Maryland Governor Signs UCITA

FRAMINGHAM (04/25/2000) - Maryland Gov. Parris N. Glendening signed the Uniform Computer Information Transactions Act (UCITA) into law today. UCITA will take effect Oct. 1; as things stands now, Maryland will be the first state to enact the software licensing measure.

UCITA, which was approved in July by the National Conference of Commissions on Uniform State Laws and sent to all 50 states for adoption, was approved in Maryland with some changes sought by opponents, but the changes fell far short of what they were seeking.

The legislation signed by the governor also calls for creation of an oversight panel to provide ongoing review of UCITA.

With Glendening's action, Maryland became the second state to approve UCITA.

Virginia approved UCITA in March but delayed its implementation for a year pending a review by a study committee. That committee was created after a coalition of Virginia user companies that included Reynolds Metals Inc. and International Paper Co. sought a delay.

Maryland's action wasn't welcomed by James G. Neal, the dean of university libraries at Johns Hopkins University in Baltimore. The university is part of a coalition of library and nonvendor companies - users of software - that have been opposing UCITA.

"If UCITA becomes the governing principal for electronic information, I don't have as strong a leg to stand on in my negotiations" with vendors, said Neal, who added that he believes his cost will rise as result of the state's action.

Neal said he expects publishers of electronic information to use UCITA to set restrictions on the use of electronic material. The vendors will accomplish that by setting restrictions in electronic contracts, he said.

Such a click-on electronic contract may override federal copyright law, Neal said. Without the protections of copyright law to determine how material can be used and duplicated, the university's use of material will be "defined by how well you negotiate" and by the clout of organizations involved in negotiations, he said.

The software industry, which backs the measure, argues that UCITA will bring predictability and uniformity to licensing. UCITA doesn't determine what goes in a contract, but it gives both parties the freedom to contract, supporters say. "The parties should be able to agree to whatever they want," said Keith Kupferschmid, intellectual property counsel at the Software & Information Industry trade association.

Maryland's adoption could have wide ramifications. Software companies may now seek to apply the law of Maryland in their contracts. Whether they need to establish some form of "nexus," or physical presence, in Maryland to apply its laws to software licensing has drawn a variety of opinions from legal experts.

But Maryland's governor, in approving the legislation, is hoping that the state's approval of UCITA will attract high-tech businesses.

A group that is lobbying against UCITA, 4Cite (For a Competitive Information and Technology Economy), believes the Maryland legislation is "a significant step forward" because it includes new provisions that ensure consumer protection laws apply to software licensing, said Skip Lockwood, the group's spokesperson. But he also said the legislation doesn't go far enough, and his group will be working to amend the legislation through the oversight committee.

Adoption by states is happening slowly. The measure is being actively considered in the District of Columbia, Delaware, Louisiana, Iowa and New Jersey. Proponents say national adoption could take five or more years.

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