Debate Opens on Making E-Commerce Law Consistent

WASHINGTON--Douglas Koelemay's view on regulating Web software transactions is simple: "If fences make better neighbors, then contracts make better customers." He supports a uniform law governing information transactions nationwide.

Koelemay, vice president of the Northern Virginia Technology Council, defended the proposed Uniform Computer Information Transaction Act (UCITA) Wednesday at a debate sponsored by the Washington Legal Foundation.

The proposal was created by the National Conference of Commissioners on Uniform State Laws, a group of lawyers, judges, and professors appointed by state governments. UCITA aims to make business and consumer software transactions legally consistent from state to state. But opponents worry that consumer rights will be lost in the uniform standards the proposed law would impose on what they characterize as borderless, faceless transactions.

"UCITA is faulted because the terms are murky in showing the relation between copyright and licensing," says Jonathan Band, of the Washington law firm Morrison & Foerster.

Charles Shafer, a professor at the University of Baltimore Law School agrees, adding, "UCITA gives software publishers the right to enter into licenses that take away the rights we've traditionally had under copyright law."

Distinguishing Software

Publishing and libraries normally governed by copyright and fair-use doctrine would be specifically affected. Because the proposal defines a software purchase as buying a license to use the software on specific agreement terms, it differs from copyright law that governs the purchase of software copies.

And because no common law governs software and Internet-access transactions, proponents say manufacturers have nearly exclusive power to decide software sales terms.

So when customers buy software products, the transactions are at their sole risk, Shafer explains. This is the case in no other consumer product, he says. But he contends the proposal would not protect consumer rights, and instead favors large vendors and software companies.

Yet proponents question whether copyright law alone can adapt with the evolution of technology.

"There are lots of unanswered questions in the current law," says Carlyle Ring, an attorney with Ober, Kaler, Grimes & Shriver and a member of the National Council of Commissioners of Uniform State Laws. "Exactly who the parties are, what are the agreement terms and which state governs them, even who has jurisdiction over the dispute. All these are questions UCITA tries to address."

Proposal Under Scrutiny

"We're in a period of very rapid change, Koelemay says, citing the public's increasing use of the Web and software downloads. "The law itself is not immune to that."

Legislators in Delaware, Arizona, Texas, and New Jersey are reviewing the legislation, but Maryland and Virginia are the only two states to yet adopt UCITA. In a July speech, Virginia Governor James Gilmore explains why Virginia supports the act.

"While UCITA is controversial, we proceeded with the realization that approximately 21 states were actively pursuing or had already enacted legislation related to electronic contracting outside the UCITA framework," Gilmore says. "We did so with the expectation that a sound legal structure would attract entrepreneurs to locate in Virginia, generate prosperity here, and enhance our quality of life."