Controversial ‘time bomb’ legislation fizzles

After nearly four years of intense debate, the National Conference of Commissioners on Uniform State Laws (NCCUSL)–a group of more than 350 lawyers, judges, and law professors–said it is shelving efforts to pursue nationwide legislation that would give software publishers the right to shut down computer programs remotely when users, including school customers, are found in violation of their licensing agreements.

Known as the Uniform Computer Information Transactions Act, or UCITA, the initiative sought to create the first state-to-state law governing all contracts for the sale, licensing, service, and support of commercial software or digital information products. The legislation would command greater respect for the terms set forth in “shrink-wrap” and “click-wrap” licensing agreements encountered by users when they download or manually install new software onto their machines; prevent the transfer of licenses from one party to another without vendor approval; and enable vendors to disable software remotely in the event that a user violates the terms of his or her software agreement, among other things.

But despite its adoption so far in two states–Maryland and Virginia–the law has struggled to gain momentum nationwide and, in some cases, has met with stark resistance from lawmakers and consumer-interest groups, many of whom contend that UCITA places too much power in the hands of software providers. Now the group responsible for drafting the law has announced it no longer plans to fight for UCITA’s passage.

NCCUSL President K. King Burnett attempted to explain the decision at the organization’s annual meeting in Washington, D.C., in August: “Clearly our efforts to find consensus and to bring all of the interested parties together has been extraordinary. Unfortunately, in the real world, sometimes doing the right thing at the right time is not enough. We have determined to focus [our] energies on the items related to our larger agenda and not expend any additional…energy or resources in having UCITA adopted.”

The decision is doubtless a disappointment to software companies such as Microsoft Corp. and other supporters of the bill, including the Business Software Alliance and the Software and Industry Information Association, which lobbied hard for widespread adoption of UCITA and were encouraged by NCCUSL’s commitment.

According to NCCUSL’s legislative director, John McCabe, UCITA attempted to bring a sense of uniformity to the chaotic world of internet commerce, where transactions–especially for software products–occur in the form of licensing pacts between vendor and consumer, rather than the outright sale of goods.

“Certainty is useful in commerce. Uncertainty is not useful,” McCabe said. “The assumption was that ultimately an adapted law for computer information contracts is likely to be necessary.”

But while pro-UCITA factions billed the law as a way to extend the protections of the Uniform Commercial Code, which governs the sale of tangible goods, to products in the digital realm, its detractors saw the law a as nod toward free reign for software manufacturers and attempted to thwart the bill’s adoption.

At the head of the opposition movement stands the Americans for Fair Electronic Commerce Transactions (AFFECT), a coalition of more than 60 retail, nonprofit, and consumer groups formed in 1999 to fight UCITA’s passage.

The group has lobbied with legislators in all 50 states to block UCITA, and its efforts have given way to a grassroots movement, garnering the support of the American Library Association, the Association for Computing Machinery, the American Law Institute, the National Consumer Law Center, and the Federal Trade Commission, among others.

“UCITA is an extremely complex piece of legislation,” said AFFECT Coordinator Carol Ashworth. “On the surface it might look like a good thing, but the more you know about UCITA, the less likely you are to support it.”

At the heart of the UCITA debate is the law’s controversial “self-help” provision, which would enable software companies to repossess their products in the event that users fail to live up to the terms set forth in their licensing agreement. Specifically, the provision would enable software companies to use “time bomb” mechanisms that would disable software products remotely.

While UCITA’s supporters have said the terms of self-help are analogous to the same commercial code laws that allow banks to repossess a person’s house, they’ve also argued that UCITA provides sufficient protections for consumers.

Not so, according to Ashworth. “UCITA was far too sweeping in its scope,” she said. “One of the factors that led to its demise is that it really tried to be all things to all people.” Some legal experts argued that UCITA would permit software publishers to circumvent the fair-use exceptions in existing U.S. copyright law by enabling them to include language in both “shrink-wrap” and “click-wrap” licensing agreements that is contradictory to standard fair-use policy. Perhaps more important, software customers generally do not get an opportunity to read the fine print in licensing agreements until after the original point of purchase.

“UCITA is designed to give software and digital content producers the right to hold back their terms until after customers have paid and taken delivery, and it also invites publishers to try to cut back on fair-use rights by [using] boilerplate contract terms,” said University of Arizona law professors Jean Braucher and Roger Henderson.

Although a uniform law governing computer transactions would not be a bad thing in itself, legal experts who spoke with eSchool News said UCITA probably is not the best answer.

Instead, it would be desirable to have legislation that clearly requires advanced disclosure of contract terms, protects fair-use rights in mass-market transactions, and gives rights of transfer to the customer, so customers can make fair use of the products, Braucher said: “It would be better to do nothing than enact a law like UCITA that protects, rather than addresses, abusive practices of producers. There are tools in federal and state consumer law and in state contract law that can address the problems until a [better] statute is written.”

Jonathan Band, an internet lawyer and a partner at Washington, D.C.-based Morrison and Foerster LLP, said the use of “click-wrap” and “shrink-wrap” licensing tools is not necessarily a bad idea, as long as the terms of those agreements do not supercede existing copyright law.

Band suggested creating a “black list” of licensing terms, precluding software makers from incorporating language into their legalese that would adversely affect consumer protections.

Some states already have taken steps to undercut UCITA.

Iowa, North Carolina, West Virginia, and Vermont all have enacted “bomb-shelter” provisions to shield their residents against UCITA laws already in place in other states. Delaware and Massachusetts have introduced similar provisions for consideration in their state legislatures.

In 2001, a letter from 32 attorneys general opposing the law stated, “UCITA is so flawed that any amendments which could reasonably be expected…would not significantly ameliorate UCITA’s negative impact on consumers or on the marketplace in general.”

And earlier this year, UCITA initiatives in Nevada and Oklahoma fell flat when the law failed to win the support of the American Bar Association, which questioned its approval on the grounds that it could “present a significant security concern, potentially affecting key aspects of our nation’s critical infrastructure.”

“UCITA’s failure to take the state legislatures by storm was more than a matter of timing–it was the wrong act as well as the wrong time,” said Miriam Nisbet, president of AFFECT. “We are quite pleased that the [NCCUSL] has decided to expend no further energy on UCITA.”

At the school level, educators don’t dispute the need for companies to monitor the appropriate use of licensed software, but many have questioned their methods.

“While I don’t like the idea of a software developer being able to unilaterally uninstall a program, there need to be processes whereby they can monitor correct use and get compensation that is due them from misuse,” said Marc Liebman, superintendent of the Marysville Joint Unified School District in California. “Quite frankly, current law as I understand it allows for [that] compensation. I am not sure that giving a vendor access to organizational networks is appropriate–there must be some way of [crafting a better law] to ensure users are using software appropriately.”

In Maryland and Virginia, where UCITA already is law, experts say the best protection against potentially unfair licensing policies is to read thoroughly the terms listed in both “click-wrap” and “shrink-wrap” agreements.

While NCCUSL has no immediate plans to pursue further passage of UCITA in other states, it did not rule out the possibility of rewriting the bill down the road.

“Of course, we are not abandoning our interest in the subject matter. UCITA will remain in place as a resource for the American legal and political community and for reference by the courts,” Burnett said during the meeting. “At some time in the future, there will be opportunities for making contributions of law suitable for the information economy. The [NCCUSL] remains interested in making these kinds of contributions and will undoubtedly consider carefully any new opportunities that arise.”

Links:

National Conference of Commissioners on Uniform State Laws
http://www.nccusl.org

Americans for Fair Electronic Commerce Transactions
http://www.4cite.org

Morrison and Foerster LLP
http://www.mofo.com/search/index.cfm

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