Editorial

Article 2B, a proposed addition to the Uniform Commercial Code (UCC), is due to be "statute ready" by the end of 1999. As such, it picks up where software shrink-wrap licenses left off -- and then some. UCC 2B, you see, is intended to cover all transactions involving the sale and lease of software, databases, and information. Putting this another way, UCC 2B is intended to be the commercial law governing the global information economy.

UCC 2B will affect literally everyone who produces or uses commercial software or other digital information for years to come. In fact, says University of Houston law professor and UCC Article 2B Reporter Ray Nimmer, UCC 2B "could be one of the most important law reform projects [of] this generation." But, as you'd expect with any important issue, debates about UCC 2B are contentious and acrimonious. According to InfoWorld columnist Ed Foster, "The fight over Article 2B is going to mark a watershed in the software industry's development."

On the one hand, you have ardent UCC 2B proponents, such as the American Law Institute, the National Conference of Commissioners on Uniform State Laws (the UCC's governing body, made up of 300-plus lawyers), the Business Software Alliance (whose members include the giants in the software industry), the Information Industry Association (database producers, online services, multimedia publishers, software companies, ISPs, financial information services, and the like), and others, who believe it's time for changes in how we treat the sale and licensing of intangible digital products (as opposed to the traditional way we transfer tangible goods). According to the NCCUSL:

Article 2B deals with transactions in information; it focuses on a subgroup of transactions in the "copyright industries" associated with transactions involving software, on-line and internet commerce in information and licenses involving data, text, images and similar information. It excludes core licensing activ-ities in many traditional fields of licensing including patent, motion picture, and broadcasting, but covers transactions in digital and related industries. In the digital economy, information industries are rapidly converging into a multifaceted industry with common concerns...

Article 2B concerns transactions that largely have never been covered by the U.C.C....In Article 2B transactions, the value lies in the intangibles: the information and rights to use information.

Article 2B provides a framework for contractual relationships at the center of the information era. This proposal is in effect a cyberspace contract statute.

On the other hand are those who acknowledge that laws surrounding software transactions need to be changed, but see UCC 2B in its current form as going too far. Pamela Samuelson, a professor of information management and law at the University of California, Berkeley, for instance, sees UCC 2B as too "licenser-centric" and catering to the demands of software publishers at the expense of consumers. Groups that have expressed grave reservations about UCC 2B include the Motion Picture Association of America, National Association of Broadcasters, National Cable Television Association, Recording Industry Association of America, Newspaper Association of America, Magazine Publishers of America, Association for Computing Machinery, Institute for Electrical and Electronic Engineers, American Library Association, American Association of Law Libraries, Association of Research Libraries, National Writers Union, Society for Information Management, Consumers Union, and Consumer Project on Technology, among others.

As you might expect from a document that springs from the minds and mouths of 300 lawyers, trying to figure out what UCC 2B really says is like grabbing hold of a hog on ice. Still, it seems that the problems with UCC 2B boil down to a few issues: 1. UCC 2B validates the concepts of mass-market licenses -- shrink-wrap and web site "I agree" buttons -- which are notions that have been on questionable legal ground up to now; 2. UCC 2B does little to curb the terms of these licenses, allowing publishers to include all kinds of highly restrictive limitations; 3. UCC 2B extends mass-market licenses to include other forms of information dissemination, such as books. In the process, UCC 2B seems to be on course to preempt copyright and other federal intellectual-property laws.

That's not to say UCC 2B is problematic from the git to the go. It has its good points, my favorite being that advertising can create an expressed warranty. But the worry is that the bad will outweigh the good.

Within the next few months, the NCCUSL will designate UCC 2B as a "model" law to be adopted by every state in the union. This means that you can still comment, but time is running out. Start by reviewing the current draft at Ray Nimmer's web site at http://www.lawlib.uh.edu/ucc2b/. Then go to http://www.2BGuide.com/, a comprehensive UCC 2B resource site maintained by Carol Kunze. Finally, you'll need to let your state representatives know how you feel about the proposal. They'll be voting UCC 2B into law before the end of 1999.

--Jonathan Erickson