Contents

Lawyers Serving Society Through Technology: E-Lawyering

Tech2000 Plenary Recommendations

Spotlight on UCITA

• A Primer on UCITA
• UCITA Threatens the Historic Functions and Services of Our Nation’s Law Libraries
• Let’s Wait and See on UCITA

SCOTIS Members

LTRC Staff

We hope you find this newsletter informative and useful.We appreciate any feedback; contact the Legal Technology Resource Center at ltrc@abanet.org or (312)988-5465.

Lawyers Serving Society Through Technology: E-Lawyering
The primary focus of the conference was on the emergence of innovative methods to practice law over the Internet. During the year and a half of the Task Force’s work, a number of companies have emerged in the US and UK that extend far beyond providing legal information over the net. They have client intake forms, provide targeted legal information (e.g. divorce kits), and even offer live chat services between the online user and a lawyer licensed in the jurisdiction where the user claims to have a legal need or situation. Instead of looking on these developments as anathema, the conference examined how practicing law over the Internet can extend the reach of legal services to the poor and to people of moderate means.

The conference developed action recommendations regarding ethics and rules, technology standards, and lawyer competency. One of the resolutions reads as follows:

The President of the ABA should designate an appropriate entity to play an active role in developing and sponsoring the Legal XML Standard. In that role, the ABA will encourage the use of the Standard among its members, private industry, courts, and government agencies. The ABA will adopt this Standard for all ABA publications. [Ed. Note: The entire list of plenary recommendations follows this article.]

Tech2000 Plenary Recommendations

Ethics and Rules

• Rule Modification: The ABA should fund an entity to review existing ethics rules to identify those that impede the use of Internet technology to deliver legal services to low and moderate income Americans, and, on an accelerated basis, to submit appropriate recommendations, consistent with the core values of the profession, to the appropriate rule-making authorities.
• Rule Interpretation: The President of the ABA should designate an appropriate entity to engage state rule making and rule enforcement authorities so that interpretations and enforcement do not needlessly inhibit innovation. To that end, convene a multistate (virtual and live) conference of state bar ethics policy makers and disciplinary officers, National Organization of Bar Counsel (NOBC), National Council of Bar Presidents (NCBP) to encourage Internet delivery of legal services and information.
• Safe Harbor Rules: The President of the ABA should designate an appropriate entity to facilitate the immediate creation of Safe Harbor rules to facilitate technical and practice innovation, while protecting consumers, lawyers and providers.

• Collaboration: The President of the ABA should delegate to an appropriate entity the responsibility to develop collaborative relationships between non-profit organizations and entities engaged in electronic commerce and services, with a particular focus on those engaged in the delivery of legal services over the Internet.
• Electronic Standards (XML): The President of the ABA should designate an appropriate entity to play an active role in developing and sponsoring the Legal XML Standard. In that role, the ABA will encourage the use of the Standard among its members, private industry, courts, and government agencies. The ABA will adopt this Standard for all ABA publications.
• Low Cost Tools: To improve law practice efficiency and enable lawyers to provide better legal services, the President of the ABA should designate an appropriate entity to facilitate private sector development of low-cost, comprehensive Internet practice tools for lawyers. These tools should be especially targeted at small and solo practitioners.

• Stamp of Approval: The President of the ABA should delegate to an appropriate entity the responsibility to establish standards and policies for e-law sites and provide ABA stamp of approval for e-law sites. Such standards should include, but not be limited to, privacy standards, disclosures, disclaimers, confidentiality, due diligence, security, consumer information, and consistency of business models with professional norms.
• Technological Competency: The President of the ABA should designate an appropriate entity to revise the MacCrate Report’s Statement of Fundamental Lawyering Skills and Values, to reflect new technological advances and interdisciplinary developments as standards of lawyer competency.

Spotlight on UCITA
The ABA Technology Council met March 29, 2000, and recommended that the LTRC and SCOTIS publish educational material about this Uniform Act and its effect on the legal profession. LTRC staff contacted individuals supporting and opposing UCITA to help in this effort. We would like to thank our authors for their help. David Whelan.
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A Primer on UCITA
The controversial Uniform Computer Information Transactions Act (UCITA) will become effective in Maryland on October 1 (and perhaps elsewhere under contract clauses choosing Maryland law).

Virginia also has enacted it, but with a July 1, 2001, effective date to allow a study commission to look into concerns of business and consumer users and libraries. Meanwhile, Iowa is considering “bomb-shelter” legislation to make the choice of UCITA as the law of a transaction ineffective against an Iowa consumer or business. Several other states are considering UCITA, while most are holding off to see the lay of the land when the dust settles.

For those who have escaped delving into UCITA so far, here is a primer on its scope, history, and key features.

What does UCITA cover?

UCITA applies to contracts for “computer information,” including software, online access services and content, books and data bases on CD-ROM, and material (non-trivial) software elements embedded in goods.

Who sponsored UCITA?

The National Conference of Commissioners on Uniform State Laws promulgated it. Originally, UCITA was planned as a new Article 2B of the Uniform Commercial Code, but it was turned into a freestanding uniform law after the American Law Institute withdrew from the project in April of 1999. An ALI Council committee and the ALI representatives on the drafting committee, Amelia Boss, David Bartlett, and David Rice, expressed reservations about the legislation’s technical quality and policy choices.

What are UCITA’s key features and why are they controversial?

1. Assent. UCITA validates double clicking on a license after payment as assent. (Mass-market customers have a right of refund, but only if the customer does not double-click and returns the product without accessing it.)

The case law on this issue is spotty and divided. Case holdings finding post-payment assent valid are of course limited to their particular facts, which have included availability of the license terms before purchase or a refund right that lasts for 30 days after the customer accesses the product. Other cases have held post-payment terms unenforceable.

The delayed disclosure approach of UCITA applies to all terms-including warranty disclaimers, remedy limitations and restrictions on transfer and use.

UCITA’s approach to assent is controversial among all types of users. Businesses and libraries are concerned about losing effective legal oversight when any employee might double click on a license and arguably override even a negotiated contract.

In the case of consumers, UCITA does not adopt the modern approach to consumer protection, calling for early, effective communication of the material features of a deal. UCITA makes it easier for producers to offer unattractive terms, because they can be held back until after the customer entered into the transaction and feels committed.

2. Relation to intellectual property law. UCITA appears to validate contract license terms that take away rights users would have under federal intellectual property law upon purchase of a copy. These include the right to transfer a copy, the right to examine a copy of software (“reverse engineer”) in order to make products that work with that product, rights of limited quotation, libraries’ rights to archive, and rights to test and then publicly criticize a product sold to many customers.

UCITA expressly approves license terms restricting transfer. Other sorts of use restrictions could be challenged as contrary to “fundamental public policy,” a general provision that will require litigation before its scope is well understood. Federal preemption challenges to UCITA can also be expected, and again a great deal of litigation will be needed before we know the ultimate resolution of the issues.

Generally, UCITA lends weight to the argument that a “license” is fundamentally different from sale of a copy and that ‘licensees” aren’t entitled to the same intellectual property rights. Libraries are concerned about losing rights to lend digital works freely and to archive them for future generations. Businesses could find transfer restrictions particularly problematic in a merger or acquisition. Software developers fear being sued for making new products that work with others. For consumers, the greatest concern is that transfer restrictions could eliminate or burden the second-hand market for digital books and for cars, computers, and other goods with significant computer programs in them.

3. Shutting off software or access services. UCITA authorizes contract terms allowing a licensor to use “electronic self help” and to “electronically monitor performance.” Electronic self help can be used only with notice, but a customer must get an injunction to stop it going into effect. Electronic monitoring of performance can be used to shut off a customer on termination, as defined in the contract, and without notice.

Remote shut off is a huge concern to business users, which could lose records and access to systems. Back doors in systems, included to make shut off possible, could cause security problems. For consumers, the concern is that software in goods could be used to remotely disable them, a form of leverage not allowed under UCC Article 9.

Jean Braucher is the Roger Henderson Professor of Law at the University of Arizona and is also active in the Cyberspace Law Committee of the Section of Business Law of the ABA. She is the Co-Chair of the working group that spearheaded http://www.safeshopping.org.
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UCITA Threatens the Historic Functions and Services of Our Nation’s Law Libraries
One of the core missions of the American Association of Law Libraries (AALL) is to provide leadership in the field of legal information and information policy. Over the course of the past several years, AALL has monitored carefully the development of UCC Article 2B which the National Conference of Commissioners on Uniform State Laws adopted last July as the Uniform Computer Information Transactions Act (UCITA). With over 4,800 members who serve the bench, the bar, government officials, the business and academic communities, and the general public, AALL is a major stakeholder in the debate over UCITA. Our nation’s 1,900 law libraries are among the largest consumers of software and fee-based electronic databases and services.

UCITA represents a fundamental policy shift away from the public law of copyright - where the well-established doctrines of fair use and first sale apply - to the private law of contract. UCITA threatens the ability of libraries to fulfill their historic functions in the electronic age by:

• Validating shrink wrap and clickable licenses in non-negotiated contracts that restrict legitimate uses under federal copyright law by merely opening and downloading the software or clicking the “Agree” button;
• Validating transfer restrictions that prohibit a library from distributing digital materials to library patrons, effectively terminating the first sale doctrine and denying libraries the ability to transfer legally acquired materials through inter-library loan or to enhance their collections through gifts and exchanges.

No effect shall be given to a term in a non-negotiated agreement with a library, archive, or educational institution in the State of Maryland, which restricts the ability of the library, archive, or educational institution to engage in archiving, reserve lending, inter-library lending, classroom use, distance education, or preservation, to the extent permitted by other law.

Let’s Wait and See on UCITA
The uniform law commissioners are anxious to chisel their interpretations of "freedom of contract" and “certainty” into statutory stone. But what’s the rush? UCITA isn’t necessary to resolve conflict in the common law or to eliminate vestigial rules prohibiting desirable transactions. There are minimal state laws on “computer information transactions” and UETA [Uniform Electronic Transactions Act], not UCITA, should be the primary vehicle for pursuing procedural efficiency.

These comments are not to question the logic or balance of UCITA, especially since much of it merely recasts UCC and Restatement rules in new terms. But when entire industries are just beginning to migrate to the e-world, experimentation - not uniform legislation - should be the rule.

UCITA is premature because it may exacerbate the major tension in information contracting: the mini-monopoly created by federal intellectual property interests. Promoting “freedom of contract” in a context of disparate bargaining power and boilerplate contracts recalls pre-Depression rhetoric. Enforcing such “freedom” with “certainty” - by reducing the risk of judicial and jury creativity - would only condone unrestrained exercise of that market power. Elevating “certainty” in contracts is especially ironic in an e-world where uncertainty of product performance is the rule (remember, “Software is an art.”)

Our federal system permits states to experiment as we move into the new economy. Legislators should consider whether UCITA-like “freedom” and “certainty” will result in more efficient and fairer bargains. Where market power is comparable, parties will provide their own rules and remedies without new legislation. But where market power is disparate, prudence and justice dictate that we defer judgement until we have more experience.

In short, we need a UCITA at some point, but we should let the market forces determine the approach we take. Until the market resolves what works in this emerging economy, UCITA as we now know it is premature at best and creativity constricting at worst.

Martin C. Loesch is a Principal of TechRisk.Law and Chair-Elect of the Self-Insurers and Risk Managers Committee of the Tort and Insurance Practice Section of the ABA.
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