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A Battle Over Software Licensing
By LAURIE J. FLYNN
A proposed law intended to standardize software licensing from state to state has ignited a battle between its supporters — most notably, the business software industry — and the many forces who have joined to defeat it.
Opposition has united a strange collection of bedfellows: librarians, information-technology managers and corporate chief information officers, insurance and aerospace executives, and consumer groups.
The dispute involves a dense piece of legalese that has been scrutinized and debated for three years, although it was first proposed nearly a decade ago. Called the Uniform Computer Information Transactions Act, the draft law aims to establish a single national framework for state laws governing the information economy — laws that vary widely around the nation.
Just as other laws apply to consumer products like cars and groceries, the new law would help states address concerns like warranties and licenses for packaged software that are particular to information products.
Three years ago, a conference of lawmakers from various states agreed to a version of the legislation, and started circulating it for adoption by individual states. So far, only two have passed it: Maryland and Virginia. Most of the nation's state attorneys general oppose the legislation, primarily because they see it as potentially overriding various state consumer protection laws already on the books.
One of the proposed law's main effects would be to make binding contracts of the consumer licenses that come with shrink-wrapped software — despite the fact the buyer often cannot read the licensing agreement before buying and opening the package.
According to one critic of the measure, Randy Roth, an information-technology buyers' consultant in Des Moines, the fight to defeat the new commercial code may very well be the first time consumers and the insurance industry have been on the same side of a major legislative issue.
This week, a group opposing the proposed law, Americans for Fair Electronic Commerce Transaction, will hold its annual planning meeting in Washington, with the goal of girding the organization for the critical year ahead. The group will try to devise a strategy to prevent the uniform computer transactions act, which is known by the acronym Ucita, from gaining ground beyond the two states that have already adopted it.
The opponents argue that Ucita is too overreaching and unclear and gives software companies an unfair advantage over consumers, while giving consumers little recourse if they buy bad software. The opposition group "has always believed that Ucita is too broad, too complex and has too many problems, and that it should be scrapped and rewritten," said Carol Ashworth, who holds the title of "Ucita grass-roots coordinator" for the American Library Association.
The opponents contend that the software industry had far too much influence in the writing the legislation.
"It's like having the American Medical Association write the laws governing malpractice," said Edward Foster, a columnist for the computer trade magazine InfoWorld, who has been active in the fight against the proposal for the past eight years.
Insurers are opposing the legislation because they say it would make their heavily regulated businesses too vulnerable to the software companies. Under the proposed law, critics contend that software companies could disable a customer's software for perceived violations to the licensing agreement, or suspected piracy — essentially bringing business to a halt.
"For us, there's more at stake because this industry is so dependent on computer software," said John Lobert, senior vice president for state government affairs for the Alliance of American Insurers, an industry trade group. "Anything that impacts how software is licensed affects the insurance industry."
The original version of the proposed code went so far as to let software companies electronically disable a program that was being used in violation of its license agreement. While that proviso was eliminated by recent amendments, critics like Mr. Lobert say so many loopholes remain in the statute that the amendments are almost meaningless.
Work on the proposal began in the early 1990's, after lawyers from the National Conference of Commissioners on Uniform State Laws determined that existing product codes would not comfortably apply to software licensing. Not until 1999, after countless hours of debate and testimony, did the conference pass the information transaction act and send it to the states.
Since then, the statute has been embroiled in debate. In perhaps the biggest blow to the proposal, the American Bar Association, after studying the act, declined to endorse it and instead issued a long list of recommended amendments. In July, the commission of legislators made 38 amendments based on those recommendations, but opponents dismissed the revisions as inadequate.
• To press their case, the pro-Ucita forces now intend to lobby states to enact the legislation.
Mary Jo Dively, who was a consultant to the original drafters of the proposal and who is now vice president and chief counsel at Carnegie Mellon University, says that many of Ucita's opponents may not be accustomed to doing business within the framework of the commercial code, and that the changes the opposition group has suggested are unrealistic.
"The group would like to change Ucita to be vastly different from any commercial law in effect today," she said, "and it would have no chance of passing."
Accusations that the software industry unduly influenced the writing of the law, or that the law is biased in its favor, are unfounded, Ms. Dively said. "I don't think any one entity had more input than any other," she said. "What it does do over existing law is make it worse for the licensor."
Ucita's backers also point out that in Maryland and Virginia the same arguments that opposition group has put forth were debated at length and rejected. But Mr. Roth, one of the legislation's critics, argues that when Maryland and Virginia passed the law, the states were hoping to ride the tech boom of the late 1990's by making their states more attractive to software and Internet companies.
In the meantime, opponents are preparing to do battle in the upcoming legislative session. In their view, the stakes are high.
"If Ucita passes in the states," said David McMahon, a consumer affairs lawyer in Charleston, Va., and the consumer representative on the board of the opposition group, "anybody buying new computer software will have less protection than when a consumer buys a cheap used car."
