Bill Would Put Byte in Software Licenses

Christopher Dorosz stifles a yawn as he left-clicks his mouse--signaling for the fifth time in 20 minutes that he accepts the terms of use for new software he is installing on his computer.

The San Francisco artist impatiently clicks “I agree” when asked if he’ll abide by the terms of software for a scanner and a printer; again for accompanying Kodak PhotoMax files; once more for Adobe Photoshop.

“I don’t have time to read all that stuff,” he says. “The type’s too small, and there’s too much literature to try to understand. I assume they’re not going to track me down if I don’t do exactly what they want me to. It’s not Big Brother out there.”

Maybe not yet, but legislation being considered in nearly every state--and now law in Virginia and Maryland--could allow them to do exactly that.

The $140-billion software industry, including such heavyweights as Microsoft Corp. and America Online, has mounted a quiet but intense lobbying effort to bring uniformity to state digital licensing laws and make contracts more binding.

But the model legislation being handed to nearly every state legislature has led to a contentious battle pitting giant businesses such as Intel Corp. against other business titans such as Caterpillar Inc. and leading to strange bedfellows as debate rages over just who it is really meant to benefit.

UCITA--the Uniform Computer Information Transactions Act--is a complicated 120-page legal document that took nearly 10 years to draft and essentially boils down to this: A deal’s a deal, even one sealed with a click.

The act’s premise: Software makers own the programs you buy in a store, download from the Internet or find pre-installed on your computer.

You, the user, simply “lease” those programs from them after agreeing to terms of often lengthy licensing agreements that appear on your computer screen and prevent you from completing the software installation until you acquiesce.

But one problem of the electronic age is that there seems to be no shortage of users who illegally copy and distribute that leased software, the industry complains, causing them to lose untold millions of dollars from shared programs.

Proponents say UCITA closes loopholes in existing laws that allow consumers and businesses to wriggle out of contracts, and actually provides new consumer protections by specifying that merely breaking the shrink-wraps on new software is not tantamount to accepting a licensing agreement.

“It’s necessary for consumers as well as businesses to be able to operate under one standard set of laws across all states,” said Diane Smiroldo, a spokeswoman for the Business Software Alliance, the lead industry lobby group pushing the legislation.

But some federal and state regulators, consumer advocates and business and technology groups contend UCITA does much more.

Under some interpretations of the legislation, you won’t be able to sell or give away any software you no longer want. And you may not be able to install that software on multiple computers, even if you own those computers.

Further, you may not be able to complain if the software you accept before it’s ever installed is riddled with bugs.

And if you do complain when the license clearly says you cannot, vendors might have the right to reach into your computer and remotely switch off their software after providing adequate warning.

The software alliance says that “reach-in” provision is aimed at business licensees who do not pay their bills, but critics argue leaving backdoor access to the software can lead to abuses or offer hackers a new opportunity to break into your computer and corrupt or steal files.

That translates to a new axiom: Even if they broke it, you bought it, said Skip Lockwood, director of Washington-based 4Cite, a coalition of consumer and business groups opposed to the legislation.

“It’s the only law I know where you get all the benefits of being the owner of property and none of the disadvantages,” Lockwood said.

“If you went out to a store, bought a lamp, brought it home and it caught on fire and burned down your home, you’d generally have several remedies you could pursue against the lamp maker,” he said. “If that were applied to UCITA, you might consider yourself lucky to get your money back for the lamp.”

The legislation, in theory, also could allow vendors to change the terms of their licenses without informing you. Instead, changes could be posted to a vendor’s Web site, requiring you to check periodically.

But John McCabe, a spokesman for the nonpartisan Chicago-based National Commissioners of State Uniform Laws, which helped draft UCITA, says the legislation has been roundly mischaracterized as bad.

“Consumers generally have choice, open markets and inexpensive prices--all things that are good for the consumer and the market in general. UCITA, itself, really would not change all that,” McCabe said.

“I’m not going to tell you there won’t be adjustments needed along the way as we essentially feel out the parameters of [electronic] licensing transactions,” he added. “But the bottom line is, uncertainty costs money, and there’s currently no solid basis for negotiating contracts in the digital and electronic marketplace without UCITA.”

There is almost universal agreement that U.S. states need to update their contract laws to adapt to the Internet age. But at least 25 state attorneys general, the American Library Assn., the Federal Trade Commission and insurance, consumer and media organizations say UCITA is not the answer.

In April, Gov. Parris Glendening of Maryland signed the legislation into law, hoping to attract more e-commerce firms. It takes effect in October there, eight months before Virginia, which was the first state to pass a UCITA statute, but then put it on hold for further study.

In coming weeks, Delaware, Oklahoma and Washington, D.C., will all be considering UCITA legislation.

In California, a UCITA bill was not introduced by the required filing date. Other states are likely to take up the matter early next year.

And Iowa appears to be unique. Politicians there are attempting to craft “bomb-shelter” legislation to shield businesses and consumers from UCITA effects.

Dan Duncan, director of the Digital Commerce Coalition, a UCITA-backing industry group, contends opponents of the measure have banded together essentially for selfish reasons: to address their separate interests in weakening licensing laws.

“But the bottom line is, we believe if we’re going to get really effective e-commerce going . . . it’s going to require a system by which people understand the transfer of computer information,” Duncan says.

Lockwood of 4Cite responds: “When else have you heard of politicians, insurance groups and consumer groups sitting on the same side of the table? Can we all be wrong?”