It's Bad News If You Still Buy Software

FRAMINGHAM (04/10/2000) - UCITA may have won approval in Virginia last month, but the fight over this legislation, which overwhelmingly favors software licensors over the concerns of their customers, is far from over.

When the Virginia General Assembly took up UCITA in January, the influential software industry tried to convince lawmakers of the merits of the proposal.

The industry argued that Virginia, as a prominent high-tech region, could make a bold statement in passing the bill.

Not so fast! A coalition of businesses, libraries, consumer groups and various associations labored to present concerns and encourage further study of UCITA's potential impact on software users before enacting legislation.

The result was a compromise bill. Amendments were added to temper some concerns, require a committee to study UCITA, establish a technical advisory group of representatives from all involved parties, require a report by Dec. 1 and defer the effective date to July 1, 2001.

Virginia has clearly established a leadership position by enacting UCITA. The legislation - as approved with the user-friendly amendments - helps generate interest and comments for the effort to produce needed amendments prior to the start of the next General Assembly session in January. Enough opposition can prompt necessary change or further delay the effective date.

The risk is that without resolution of the many concerns, Virginia, in less than 15 months, may have a new law that helps less than 10 percent of its economy at the expense of the other 90 percent of industries that support the state.

Of course, the battle must still be waged in other states, which may wait and see what happens in Virginia. The UCITA study in Virginia, as well as other states' actions, will be crucial for software users, especially businesses. The consequences of unbalanced legislation will raise businesses' costs to negotiate, administer and litigate software contracts and disputes.

While vendors argue that UCITA serves only as a default contract law in the absence of negotiated terms, it overwhelmingly favors software licensors. The legislation creates a legal framework that, among other things, does the following:

-- Shifts the balance of existing contract law in favor of vendors when they contract with businesses and consumers.

-- Permits vendors to shut down mission-critical software without court approval and without incurring liability for the resulting harm.

-- Allows vendors to prohibit the transfer of software from one company to another, even during a merger or acquisition, and limits consumers' access to information through libraries.

-- Allows vendors to avoid liability for damage caused by defects known to the vendor - and undisclosed to the licensee - at the time the software was acquired.

-- Allows vendors to include such unreasonable terms in agreements as prohibiting public criticism of their products.

If you think that negotiating with software vendors is already difficult and expensive, the outcome of UCITA may make things much worse. If you want an equitable contract law, let your state legislators know of your concerns and urge that the act not be adopted in its present form.

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