I believe in public debate, including political opposition. I believe, however, that it should be based on reasonably correct facts, rather than distortions. Unfortunately, over the past year or so, numerous distorted and incorrect representations about the content and effect of UCITA have been circulated. Having been repeated in various contexts, they take on an apparent life of their own and set the stage for irrational debate, rather than an actual discussion of issues.

           Let me correct some of the errors.

           Initially, one implicit assumption in most opposition statements about UCITA is that, absent UCITA, current mass market software licenses, including shrinkwrap licenses, are unenforceable. That is not correct.. In fact, the majority of court decisions enforce these contracts, and several decisions simply apply their provisions without even questioning whether the contracts are enforceable, since the court and the parties do not dispute that they are. If we go outside the computer and software industries, the pattern is even clearer. Contracts of this type are common in modern commerce and support billions of dollars of business annually. Enforceability in the computer information area is particularly important because, in most mass market licenses, the license gives the licensee greater rights than it would have if it simply bought a copy of the software. If the license were not enforceable, these rights would not exist and many ordinary uses of software might constitute infringement.

           This does not mean that all of the terms of all of the contracts are always enforceable, although strangely, that is the other side of the implicit assumptions that many opponents make. Courts have used several existing legal doctrines, such as a concept that makes unenforceable any term that is unconscionable, to prevent cases of abuse. UCITA retains those limiting concepts as they exist today on a national basis. It also leaves undisturbed all state and federal consumer protection rules, except for a limited group that need to be modified to allow electronic commerce. It also imposes new limitations on these contracts that do not clearly or uniformly exist in current law. These new limitations create new protection for licensees. These include a statutory right to a cost free refund if the terms are not acceptable, a limitation on the effectiveness of the terms themselves if they conflict with the actual agreement, and a newly stated power of a court to invalidate terms that violate fundamental public policy.

           In addition to a wrong underlying assumption that UCITA creates contracts where none exist today, there are frequent inaccurate descriptions of the substantive rules of UCITA. Since these are common political misrepresentations, they need to be corrected.

           The first concerns the ability of a licensor to include devices that allow the licensor to disable software in the event of breach by the licensee. UCITA actually enacts significant new protections for the licensee which will, in effect, largely preclude use of this remedy. Although there are very few cases, current law allows disabling devices, so long as there is some notice of their availability at the beginning of the transaction. A federal statute related to this issue contains legislative history specifically stating that it does not preclude such devices given notice. Articles 2A (leases) and 9 (security interests) of the UCC allow self-help of this type and place no relevant restrictions on it. UCITA, on the other hand, bans these devices unless the licensee specifically agrees to their inclusion. This cannot be done easily since the licensee must not only consent, it must provide the name and address of a contact person in the licensee company. Furthermore, even if the licensee agrees to the inclusion of these devices, the licensor cannot use them without giving 15 day advance notice and cannot do it at all if there is risk of serious harm to persons or public interests. If the licensor acts improperly, it is responsible for all resulting damages, regardless of what its contract says.

           This has been a hotly debated issue, but the resolution proposed in UCITA has been endorsed by several large licensees who have much at risk in these cases and by some federal regulators. UCITA does not ban hackers or disgruntled employees. Those are issues for criminal law, not contract law. In fact, most states' laws already make such conduct by hackers and employees criminal. UCITA deals with contracts, and creates greater licensee protection than current law.

           A second misrepresentation is that UCITA allows licensors to require the licensee to sue in any place in the world, such as Paraguay, in the event of breach. Presumably this is meant to suggest that the licensor can arbitrarily make it impossible for the licensee to sue for its rights. Actually, UCITA invalidates choice of forum clauses if they are unreasonable and unjust. This parallels a standard created by the U.S. Supreme Court and by a respected Restatement of law on this point. It is used by courts to prevent exactly the kind of problem to which you refer - picking a location just to prevent me as licensee from enforcing my rights. Also, as I mentioned above, UCITA allows courts to invalidate unconscionable contract terms. A recent New York court held that a choice of mandatory arbitration in a form contract was unconscionable because the fee was larger than most disputes. This doctrine, which is in UCITA, also prevent the horror story result your note suggests could occur.

           A third misstatement is in the comment that shrinkwrap licenses can change the license after the fact. That may be possible under current law, but UCITA makes it impossible in the mass market under its provisions. UCITA states that the terms of a mass market license cannot alter the express agreement of the parties. For example, I get your promise that the license will allow me to copy the software into my six computers. The license actually limits me to two computers. That contract term is unenforceable. The actual agreed terms cannot be changed after the fact in the mass market.

           A fourth misrepresentation is that UCITA allows licensors to prevent licensees from commenting about the products. This allegation makes nice copy and superficial impact, but is simply untrue. You can scroll through the UCITA draft and will not find any such provision. In fact, the only reference to comment and criticism is in connection with a right given to courts by UCITA to invalidate terms that violate public policy, including as noted in the comments, policies that support a right to make fair comment and criticism. To the extent UCITA changes the law on this issue, it makes such contract terms less likely to be enforced, not more. The basic premise of some comments on this issue seems to be that, if there is no term of the statute specifically preventing a practice, that practice is authorized. If that were so, then current contract law on goods "authorizes" such contract terms that place bars on criticism, but UCITA does not since its comments specifically say that protecting the right of fair comment is a fundamental, protected right. Some concern might be directed elsewhere, but the truth is that the general doctrines of contract law do in fact protect against this type of abuse.

           The only entity that I know that does try to enforce such a restriction in its mass market contracts is the Consumers' Union, which restricts commercial use of the data from its magazine or Website. (http://www.consumerreports.org/functions/join/tos.htm ) Courts have been quite willing and able to invalidate these restrictions by balancing First Amendment, copyright and other principles, such as protecting a trademark. UCITA does not change that law but enhances protections under it by making the right to invalidate such terms when appropriate even more clear.

           Outside of mass market contracts, it is very common for companies to agree on nondisclosure terms to protect sensitive information. The law that supports and limits these contract terms is called "trade secret" law. It permits enforcement of such terms when there is real confidentiality involved. Why is this law important? UCITA expressly states that it does not displace trade secret law. Whatever the rules are today on such types of clauses, those rules remain in place under UCITA.

           I mention trade secret law because it relates to a further misrepresentation. A familiar litany suggests that UCITA bans reverse engineering, or allows licensor's to ban it. Again, if you scroll through UCITA's provisions, the only reference to reverse engineering that you will find is in reference to a discussion of the policies that might lead a court to invalidate a contract term. The issue of reverse engineering of digital products has been fought in Europe, in international forums, in Congress, and in the courts, with the result being to recognize that in some cases it is appropriate and in some cases not, but in the U.S. at least, to leave the specifics of how to decide this as a matter for the courts.. The idea of reverse engineering comes from trade secret law, which UCITA retains in full. More to the point, after hours of debate involving hundreds of people, UCITA adopted the fundamental public policy rule with comments indicating that a court can invalidate "no reverse engineering" clauses where they conflict with public policy. UCITA does not change the law on that question.

           Now to the final, more fundamental point. The nature of a polemic is that it ignores the other side of the issue. That is true in many of the statements against UCITA. In fact, UCITA creates a number of new rights for licensees that are not present in current law. It is useful for an opponent to ignore these, but it is important not to do so if you are trying to find reality in this debate. Let me list some rights, but not all of them, that are pro-licensee rules in UCITA:

* Creates an obligation of good faith in performance of all information contracts; this right does not exist in all states.
* Makes many software licenses perpetual even though current law would have made them subject to being terminated at will
* Gives consumers a statutory right to avoid the consequences of errors in on-line transactions
* Creates the state law presumption that licenses are transferable, which is not the presumption in current law
* Creates a cost-free, uniform statutory right of refund if mass market contract terms are not acceptable
* Prevents mass market contract terms from contradicting express agreements
* Creates a warranty of quiet enjoyment of rights under the license which does not exist under current sale law
* Provides that express, non-waivable warranties can be created in advertising
* Reduces licensee liability risk in cases when it provides specifications to be implemented by the licensor that infringe another person's patent or copyright
* Expands the warranty of merchantabililty to all computer programs
* Creates a new implied warranty of system integration
* Creates a new implied warranty of accuracy of data in consultant cases
* Allows a licensee who will use the software in another product to obtain and enforce an agreement that the licensor cannot cancel the license.
* Enables licensees to use nonexclusive licenses as a basis for obtaining financing.
* Sets out a basic rule preventing a licensor from canceling a license except for material breach by the licensee
* Gives end user a right of action for breach against both publisher and the distributor
* Gives the licensee a right to demand a cure in some non-mass-market cases, whereas under current law the licensor merely has a right to cure if it chooses
* Preserves all existing rights of action under the law of fraud (e.g., for non-disclosed performance problems) and other misrepresentations
* Creates a statutory implied license of rights needed to fulfill contract purpose, which type of implied license is created only in some cases under current law
* Transfers title to software in a development contract at a far earlier point than under current law