The Software Lawyers Strike Again

A proposed anticonsumer IT law moves closer to passage

In early April, an influential legal action group shredded a 76-year tradition of writing good business law. As a result, state legislators across the country might soon introduce strongly anticonsumer bills aimed at governing the sale of computer software. The bill began as Article 2B, part of a proposed change to the Uniform Commercial Code (UCC). Now the bill is a standalone proposal called the Uniform Computer Information Transaction Act (UCITA).

The UCC is a set of laws describing how business sales and transactions must occur. These laws are state laws rather than federal laws; hence the term uniform in UCC. But because each state legislature controls the laws governing commercial transactions within its state borders, each legislature can potentially pass unique forms of the law. This condition would make interstate business a nightmare. To combat that possibility, two groups have worked since 1923 to formulate model laws that are well written from a legal standpoint, acceptable to all 50 states, and conducive to interstate trade. As a result, state legislatures pass many of the laws these groups propose.

The first group is the National Conference of Commissioners on Uniform State Laws (NCCUSL). As its name implies, NCCUSL works to obtain uniform state laws.

The second group is the American Law Institute. ALI looks at a proposed law and asks, Does this law make sense? Will it be easy to teach to law students and useful for judges? Does it fit within existing law? If the answers aren't affirmative, the group proposes changes to the law.

Several years ago, NCCUSL and ALI realized that software and other information products were growing in importance and that existing law didn't handle these products well. The two groups decided to start working on UCC Article 2B, which dealt with buying and selling software and information in general. The resulting proposal put forth a set of far-reaching laws that reflect both good intentions and a bias toward software vendors at the expense of software buyers. For example, the proposed law doesn't require software vendors to scan their software for viruses before shipping it to customers. You might be able to sue a vendor for shrink-wrapped viruses today, but this legislation would end all that.

The proposed law has other serious flaws: It would make some of the more outlandish demands in software licenses enforceable; it lets a software vendor shut down your software remotely, via email, if you have a dispute with the company; and it establishes email as a sufficient means of delivering legal notice—delivery is legally accomplished when a message gets to your mail server. You'd better check your America Online (AOL) account daily if this legislation passes!

In early April, ALI and NCCUSL issued a joint press release announcing that NCCUSL would remove 2B from the UCC drafting process and submit the article directly to the state legislatures under the name of UCITA. ALI would no longer participate in the process. The press release offered no clue as to why ALI pulled out, but the ALI membership basically rejected the proposal recently, politely asking NCCUSL to rewrite the law. NCCUSL chose to ignore that request and instead to go it alone, breaking a 76-year-old tradition of cooperative law formulation. By the time you read this, NCCUSL will have held its late July annual meeting in Denver, Colorado. If the full membership approves the proposal, NCCUSL will try to shove a flawed law down your state legislature's throat.

Why depart from a time-tested method for making good law? Because the software industry likes the law as it stands and wants it passed. When I attended a 2B committee meeting in February, I was struck by how much power the lawyers from software companies and software industry groups wielded. Committee members would look to these lawyers when considering draft changes, ignoring the comments of consumer advocates. Several participants explained, "We've been working on this issue for 11 years. It's time to just do something." I'll take inaction over bad law any day.