May 10, 1999

John McClaugherty, President - Elect
National Conference of Commissioners on Uniform State Laws
211 E. Ontario Street, Suite 1300
Chicago, IL 60611

Geoffrey Hazard, Jr., Director
American Law Institute
4025 Chestnut Street
Philadelphia, PA 19104-3099

Connie Ring, Jr., Chairman
NCCUSL UCITA Drafting Committee
Ober, Kaler, Grimes & Shriver
1401 H Street NW – Fifth Floor
Washington, DC 20005

Gentlemen,

        We are writing on behalf of our respective trade associations and member companies to inform you of our continued opposition to the proposed statute formerly known as Article 2B. This initiative, now known tentatively as the Uniform Computer Information Transactions Act ("UCITA"), was recently separated from the UCC revision process because NCCUSL and ALI recognized that it was not the "sort of codification that is represented by the Uniform Commercial Code." While removing this project from the UCC made sense, it does nothing to remedy the serious flaws in the draft.

        Following NCCUSL's current mandate to seek "immediate introduction and enactment beginning this fall in the 50 states" is an imprudent rush to judgment that will force us and many others to vigorously oppose this proposed legislation.

        Based on the strong and broad based opposition ranging from consumers to the large entertainment, publishing and other affected industries, we believe that this highly controversial proposal does not have a fair chance of enactment in most states.

I. Why We Care: The Entertainment, Communications and Publishing Industries Cannot be Effectively Excluded from UCITA

        Although the ever-changing statute's most recent iteration purports to exclude the activities of our industries, it has not achieved and cannot achieve that objective. For example:

The typical motion picture agreement for the acquisition of rights involves securing a variety of rights for theatrical, home video, interactive, merchandising, publishing and other areas--a mixed transaction requiring the application of both UCITA and the common law, with different results.

• An acquisition of a camera containing embedded software for use by a broadcast studio would be governed by both Article 2 and UCITA.
• Distribution of a newspaper, magazine or other text would be governed by one set of contract rules when physically distributed and UCITA when distributed electronically.

       The application of an additional and different set of contract rules to our existing transactions will needlessly increase expense, uncertainty and litigation. Existing law differs from UCITA on contract formation, warranties, performance and remedies. For example, UCITA's contract formation rules are far more aggressive than analogous provisions in the California Civil Code.

        Irrespective of the effectiveness of any exclusions, our industries will be affected by UCITA as technology is critical to the operation of each of our businesses. Even in this area, rather than being a consistent and coherent set of contract rules, the proposed statute is needlessly complex and, in certain key areas, incomprehensible. While our trade associations and member companies have worked diligently for several years to improve the proposed law, its lack of clarity would result in uncertainty in commercial transactions, create a substantial likelihood of increased litigation and increase the cost of doing business.

II. The Statute Is Based On Inappropriate Paradigms

        UCITA was modeled on UCC Article 2 and the retail, mass-market computer software paradigm. It takes a "one-size-fits-all" approach to "information" transactions, establishing the same warranty provisions for intellectual property, publishing, software and other licensing where real world practices often differ. Much as an attempt to impose football's detailed rules on baseball, basketball and swimming would result in chaos and physical injury, imposing the rules of the computer software industry on other disparate industries will create unintended consequences resulting in confusion and economic injury.

        It was not surprising that after several years of cooperation, on April 7, 1999, ALI and NCCUSL jointly announced ALI's withdrawal of its support for proposed Article 2B's inclusion within the UCC. In the announcement, ALI and NCCUSL appropriately acknowledged that the disparate businesses within the "information industry" do "not presently allow the sort of codification that is represented by the Uniform Commercial Code." We strongly endorse the view that uniform rules governing these converging industries are inappropriate at this time. As technology advances and the digital convergence continues, we will have a clearer perspective of whether additional uniform laws are necessary and the direction such laws should take. Creating a detailed blueprint to govern such future transactions at this time is premature.

        For these reasons, we respectively urge the membership of NCCUSL to refrain from approving the UCITA.

Sincerely,

/s/
Eddie Fritts
President & CEO
National Association
of Broadcasters

/s/
Hilary Rosen
President & CEO
Recording Industry
Association of America

/s/
Don Kummerfeld
President & CEO
Magazine Publishers
of America

UCITA Pages On
James S. Huggins' Refrigerator Door

This page created:
before
Fri, 25.Oct.2002

Last updated:
18:37, Sun, 17.May.2009