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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