Articles / The Dangers of UCITA

The Dangers of UCITA

Skip Lockwood writes: "Virginia and Maryland are racing to be the first states in the U.S. to enact a new law governing software and Internet information transactions. No matter which state wins, local consumers, businesses, and libraries will lose."

The Uniform Computer Information Transactions Act (UCITA) has a reasonable goal: to create up-to-date rules governing the buying and selling of software. But UCITA unnecessarily reverses hard-won developments in consumer protection law that we now take for granted. It also tilts the playing field in favor of large software vendors and publishers.

For instance, legally mandated disclosure requirements and standardized terminology such as the APR (annual percentage rate) help us compare interest rates and locate important credit terms. Most product warranties are easier to understand than they were 20 years ago thanks to laws that require simplified language and distinguish between "Full" and "Limited" warranties. State commercial laws and Federal Trade Commission rules compel more truthful advertising.

Software is exactly the kind of product for which those types of rules are beneficial. Of course, disclosures and remedies appropriate for toasters and credit cards may not be appropriate for software. But rather than refine the current rules, UCITA returns to the days before nationally-supported consumer laws.

UCITA permits sellers to conceal known defects, escape responsibility for advertising claims, continue the practice of smothering the consumer with a blizzard of incomprehensible language, and hide contract terms until after purchase. The proposed law allows contract terms to be embedded in the software. Consumers would first see the contract after installing or downloading programs. UCITA could also drastically limit consumer's rights to seek legal remedies.

For example, UCITA will allow such practices as claiming the copyright on your creations. Libraries would be limited in their ability to lend digital material. Consumers will be restricted from publicly criticizing products. Businesses will be at the mercy of software and electronic information providers who could disable their computer programs when there is a contract dispute.

It's no wonder that 25 state Attorneys General oppose the proposed law, saying that it is "an open invitation to... exploit our citizens." Similarly, the Federal Trade Commission, the American Law Institute, consumer groups, the library community, and a wide range of businesses oppose it.

UCITA's proponents argue that the proposed law provides sufficient protection to consumers since it bans "unconscionable" tactics. That's a legal term for practices that are grossly unfair. Courts and scholars don't like to rely on "unconscionability" since it's so vague. Creating clear and fair rules is vastly superior to requiring litigation over an amorphous standard.

Proponents also say consumers can return software if they discover terms and conditions they don't like after opening or installing the software. But consumers would rather know what's hidden in the box prior to purchase. These consumer protections also assume that the software market is competitive, when in fact there are often few, if any, choices for consumers for many types of software and information.

UCITA's backers assert what industry groups always claim: this legislation will bring new high-tech jobs. Supposedly, companies will move to Maryland or Virginia to take advantage of the proposed law. But UCITA permits companies to select the law of any state to govern their agreements, so companies will be able to take advantage of Maryland's or Virginia's version of UCITA without ever leaving Silicon Valley.

Members of the Maryland General Assembly have begun the process of working through UCITA. They are still trying to pass the proposed law by the end of this legislative session. The Virginia legislature has passed UCITA and will now study it. Virginia has the right idea, just backwards.

Designing laws to govern computer software is too important to rush. The American Law Institute (ALI), a group of distinguished lawyers and law professors that help draft state laws, concluded that UCITA was fundamentally flawed, and ALI withdrew its support for the measure. We need thoughtful legislation that retains the protections of modern commercial and consumer law.


Skip Lockwood is the Director of For A Competitive Information and Technology Economy. He may be reached at skip@4CITE.org.


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RSS Recent comments

23 Feb 2000 09:04 starbane

Gee whiz
Litigators have proven over and over again that they don't understand the majority of technology, on any scale.

And forming an organization that has the word "Technology" in it's acronym isn't going to change that. lol

23 Feb 2000 12:49 raycormier

RE: Bellyache, bellyache
You don't really understand UCITA by your comment. Open Source stands to lose the most if UCITA is passed because we don't use "Shrink Wrap" so we can not avoid liability, and as an even more evil aspect of the UCITA,this would be retroactive for every piece of software. So say you created a calendar program and gave it to me for free. I use it and lose all my data and it costs me sales. Well since you don't have a "Shrink Wrap" license that excludes you from liability I would be able to sue you and put you in a hole forever probably because you are just some poor bum. While the same scenario applied to a large company with a "Shrink Wrapped" product would not be held liable. So your comments are quite ridiculous indeed. Get active NOW in preventing UCITA, your "little" pocket book won't help you AT ALL once UCITA is passed. Read more on this from Richard Stallman, he does a million times better job of explaining this than I could ever do. linuxtoday.com/stories... (linuxtoday.com/stories...)

My2cents,

Ray Cormier

23 Feb 2000 14:50 archersully

More on Bellyachin'
The problem that I see with UCITA is that even if it is unconstituional, we are counting on the courts to overturn it. I find that relying on an increasinly pro-business/anti-consumer judiciary to overturn bad legislation to be a demonstrably BAD THING. Far better to get the right legislation passed in the first place. Or at least less egregious legislation.

As for the "take your business elsewhere", the majority of consumers in this country use a limited number of applications from an even more limited number of vendors. There is increasingly little choice in software for the average consumer.

23 Feb 2000 16:38 cardinal

Organized resistance?
So where do people sign up in their states to fight the UCITA? I've seen a lot of great essays about why the UCITA is bad, and I don't think there's any real debate about that anymore. But what I haven't seen, and would really like to see, is some good groups/organizations to support that are making an effort to fight the UCITA.

So. Links, anybody? :)

23 Feb 2000 17:41 impvillage

You can't return opened software.
"You can always return the software..."

This isn't entirely true. Right now many stores WILL NOT ACCEPT returns of opened software packages. CompUSA, for example, will only exchange software for exactly the same title as you've purchased. Not knowing terms of the contract until after the sale is not an option *AT*ALL*. It may also be illegal under federal contract law, which generally trumps state law, but in this case who can be sure that the courts would view it this way.

23 Feb 2000 19:23 mindstrm

Returned software
Someone pointed out that most stores will not accept returns, and that this has been a hassle in the past.

Look at it this way.
If the product is misrepresented, and does not do what it claims to do, or what the salesperson claimed it would do, they *MUST* take it back. The sale was fraudulent.
If, on the other hand, you bought it in good faith, and they made no misrepresentation, they are under no obligation to accept a return. The same can be said for *any* product you purchase. When you buy a TV from wal-mart, then decide it's too big for your room, the only reason they take it back is because the store stated during the sale that you may return it. Other than the fact that they agreed to accept a return prior to the sale, they are under no legal obligation to accept the return of something sold under fair and legal pretenses.

24 Feb 2000 01:26 kobaz

Help us fight the UCITA: links
www.acm.org/usacm/copy... (www.acm.org/usacm/copy...)

This is the only link that I have come across regarding who/what/where to contact regarding fighting this horrible act

24 Feb 2000 11:18 mcoletti

Anti-UCITA page
Skip actually has an anti-UCITA page. (www.4cite.org/ucta101....)

I live in Virginia and will be writing the governor, the president of the state senate and the speaker of the house. I will also write complaints to the miscreants that allegedly represent me in Richmond asking why they voted in favor of this evil law.

Cheers,

Piprrr

25 Feb 2000 17:16 lithos

mindstrm you misunderstand the ramifications
Ok, to start off your completely correct in what you wrote. However that law changes everything. Right now if you buy software that is defective or isn't what it says it is you can take it back. When/if the law comes in, if you buy defective or software that isn't what it says it is, or it just blatently lies about everything in the package you can't return it, you can't get your money back, you lose. This law takes all responsibility for their products and just throws it out the window.
Thank god I'm a Canadian and the kind of legal crap they are pulling is simply illegal.

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