UCITA Advances in Mid-Atlantic States

FRAMINGHAM (04/28/2000) - The controversial Uniform Computer Information Transaction Act (UCITA) has established a beachhead in the technology-hungry Mid-Atlantic states.

Last week, Maryland became the second state to approve the legislation, preceded by Virginia. The act is also now being considered in Delaware.

In Maryland, which may become the first state to legally enact UCITA, the legislation is scheduled to take effect Oct. 1. Last month, Virginia delayed the act's implementation until July 2001, after companies with operations in the state, including Richmond, Virginia-based Reynolds Metals Co. and Purchase, New York-based International Paper Co., protested. A committee has been formed to review the measure.

A number of end-user companies, libraries and special-interest groups have formed an organization, called 4Cite, to fight state-by-state adoption. But Randy Roth, director of corporate purchasing at Principal Financial Group in Des Moines, Iowa, and a leader in the anti-UCITA movement, said opponents are being outspent and outlobbied by the software industry.

"We're doing marginally" well in stopping UCITA, said Roth, adding that he believes many end-user companies "don't have a clue" about the act's impact on corporate software licensing. "The grassroots effort has to get larger," he said.

The act was drafted last July by the National Conference of Commissioners on Uniform State Laws and was sent to all 50 states for adoption.

UCITA has drawn opposition from corporate software customers because it would validate shrink-wrap and online license agreements, which vendors use to limit liability and set restrictions on software use. It would also allow "self help," under which licensors could threaten to disrupt licensees' systems, using "time bombs" or backdoor traps.

Opposing View

The software industry argues that UCITA will bring predictability to licensing.

UCITA merely gives parties the freedom to contract, said Keith Kupferschmid, intellectual property counsel for the Software & Information Industry Association, a trade group in Washington. "The parties should be able to agree to whatever they want," he said.

But James G. Neal, the dean of libraries at Johns Hopkins University in Baltimore, said UCITA will create a new kind of "digital divide," because institutions that don't have negotiating clout will be stuck with licensors' terms.

"If UCITA becomes the governing principle for electronic information, I don't have as strong a leg to stand on in my negotiations" with vendors, said Neal, who also oversees all the library's contracts.

Maryland's adoption of the legislation could have wide ramifications. Software companies, regardless of where they are located, may soon seek to apply Maryland's UCITA law in their contracts.

Whether vendors need to establish some form of nexus, or physical presence, in Maryland to do that has drawn a variety of opinions from legal experts.

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