The Gripe Line

SAN MATEO (03/10/2000) - States shouldn't be so sure that passing UCITA will bring them jobs and talentSTATE LEGISLATORS who enact the Uniform Computer Information Transaction Act (UCITA) in the belief that it will bring high-tech jobs to their constituents may be in for a big disappointment. The results may be just the opposite.

The premise the software industry lobby has been using to encourage Virginia and Maryland to enact UCITA quickly is that the law's endorsement of shrinkwrap/clickwrap license terms will have high-tech firms flocking to relocate their operations there. On the surface, one might think that would be true, considering how eagerly the Microsofts and AOLs are backing it, but there are a number of reasons why UCITA is unlikely to bring any benefit to states that adopt it early.

UCITA itself makes it very easy for companies that aren't based in a UCITA state to choose a UCITA state's laws as the ones that govern their shrinkwrap licenses. A consumer in Alaska could purchase a copy of a software package made by a California-based company and discover the shrinkwrap license is governed by Virginia law. Assuming Virginia doesn't change its mind, after July 1, 2001, any dispute between that consumer and that software company could fall under UCITA, even if neither Alaska nor California have passed it.

A state might tinker with the "choice of law" provision in UCITA to make it a little tougher for companies in other states to choose their law, but even under current law it's not that hard for a company to use the laws of a state in which it has no real presence. At most, a company wanting to take advantage of UCITA would probably just have to incorporate there, much as many corporations do now in Delaware.

UCITA may well wind up encouraging some of the high-tech talent that an early-adopting state already has to leave. Why? High-tech professionals themselves dislike it intensely. The two most prestigious organizations representing the engineering/programmer community -- the IEEE and Association of Computing Machinery (ACM) -- are opposed to UCITA. Many other organizations representing software industry professionals have also spoken out against UCITA, including the Software Engineering Institute, the American Society for Quality, and the Free Software Foundation. That such groups oppose UCITA is a fact that has always been ignored by those who drafted the law, and so far it sounds as if it's also being ignored by the state legislatures that have UCITA on a fast track.

It's easy to understand why software professionals oppose UCITA. Many of them have witnessed too many situations in which the quality of the product they helped produce was excessively compromised to get it out quickly. Under UCITA, there would be few lingering restraints on software companies in terms of their legal liability for putting out poorly engineered, poorly tested products. The law is an open invitation for high-tech companies to put fewer resources into delivering quality products. Wouldn't that make you think twice about taking a software engineering job in a state where UCITA is law?

One group of software professionals, though, might actually find themselves motivated to flee a UCITA state for their own good: independent consultants.

That's because of what UCITA means to their customers. UCITA is going to raise the cost of contractors doing business, not just in their relationships with big software companies, but with many consultant-type relationships that they may now do on the basis of a handshake or a simple contract. There are so many known pitfalls for licensees in UCITA's default rules that corporations cannot take the chance of leaving a hole in their contract with anyone from a UCITA state who is writing a little code for them.

What does this mean? Contractors will need to painfully negotiate detailed contracts that they don't have to bother with now. The alternative?

Corporations may avoid doing business with software developers from a state where UCITA is law. That's going to be particularly difficult for a corporation if its state passes UCITA, and Virginia-based corporations should start considering this now. Unless something dramatic happens, on July 1, 2001, the relationships between Virginia-based corporations and local consultants will in all likelihood be covered by UCITA, and its default rules will govern any area where a contract doesn't specify otherwise.

In UCITA states, InfoWorld readers and other corporate software customers are going to find themselves needing to hire more lawyers and fewer independent consultants. This may come as a surprise to state legislators, but it follows the one rule that we've reiterated many times about UCITA: The only people who are going to benefit from this law in the long run are the lawyers.

Got a complaint about how a vendor is treating you? Write to Ed Foster, InfoWorld's reader advocate, at

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