Uniform Law for Computer Info Transactions is Offered National Law Journal, August 30, 1999.
After more than 10 years of proposals, revisions and re-revisions, the National Conference of Commissioners on Uniform State Laws (NCCUSL) at long last voted to adopt the Uniform Computer Information Transactions Act (UCITA) on July 29. Like its better known cousin, the Uniform Commercial Code (UCC), this act is intended to promote uniformity in the area of computer information transactions.
"What are computer information transactions?" you ask? Under the language of the model act, they would include any "commercial agreements to create, modify, transfer or distribute computer software, multimedia interactive products, computer data and databases [and] Internet and online information." Members of the NCCUSL have been concerned about the lack of clear, consistent rules governing such transactions in this rapidly expanding part of our national economy (which now accounts for more than a third of the nation's economic growth). Contracts for computer information may be valid in one state while not in others, or terms within such contracts may or may not be enforced, thus creating uncertainty and risk which both sides to such contracts would prefer to avoid.
Five basic themes underlie many of the provisions of the UCITA. They are the following:
Computer information transactions involve licenses, not sales.
Small companies play a more significant role in the computer information industry than many other industries.
Computer information transactions implicate fundamental free speech issues.
Freedom to contract and practical commercial context of the transactions are important.
The law should facilitate continued expansion of e-commerce and be technologically neutral.
Like the UCC, the UCITA will remain as a model act until it has been presented to each state's legislature and until it is adopted as part of the state's statutory law. That could be its biggest hurdle yet. Several well-funded information industry groups remain opposed to some of the terms contained in the model act's language. Many consumer advocates would also like to see more protection for consumers be added. Because these groups may have more sway over legislatures in some states than others, the result may be a uniform act that differs from state to state. Does that sound unusual? Its not—remember that UCITA's distant cousin, the UCC, also varies from state to state.
Write a 1-2 page paper answering the following questions:
Before the UCC and the UCITA, what was one of the first, and most significant, of the U.S. government's attempts to promote uniformity in commercial laws from state to state? (Hint: think of "commerce" and Constitution).
Based on the information presented above, what do you see as the major differences between Article 2 of the Uniform Commercial Code and UCITA?
What is the legal distinction between selling a product and licensing it?
Many of the provisions in the UCITA were first proposed as a modification to Article 2 of the UCC. Why do you think the drafters decided to propose it as a separate and distinct uniform act?
What are your thoughts about these questions? If you post your ideas, we'll be glad to discuss them with you.
The Uniform Law for Computer Information Transactions (UCITA) and Article 2 of the Uniform Commercial Code (UCC) are compared. It also discusses the government's earlier attempts to promote uniformity in commercial laws from state to state. and why there was a need for two separate and distinct laws. It then explores the legal distinction between selling a product and licensing it. Supplemented with information on the two acts.
Before the UCC and the UCITA, one of the first and most significant attempts by the U.S. government to promote uniformity in commercial laws from state to state was the Commerce Clause of the United States Constitution. The Commerce Clause, found in Article 1, Section 8, grants Congress the power to regulate interstate commerce. This clause empowers Congress to pass legislation that applies uniformly in all states, thus promoting consistency in commercial laws.
Based on the information presented above, the major differences between Article 2 of the Uniform Commercial Code (UCC) and UCITA are as follows:
1. Scope: Article 2 of the UCC primarily deals with the sale of goods, while UCITA focuses on computer information transactions, which include the licensing, modification, transfer, and distribution of computer software, multimedia interactive products, computer data and databases, Internet, and online information.
2. Nature of Transactions: Under the UCC, the focus is on the sale of goods, where ownership of the goods is transferred from the seller to the buyer. In UCITA, the emphasis is on licenses rather than sales. When software or digital content is licensed, the copyright and intellectual property rights remain with the licensor, and the licensee is granted limited rights to use the product.
3. Protections and Remedies: Article 2 of the UCC provides certain protections and remedies for buyers of goods, such as the right to inspect goods and reject them if they don't conform to the contract. UCITA, on the other hand, includes provisions specific to computer information transactions, such as the ability to access and inspect the source code of software and provisions for remedies in case of defects or nonconformities.
4. Consumer Protections: While Article 2 of the UCC does provide some protections for consumers, UCITA has been criticized for not offering sufficient consumer protections. Many consumer advocates have called for additional safeguards to be added to UCITA to ensure fair treatment and avoid potential abuses in computer information transactions.
The legal distinction between selling a product and licensing it lies in the transfer of ownership and the nature of the rights granted to the recipient. When a product is sold, ownership of the product is transferred from the seller to the buyer. The buyer has full ownership and can use, modify, or resell the product as they see fit, subject to any applicable laws or contract terms.
In contrast, when a product is licensed, ownership and intellectual property rights typically remain with the licensor. The licensee is granted certain rights to use the product based on the terms of the license agreement. These rights may be limited in terms of duration, scope, or purpose. The licensee does not own the product but is granted specific permissions and is bound by the terms and conditions of the license agreement.
Many of the provisions in the UCITA were originally proposed as modifications to Article 2 of the UCC. However, the drafters decided to propose UCITA as a separate and distinct uniform act for several possible reasons:
1. Specificity: By creating a separate act, the drafters were able to address the unique legal issues and complexities associated with computer information transactions more specifically and comprehensively. This allowed for clearer and more tailored rules within the context of rapidly evolving technology.
2. Technological Neutrality: UCITA was designed to be technologically neutral, accommodating future advancements and changes in the field of computer information transactions. This would not have been easily achievable within the framework of Article 2 of the UCC, which primarily focuses on traditional sales of goods.
3. Flexibility: Creating a separate act allowed for flexibility in drafting provisions that address the unique characteristics of computer information transactions. It also provided an opportunity to consider and incorporate input from various stakeholders, including industry groups and consumer advocates.
Overall, by proposing UCITA as a separate and distinct uniform act, the drafters aimed to establish a comprehensive and technology-specific framework for governing computer information transactions, taking into account the concerns and interests of all relevant parties.