Press Alert for Immediate Release
November 12, 1999

MICROSOFT DECISON UNDERSCORES PROBLEMS POSED BY UCITA

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Judge Jackson's recent decision in the Microsoft antitrust case underscores the problems posed by the Uniform Computer Information Transactions Act (UCITA), which several states have begun to consider enacting. Judge Jackson found that Microsoft was able to use its market power to dictate license terms on some of the world's largest information technology companies. This demonstrates that in the software market in particular, and the information market generally, dominant companies are able to impose onerous license terms on consumers and corporate licensees. UCITA exacerbates this problem by legitimizing these onerous license terms. For example:

• UCITA would allow a software vendor to escape liability for damage caused by defects known by the vendor at the time the software is shipped.

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• UCITA would allow a software vendor to prevent licensees from publicly criticizing the software.

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• UCITA would allow a software vendor to exercise "self help" against a licensee it believed to be violating the terms of the license, and then escape liability for any damage caused, even if it turns out that the licensee had not violated the license. "Self help" could involve disabling the operation of mission critical software at a hospital or bank.

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• UCITA would make it easier for a software vendor to prevent "reverse engineering" necessary for interoperability and innovation.

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• UCITA would allow a provider of information in digital form to prevent a consumer from selling her copy of the information.

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While these aspects of UCITA are bad for consumers, they have an even more negative impact on large corporate users. For this reason, many life insurance companies and manufacturers have opposed UCITA. Further, when UCITA was before the National Conference of Commissioners on Uniform State Laws (NCCUSL) this past summer, it was opposed by over 20 state attorneys general, including some of the AG's involved in the Microsoft antitrust litigation. Despite the opposition of the AGs and the Federal Trade Commission, NCCUSL adopted UCITA at the urging of Microsoft and other large software companies. According to Skip Lockwood, the coordinator of the Digital Future Coalition, "UCITA encourages software companies and other information providers to abuse their market position to harm consumers and impede innovation."

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