UCITA: What it means for corporate UK.

On 29 July 1999 new draft legislation was approved by the US National Conference of Commissioners on Uniform State Laws (NCCUSL), designed to unify commercial laws governing the licensing of software. The hotly debated Uniform Computer Information Transaction Act (UCITA), which has been agreed at a federal level, has now been passed to every US State government for adoption. Many State legislators, eager to attract software companies, will have a clear incentive in passing this statute.

The legislation so far only applies in the United States, and it is much too early to assess the implications for the purchasing of software in the EU. However, the Federation Against Software Theft (FAST) is already advising that companies purchasing software in the US should study the act carefully in conjunction with any licence that has been drafted.

In addition, FAST believes that given the fact that the US leads way in technical law, the UK is likely to follow and apply similar legislation. It is crucial that organisations in the UK are aware of the changing face of software licensing on the other side of the Atlantic.

The UCITA legislation purports to apply to "computer information transactions" as defined in Section 102, including commercial agreements to create, modify, transfer or distribute: computer software, multimedia interactive products, computer data and databases, the internet and online information.

Its purpose is to facilitate computer information transactions in cyberspace, clarify the law governing such transactions and create a body of law, which is consistent within the US concerning such transactions.

Under the act software contracts will become more enforceable because a licence to use software would allow the licensor to limit or control how licensees use software, even where the software has been mass-marketed to consumers.

This will include allowing the manufactures to switch off software remotely and without a court order if they suspect licensing agreements have been broken or abused, as a form of repossession. This particular provision has been criticised for sanctioning the wilful invasion of a person's privacy as regards their computer. Where a contract exists the act essentially gives a complete stranger freedom to access a person's hard drive to search for and disable any software being used unlawfully. This is very similar to purchasing a house but later discovering that the previous owner not only has rights of access at any time to enter your premises, but can also rearrange your furniture and, where appropriate, take things.

The above provision does not seem to take into account safety critical software where the unforeseeable consequences of any arbitrary switch off might include death, injury or property damage. To its credit this legislative right of access for the licensor is tempered by the condition that its use does not create a foreseeable risk of personal injury or physical damage to information or property. Also repossession is not permitted where the licensor's data is thoroughly intermingled with the licensee's data.

The UCITA prevents licence transfers from one party to another without vendor approval, and it allows vendors to disclaim warranties.

The act also makes shrink-wrap licensing terms more enforceable, in favour of licensors. The UCITA departs from an important principle of consumer protection that material terms must be disclosed prior to the consummation of a transaction. UCITA does not require that licensees be informed of licensing restrictions in a clear and conspicuous manner prior to the completion of a contract.