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Like the Uniform Commercial Code, the Uniform Computer Information Transactions Act is a model law intended to advance the goals of uniformity and consistency. But unlike the UCC, UCITA has existed under a shroud of controversy. Now it may be on the verge of collapse. UCITA, which covers contracts concerning digital information, has won meager acceptance at best. It has been adopted as law in Maryland and Virginia only. It has been rejected by at least five states and the District of Columbia. Even worse, several states have enacted “bomb shelter” provisions to protect against UCITA’s application. And in what may be the death knell, UCITA’s promulgating body, the National Conference of Commissioners of Uniform State Laws, announced on Aug. 1 that it was suspending efforts to win the American Bar Association’s approval. The NCCUSL statement came after UCITA was presented to the ABA House of Delegates and met with substantial resistance, including formal statements from five ABA sections indicating that they would oppose it. The ABA reaction came as no surprise, for UCITA’s path was rocky from the start. Originally intended to be Article 2b of the UCC, UCITA began as a joint drafting effort between the NCCUSL and the American Law Institute. Then the ALI changed its mind. According to a joint press release in 1999, the area of computer information transactions did not, at the time, allow for the sort of codification represented by the UCC. When the ALI’s support fizzled, so did the opportunity for an Article 2b. State officials also raised substantive concerns. In July 1999, 13 attorneys general and a Georgia state official sent a letter arguing that UCITA put forward “legal rules that thwart the common sense expectations of buyers and sellers,” and that “the policy choices embodied in UCITA seem to almost invariably favor a relatively small number of vendors to the detriment of millions of businesses and consumers.” Soon thereafter, 10 other attorneys general submitted a concurring letter. Despite this multi-front resistance, the NCCUSL continued its drafting efforts and ultimately promulgated a stand-alone model law, which it called UCITA. WRONG DIRECTIONS? Debilitating criticisms continued after UCITA’s promulgation. Here is a snapshot of the major ones: � UCITA fails in its ultimate purpose of providing consistency and uniformity, and would increase uncertainty in law and practice. Many found UCITA both unclear and overly complex. Perhaps most telling is the fact that the ABA Working Group on UCITA had to hold a series of multihour tutorials to explain the act to its members. The group then wrote a report setting forth numerous suggested amendments, including that UCITA be redrafted to make it easier to understand. (The NCCUSL incorporated some of these amendments, but apparently not enough, as the new version was the one that met fatal resistance in the House of Delegates.) Additionally, critics contend that UCITA might raise costs for users and licensees. For example, educational, research, and library enterprises often use decentralized systems of procurement whereby individual staffers buy software. The uncertainty created by UCITA would require a costly shift to centralized purchasing in order to maintain appropriate control over software procurement and use. � UCITA would shift the balance of power from software licensees to licensors. Some critics argue that UCITA heavily favors licensors and thereby would undermine the balance of the interests of creators, users, and publishers under copyright law. They point to the fact that UCITA codifies the acceptance of non-negotiated shrink-wrap and click-on licenses, which tend to disadvantage users, who may not grasp the legal implication of contract terms and may not read (or even have access to) those terms prior to acceptance. � UCITA would jeopardize the privacy rights of software users. As originally promulgated, UCITA codified a licensor’s right to self-help, such as by monitoring or disabling software after purchase. According to critics, such self-help rights pose great risks to mission-critical software that could be disabled based on a licensor’s unilateral decision that there had been a license breach. Critics also complained that self-help poses risks to system security because of electronic “back doors” that might be accessed by hackers and because of licensors’ increased ability to monitor their licensees’ work. Although amendments in 2002 eliminated the unilateral right to self-help, critics complain that the remaining provisions allowing electronic regulation of performance present similar risks. � UCITA would undermine consumer protection rights. Several provisions are a marked shift away from common modes of doing business. Critics complain that UCITA allows shrink-wrap licenses to eliminate the consumer’s right to return any software that has been opened or used. Because consumers are unlikely to be aware of that restriction until the product is in fact opened or used, all rights to return would effectively be eliminated. Critics also point out that UCITA allows licensors to waive liability for known defects even if those defects are not disclosed to customers. The fear is that this right to waiver may leave users with no legal recourse for damage caused by known defects and also discourage software makers from exercising quality control. CLEARLY UNCERTAIN Faced with these criticisms, it is no surprise that the NCCUSL suspended its efforts to promote UCITA. Other than uniformity and clarity, there was never any consensus on what the act should accomplish. Moreover, UCITA does not address marketplace expectations in a manner deemed satisfactory by many software users. Until it is revised to better reflect marketplace realities, UCITA will continue to struggle. For now, UCITA remains law in Maryland and Virginia. Perhaps disputes enforcing the law in those two states will bring greater clarity to the model law. And UCITA may yet be enacted in other states � either at their own initiative or at the prodding of some other organization that chooses to take up the UCITA banner. Most likely, the NCCUSL will lick its wounds and redraft UCITA in a form that has broader appeal. However, absent a clearer explanation of what the model law means in practice or why it is even necessary, resistance to UCITA is likely to remain strong, and change is likely to be slow. Jon Grossman is a partner and DeAnna Allen is an associate in the D.C. office of Dickstein Shapiro Morin & Oshinsky (www.dsmo.com). Grossman ([email protected]) focuses on IP issues relating to the computer industry, including the licensing and acquisition of software rights. Allen ([email protected]) practices in the IP department. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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