What Have You Signed Away Today?

Juno wants to sell your computer's idle time. Microsoft wanted the rights to all content passing through its Passport Web services. Some vendors want no liability for their products--even if they know about product defects in advance. And chances are, you've legally agreed to let vendors have what they want.

All it takes is clicking an "I Accept" button or ripping the shrink-wrap off a new box of software. Both software and Web services come with End User License Agreements (EULAs) or Terms of Service (TOSs), and few people read them. Until recently, buyers didn't need to. Historically, EULAs were confusing and rarely invoked--but EULA and TOS contracts have always been legally binding.

This "fine print" has suddenly become a cause célèbre as states around the country move toward adopting a set of proposed e-commerce rules called the Uniform Computer Information Transactions Act (UCTA). If UCITA is adopted nationwide, it will give ominous legal power to previously unenforceable parts of End User License Agreements--in fact, it has already started to.

It's Your Problem

Although only Maryland and Virginia have enacted UCITA, consumers around the country are beginning to feel its impact. For one thing, companies are demanding far more in their EULAs. Some agreements let a software maker perform highly invasive scans of a user's system. Others limit the methods by which consumers can seek to resolve disputes with vendors; some also attempt to restrain customers from complaining publicly about a product.

In some cases, EULAs insulate firms from liability for a defective product--even if the company knew the product had defects prior to shipping it.

Consider the case of M.A. Mortenson, a contracting firm that sued Timberline Software of Oregon; the suit alleged that defects in a Timberline bid-preparation program caused Mortenson to make a $1.95 million bidding error.

Last year, the Washington State Supreme Court ruled that Timberline was not liable for the buggy program--despite the fact the company knew about the bug before putting the software on the market. The reason: Timberline's EULA exempted the company from responsibility "for any damages of any type" resulting from use of its products.

"It [UCITA] does away with product liability so far as software manufacturers are concerned," says Gordon Pence, intellectual property counsel for Caterpillar Inc. in Peoria, Illinois. (Pence represents the company in Americans for Fair Electronic Commerce Transactions, a business coalition that opposes UCITA.)