7 November 2000 The Honorable Joe T. May Dear Delegate May: I am writing on behalf of the Institute of Electrical and Electronics Engineers – United States of America (IEEE-USA) to convey our endorsement of the amendments submitted by Ms. Tamara Maddox to the Advisory Committee concerning recovery of damages and attorney fees through litigation of unconscionable contracts or terms, liability for consequences arising from security vulnerabilities caused by an electronic self-help mechanism, and requiring that the licensee receive a copy of the license. As drafted, UCITA delegates to licensors of computer information responsibility for areas traditionally regulated by states through consumer protections applicable to goods and services. It does so based on a theory of equal bargaining power between licensor and licensee, which may be questionable in the context of a mass market transaction. To ensure fairness, it is essential not only that licensees have a copy of the terms and conditions agreed to (as recognized by Maryland in adopting its UCITA law), but also a legal mechanism to protect themselves from licensing abuses. Given the critical importance of computer and data security, coupled with the apparent movement to prohibit self-help in mass market transactions, it also serves a valuable public interest to hold software licensors responsible for security vulnerabilities that they create through inclusion or improper utilization of electronic self-help mechanisms in their software. The Institute of Electrical and Electronics Engineers, Inc. is a non-profit, technical professional association with more than 350,000 individual members in 150 countries. IEEE-USA supports the careers and public-policy interests of the nearly 240,000 electrical, electronics, computer and software engineers who are U.S. members of the IEEE, including the 8,900 IEEE members who live and work in Virginia. Thank you for your consideration of our views. Sincerely, Merrill W. Buckley, Jr. [Proposed Amendments Submitted by Tamara A. Maddox] PROPOSED AMENDMENT #1a: Add the following sections (d) & (e) to §59.1-501.11 (Unconscionable Contract or Term):
Rationale: § 59.1-501.11 recognizes that a shrinkwrap or clickwrap licensing agreement may contain terms that are unconscionable or that conflict with fundamental public policy, and it clarifies that such terms shall not be enforceable. However, in order to obtain the protection of this and related sections, it will likely be necessary to bring a case to court. Because a determination that something is "unconscionable" or is against public policy is a very high standard, it is unlikely that most consumers and small businesses will be successful in obtaining relief without an attorney's assistance, especially if they are compelled to litigate in a foreign jurisdiction. Even with the assistance of an attorney, it will be difficult to prove actual damages for this type of violation. (For example, if a software product contains a known bug that erases all information on a consumer's hard disk, but the licensor deliberately withholds that information from the consumer, yet simultaneously includes a term agreeing that the company shall have no liability for any losses associated with its product, regardless of the circumstances, this might constitute an unconscionable provision. However, how will the consumer prove the value of his or her lost personal information? Valuation of damages under such circumstances would be extremely difficult.) For these reasons, it is important to include a minimum damages clause and a clause awarding attorneys fees to litigants who are successful in challenging a term under this subsection. Otherwise, individuals and small businesses will be unable to afford to litigate even clearly unconscionable provisions because of the expenses of litigation. Simultaneously, this provision will encourage attorneys to take on meritorious cases due to the expectation that attorneys fees may be awarded should they prevail. Most importantly, these provisions are necessary to effectively deter licensors from including such unconscionable provisions in their contracts, which provisions consumers may believe they will be required to abide by. The Virginia Consumer Protection Act, which prohibits fraudulent and deceptive trade practices, provides generally for minimum damages and the awarding of attorneys fees at the court's discretion for violations of its provisions. These violations need not include willful conduct on the part of the violators; in fact, the court is entitled to increase damages should it find that the conduct was willful. Va. Code § 59.1-204(A). The above provisions generally track the language of the penalty provisions of the Virginia Consumer Protection Act. The proposed amendment provides a minimal damages award and availability of attorneys fees for a litigant who shows that a specific contract, provision or term is unconscionable or against fundamental public policy. In particularly egregious cases, the court is given the discretion to award treble damages or a higher minimum damages award which parallels the penalty provision for willful conduct under the Virginia Consumer Protection Act. See Va. Code § 59.1-204(B). PROPOSED AMENDMENT #1b: In conjunction with the above, modify §59.1-501.13(a)(2) as follows:
Rationale: The clause contained in § 59.1-501.13(a)(2) is intended to prevent software manufacturers from evading the intent of the unconscionability provisions by making it clear that they cannot simply add a term to their licensing agreements waiving or modifying consumer rights in this regard. The above modification simply clarifies that this paragraph also covers the additional sections (d) and (e) added above. PROPOSED AMENDMENT #2: Add the following new subsection (g) to UCITA §508.16 (Limitations on Electronic Self Help)
Note: Current § 508.16(g) should be renumbered as § 508.16(h) Rationale: An amendment has been proposed by the National Conference of Commissioners on Uniform State Laws (NCCUSL) (see Amendment #5 of August 23, 2000 proposed by Carlyle C. Ring, Jr.) that would prohibit use of "electronic self help" in mass market transactions and reinforce the requirement of manifest agreement by the parties to authorize resort to "electronic self help." This Amendment is an excellent measure. However, it does not protect consumers from the deliberate inclusion of "back doors" in mass market software (perhaps because the software licensor does not wish to take the time to remove them from software sold to non-mass-market customers) which may then be misused by others to wreak havoc upon the consumer. Security holes can cause major problems to consumers, even if the software licensors themselves do not utilize the "self help" capabilities that caused these holes. Software licensors must not be allowed to disclaim liability for damages that result from the deliberate inclusion of electronic self-help mechanisms in situations where such self-help is not permitted. (This provision also clarifies that should the licensor itself utilize such a backdoor when not permitted to do so, that it may not disclaim liability for its actions.) PROPOSED AMENDMENT #3: Amend § 59.1-502.9. Mass-market license, by adding proposed new subparagraph (a)(3) - Copy of license; MASS-MARKET LICENSE. (a) A party adopts the terms of a mass-market license for purposes of § 59.1-502.8 only if the party agrees to the license, such as by manifesting assent, before or during the party's initial performance or use of or access to the information. A term is not part of the license if: (1)-(2) (unchanged, and therefore omitted here) (3) The term is not available for viewing before and after assent:
Rationale: This amendment insures that the licensee is able to receive a copy of the license agreement specifying the terms that are agreed upon and enforceable between the parties to the transaction. Having a copy of the license terms is an issue of fundamental fairness and will enable a consumer to readily determine or refer to the terms agreed to in the event of a dispute. This amendment was approved by Maryland in its UCITA Law (see § 21-209(a)(4) of Maryland Enrolled House Bill 19). | Top of Page | UCITA Network | Policy Log | Public Policy Forum | IEEE-USA | Last Update: 13 Nov. 2000 Copyright © 2000, The
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