed effort to win support for the proposal.

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