Group proposes common licensing rules

A U.S. organization that works to unify state laws today overwhelmingly approved a controversial proposal to adopt common licensing rules for software and other information technology transactions that critics say would hold IT companies hostage to the whims of software vendors.

The Uniform Computer Information Transactions Act (UCITA) was voted on during a meeting in Denver of the National Conference of Commissioners on Uniform State Laws (NCCUSL), a private organization made up of more than 300 lawyers, judges and law professors. Under the Chicago-based NCCUSL (www.nccusl.org) guidelines, draft legislation has to be approved by a majority of states present when votes are taken, and that majority must include representatives from at least 20 states.

The vote count was 43 states in favor of the proposal, six against, two abstaining and two not present. The proposal now goes to various state legislatures for approval. Most or all states typically approve the laws recommended by the organization, which proposed the draft of the UCITA.

The UCITA would deregulate product licensing and covers software, multimedia interactive products, data and databases, and Internet and online information. It further allows vendors to disable software remotely as a means of repossessing products; makes shrink-wrap licensing terms more enforceable; prevents license transfers from one party to another without vendor approval; outlaws reverse engineering; and lets vendors disclaim warranties.

The measure has been hotly debated for several years. Software vendors are among the chief proponents, arguing that a law is needed that directly affects licenses of their products.The act means that both vendors and users will be able to rely on a uniform law instead of different state laws, said Ray Nimmer, a law professor at the University of Houston Law Center and one of UCITA's drafters. "We think that this will extend the rights of end users," he said.

Opponents include technology consumer groups, various trade associations and some law professors who contend that the UCITA would increase costs to companies while giving software vendors undue power.

"This law is going to bad for industry and for the country," said Cem Kaner, a software developer, lawyer and author who has taken a lead in fighting the proposal. "It redefines intellectual property law in a way that transfers huge amounts of power from the public, including universities, libraries and (software) customers, to software publishers."

The Business Software Alliance (BSA), which counts Microsoft Corp., Novell Inc. and Adobe Systems Inc. as members, applauded UCITA's passing in Denver. "As more and more consumers are conducting electric commerce and business over the Internet, it is increasingly difficult to know where you are doing business and what state laws apply to particular transactions," BSA president Robert Holleyman said in a statement. "UCITA provides a uniform commercial law, which is clear, fair and balanced, while retaining consumer protections."

NASDAQ, the New York Stock Exchange, Citibank Corp., DaimlerChrysler Corp. and others also have announced their support for UCITA.