From Tue Dec 17 12:01:33 1996
Date: Tue, 05 Nov 1996 11:50:09 -0800
From: "Band, Jonathan"
To: "''"

The Threat Posed By the Proposed New Article 2B of the Uniform Commercial Code

The National Conference of Commissioners on Uniform State Laws is in the process of drafting a new article for the Uniform Commercial Code, which forms the basis of contract law in most states. Draft Section 2B-308 addresses mass market licenses, and would provide that in most instances shrink-wrap or click-on licenses would be enforceable. Under current law, such unilaterally imposed, take it or leave it licenses are generally viewed by courts as unenforceable contracts of adhesion.

Making shrink-wrap and click-on licenses enforceable would severely harm consumer welfare, particularly in the copyright area. The license written by a software developer, for example, could state that by removing the software's shrink-wrap packaging, a user agrees to waive all fair use privileges in the software . Likewise, the license written by a web page designer could provide that by clicking on the next page icon, the user agrees to refrain from copying any facts appearing in the web page. Because in the digital age most information will be available only on-line or via CD-ROM, the enforcement of shrink-wrap or click-on licenses will permit content providers to underact dramatically the limitations contained in the Copyright Act.

Additionally, new Article 2B-308 could apply to analogue as well as digital works. Thus, a telephone company could distribute White Pages with a license printed on the front cover stating that by opening the phone book, a user agrees not to copy any of the listings contained therein.

Arguably, the enforcement of a shrink-wrap or click-on license which conflicts with the Copyright Act is preempted either by Section 301 of the Copyright Act or the U.S. Constitution. However, because preemption law is far from clear, one cannot rely on preemption law as it currently stands to protect users and the copyright law from encroachment by content providers.

Fortunately, there remains time to influence the UCC revision process. The Article 2B drafting committee is still at work, and will not present its final draft to the Commission until the summer of 1997. Accordingly, concerns with Section 2B-308 need to be directed to the entire drafting committee, as well as the Commission itself, as soon as possible.