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Software law foes see route to harm; Regulation: Debate rages over whether licensing-agreement legislation hurts the public.

THE BALTIMORE SUN

Maryland won the national race to put a law on the books governing software transactions, but in the months since it was enacted here, opponents have vowed to make sure that no other state follows suit.

A decade in the making and debated endlessly in a host of forums, the Uniform Computer Information Transactions Act spells out what "shrink-wrap" and "click-on" software licensing agreements can say and how they can be enforced. It continues to ignite firestorms around the country.

UCITA is a model statute that the nonpartisan National Conference of Commissioners on Uniform State Laws wants every state legislature to adopt.

A diverse group of opponents, including attorneys general, consumer advocates, insurance companies, library associations, educational institutions and small businesses, has lobbied against the measure, calling it an enemy of consumers that favors large corporations.

Unlike most items that consumers or businesses buy outright, software is licensed under an agreement between the buyer and the publisher. But buyers rarely, if ever, sign such agreements - which would be legally binding under traditional law. So, software publishers want legislation that would bind consumers to those agreements merely by opening the shrink-wrap on a software box or clicking an "I agree" button on their screens when the software is installed. UCITA would make those agreements enforceable in court.

Opponents point out that some software licenses are so draconian that they prohibit buyers from publicly criticizing the software or from moving a program from one computer to another.

Supporters, including Microsoft, Adobe, America Online and the Federal Reserve, maintain that the transfer of digital products is so different from buying a carton of milk that the country needs separate rules to regulate the transactions.

While Maryland's law will take effect Oct. 1, several state legislatures - including those of Illinois, Oklahoma, Maine and Delaware - tabled the measure this year, while others postponed the introduction of the bill altogether. Iowa went even further and passed an anti-UCITA law.

And, while the law is supposed to be uniform across the country, it may not be. The Virginia legislature, which enacted UCITA before Maryland but postponed its effective date until July 2001, could have a law that's different from the legislation here once an advisory panel and lawmakers take a serious look at it in the next six months.

UCITA opponent Mary Alice Baish of the American Association of Law Libraries sees a consistent pattern outside of Maryland: "These things get looked at, then legislators learn about the controversy and table it."

John McCabe, legislative director of the National Conference of Commissioners on Uniform State Laws, disagrees. "We'll see initial efforts, like those in Maryland and Virginia, then we'll see reassessments," he said. "And we're going to find other areas where we need to make adjustments. And we'll come to a point where we can obtain a modicum of uniformity."

Maryland lawmakers amended the model statute to meet objections. The state's consumer protection laws will apply to sales of software, and consumers have the right to return software after purchase. Also, publishers can't use a click-on license to disavow the state's implied warranty law, which says programs must do what they purport to do. In addition, Maryland law will prevail in legal disputes.

Del. Kumar P. Barve, the Montgomery County Democrat who pushed Maryland's UCITA bill on the House side, called Maryland's version pro-consumer and says it establishes rules of the road for everyone. "Several smaller IT [information technology] businesses liked the idea ... that the rules are clear," he declared.

Sen. Leonard H. Teitelbaum, who chaired the Senate work committee, said UCITA and a companion package of technology bills would help Maryland stay ahead of others in attracting e-businesses. He noted that the law sets up an oversight committee that can deal with unforeseen problems.

While some opponents applaud Maryland's effort to make the law more consumer-friendly, they say it didn't go far enough.

For example, they note that it bans businesses and educators from taking apart a piece of software, a process called "reverse engineering," to make it work with other programs or to teach students how software is designed.

Attorney General J. Joseph Curran Jr. says he wants important provisions in program licenses to be more conspicuous.

And libraries and colleges fear that UCITA will usurp the "fair use" provisions of federal copyright law under which they lend books, copy portions of written work, archive an extra copy of a document and make materials available to the disabled through new technologies. Software industry officials argue that granting "fair use" exceptions to libraries and others assists in piracy, a charge the librarians dismiss as nonsense.

Maryland lawmakers inserted language to address the copyright question that fails to ensure that fair use is still in force, said University of Baltimore Law Professor Charles Shafer, a consumer advocate.

Barve argued that the law is clear.

Bruce Barnes, vice president for technology, strategy and planning for Nationwide Enterprises, said he has broader concerns. Businesses will have to be more vigilant about licenses - including those with provisions allowing the vendor to reach in and shut down a critical program during a dispute.

"You have security concerns, licensing limitations, electronic repossession, non-accountability for defects," Barnes said. "For us to deal with all of those weaknesses, that translates to cost and cost gets passed on to consumers."

Many opponents wish Maryland had taken Iowa's approach. That state's legislature passed a law, effective July 1, that says Iowa doesn't recognize other states' UCITA laws in legal disputes with a state resident or business. The law, which expires after a year, also calls for a review of UCITA during the 2001 legislative session.

Iowa's attorney general was one of 26 in the country who said the proposal needed to be fixed or scrapped before the National Conference of Commissioners on Uniform State Laws voted on the model statute last summer.

"We're not going to surrender our ability to protect people," said Bill Brauch, who heads consumer protection for Iowa's attorney general office.

Iowa's attorney general and his counterparts in other states negotiated a settlement with AOL forcing the company to notify users of changes in its terms of service. Brauch said UCITA in its original form "endorses the very practices that we got AOL to discontinue."

Barve said settling disputes would be chaotic if states acted like Iowa.

Iowa's bomb-shelter move was not what proponents had in mind, McCabe admitted. He promised an educational and lobbying blitz to build support for the bill in Iowa next year.

Meanwhile, Jim Neal, director of libraries at the Johns Hopkins University, says library associations, consumer advocates and others are targeting university provosts, government relations employees, procurement and purchasing officials with a message: Know what UCITA can do and get it changed to protect consumers, libraries, businesses and others using electronic information.

Says Neal, who fears Maryland's law doesn't provide enough protection for the state's libraries and educational institutions: "Let's remember that the early bird may get the worm, but it's the second mouse that gets the cheese."

An article appearing June 19 in the Plugged In section incorrectly stated that the Federal Reserve Board supports a new computer law in Maryland aimed at regulating software transactions. The Federal Reserve has taken no position on the Uniform Computer Information Transactions Act.The Sun regrets the error.
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