- UCITA 101
- UCITA 102 (Proposed UCITA-Related Legislation)
Last Update: 6 Feb
What is UCITA?
The Uniform Computer Information Transactions Act
(UCITA) is a proposed state contract law designed to standardize the
law and provide the default rules for licensing software and all other
forms of digital information. UCITA is applicable to "information in
electronic form" including computer software, on-line databases,
electronic journals, e-books, CD-ROMs, and videos. UCITA has become law
in only two states so far (Maryland and Virginia). [http://www.law.upenn.edu/bll/ulc/ulc_frame.htm]
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What does UCITA do?
Producers of computer information products have
developed a business model that relies on licenses or contracts to
govern the user's "access to " and "use of " a product. In the world of
electronic commerce, people purchase but do not own the software in the
same sense that they would own other types of goods like books, cars,
or toasters. Some licenses are negotiated and the final terms
result from the traditional "meeting of the minds." Many libraries are
able to negotiate the terms of the licenses that govern the use of
databases or online journals, for example.
However, libraries, like most businesses, rely on
millions of dollars of mass-market retail computer information
products. These products use non-negotiated or standard form
licenses in which the licensor or vendor determines the terms without
input from the licensee. Often called "shrink-wrap" or "click-wrap"
licenses, these agreements accompany products that are sold in
"shrink-wrap" packaging or online products that are accessed by
clicking "I agree" to activate the license. Such licenses are not UCITA
inventions but, under the Act, licensors or vendors of the software
product would have more latitude in establishing and enforcing the
terms.
Questionable or unfair terms in "shrink-wrap" and
"click-wrap" licenses may be challenged by licensees in court but in
recent years, the courts have more often than not enforced the terms in
"shrink-wrap" contracts. UCITA takes a leap forward in validating the
terms of this kind of license.
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The UCITA controversy
At two hundred pages in length, UCITA is technically
complex, ambiguous and overly broad in scope. The proposed law has
evoked criticism from experts in commercial, consumer, and intellectual
property law. Vigorous debate has followed UCITA throughout the decade
of its drafting by the National Conference of Commissioners on Uniform State Laws
(NCCUSL) and since its approval in 1999 as a "uniform law" that
potentially might be enacted in all the states. Libraries and other
opponents maintain that UCITA favors the interests of software vendors
and is so fundamentally flawed that it should be completely re-drafted.
UCITA was further amended in 2002 but the changes do not sufficiently
address the issues libraries and other opponents have identified.
AFFECT (Americans for Fair Electronic Commerce Transactions), the national coalition of over sixty businesses and non-profit organizations, including libraries:
[http://www.affect.ucita.com]
In 2002,the American Bar Association (ABA) Working Group on UCITA
stated that UCITA "is a very complex statute that is daunting for even
knowledgeable lawyers to understand."
 Proponents say UCITA provides clear and uniform guidelines that are much needed in the rapidly changing digital world.
See the ABA report: [http://www.abanet.org/leadership/ucita.pdf]
Even though thirty-eight amendments to UCITA were approved in 2002, AFFECT, continues to oppose UCITA.
Proponents describe the amendments as "substantive"and claim that they respond to critics of the act.
Five major library associations have consistently argued that UCITA will continue the trend of whittling away at the carefully balanced doctrines of federal copyright law.
Proponents claim UCITA provides ample protections for libraries.
Most consumer protection advocates have opposed UCITA and continue to
contend that UCITA allows contract terms that are harmful to consumers:
[http://www.affect.ucita.com/what_reasons.html]
Proponents claim UCITA is consumer-friendly.
In a letter to the UCITA Standby Committee of NCCUSL in 2001,
thirty-three state attorneys general agreed "UCITA is fundamentally
flawed in its scope and approach" and contended that "UCITA is so
flawed that any amendments would not significantly ameliorate UCITA's
negative impact on consumers or the marketplace in general."
[http://www-affect@ucita.com/pdf/Nov132001_Letter_from_AGs_to_Carlyle_Ring.pdf]
Businesses including insurance companies, retail and manufacturing
concerns and software developers claim UCITA would be detrimental to
their businesses because it would allow contract terms that pose
security risks and could result in millions of dollars in increased
costs.
[http://www.affect.ucita.com/what_cost.html]
Proponents claim UCITA will benefit commerce and is needed to promote an e-economy.
UCITA passed in Maryland and Virginia in 2000, the only two states to
do so since it was released by NCCUSL to the state legislatures in
1999. Since then over twenty states have considered introducing it but
many have not done so because they have been reluctant to take on such
a controversial act. In 12 other states where it was introduced, it was
killed. (Follow UCITA in state legislatures - go to the "Your State"
section.)
Since 2000, three states have passed UCITA "bomb-shelter"
legislation, which specifically protects consumers and businesses in
their states from some far-reaching provisions of UCITA that could
affect citizens in states where UCITA is not law.
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The UCITA drafters
The National Conference of Commissioners on Uniform State Laws (NCCUSL) [http://www.nccusl.org]
is responsible for creating UCITA. The organization is comprised of
lawyers, judges, and law professors appointed by each state, the
District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
NCCUSL's mission is to draft uniform and model laws and
work toward their enactment in state legislatures. The Uniform
Commercial Code (UCC) is the most well known body of uniform law. UCITA
was originally drafted as an amendment to Article 2 of the UCC and was
known as "UCC 2B." Once NCCUSL approves a proposed uniform law, state
NCCUSL commissioners promote its passage in their home states.
NCCUSL and the American Law Institute (ALI) [http://www.ali.org/]
collaborate on the development of uniform laws. NCCUSL and ALI spent
almost ten years attempting to amend the Uniform Commercial Code to
include rules that would govern computer information transactions on
the Internet and elsewhere. The two organizations could not reach
consensus about the scope and wording of the amendments to UCC Article
2. After ALI withdrew from the process in 1999, NCCUSL approved the
proposals and released them for adoption, renaming the proposed state
law the Uniform Computer Information Transactions Act (UCITA).
The process of drafting UCITA has been unusual and
controversial. Usually, the ALI and NCCUSL work together to make
changes to the Uniform Commercial Code. In this case, however, ALI
withdrew its consideration of the UCC2B language after it failed to
find consensus among its own membership of law professors, lawyers and
judges.
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UCITA "bomb-shelter" legislation
A software license includes a provision that specifies which law governs the contract. In UCITA this choice of law
provision enables contracting parties to select Virginia or Maryland
law (i.e. UCITA) to govern a software or access contract entered into
by residents and businesses anywhere in the country. This means that a
business or consumer in a state that has not passed UCITA could still
be subject to it. In the case of "shrink-wrap" or "click-wrap"
licenses, the licensor unilaterally determines the terms and could
include such a term regardless of whether the licensor or the licensee
have any relationship to Virginia or Maryland. UCITA also broadly
allows choice of forum clauses that might choose Virginia or
Maryland as the state where any litigation or arbitration regarding a
dispute in the contract would take place.
UCITA "Bomb-shelter" Legislation one page brief
[http://www-affect.@ucita.com/pdf/UCITABombShelter.pdf]
Consequently, some states have developed "defensive
legislation" to protect their residents. Iowa, West Virginia and North
Carolina have passed such laws, often referred to as "bomb-shelter
laws." In most cases, this legislation narrowly states that such a choice of law or choice of forum term is unenforceable in that state.
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2002 Amendments to UCITA
In August 2002, NCCUSL approved thirty-eight amendments to UCITA.
[http://www.nccusl.org/nccusl/ucita/UCITA_Standby_Comm.htm]
These amendments attempt to respond to criticisms voiced at hearings
held in 2001 and to recommendations made earlier in the year by the
American Bar Association (ABA) working group on UCITA. Although the
amendments respond to many issues raised by the ABA, they do not
address some important consumer protection issues. Moreover, the
amendments still do not substantially improve UCITA. Although an
amendment related to libraries has been approved, the amendment was not
originally proposed by the libraries and does not address the
fundamental concerns that libraries have voiced about UCITA.
AFFECT Response to NCCUSL Commentary on the 2002 UCITA Amendments, December 4, 2002
This is a detailed analysis that responds to comments issued by NCCUSL on August 23, 2002.
http://www-affect.@ucita.com/pdf/AmendmentAnalysisFinal.pdf
Summary of AFFECT Response to 2002 UCITA Amendments
This is a three page summary of the key points of the longer analysis.
http://www-affect.@ucita.com/pdf/AFFECTResponseRevision.pdf
AFFECT challenges recent amendments to UCITA (one page)
This is a one page document that highlights the deficits in the amendments relating to key issues.
http://www-affect.@ucita.com/pdf/AFFECTChallenges.pdf
AFFECT continues to oppose UCITA (one page)
This one page document is a convenient reference summarizing the major
reasons for opposition to UCITA by libraries, businesses and consumers.
http://www-affect.@ucita.com/pdf/AFFECTOppose.pdf
Library amendment
Libraries received a small concession to their concerns
in an amendment, originally proposed in late 2001, that would permit
the transfer or donation of computer software to public libraries, and
public elementary and secondary schools, even if the terms in a
shrink-wrap contract indicate otherwise. However, the proposed
amendment would apply only to computer software that is transferred in
a computer. Moreover, the drafting committee rejected library proposals
that would have affirmed the primacy of federal copyright law in
determining the enforceability of terms in "shrink-wrap" and "click-on"
contracts. The committee's report showed either a complete
misunderstanding or a misinterpretation of the library arguments
regarding UCITA.
Library Response to NCCUSL Amendment Proposals, January 2002:
[libresp.pdf]
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UCITA and the American Bar Association
The impetus for a uniform law relating to information
technology transactions came from the American Bar Association (ABA).
The ABA usually reviews proposed uniform laws and approves their
readiness for introduction in state legislatures. However, UCITA was
not submitted for review to the ABA in 1999 and did not actually come
under ABA scrutiny until the end of 2001.
The Working Group did an extensive review of UCITA and issued an internal report on January 30, 2002. {item below}
At the February 2003 ABA Midyear Conference, NCCUSL submitted a
resolution to the ABA House of Delegates that recommended that the ABA
"approve" UCITA as appropriate for consideration by state legislatures.
The resolution was withdrawn before a vote could be taken when it
became apparent that the resolution was likely to fail. Prior to the
meeting, six ABA sections and two committees had considered the
resolution and all failed to vote for passage. {ALA Press Release of
Feb. 11, 2003, Headlines page}
[http://www.abanet.org/leadership/ucita.pdf]
January 30, 2003:
Open Letter from the American Library Association, the American
Association of Law Libraries, the American Association of Research
Libraries, the Special Libraries Association, the Medical Libraries
Association and the American Association of Universities letter to the
American Bar Association House of Delegates.
[ABAltr30jan03.pdf]
2002 American Bar Association Working Group Report on UCITA
In an internal report released on January 30, 2002 to the ABA Board
of Governors, the ABA Working Group assigned to review UCITA issued a
report with eighteen recommendations for changes.
[http://www.abanet.org/leadership/ucita.pdf]
Some of the working group's suggestions were addressed
to some degree in the amendments that were approved by NCCUSL in August
2002. The report states that UCITA "is a very complex statute that is
daunting for even knowledgeable lawyers to understand and apply." The
first recommendation stated, "UCITA should be redrafted to make it
easier to understand and use." The ABA has not issued any statement
regarding the recent amendments.
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Opponents of UCITA
Opposition to UCITA has been consistent and contentious throughout the life of the Act. The Americans for Fair Electronic Commerce Transactions (AFFECT)-formerly
known as 4CITE- formed in 2000 and is leading the nationwide
opposition. AFFECT is a broad-based coalition of over sixty retail and
manufacturing businesses, consumers, financial services institutions,
technology professionals and libraries. Libraries were founding members
of AFFECT which has been active in every state in which UCITA has been
considered.
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Proponents of UCITA
UCITA is supported primarily by software publishers and
some technology firms: Microsoft, AOL, LexisNexis, Reed Elsevier, the
Business Software Alliance, the Information Technology Association of
America, Software and Information Industry Association.
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UCITA 102
Proposed UCITA-Related Legislation
While UCITA is increasingly being perceived as a failed attempt to
modify the law to meet the demands of the Digital Age, other more
narrow efforts to modify the Uniform Commercial Code (UCC) have been
simultaneously underway. Libraries and other UCITA opponents are
concerned that certain proposed amendments to UCC Article 1 and Article
2, if adopted, would create changes to the law that would negatively
impact business and consumer transactions and create fertile ground for
a renewed interest in UCITA in the future. AFFECT has followed these
issues for several years and the coalition has filed comments with both
NCCUSL, the American Law Institute (ALI), the American Bar Association
and several state legislatures. Libraries will continue to join with
their partners in AFFECT to oppose the adoption of these proposed
amendments in state legislatures.
Proposed Amendment to UCC Article 1-Section 301: Choice of Law [http://www.ucita.com/Legislation.htm#one]
Proposed Amendments to UCC Article 2
[http://www.ucita.com/Legislation.htm#two]
Track the introduction of proposed Article 1 and Article 2 amendments.
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