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CASES THAT REFER TO UCITA UCITA has been enacted in Virginia and Maryland. There have been no reported court decisions relating to UCITA in those states, reflecting perhaps that UCITA fits smoothly into the law and practice of states that adopt its clarifying provisions. On the other hand, UCITA has been increasingly referred to in reported opinions dealing with licensing law issues even when UCITA does not directly apply to the case. These reported opinions often use UCITA as a basis for clarifying existing law. They include:
Specht v. Netscape Communications Corp., 306 F.3d 17 (2nd Cir. 2002) (This case dealt with the requirements of assent in an online context. The court applied standards consistent with UCITA. In a discussion of UCITA, the court noted: "We hasten to point out that UCITA, which has been enacted into law only in Maryland and Virginia, does not govern the parties' transactions in the present case, but we nevertheless find that UCITA's provisions offer insight into the evolving online "circumstances" that defendants argue placed plaintiffs on inquiry notice of the existence of the SmartDownload license terms. UCITA has been controversial . Nonetheless, UCITA's notice and assent provisions seem to be consistent with well established principles governing contract formation and enforcement.") (The court also said: "Downloadable software, however, is scarcely a "tangible" good, and, in part because software may be obtained, copied, or transferred effortlessly at the stroke of a computer key, licensing of such Internet products has assumed a vast importance in recent years. Recognizing that "a body of law based on images of the sale of manufactured goods ill fits licenses and other transactions in computer information," the National Conference of Commissioners on Uniform State Laws has promulgated the Uniform Computer Information Transactions Act ("UCITA"), a code resembling UCC Article 2 in many respects but drafted to reflect emergent practices in the sale and licensing of computer information. . We need not decide today whether UCC Article 2 applies to Internet transactions in downloadable products.") Rhone-Poulenc Agro, S.A. v. DeKalb Genetics Corp., 284 F3d 1323 (Fed. Cir. 2002). (This case dealt with whether a purported licensee could take free of
an ownership interest as a bona fide purchaser. The court reaffirmed long-standing
case law that there is no bona fide purchaser concept in a license. As
to UCITA, the court noted: “Monsanto urges that the cases requiring
that one obtain title to benefit from the bona fide purchaser defense
are "antiquated," and the Uniform Commercial Code's modern approach
has rejected the requirement of title. … Article 2B of the U.C.C.
was recently adopted as the Uniform Computer Information Transactions
Act ("UCITA"), and is relevant to the application of the bona
fide purchaser rule to intellectual property. To be sure, the scope of
UCITA is limited to "computer information transactions," and
therefore is not applicable to all patent licensing cases. Nevertheless,
UCITA … provides guidance on the … common law. … Official
Comment 3 to UCITA § 506(b) makes clear that the drafters …
concluded that at common law the bona fide purchaser rule does not apply
to the licensing of intellectual property [quoting the comment] ….
Monsanto has been unable to cite a single common law case in which the
bona fide purchaser rule was applied to the holder of a mere contract
right, such as a license.”) (The court dealt with the enforceability of a shrink wrap license and applied standards consistent with UCITA. As to UCITA, it noted: “The fact the approach utilized by the ProCD, Hill, and Brower courts represents the overwhelming majority view on this issue is further demonstrated by its adoption into the UCITA. The UCITA embraces the theory of "layered contracting," which acknowledges while "some contracts are formed and their terms fully defined at a single point in time, many transactions involve a rolling or layered process. An agreement exists, but terms are clarified or created over time.") ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (Shrink wrap type contract held enforceable under standards consistent with UCITA. Court rejects lower court’s conclusion that Article 2B (UCITA) would change law. It notes that the mere fact that a proposed law clarifies law does not mean that it contemplates a change in the law.) I.Lan Systems, Inc. v. Netscout Service Level Corp., 183 F.Supp.2d 328 (D. Mass. 2002) (The court in this case held that a shrinkwrap software license was enforceable. It questioned whether UCC Article 2 was appropriate law for software and stated: “In Massachusetts and across most of the nation, software licenses exist in a legislative void. Legal scholars, among them the Uniform Commissioners on State Laws, have tried to fill that void, but their efforts have not kept pace with the world of business. Lawmakers began to draft a new Article 2B (licenses) for the UCC, which would have been the logical complement to Article 2 (sales) and Article 2A (leases), but after a few years of drafting, those lawmakers decided instead to draft an independent body of law for software licenses, which is now known as the Uniform Computer Information Transactions Act ("UCITA"). So far only Maryland and Virginia have adopted UCITA; Massachusetts has not. … Software licenses are entered into every day, and business persons reasonably expect that some law will govern them. For the time being, Article 2's familiar provisions which are the inspiration for UCITA better fulfill those expectations than would the common law. Article 2 technically does not, and certainly will not in the future, govern software licenses, but for the time being, the Court will assume it does.”) AGT Intern., Inc. v. Level 3 Communications, LLC, 2002 WL 31409879 (S.D. Ohio 2002) (The court dealt with a number of issues, one of which was whether there was an expectation that some licenses of software might involve a perpetual term. In reference to that issue, the court said: “That [foregoing] statement [in the license] provides a clear indication that the Operating License provides a perpetual term … In addition, pursuant to § 308 of the Uniform Computer Information Transactions Act, the duration of a license for use of object code computer software is presumed to be perpetual where a copy of the software is delivered to the licensee for a fixed fee, as occurred here. Although UCITA does not govern the transaction between AGT and Level 3, it does provide additional support for the contention that the industry custom is to grant a perpetual license for licenses of software such as the IRTH Software.”) Klocek v. Gateway, Inc., 104 F.Supp.2d 1332 (D. Kan. 2000) (The court held that, in the particular case, the buyer of computer hardware did not assent to terms included in the package containing the hardware. It noted the rules contained in UCITA, but properly concluded that UCITA does not deal with contracting with reference to hardware, as compared to computer information.) Applied Information Management, Inc. v. Icart, 976 F. Supp. 149 (E.D.N.Y. 1997) (Decided several years before UCITA was promulgated, the court dealt with
the issue of whether a software licensee was the owner of a copy of the
program. It held that the terms of the contract control this result. As
to UCITA, the court noted: “[No] section of the U.C.C. assists in
determining whether a transaction involves transfer of ownership. The
current U.C.C., in force in New York, provides rules for determining when
title has passed, when the risk of loss has passed, and even what terms
form part of the contract, but it provides no guidance as to whether title
ever passes under a given agreement. The proposed Section 2B 501 of [UCITA]
would resolve this question by looking first at the contract. In the absence
of contractual provisions, the default rules would presume that ownership
of the copy rests with the possessor of the copy. … This draft,
however, reflects only a proposal for new legislation and does not reflect
the state of the current law. Thus, there do not currently exist any accepted
default rules to clarify an ambiguous license agreement.”) |
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