Opponents blast proposed software law

Computer World –

U.S. state legislatures may soon pass the Uniform Computer Information Transaction Act (UCITA), a proposed law that opponents characterize as a gift to information technology vendors, a threat to software buyers and a legal mess.

The draft statute has been proposed by an organization of more than 300 lawyers, judges and law professors. The organization -- the National Conference of Commissioners on Uniform State Laws (NCCUSL) -- assists in making laws uniform across state borders in the U.S. Traditionally, most or all U.S. states pass the organization's recommendations into law.

The members will meet in Denver July 23-30 to vote on the IT statute and other issues.

The NCCUSL previously participated in drawing up a law on the sale of goods, which today provides a minimum level of protection for U.S. consumers.

The UCITA proposal also relates to transactions between buyers and sellers but in relation to intangible goods such as software. The act further regulates the licensing of a product. The proposed law covers software, multimedia interactive products, data and databases, the Internet and online information.

According to the NCCUSL, software users should welcome the new law. "UCITA provides [consumers] protections equal to or more than current law," said Carlyle "Connie" Ring, chairman of the NCCUSL committee that worked on the statute, in a written statement recently sent to all NCCUSL members. He also stated that there is an unquestioned need for uniform rules in this area.

Not true, opponents of UCITA have said during several years of heated debate. They claim that users are better protected by using existing laws, such as the one on the sale of goods. They also say it is far too early to create special laws in this area. Not enough cases have been tried in court yet, and many in the legal community lack understanding of the subject, UCITA opponents say.

Law Professor Jean Braucher at the University of Arizona is among the opponents. "The draft statute will make it very easy for software publishers to disclaim all liability for the quality of their product and to provide no meaningful remedy," Braucher wrote in an article published in the July issue of the "UCC Bulletin," a legal newsletter.

The UCITA relies on detailed regulation to protect vendors and is both premature and unsound in its policy tilt, according to Braucher. For example, the law will make it possible for vendors to give disclaimers, to reduce their potential liability, which buyers cannot see until the product is paid for. Braucher referred to shrink-wrapped software and the "click during installation" model of assent adopted in the UCITA.

Braucher also criticized the proposed act for making it legal for a vendor to cut off a buyer's transfer rights.

"If you later want to sell the software or give it to a relative or charity, you will have to ask the vendor for permission. But if you bought a book, such a demand is against the law," Braucher said. The UCITA thereby eliminates a second-hand market.

"It is my impression that this law is driven by the desire of some software publishers who want to protect their interests even more than the existing laws allow them to," Braucher added.

Several organizations of IT professionals oppose the law, arguing its new rules could hinder them in performing their joob as efficiently as they have done before. For example, it will become more difficult to ensure integration between products, they say. This is because the UCITA would ban the reverse engineering of software, a method of development often used to construct links between products.

Additionally, businesses using software have protested, including companies that participate in the Society of Information Managers, which has 2,700 members. Business users, just like consumers, will lose ground when it comes to the terms of shrink-wrapped licenses, according to SIM.

Also, the law gives software vendors an extremely powerful threat in case of disagreements with users. In some cases, vendors are allowed to make the software stop functioning at a customer's site without going to court first.

The University of Arizona's Braucher pointed out another problem in her recent article in the "UCC Bulletin," namely, a limitation to the right of free speech. "UCITA enables the vendors to forbid the customers to publish results of tests of software or other criticism," Braucher wrote in the article.

SIM has supplied all its members with a draft of a protest letter, urging them to send it to NCCUSL members from their own state.

"If enacted, UCITA would increase our cost of doing business and adversely affect the economy of the states in which we operate," the letter states. It also claims that there is an imbalance in favor of the vendors "in both blatant and numerous subtle nuances woven throughout the law."

According to SIM Executive Director Jim Luisi, many IT managers have already posted the letter written on their company letterhead.

However, Fred H. Miller, law professor at the University of Oklahoma and executive director of the drafting committee on UCITA, expects the law to be passed.

According to Miller, the law is needed because there are many issues in this area not being specifically addressed in existing legislation. "The law is unclear, and therefore there is a lot of effort to provide clear rules," he said. Different laws in different states may be preventing business across borders or raising the cost of them, according to Miller.

The software industry is positive about the initiative, Miller said. Also, the balance struck by the proposed law between the vendors and the users is fair, he added.

According to the letter from UCITA's Ring, the following software industry organizations are supporting the draft: industry antipiracy body the Business Software Alliance (14 members, among those Microsoft Corp, Lotus Development Corp. and Adobe Systems Inc.), the Software Information Industry Association, Silicon Valley Software Industry Coalition and the Computer Software Industry Association.

Not one consumer organization is supporting the draft, but the list of consumer organizations protesting against it is a long one.

The U.S. Federal Trade Commission (FTC), an independent agency responsible for safeguarding the interests of consumers, in October last year wrote to the UCITA drafting committee expressing concerns and giving recommendations for changes. The FTC still has concerns relating to the new draft of the UCITA that will be voted on, the IDG News Service has learned. By Monday, the FTC is expected to send another letter to the drafting committee explaining the problems it has with the proposed act.

According to Miller, the UCITA especially protects consumers. Enterprises have the power to negotiate conditions with software vendors, Miller said.

When asked whether the UCITA covers issues that arise when hackers use a bug in a software product to harm end-user organizations, Miller said no.

Professor Braucher wouldn't be surprised if the draft statute is approved by NCCUSL members. "But I know many people who are not happy with the content," she said. Loyalty and strong leadership by the organization may make theem vote for the draft, she added.

"But it is a mess" and an example of bad legal craft, Braucher said.

Such objections may be the reason why the NCCUSL's normal partner when it comes to making uniform laws, the American Law Institute (ALI), withdrew from the project in April. At that time, the draft statute was under consideration by both organizations as an extension of the Uniform Commercial Code (UCC), and was known as Article 2B of the Uniform Commercial Code. The UCC is a long-standing statute that codifies commercial practices throughout the various states and currently covers, among other things, sale of goods and the leasing of personal property.

"The Council of the Institute continued to have significant reservations about both some of [Article 2B's] key substantive provisions and its overall clarity and coherence," the ALI said in its "ALI Reporter" newsletter.

The NCCUSL decided to carry on with the draft statute, renaming it the Uniform Computer Information Transactions Act. While the UCC codifies well-established practices, the UCITA involves high technology, an area that is still evolving, the NCCUSL's Miller said. So it makes sense to keep the UCITA separate -- at least for now -- from the UCC, Miller said.

Miller also acknowledged that even if the draft UCITA is approved, the NCCUSL and the state legislatures "may have to make some corrections later."

But if the UCITA eventually is passed by state legislatures, becoming law, the American software industry will ship worse software than today, according to one of the most ardent opponents of UCITA, Cem Kaner, a lawyer and IT professional in Santa Clara, Calif. The economic consequences of defective software will be less, according to Kaner.

California attorney Carol Kunze has posted information about the proposed legislation at www.2Bguide.com.

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