Press Alert
For Immediate Release
May 12, 2000

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Software licenses muzzle critics and cost company 1.95 million -- new state legislation says "That's OK"

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The Uniform Computer Information Transactions Act (UCITA) is pending state legislation that will validate software licenses that excuse software vendors from responsibility for "buggy" software. It will even allow vendors to prevent users and reviewers from publicly discussing a product. Both the ruling by the Supreme Court of the State of Washington and Microsoft's demand to Slashdot.org to remove Internet postings about one of its products are evidence of a disturbing erosion of customer protections in state contract law.

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The Supreme Court of the State of Washington ruled that "not our fault" language contained in a shrink wrap license for software was valid, even if the customer never read the disclaimer and the software company knew about the defect before the product was sold. In the Washington case, a construction company made a $1.95 million error in a bid it submitted to build a medical center because of a defect in the software. The construction firm discovered the error only after the bid had been accepted. The construction company sued the software developer and distributor to recover the $1.95 million and the court ruled that a liability waiver in the shrink-wrap license provided complete protection to the software company.

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UCITA would make the Washington Supreme Court's ruling law in every state that adopts the legislation. According to Skip Lockwood, director of 4CITE (For a Competitive Information Technology Economy), "UCITA takes away software firms' incentive to pre-test their software in order to distribute bug-free programs. Software companies can ship programs with known defects, secure in the knowledge that UCITA will shield them from liability."

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In another case, Microsoft has demanded that Slashdot.org remove postings on its web site about a Microsoft security product. Microsoft contends that when the users downloaded the product from the Microsoft site, they clicked on a confidentiality agreement. Therefore, users are unable to publicly comment on the software.

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UCITA would render this click-on confidentiality agreement (and many other onerous provisions) completely enforceable. "UCITA will allow software vendors to bind thousands, if not millions, of people to secrecy. Consumers and competitors will not be able to comment on or criticize the vendor's products" according to Lockwood.

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AFFECT is a 29 member cross-industry, for-profit/non-profit partnership actively supporting the expansion and competitive use of e-commerce by addressing the many legal and public policy inadequacies of UCITA.

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