> The Threat Posed By the Proposed New Article 2B
> of the Uniform Commercial Code
> by
> Jonathan Band, Esq.
> Morrison & Foerster
>
>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 undercut 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 trephone 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.
>
>
>Washington College of Law
>American University
>4801 Massachusetts Ave., NW
>Washington, D.C. 20016
>
>May 15, 1997
>
>Professor Raymond T. Nimmer
>University of Houston Law Center
>4800 Calhoun
>Houston, TX 77004
>
> Re: Section 308 of Article 2B
>
>Dear Dean Nimmer:
>
> Last year I sent you a letter on behalf of the Digital Future Coalition,
>expressing the general concern that some of the changes contained in the
>proposed revision to Article 2 of the UCC may disturb the balance
>established by Congress between the creators and users of copyrighted works.
>
> I noted particular concern that the changes might enable authors to
>restrict the fair use privilege. You responded by E-mail, stating that
>nothing in the proposed Article 2B alters fair use concepts. You observed
>that the basic thrust of Article 2B was contract, not copyright, and that,
>beyond the view that what parties agree to should be binding, you took no
>position on what effect an agreement had on fair use.
>
> In the quiet following the adoption of the WINO treaties, the members of
>the Digital Future have finally had the opportunity to consider carefully
>both proposed Section 308 and your E-mail. Moreover, Adam Eisgrau and I had
>the opportunity to speak with you about Article 2B at the informal gathering
>convened by Pam Samuelson at Stanford earlier this month. We remain
>extremely concerned. While we generally agree with your proposition that
>what parties agree to should be binding, we feel that Section 308 as drafted
>will have the practical effect of significantly diminishing the scope of
>privileges which now exist under the Copyright Act.
>
> In the March 21 draft, Illustration 2 to note 9 could be read, for
>example, as suggesting that a license term which limits a privilege or
>exception under the Copyright Act is a "refusal term" under Section
>308(b)(1) which becomes enforceable under Section 308(a) only if the
>licensor calls the term to the licensee's attention and the licensee
>manifests his assent. While in the analog environment such safeguards,
>assuming they were applicable, may be sufficient to protect the privileges
>granted by Congress to the public, these safeguards are woefully inadequate
>in the networked digital environment.
>
> Imagine, for example, that a high school student in rural Montana is using
>the Internet to research a term paper on William Faulkner. The student
>finds a Faulkner web site, which contains several articles available only at
>the web site. A message flashes on the screen, stating that the articles
>may be accessed only if the reader clicks on a box to indicate his agreement
>that he will not copy any portion of any of the articles in the web site.
>The student, desperate for secondary materials, clicks his agreement to the
>web site's terms. He accesses the articles, and finds one which directly
>supports his thesis. Under Section 308, and in light of the preemption
>analysis of ProCD v. Zeidenberg, he would not be permitted to quote even a
>brief passage from the article.
>
> In the future, progressively more information will be available only from
>web sites. Section 308, as currently drafted, will enable authors to
>condition access to the information contained in the web site on the user's
>waiver of privileges such as fair use. This will dramatically upset the
>carefully calibrated balance between creators and users which has permitted
>our intellectual property system to promote creativity while at the same
>time preserving a public domain which serves as the well-spring for future
>creativity.
>
> The drafting committee can avoid this baleful result by adding the
>following sentence as a new Section 308(h): "A term that is inconsistent
>with 17 U.S.C. Section 102(b) or with the limitations on exclusive rights
>contained in 17 U.S.C. Sections 107-112 and 117 cannot become part of a
>contract under this section." In addition, the potential conflict between
>Article 2B and copyright policy could be addressed through the inclusion of
>provisions for "fair breach" of information licensing agreements. See Jane
>C. Ginsburg, "Copyright Without Walls: Speculations on Literary Property in
>the Library of the Future," 42 Representations 53 (Spring 1993).
>
> The DFC is continuing to study the draft of Article 2B, and we may have
>comments to make on other provisions in weeks to come. Inclosing, however,
>I want to stress the depth of our concern with the issues to which this
>letter is addressed. For the past year and a half, the DFC, whose members
>include many of the nation's major high-technology industry groups, library
>and education associations, and consumer and privacy advocates, has fought
>hard to defeat amendments which would have eroded the privileges in the
>Copyright Act. We do not intend to allow amendments to state contract law
>to undermine our efforts to preserve these important privileges.
>
> Very truly yours,
>
>
> Peter Jaszi for the
> Digital Future Coalition