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UCITA
An Overview

The Uniform Computer Information Transactions Act (UCITA) was adopted as a proposed uniform act by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in July 1999 and amended in July 2002.

The goal of UCITA is to establish a new commercial law for licensing of information based products. Enactment of UCITA would dramatically alter transactions between vendors and practitioners and adversely impact businesses by shifting significant economic risks onto them as the licensees of computer technologies. This, in turn, would lead to an increase in the cost of doing business and would negatively impact the competitiveness of a licensee’s products.

Opposition to this proposed law is significant and includes numerous consumer groups, including many large and small businesses (licensees) and the American Law Institute (ALI). In addition, thirty-two state attorney generals have voiced opposition to the proposed law and have stated that the UCITA "almost invariably favor(s) a relatively small number of vendors to the detriment of millions of businesses and consumers who purchase computer software and subscribe to Internet services.

While the resistance has been significantly effective to this point, opposition is still important. For more information on UCITA visit recent position statements and press releases and our coalition partners, Americans for Fair Electronic Commerce Transactions, AFFECT.

Position Statement

Formal Statement of Position:

SIM Opposes Implementation of UCITA
The Society for Information Management (SIM) is in opposition to the passage and implementation of the Uniform Computer Information Transactions Act (UCITA) by any state or federal legislative body. SIM is a not-for-profit association, with 2300 members representing IT leadership in major corporations and organizations. UCITA is proposed legislation drafted by the National Conference of Commissioners on Uniform State Laws (NCCUSL), to encourage state legislatures to establish a uniform law governing software and computing information licensing agreements.

SIM believes the UCITA drafting project may have been started with good intentions, but has resulted in a poorly drafted policy with unfair protections for licensors, which will significantly increase costs for companies that rely on the use of software and technology. UCITA will create a need for increased asset management, legal, and contract negotiation efforts without providing corresponding benefits.

UCITA will be harmful to corporate technology users and individual consumers because it will:
  • Expressly authorize a licensor to remotely shut down mission critical software without court approval, in many cases shielding the licensor from liability for the foreseeable harm caused
  • Create barriers to challenging unfair provisions in shrink-wrap and click-on agreements such as clauses prohibiting public criticism of the licensed software, or requiring the end user to litigate disputes in the courts of a distant state or country
  • Make it easier for software companies and access providers to avoid being sued for breach of contract
  • Allow the service provider in an access or maintenance contract to change the terms of the contract unilaterally by simply posting the changes somewhere on its website
  • Make it easier for software licensors to claim that licensees are required to pay additional license fees to continue using their products after a period of initial use
  • Potentially expose users to increased risks should the licensed software infringe on a third party’s intellectual property rights
  • Upset the copyright law’s balance between the interest of the public in the free flow of information and the protection of the rights of creators of software programs and other computer information.
Rather than achieving its stated goal of increasing certainty in computer information transactions, UCITA will actually create more uncertainty in the development and enforcement of software and computer information contracts. Law professors and attorneys have criticized the model law as being convoluted and difficult to follow. In addition, the controversy surrounding UCITA invites different amendments by each State to try to make it more palatable to the objectors. This will lead to a confusing maze of rules, depending upon which state’s law is designated as the "governing law” in a particular agreement. Furthermore, a licensor need not reside in a state chosen by it as "governing law”. For example, a California software company can designate the law of Maryland (the first state where UCITA has taken effect) in its standard form contracts.

For the reasons stated above, SIM opposes further enactment of this legislation, asks NCCUSL to withdraw it from consideration, and supports the repeal of UCITA in states where it has already been enacted.

Approved by the SIM Executive Board on 2 March 2001

Why the Controversy?

UCITA - Why the Controversy?
The Uniform Computer Information Transactions Act (UCITA) is a model law "on the books." While no longer sponsored by the National Council of Commissioners on Uniform State Laws (NCCUSL), it has not been withdrawn and can be cited in any future legislation and/or court case. UCITA would govern contracts between manufacturers and consumers regarding nearly all "transactions in information.” The broad definition of "computer information” would cover everything from copyrighted expressions such as stories, computer programs, images, music and web pages to intellectual property such as patents, trade secrets, and trademarks as well as online databases and interactive games.

UCITA is controversial because:

It replaces the public law of copyright with the private law of contract
Under the public law of copyright, a vendor sells copies of information such as books or software. UCITA would allow for the "licensing” of information. Rather than owning a copy, you are granted permission to use the copy within limits dictated by the "license.” When you purchase a license to use a piece of software for instance, you agree to a contract, that you are unable to read in advance or negotiate, governing everything from how the software is to be used to whether or nor you are allowed to publicly criticize the product. The public law of copyright comes with certain privileges such as fair use, the private law of contract does not.

The scope of UCITA is overly broad
As stated above, the definition of computer information would cover nearly all things digital. Moreover, the UCITA framework would allow those items not covered by the original draft to "opt-in” or be governed by the UCITA.

UCITA enables "mass-market” or shrink-wrap/click-on licenses
When you buy a piece of software or other information products, you buy the product without the capability to read the license. In some cases, the act of opening the box or "breaking the plastic wrapping” is consent to the terms of the license. This is a fundamentally unfair position because the licensee has no idea ahead of time concerning the terms and conditions laid-out in the license. UCITA would enable a vendor, such as a software company, to restrict a consumer’s right to sue for a product defect, to donate the product to charity, to use the product, or even to publicly discuss or criticize the product or information contained in it.

UCITA would undercut fair use, preservation, and the unhindered use of works in the public domain
Click-on/shrink-wrap licenses would supersede the traditional copyright balances that insure access to information; a key principle for the function of libraries.

UCITA would prevent reverse-engineering even in cases of interoperability
Reverse-engineering allows software developers to make better products. Without this capacity, there is no guarantee that new programs will work together.

 
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