UCITA – AGAIN
& OTHER ONLINE CONTRACTS
October 2002
The Uniform Computer Transactions Act (UCITA) is a model uniform state law that must be adopted state-by-state.[1] It basically creates a presumption that computer information transactions, which include, but are not limited to software, are licenses rather than sales. Further, it explicitly validates shrinkwrap, clickwrap or click-on contracting practices which may restricts warranties and purchasers’ use of the software. Some of the other complaints about UCITA include that it (1) validates post-payment disclosure of materials terms of a software licensing contract, (2) permits licensors to fail to disclose known defects in the software, (3) creates doubt about whether software transactions are covered by consumer protection law in existence for other goods, (4) validates the use of transfer restrictions in the mass market that conflict with traditional consumer expectations, (5) permits owners to exercise self help and disable a licensee’s use of the software unilaterally, and (6) prohibits a licensee from even criticizing the software.
Both Virginia and Maryland enacted UCITA in 2000. Following an initial flurry in which it appeared that many states would adopt the model law, UCITA seemed to stall. It has been opposed not only by library associations, but also by a wide range of consumer groups. A number of lawyers have also opposed enactment of the model law including the American Bar Association’s UCITA working group and 34 of the 50 state attorneys general.
By August 2001, the National Conference of Commissioners on Uniform State Laws (NCCUSL), the body responsible for UCITA, began to recognize that the proposed model law was unlikely to be enacted in aditional states. Several states that considered UCITA actually enacted what is called a “bombshelter” law that allows a citizen of a state to avoid any provision in a contract which says it is governed by UCITA. Bombshelter legislation will prevent software producers from using electronic contracts that automatically select Virginia or Maryland as the choice of forum for any disputes under the contract, thereby making UCITA applicable to contracts in states that have not adopted it.
After the American Bar Association objected to UCITA, NCCUSL began to reexamine the provisions and changed some of the more controversial provisions. For example, electronic self help was banned; instead, vendors would have to go to court for breach of contract. Additionally, consumer protection laws would trump UCITA, and no contract could waive consumer protection under state or federal law. Important to libraries and educational institutions, the right to criticize an electronic product was preserved; remedy for known material defect was preserved just as it is for any goods or services; and reverse engineering for interoperability was expressly authorized.
The American Bar Association working group on UCITA issued a report in February 2002 which agrees that there is need for a uniform law, but states that UCITA is still unworkable in its current form, even with these changes. At the end of July 2002 NCCUSL met and offered 38 amendments to UCITA. It will present these changes to the American Bar Association either in September or early next year.
Library associations continue to opposed even the amended UCITA believing that it is fundamentally flawed and biased in favor of the software industry against the interests of libraries and their users. Special Libraries Association, along with other library groups, is a member of AFFECT, Americans for Fair Electronic Commerce Transactions,[2] formerly 4Cite. Even if all of the proposed amendments to UCITA are adopted, the major complaint of library associations has not changed: shrinkwrap and clickwrap licenses are non-negotiable licenses and the terms of the license agreement are not even disclosed until after payment is made for the product. These terms often attempt to restrict even legitimate uses of the material that would be allowed under copyright and fair use, such as interlibrary lending, preservation copying, and the like.
Consumer concerns are not solved by the amendments either. Three major issues remain for consumers. First, it remains unclear whether and to what extent a state’s consumer laws would apply when UCITA is applicable. Second, software producers can still disclaim warranties even under the amended language. Third, consumer groups agree with library associations that UCITA would enforce contract terms that are not even disclosed until after payment for the software. There is also considerable concern that consumers will not even read these agreements, in any event, and will be agreeing by clicking without having a clear notion of the terms of the agreement.
Much of the disagreement is over the underlying policies for UCITA. By contrast, the Committee on the Law of Cyberspace of the American Bar Association last year developed a list of six principles that librarians and library associations are much more likely to favor. These principles are specifically for the digital environment to create enforceable click-through agreements which were announced last. Most libraries would agree that these are commonsense principles based on fairness to both parties. Principle 1 - users must have easy, automatic access to the terms of the proposed contract as well as a subsequent opportunity to review terms. Principle 2 - the contract terms should be displayed provided so that the display complies with applicable laws on notice, disclosure, conspicuousness and other formal requirements. Principle 3 - assent to the terms - directs licensors to make sure that a user has notice of the consequences of clicking a button or otherwise indicating assent to contract terms. Principle 4 - drawn from the Uniform Electronic Signatures Act (UETA) - states that the assent process should provide a reasonable method to avoid or detect and correct errors likely to be made by the user in the assent process. Principle 5 - if the user rejects the agreement terms, that action should actually prevent the user from getting whatever the click-through agreement grants and means that agreements need both an “I agree” and “I disagree” button. Principle 6 - encourages licensors (vendors and publishers) to provide for preservation of records of the contract terms and the manner in which the user indicated assent to them so that the user can print out a version of the contract terms.
UCITA still looms on the horizon, but not so large as it did a couple of years ago. Librarians are still advised to watch their state legislatures carefully and be prepared to present to those bodies the problems that libraries and library users will encounter if UCITA is enacted in the state.