Please see the attached file.

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:
1. 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).
2. Based on the information presented above, what do you see as the major differences between Article 2 of the Uniform Commercial Code and UCITA?
3. What is the legal distinction between selling a product and licensing it?
4. 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?

1. 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).

I have located two earlier attempts to promote uniformity in commercial laws from state to state. However, it is not clear whether one or both are the most significant ones, so to be sure, I attached a list of all the commercial codes (attached as "NCCUSL") for you to go through and consider:

DECEPTIVE TRADE PRACTICES ACT (1964)(1966)
Legislative Fact Sheet | Final Act

TRADE SECRETS ACT (1979)(1985)
Legislative Fact Sheet | Summary | Why States Should Adopt | Final Act

2. Based on the information presented above, what do you see as the major differences between Article 2 of the Uniform Commercial Code and UCITA (Uniform Computer Information Transactions Act)?

Perhaps, the major difference is one of focus and scope. For example, UCITA was intended to be an extension of UCC (Uniform Commercial Act) (see http://www.law.cornell.edu/ucc/2/article2.htm). Whereas UCC Article 2 is focused on sales in general, the focus of UCITA is specifically on computer software - to govern all contracts for the development, sale, licensing, support and maintenance of computer software and for many other contracts involving information. It also extends easily (vendor's choice) to sales of computers and computer peripherals and probably extends to many types of embedded software, such as the fuel injectors in your car.
Example: (Excerpt)
Scope of Rights Licensed for Consumer Software
One of the ongoing legislative debates turns on whether software is so different than goods that a different commercial code must be developed to address the specific concerns of software. I share the sentiment of most academics that the answer is no. The proposed Uniform Computer Information Transactions Act (UCITA) provides a new set of default contracting rules for software transactions, but most of the proposed changes can be achieved under the existing Uniform Commercial Code without the confusion and difficulty created by adopting UCITA. Nonetheless, those changes are important to identify.
1. The first question addressed by UCITA and often deemed significant is whether the transaction for software is a license to use the software OR a sale of the product. For consumer transactions, this distinction is more illusory than real. The so-called consumer software license allows the consumer to use the software and to create a back-up copy, but not to modify the software, make additional copies, or to incorporate the software into another software package. Since copyright law provides these same protections for all copyrighted works - songs, software, or films - there is no meaningful difference between a sale protected by copyright or a license protected by contract. The primary difference is whether the purchaser can re-sell the particular copy. This right is protected by copyright but generally abrogated by most license agreements. In practice, however, no software publisher has attempted to enforce this licensing limitation on a consumer, so the advantage sought under UCITA is an empty, perhaps unenforceable right.
2. Even if software is treated as a good under commercial law, copyright law can be used to expand the publisher's protection from competition. Specifically, if the publisher harbors concerns about reverse engineering, the software should be encrypted. Whether the encryption proves impregnable no does not matter. Copyright law prohibits the decryption of encrypted software in all but the most limited of situations. As a result, the use of some encryption provides an additional measure of protection. The sales or license agreement should similarly prohibit reverse engineering and decryption so that no claim can be made that the publisher had waived the copyright protections.
3. In the commercial setting, the terms of the sales or license agreement must be negotiated specifically. Unless the sale of the software is for a single use by the commercial purchaser, additional terms must be added such as the number of users (or copies that can be made of the software), the ability of the purchaser or licensee to modify the software, the length of the license term if not an outright sale, the ability of the licensee to incorporate the software into its own products or services, and similar issues typically negotiated between a component manufacturer and the manufacturer of a completed product.
4. For non-consumer transactions, the scope of the license may be the most important negotiated term of the transaction. The scope reflects the range of uses to which the licensed property can be put, as well as the limitations on such exploitation. Companies often make mistakes by demanding too much as well as too little for their intellectual property licenses (see full article at http://www.gcglaw.com/resources/tech/rightsizing.html).

For other consideration, see an article what is UCITA? at http://cgi.infoworld.com/cgi-bin/displayStory.pl?/features/990531ucita1.htm

It is indeed a somewhat controversial bill. For example, Cem Kaner, Ph.D., J.D. (1999) argues that UCC was sufficient (and therefore, there was no need for UCITA) as it already covers copyrights and patents sufficiently Rather, he argues that UCITA is promoted by the publishers of software to avoid legal sanctions for poor quality products, etc. In contrast, the usual purpose of Codes is that of clarity - for judge rulings in the event that a case comes before him or her. However, it is also argued that UCITA, instead, does the exact opposite. Presently, judges can use either codes, which is more confusing and perhaps dangerous for the consumer, not knowing what to expect or what their rights are (other things are pointed out in http://www.badsoftware.com/networld.htm http://www.badsoftware.com/badindex.htm).

Another reported difference between UCITA and UCC is that UCITA's approach posited by American Law Institute (ALI) is that it takes away key customer rights, limits competition, and conflicts with federal policies on innovation and fair use of copyrighted materials (http://www.badsoftware.com/uccindex.htm).

3. What is the legal distinction between selling a product and licensing it?

In contrast, licensing (an intellectual property) has conditions (i.e., limited use). Intellectual license, for example, provides the licensee rights to use the licensed matter in the manner described in the license in exchange for payment. The license may include patents, copyrights, trade secrets or trademarks. The art of licensing intellectual property is distinct from the sales of traditional goods or services, requiring a unique set of legal and business approaches for the success of the licensor.

For the consumer, however, the basic legal distinction is that a sale is forever, whereas a contract for licensing is for a limited time period and conditional. However, there are tons of different opinions of exactly what this distinction is between UCC and UTICA.

See http://www.gcglaw.com/resources/tech/rightsizing.html for the differences in a commercial setting, as the article deals quite effectively with this distinction and is sometimes referred to as an "illusionary" distinction. For example, copyright and patent licenses are sometimes described as public goods because they can be sold numerous times without diminishing the source. When a gallon of gas is pumped, there is one less gallon to sell in the tank. When a song is played on the radio, it does not reduce the number of stations on which the song can be played. Put another way, the manufacturing cost bears little relation to the retail cost. The same CD can embody a $5.00 software game, a $18.00 musical album, or a $400 business software program. In addition, the licensee can reproduce the licensed work with relative ease, and the product does not have an inherent life span (although software, unlike music or books tends to have a short market life rather than the nearly infinite lifespan of entertainment content). http://www.gcglaw.com/resources/tech/rightsizing.html

It is not quite that straightforward, though. For example, licensing is a tricky issue for professional software development. Questions arise, such as, what kinds of software can you use from third parties and what kinds of attached strings are you willing to accept? What kind of a license can or should you release under? What kinds of licenses are appropriate to academic publication? Do you have a situation where the available open source licenses don't make sense? It is murky water to say the least. In fact, a content license may be nothing more than the sale of a copy of a software program to a consumer, OR it may be as complex as any merger between publicly held companies. Interestingly, the fundamentals of good licensing apply to any size transaction. The licensor must therefore focus on the transaction's goals rather than the mechanics. There are other areas of focus, and by focusing on generating revenue, maximizing exploitation of the intellectual property, minimizing risk, and building a common understanding between the parties, the licensing agreement will serve both parties (http://www.gcglaw.com/resources/tech/rightsizing.html).

4. 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?

Mainly, because of the new trends in Information and technology, and the related laws (e.g., intellectual property laws) needed to address specific areas of technology and software. Some argue as we saw above, that a separate Act was not needed, but the drafters needed that it would best meet the new and changing software trends. The drafting process, however, has a history to consider.
For example, as stated in the scenario above, UCITA was initially proposed as an amendment to the Uniform Commercial Code (UCC), which is co-authored by NCCUSL (the National Conference of Commissioners on Uniform State Laws) and the ALI (American Law Institute). That project (UCC Article 2B) ended when ALI walked out, after repeatedly calling for fundamental revisions over a three-year period (objecting primarily that UCITA's approach takes away key customer rights, limits competition, and conflicts with federal policies on innovation and fair use of copyrighted materials). UCITA confounds different strands of intellectual property law into a law of "informational rights" that doesn't fit any of them For example, there should be a different implied warranty for copyright and patent rights. This criticism was raised in detail at the Berkeley conference and is one of the themes underlying the American Intellectual Property Law Association's decision to oppose UCITA (See http://www.badsoftware.com/debate.htm for objections to UTICA).
ALI called for "fundamental revisions" in Article 2B. On April 9, the ALI withdrew from the Article 2B process, so 2B could not amend the Uniform Commercial Code. NCCUSL renamed the bill - 2B UCITA - adopted it in July 1999, primarily with the support of software and information publishers. It now carrying UCITA on its own (http://www.badsoftware.com/uccindex.htm)
Indeed, some argue that the main reason for a separate and distinct uniform act was because the drafters were mainly publishers or publisher's lawyers, so it would give them more power. In fact, it has been argued that this law is more about protecting the publisher than being fair to the customer. Therefore, carrying UCITA on its own, gives the publishers more power to meet this end. One authors writes this, "Writing a law that makes it almost impossible to sue software publishers for defects is a poor way to manage the escalating level of software customer dissatisfaction with bad software and bad support. But without opposition from more businesses, that law will pass" (http://www.badsoftware.com/networld.htm).