A Setback for E-Consumers

While the Microsoft antitrust case attracts big headlines, a proposed law with potentially huge adverse consequences for competition and consumer welfare is quietly making headway in a few states, promoted by none other than Microsoft, along with some other software and on-line service companies.

The Uniform Computer Information Transactions Act (UCITA), as the law is called, was signed by the governor of Maryland last month and will become effective in October in that state and possibly elsewhere (under form contracts "choosing" the law of Maryland).

UCITA covers contracts for "computer information," a neologism that masks conceptual chaos, including software, on-line access services and content, books and databases on CD-ROM, and even the digital information on silicon chips in your car or oven.


Virginia also has enacted UCITA, but with an effective date of July 1, 2001, to allow a commission to study the concerns of consumers, business users and libraries.

UCITA validates holding back the terms of a deal until after a customer has paid, making clicking through legal terms while installing software or accessing content a legally airtight form of assent. Furthermore, it allows software, access and content companies to write their own intellectual property law, using "licenses" rather than sales to, for example, eliminate rights to transfer a copy or to develop products that work with other products.

UCITA thus addresses two legal controversies, in each case tipping the balance in the law in favor of producers. Click-through licenses allow producers to draw attention away from nasty, brutish and long standard form terms that deprive users of remedies for defective products and eliminate protections of intellectual property law.

Much litigation will be needed before we know whether UCITA's attempted end-run around intellectual property law will be accepted by the courts. Customers now have the right to transfer a purchased copy, and developers have the right to "reverse-engineer" purchased products to make others that operate with them. These rights are not clear when a "license" rather than a "sale" is used, an uncertainty that UCITA exploits.

Here are some examples of what UCITA could be used to do:

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