A law anything but uniform

UCITA fact sheet

On March 14, Virginia became the first state to adopt a version of the Uniform

Computer Information Transactions Act (UCITA). Since then, numerous groups

have been seeking amendments to the law, which takes effect July 1, 2001.

In the meantime, Maryland adopted a different version of UCITA that took

effect Oct. 1.

The differences between these two laws, and also the supposedly "uniform"

model on which they were based, are important to everyone who buys, sells

or uses software.

The problem begins with a simple question, "Is the sale of a software

license the same as a sale of goods?" If the answer is yes, then its terms

will be governed by Article II of the Uniform Commercial Code (UCC), which

has been adopted in all 50 states and Washington, D.C., to protect consumers

and to make contracting more efficient. If no, then it is less clear what

law applies.

As one might expect, there is a diversity of opinion in the courts.

To address the question comprehensively, the American Law Institute

and the National Conference of Commissioners on Uniform State Laws (NCCUSL),

which jointly maintain the model UCC, started a project in the mid-1990s

to write a new UCC Article 2B to address software. Problems began immediately,

as the various competing interest groups representing consumers, software

manufacturers, user groups and others struggled to reach a consensus on

key issues.

Last year, the American Law Institute withdrew from the effort because

it believed the NCCUSL was rushing to completion before those issues could

be resolved fairly. This ended the project, but the NCCUSL continued to

push its own model law, now under the UCITA mantle. Because of the chaotic

way that the model UCITA was written, its adoption is guaranteed to be anything

but uniform.

In fact, although the Virginia law mirrored NCCUSL's originally proposed

model, NCCUSL suggested amendments to the model after the passage of Virginia's

version. Moreover, Maryland's version includes amendments that are not part

of the NCCUSL model. Furthermore, of the handful of states that have introduced

a draft UCITA bill this year, most have included nonstandard amendments

of their own.

Some of the most contentious issues in NCCUSL's model UCITA include

provisions that make it easier for a software manufacturer to disclaim warranties,

prevent reverse-engineering and impose limits on a licensee's right to criticize

the software or offer product reviews.

The Virginia legislature is considering amending its UCITA to make it

more consumer-friendly. Indeed, the unusually long time between the passage

of Virginia's UCITA and its effective date was intended to allow lawmakers

to amend the law before it took effect.

Anyone interested in this issue should make the effort to become more

informed. They can reach their own conclusions on what is at stake.

—Peckinpaugh is corporate counsel for DynCorp, Reston, Va.