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State passes computer bill that portends vast changes (291963)

Virginia has become the first state to approve a wide-ranging new uniform law on e-commerce.

In nearby Maryland and a few other states, lawmakers are struggling to make sense of the Uniform Computer Information Transaction Act, a bill so complicated that only a few lawyers and electronic data policy wonks claim to fully comprehend it.

But in Virginia, as Senate Bill 372, UCITA already has sailed through both houses of the General Assembly. With support from the Gilmore administration, the bill likely will be signed into law later this spring. Presently, the effective date for the legislation is July 1, 2001, with a year of study planned prior to implementation.

The bill’s backers, including Microsoft, the New York Stock Exchange, America Online, the Federal Reserve and various computer makers, portray UCITA as a way to establish a universal legal standard for an increasingly electronic age. They exhort states that aspire to become technology industry leaders to get on board early.

But opponents, including large insurers such as Prudential, the Federal Trade Commission and the attorneys general of 24 states, warn that the bill would allow software giants and electronic publishers to write outrageous provisions into hard-to-find licensing contracts, and greater authority to enforce them.

Under UCITA, opponents say, digital libraries wouldn’t own books, but instead pay for licenses that limited how many times and with what frequency e-books could be checked out.

In fact, librarians have been among some of the measure’s most ardent opponents.

A coalition called “4CITE,” which stands for “For a Competitive Inform-ation and Technology Economy,” includes as members the Virginia Association of Law Libraries, as well as the American Association of Law Libraries and the American Library Association.

Among the criticisms of UCITA leveled by 4CITE: The statute dramatically shifts the balance of existing contract law in favor of software vendors, as against businesses and consumers, and allows software vendors to shut down mission critical software remotely through a “back door,” without court approval, and without incurring liability for the foreseeable harm caused.

Librarians also charge that the statute’s electronic regulation of performance and electronic self-help provisions would permit a licensor to recover its data, or prevent the use of its product when a license expires, which undermines a library’s traditional preservation role.

Already, software companies wield enormous power, and UCITA would strengthen that power, foes say. A computer and technology magazine last year chose to spike a story critical of a piece of software because its licensing contract barred public criticism of the product and an expensive legal fight was threatened, said Jean Braucher, a University of Arizona law professor who specializes in contracts and commercial law.

But Raymond T. Nimmer, a University of Houston law professor who testified before Virginia legislators in favor of UCITA, said opponents have overstated and sometimes misrepresented concerns about the proposal.

Nothing in UCITA preempts state consumer protection laws or federal laws that deal with such matters as copyrights, Nimmer said. Under UCITA, any egregious provisions in a software licensing agreement could be voided if a court finds them unconscionable, as they can be now, he said.

UCITA does place a greater premium on consumer vigilance. But in computer transactions, the fine print is sometimes not available until the deal is done, a concept insiders refer to as “shrink wrap.”

It takes its name from computer software purchased on diskettes or CDs sealed in tight-fitting plastic wrap. The licensing contract and other information often is tucked inside the shrink-wrap and can’t be seen until the product is purchased.

The concept is similar on data received online. Users about to download a program from the Internet often encounter a box in which they must click a link agreeing to the vendor’s licensure terms. Often they don’t see the terms until the download is done and the purchase has been made.

A key UCITA backer in the Virginia General Assembly says opponents’ examples are grossly overblown or outright false, and he’s tired of it.

“I say it’s time for them to stop waving their arms and shouting and tell me where the sky is falling,” said Del. Joe T. May, R-Loudoun, the owner of a Northern Virginia electronics engineering firm.

“UCITA, more than any one thing, codifies and formalizes existing practices,” said May, who estimates his company spends $100,000 to $200,000 a year on software. “Look, what’s the chance that I would be attempting to shift the balance of power against myself?”

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