Devil in Details? Software Law Could Be Hell

SAN FRANCISCO (06/23/2000) - If a car's engine blows up because of a defect the manufacturer knew about, the people inside--or their next of kin--can expect to collect big-time damages. But what if defective software destroys valuable data on your hard drive? Under a model statute that state legislatures are now considering, you might have little or no recourse--even if the vendor knew about the bug--as long as the vendor's license disclaimed responsibility for any problems.

In The Fine Print

Already adopted in Maryland and Virginia, the Uniform Computer Information Transactions Act is structured as a law governing software licenses--the fine print that comes with software bought shrink-wrapped or online.

But critics, including some two dozen state attorneys general and a number of consumer groups, say that it's more like a get-out-of-jail-free card for software publishers. UCITA, they say, allows the software industry to circumvent most consumer rights built into general contract law simply by disavowing them in licenses that people frequently don't read--or can't see--before they buy a product.

"The law makes it easy and simple to hide those terms from the customer," says Consumers Union attorney Gail Hillebrand.

The law doesn't stop with warranty disclaimers, either. It also allows vendors to prohibit you from reselling or even giving away software that you no longer use. In addition, vendors may create products that they can disable remotely if you violate the terms of your license.

There's more: An electronic notification provision would let a service provider change your fees without so much as an e-mail warning. Instead, the service could simply post a notice on its Web site.

The new law does stipulate that if you can't see the license before buying (common with shrink-wrapped software), you can return the product for a full refund if you decide you don't like the terms upon reading them. But what if that package was part of the software bundle that you received with your computer? Hillebrand says that your right of return probably does not apply to the PC.

UCITA started out as a controversial revision to the Uniform Commercial Code, a series of model laws most states follow that provide a consistent legal framework for commercial transactions not covered by federal law. Morphed into a stand-alone law, UCITA enjoys backing from the software industry, including Microsoft.

Ray Nimmer, the University of Houston law professor who drafted UCITA, says the law was never intended to replace or change existing consumer protection laws.

"It follows the open, free-market traditions of the United States," he says.

Of course, states can amend UCITA's provisions. In Maryland, the law bars mass-market software vendors from remotely disabling products.

At this writing, UCITA has been introduced in Delaware and the District of Columbia; it was introduced but killed in Hawaii, Oklahoma, and Illinois, and it is under study in New Jersey. There's still plenty of time for most of us--who don't have the patience or expertise to decipher the fine print in software licenses--to just say no to UCITA through our state legislators.

--Yardena Arar

What's Wrong With UCITA?

The uniform computer Information Transactions Act would give the force of law to all the fine print in those software licenses that you find in shrink-wrapped packages and on Web sites. Among other things, UCITA would let a vendor:

*Disclaim liability for any damages incurred by software it knew to be buggy.

*Prevent buyers from selling or giving away any computer software that they no longer intend to use.

*Prohibit buyers from using software that came bundled with a PC on other computers, even after erasing it from the original system.

*Notify users of a change in the terms of a license (such as fees for online services) simply by posting an announcement on its Web site.

*Claim UCITA protection for music CDs, so buyers might not be able to sell or give away a used CD or record it in MP3 format for personal use.

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