Home | 101 | Impact | News | Flash | States | Tools | Library | WO
Topics covered below:
Nearly all libraries engage in contract negotiations and regularly sign license agreements for software, online databases, and other information products in digital form. License agreements allow the library to use information products under certain conditions. Libraries play an important role in negotiating licenses that allow for the broadest use rights possible including the right to lend, preserve, and make a fair use of a work. With the ratification of UCITA, contractual licensing will assume increased importance in libraries, yet our ability to negotiate balanced contractual terms in the interests of library users will be weakened.
Libraries are already feeling the chilling effects of restrictive licensing terms. UCITA would validate the business model that makes this possible and further legitimize the inherent imbalance that favors the interests of the software licensor while making terms in non-negotiated mass-market licenses more enforceable by the courts.
UCITA replaces the public law of copyright with the private law of contract. Under the public law of copyright, a vendor who sells copies of information such as books or software has only limited power to control their subsequent use. UCITA would facilitate the restrictive "licensing" of information distributed to the general public. Rather than owning a copy, you will be granted permission to use the copy within limits dictated by the"license." A license agreement for a piece of software, for instance, may carry with it restrictions-that you may be unable to read in advance or negotiate-that govern everything from how the software is to be used to whether you are allowed to publicly criticize the product. The public law of copyright comes with certain privileges such as fair use; the private law of contract does not.
The scope of UCITA is overly broad
The definition of computer information would cover nearly all things digital. "Computer information," under UCITA, includes everything from copyrighted expression, such as stories, computer programs, images, music and web pages; to other traditional forms of intellectual property such as patents, trade secrets, and trademarks; to newer digital creations such as online databases and interactive games. UCITA covers some software embedded in other goods so that it is possible for UCITA to govern sales of non-computer consumer electronic products. The 2002 amendments to UCITA did not address this issue.
UCITA validates shrink-wrap and click-on licenses
When a consumer buys a piece of software or other information product, he or she often buys the product without the capability to read the license. UCITA would reinforce the view that, for example, the act of opening the box or breaking the plastic wrapping constitutes consent to the terms of the license. This is a fundamentally unfair position because the licensee has no idea ahead of time what the terms and conditions in the license are. UCITA enables vendors great latitude in crafting "take-it-or-leave-it" licenses. The 2002 amendments to UCITA do not address this fundamental issue that affects both consumer and business users of software.
UCITA provides the default rules for traditional contracting negotiations
UCITA puts libraries into the category of "corporate customers." Libraries, like other businesses and institutions have the option to negotiate independent license agreements. In this kind of traditional contracting situation UCITA provides the default rules that would be applied if the parties cannot reach an agreement or in cases where there is a dispute and the contract is silent on the issue. The kinds of terms seen in shrink-wrap agreements will become the standard for negotiated contracts as well.
UCITA would undercut traditional fair use of electronic materials
License provisions may restrict traditional "fair use" of a product by defining what rights buyers have in relation to an information product. For example, license provisions could exclude the right to quote from a work, or make a copy of a small portion of a work for personal use, or to use the information product in a non-profit, educational setting. In addition, these restrictions can even be asserted through electronic means, preventing a library user from creating a copy. With click-on/shrink-wrap license agreements, library users will be unaware that they have agreed to these limitations because the restrictions may be deep within the online license or not readily available before purchase. These licenses, however, would now have the force of law.
UCITA would undermine libraries in preserving and lending information products
Just as vendors can insert terms in click-wrap contracts that undermine fair use, they can also make it impossible for libraries to lend or make copies of electronic materials for the purpose of archiving and preservation. These unique library activities are not considered when mass-market licenses are written. As a result, huge amounts of information are being lost.
UCITA would inhibit reverse-engineering
In the normal process of software development, it is necessary for engineers and researchers to dismantle software to understand how it works and how it might be re-engineered to work better. The 2002 amendments to UCITA permit reverse-engineering for the purpose of creating interoperability between products but not for the purpose of detecting security holes or defects in the software-activities permitted under federal copyright law.
UCITA would shift economic risks onto businesses who license computer technologies
All businesses, large and small, depend on computer technologies to conduct "mission critical" processes such as payments to suppliers, payroll processing and compliance with tax obligations. The broad scope of UCITA would have an impact on nearly all aspects of business operations. The business community is concerned that UCITA would impose new uncertainty regarding the duration of a licensee's rights to use licensed software, enabling vendors to disrupt service at any time they deem reasonable. Licensees could also be required to discover product defects during a short trial period.
UCITA would enable software vendors to avoid traditional protections for consumers that govern warranties and disclosure of terms
UCITA's primary effect is to shift the balance of power inmass-market transactions involving information products and tostrengthen the ability of vendors to dictate terms in mass-market contracts that are difficult for consumers to negotiate. UCITA would enable a vendor of information products, such as computer software, to restrict a consumer's right to sue for a product defect, to donate the product to charity, or even to discuss or criticize publicly the product or information contained in it if the product were released in other than "final form." In addition, UCITA would enable software companies and other information product providers to require that all consumers bring all claims against the software company in a state of the software company's own choosing and that may be far from where the consumer lives.
More time and resources devoted to contractual negotiations
Libraries and consumers will see an increase in the use of contracts to gain access to information products. Vendors want to establish a "one size fits all" kind of contract template, to simplify the licensing process. This means that the same license agreement could be used for individual consumers, as well as library and business customers whose product requirements may be quite different. When the license is in a mass-market or off-the-shelf product, the terms are non-negotiable. Moreover, such agreements become the template for mass-market contracts; additional terms will be negotiated or added to contracts only as necessary. The publishing community, interested in clearly delineating terms of use, has acknowledged that contracts, along with the use of technological protection measures to control access, are indispensable mechanisms for commercial information transactions. Therefore, libraries can anticipate that more staff time will be needed to negotiate and review contracts for access or lease of computer information products.
Increased use of shrink wrap and "click-on" licenses
UCITA validates the use of shrink wrap and click-on licenses as legally binding agreements. With shrink wrap and click-on licenses, consumers do not know the terms of the license until after they purchase the product. Contract terms may restrict a person's ability to lend or resell a product or may limit fair use privileges. If a consumer does not agree to the terms outlined in the contract, his/her only remedy is to return the product for a refund. Libraries may see the increased use of click-on agreements as they receive updates or enhancements to online products licensed from vendors. Library staff must be diligent to note and understand changes in license terms that are included in updates.
More staff involved in license transactions
Because UCITA provides that click-on agreements have the force of law, library staff from throughout the organization will, more than ever, need to read the "fine print" with any downloaded or shrink- wrapped products. Acquisitions and processing staff who receive or check-in software, CD-ROMs, and other shrink-wrapped materials will have to look carefully for license terms that may be included in the packaging. Information technology staff who load new software or databases to the library systemwill need training so they understand terms included in click-on agreements. These terms may include important information such as the length of the contract, copying privileges or transfer restrictions.
Use of "automatic restraint" will impact library service and preservation
UCITA allows vendors to use "automatic restraint" techniques when they deem it necessary. Under this provision, a vendor may disable the product remotely because of a perceived misuse of the product or because payment has not been received on time, or upon expiration of the stated duration of the contract. Libraries will need to closely monitor whether vendors have included automatic restraints in the product license and to seek ways to avoid disruption of service. In addition, preservation and archival functions will be hampered if electronic products "disappear" upon expiration of the license or some other event determined by the vendor.
The 2002 amendments to UCITA prohibit the use of "electronic self-help," originally allowed in UCITA, to shut down a product's use in case of a "breach" of the contract. (In legal terms, a breach occurs when one of the parties to a contract acts in a manner to the end the contract.) Although the proposed amendment is an improvement over existing language, the complexity of the model statute makes it uncertain that the equivalent of electronic self-help would not be permitted through other sections of the law. A licensor could ignore UCITA's prohibition of "electronic self-help" with little fear of monetary consequence. See Related Pages, below.
Impact on "first sale" doctrine of copyright law
Because information products are licensed and leased from vendors, rather than purchased and owned by libraries, copyright law's "first sale doctrine" does not apply. This means that libraries can no longer assume that they can legally loan software or CD-ROMs to library users. License provisions could eliminate the right of libraries to lend products, donate library materials, or resell unwanted materials in the annual library book sale.
In 2002 NCCUSL approved an amendment to UCITA that permits the donation or transfer of software to public libraries, public elementary and secondary schools but only if the software is donated with the computer. Academic, private, and all other types of libraries are not included in this exception. Although this proposed amendment takes a small step in the right direction, this recommendation is still too limited in scope and should be more consistent with the copyright "first sale" doctrine, which does not specify who the recipients of such gifts must be. This amendment does not address the broader and deeper concerns that affect core library operations.
Copying and other fair use privileges determined by the vendor
License provisions may restrict traditional "fair use" of a product by defining what rights buyers have in relation to an information product. For example, license provisions could exclude the right to quote from a work, or make a small portion of the work for personal use, or to use the product in a non-profit, educational setting. These restrictions can even be asserted through electronic means, preventing a library user from creating a copy. With click-on or shrink wrapped license agreements, the library user or the library may be unaware that they have agreed to these limitations since the restrictions are buried deep within the online license or not readily available before purchase.
One page AFFECT summary of library concerns 
For a more extensive discussion of library concerns with UCITA, see: "Library Response to NCCUSL Amendment Proposals" in the Library section.
Inter-library loan (ILL) allows libraries to share materials with other libraries across the country and even internationally. Both public and academic libraries offer ILL services. In communities with small libraries and limited budgets, ILL offers a lifeline of materials to library users who ordinarily would not have access. ILL materials include books, books with CD-ROMs, software, CDs and videos.
Libraries are most concerned about products that are sold in shrink-wrap packaging or that can be downloaded from a computer. These products have licensing terms that are written for mass-market sale and therefore do not take into consideration the special needs of libraries. Federal copyright law allows libraries to share materials through inter-library loan under the first sale doctrine and other more specific library provisions outlined in Section 108 of the Copyright Act. However, under UCITA, terms in the shrink-wrap or click-on licensing could restrict the kinds of uses normally permitted to libraries under federal copyright law. Thus, terms could restrict use to one person at a time, prevent installation on more than one computer, or prohibit lending. UCITA makes the terms of such licensing contracts enforceable- even though the library may well never have seen the terms ahead of time or had the opportunity to negotiate with the licensor about them. Some examples…
CD-ROMs
For example, we heard from a librarian who had ordered Margaret Thatcher: Complete Public Statements 1945-1990 on CD-ROM, published by Oxford University Press. The licensing terms say the consumer may "load and store the Licensed Materials on a single computer." Such a term would prohibit the library from distributing this material through ILL.
Material distribution affected by post-purchase changes in the license
UCITA allows vendors to change the terms of a license any time after the licensee initially agrees to its terms. If a library licenses an electronic journal through a mass-market license, the publisher could later add a pop-up click-wrap updated license that restricts inter-library loan or other rights to the e-journal or e-book. The library's only option at that point would be to return the item for a refund.
Books with CD-ROMs
A library buys a hard copy of a book that includes a CD-ROM. Federal copyright law allows libraries to share the hard copy of the materials through ILL. But in a state where UCITA is in force, the acquisition of the hard copy becomes part of the larger license that accompanies the CD-ROM and therefore the books use is governed by the licensing terms. Libraries could be forced to accept terms that eliminate their right to ILL books as licensors continue to insert restrictive terms in mass-market products. UCITA validates this kind of term.