Proposed software law passes first state test

A plan that would give vendors the power to disable software if they believe the user has violated the contract terms is one step closer to becoming law.

The Virginia Senate today became the first legislative body in the nation to approve the Uniform Computer Information Transactions Act (UCITA), which establishes the rights of software buyers and sellers and covers topics such as shrink-wrap licenses, contract disputes and vendor liability for defects.

The Senate's actions could signal the beginning of a state-by-state battle between proponents and opponents of the proposal. To become law, the plan must be adopted in all 50 states.

But while proponents like the Washington-based Software & Information Industry Association hail the Virginia Senate's approval — they say it will give businesses predictable and uniform software licenses, especially in e-commerce — opponents continue to work to quash the pending legislation.

"This is a very good sign for its passage," said Keith Kupferschmid, intellectual property counsel for the Software & Information Industry Association. "We couldn't have asked for anything more."

But members of For a Competitive Information and Technology Economy (4Cite), a coalition of end users and developers of computer and information technology, contend UCITA is antiquality and anticompetitive.

Members of 4Cite maintain that UCITA won't promote the development of high-quality computer and information technology or the growth of fair and competitive markets in technology licensing and e-commerce.

"(UCITA) is a big mistake," said 4Cite spokesman Skip Lockwood. "It is a miserable piece of legislation for consumers and businesses, and we are urging people to write, fax, or e-mail their legislators and keep the pressure on (to defeat this legislation)."

Lockwood said UCITA is a "vampire" piece of legislation — one that won't hold up once it sees the light of day. "This cannot stand the test of public scrutiny," he said. "Once it moves out of the dark and into the sunshine, it will lose all of its power."

But what does the fact that UCITA has passed muster in the Virginia Senate mean for its future in the rest of the states?

John Kennedy, an attorney at Morrison & Foerster LLP in New York, said today's actions by the Virginia Senate will focus more attention on the statute in other states.

Kennedy said the House's approval of UCITA also raises certain questions about the motives of states, like Virginia, which decide to pass the legislation.

"Is Virginia trying to become the information technology (state)?" he said. "If Virginia adopts it, what impact will that have on businesses in other states? Companies, which can choose to (operate under) any state's governing laws, might just decide to choose Virginia because they are getting the best protection (under UCITA). Will other states jump on the bandwagon, and will it just become a race (to adopt UCITA)?"

Copyright © 2000 IDG Communications, Inc.

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