New Software-Licensing Legislation Said to Imperil Academic Freedom

The measure, designed to make state laws consistent, has provoked a storm of criticism

By ANDREA L. FOSTER

Imagine that an architecture professor distributes to his distance-education students digitized photographs of the palace at Versailles, warns the students about the images' poor quality -- and then gets hit with a lawsuit from the software company that provided the pictures.

The company accuses the professor of violating the terms of the license agreement, which prohibits customers from publicly criticizing the product. A judge rules in favor of the company, citing UCITA, a new law that makes ubiquitous software-licensing agreements readily enforceable.

The scenario is only imaginary, but scholars warn that it could easily become reality in any states that adopt UCITA, the Uniform Computer Information Transactions Act, which was drafted by a legal group that seeks to make state laws consistent nationwide.

The law gives muscle to the shrink-wrap and click-on contracts that typically accompany the sale of electronic software and data. Vendors say such contracts become valid once purchasers open the plastic wrap on software boxes, or click "I agree" when they install software. But the contracts are routinely ignored by purchasers, and are not always recognized by judges.

UCITA was signed into law this year in Maryland and Virginia, but has yet to take effect in either state. Other state legislatures are considering adopting it.

UCITA critics in academe say the law's sting extends beyond stifling free speech. They say professors may be limited in their ability to use or distribute copies of articles. That's because vendors, seeking to guard against the uncontrolled dissemination of online data, write contracts that restrict how much of their material can be copied, under what circumstances, and how frequently. For example, people reading the online version of Stephen King's latest book, The Plant, can copy only a portion of the text, says Miriam Nisbet, legislative counsel for the American Library Association.

Those contract provisions also have the effect of curtailing interlibrary loans and archival preservation, critics say. For example, an academic medical library refused to lend the European Journal of Surgical Oncology to another library because it said the journal's license agreement did not allow interlibrary loans, Ms. Nisbet says.

Critics also complain that many license agreements allow companies to remotely disable software if they think a purchaser is violating the terms of a contract. They say the cost to libraries of acquiring and preserving information could increase, because librarians and colleges' lawyers would have to spend more time dissecting the terms of shrink-wrap licenses. And they charge that software vendors could avoid accountability for bug-laden programs because of contract terms that require the products to be accepted as is.

But UCITA backers say that since the software industry is a boon to economic growth and development, vendors need some legal assurance that consumers will not misuse the information they purchase.

Among the groups most vocal in their opposition to UCITA are the American Library Association and the Association of Research Libraries. The groups argue that the law is an assault on federal copyright provisions that allow for fair use, first sale, and preservation of information. Fair use permits the copying of material under limited circumstances, while the first-sale doctrine lets purchasers of information resell, lend, or share it. If they had a hard copy of Mr. King's book, for example, fair use would allow them to copy several pages.

Ms. Nisbet says shrink-wrap contracts, by their very nature, deter libraries from negotiating the inclusion of fair-use and first-sale provisions in contracts when they purchase software. "It's a take-it-or-leave-it situation," she says. "You don't have another party at the other end of the table that you can talk with about those terms."

Sheldon E. Steinbach, vice president and general counsel of the American Council on Education, says librarians may be motivated by a desire to keep library expenses under control. Because software contracts often require users to pay license and distribution fees, the contracts make it more expensive for colleges to acquire and distribute data. Librarians fear those added costs would come out of their budgets, he adds.

To underscore their view that shrink-wrap contracts favor vendors over purchasers, critics often cite two contracts that vendors sought to enforce.

The Microsoft Corporation invoked its license agreement when it threatened to sue the technology-news Web site Slashdot.org unless it removed postings critical of a Microsoft security product. Microsoft argued that when Slashdot's reviewer downloaded the product from the Microsoft Web site, the reviewer clicked on a confidentiality agreement that effectively prevented public comment on the software. Slashdot did not accede to Microsoft's demand, and Microsoft has not sued Slashdot.

"When Microsoft rattles the saber, people toe the line," says Jonathan Band, a Washington lawyer who advises UCITA foes. "Imagine how much more effective that saber rattling is once UCITA is in place."

In another case, the M.A. Mortenson Company, a Minneapolis-based construction business, prepared a project bid using software designed by the Timberline Software Corporation of Beaverton, Ore. After Mortenson was awarded the contract, to build a medical center in Seattle, it discovered that it had underbid by $1.95-million because of a bug in Timberline's software.

Mortenson sued Timberline and the software vendor, citing breach of warranty. But the Washington Supreme Court sided with the defendants this spring, citing the software's shrink-wrap license agreement. That agreement bars purchasers from recovering losses due to product defects.

"How can we make informed decisions about software purchases when we can't even access the software?" asks Skip Lockwood, the former executive director of an anti-UCITA group called For a Competitive Information and Technology Economy, a coalition of insurance, manufacturing, technology, library, legal, and consumer interests. "The moment you click 'I agree,' your right to return vanishes," he adds. Mortenson, for example, uncovered the software defect long after it had accepted the license terms.

UCITA advocates counter that the criticisms are inaccurate or based on improbable consumer nightmares. "There's a lot of mythology out there," says Mark Plotkin, a Washington lawyer who tells his corporate clients to support the law's passage.

He says UCITA also benefits consumers because it makes clear what their rights are when they purchase electronic information. UCITA accomplishes that by applying to shrink-wrap contracts a set of default rules that the legislation's supporters say accommodate purchaser concerns. Under UCITA, consumers can get refunds if they don't agree to license terms, and they can ask a court to invalidate those terms that violate "a fundamental public policy." In addition, the measure does not supersede most state and federal consumer-protection laws, Mr. Plotkin says.

He predicts that UCITA won't silence public criticism of software because comments accompanying the text of the law stipulate that fair comment and fair use are among the public policies that would probably override contract provisions.

Another comment accompanying UCITA states that license terms that prohibit quoting from electronic material for "purposes of education or criticism" or that prohibit non-profit libraries from making archival copies would be invalid, barring a "significant commercial need."

But because those UCITA comments were written only to advise judges on how to interpret the law, they may be ignored, Mr. Band says.

Mr. Plotkin argues that UCITA would reduce the cost of producing software, because manufacturers would spend less money guarding against the possibility of lawsuits. Those savings might be passed on to consumers, he adds. "For all of our clients, the cost of uncertainty is pretty substantial. They have to pay us to go out and look at the latest decisions, and see whether this kind of clause or that kind of clause applies."

Challenged in the courts, the terms of shrink-wrap contracts are usually upheld. But software and data vendors say their relationship with purchasers needs to be defined more clearly and consistently from state to state.

"While it's true that the courts have been enforcing these licenses, not all the terms are enforced in a consistent manner, and they've been relying on a variety of legal doctrines to enforce them," Mr. Plotkin says.

That inconsistency prompted the National Conference of Commissioners on Uniform State Laws to create UCITA as a code that would apply to all 50 states. The group, composed of lawyers nationwide who strive to make state laws uniform, unveiled the measure in July 1999.

But the drafting process for UCITA was fraught with controversy. The American Law Institute, charged with helping to draft the document, dropped out in midstream.

Already, Iowa has approved legislation that prevents any state that has adopted UCITA from enforcing its provisions in Iowa. The law is valid until July 1, 2001. Delaware is considering a comparable bill.

It's no coincidence that Virginia, whose economy has boomed with the rise of technology and Internet companies, was the first state to approve UCITA. Adoption of the law was pushed by the Digital Commerce Coalition, an umbrella organization for trade groups representing Internet and technology businesses, including Microsoft and America Online Inc., based in Dulles, Va. The group is pushing for UCITA's passage in other states as well. Dan Duncan, the group's executive director, says he expects from 5 to 10 states to enact UCITA in 2001.

"With two states moving aggressively and others not wanting to be left behind, this is a train that is not likely to be stopped, because of the intense desire of states to be hospitable to the e-commerce environment," says Mr. Steinbach, of the American Council on Education.

Even if it is widely adopted, lawyers say its uniformity may be undermined if states plaster the law with a hodgepodge of amendments to appease consumers and other interest groups. Virginia, for instance, has delayed putting the law into effect until July 2001, while legislators consider additional consumer protections.

In Maryland, UCITA is scheduled to take effect October 1. State legislators approved the law with amendments to grant consumers refunds if software does not work as advertised; to erase a provision permitting software manufacturers to disable an individual's software remotely; and to require lawsuits over license contracts to be adjudicated in Maryland, rather than in a state of the licenser's choosing.

The Maryland legislature failed to approve another amendment that would have specified that libraries' and colleges' use of online material would be governed by federal copyright law rather than by shrink-wrap licenses. Thirty-eight professors who specialize in intellectual-property law had urged the Maryland General Assembly to support the amendment.

State Sen. Leonard Teitelbaum, who headed the Senate committee that considered the UCITA legislation, says the amendment was not adopted because software publishers did not want libraries to distribute online data without restriction and without compensating the data's owner. "Making copies of a book and giving to one person at a time is different from downloading a book off the Internet and distributing it in unlimited quantities," Senator Teitelbaum says.

UCITA's foes, meanwhile, say they are working hard to build anti-UCITA coalitions in other states that are considering adopting the measure. Says Mr. Lockwood: "It's vampire legislation. Once it's exposed to the light of day, it always crumbles."

Easy-to-print version

E-mail this article