Re: Uniform Computer Information Transactions Act (UCITA)

From: AR <RAGUENEA[_at_]STUDENT.LAW.UCLA.EDU>
Date: Thu, 03 Jun 1999 10:03:55 -0700

On Wed, 02 Jun 1999, David Rice <drice[_at_]world.std.com> wrote:
>
> On Tue, 01 Jun 1999, Ari Kahan <akahan[_at_]netcom.com> wrote:
> >
> > On 5/31/99, Mark Lemley <mlemley[_at_]mail.law.utexas.edu> wrote:
> > >
> > > On Thu, 27 May 1999, Vance R. Koven <vrkoven[_at_]world.std.com> wrote:
> > > >
> > > > As a practical matter, does that make it more or less likely to be
> > > > enacted by enough states to make it normative?
> > >
> > > (3) I think the most likely result is that UCITA will be enacted
> > > in some states (say, Washington) but not others (say, California).
> > > What happens then is anyone's guess.
> >
> > Isn't one possibility that as soon as it passes in one state (say,
> > Washington), software companies from other states (say, California)
> > would threaten to leave California for Washington, thereby putting
> > pressure on California to pass it as well?

>

> UCITA is written to avoid the race-to-the-bottom (or anywhere else)
> problem. It expressly provides that a contract may include a term that
> specifies what law governs the transaction. Discussions and Reporter's
> Notes indicate that the intention is to provide a contractual means to
> avoid application of generally applicable, non-contractual choice of
> law rules. The rationale is, of course, that the net is everywhere; a
> party and its server may be in different states, packets travel every
> whichway from origin to destination, and publisher/licensors can never
> know for every transaction where a party or its server resides, or
> whether the party clicked th wrap while at home, office, airport,
> on-the-road hotel, etc. -- and publisher/licensors need reasonable
> certainty (or, alternatively, will have to charge licensees
> substantially higher prices if they cannot have it).

>

> So, the argument that you suggest, Ari, is likely to be one that really
> is being made in a different context for a different purposes. E.g.,
> we will move to State X if you do not give us [check one or more items]
> (___ investment tax credit ___ new job creation tax credit ___ other
> public support) because the refusal to do so is one more indication
> that you, State Y, take us for granted or don't really care enough
> about our firm/industry. [Here, failure to enact UCITA is one of the
> facts that are alleged to show that State Y really doesn't care enough].

If the contract conflict of law, in the presence of a choice of law clause, offers the great advantage to "transcend" or trump boundaries it may not be always the applicable conflict law rule.

At a mere domestic level (in the U.S), what would happen if the contract contains a clause waiving all the copyright exceptions such as fair use, parody or reverse engineering? In that case it seems clear that the term of the contract would be inconsistent with copyright public policies. Then, the court may set aside the law selected by the parties and instead, rely on the copyright-conflict of law rules, namely the "lex protectionis" (the law of the country of protection, that is where the protection is demanded) as exemplified in article 5.2 of the Berne Convention, to decide what is the applicable law. (See Subafilms v. MGM 9th Cir. 1994) In that sense section 105 of Article UCITA/UCC 2B (February version 1999) provides that "if a term of a contract violates a fundamental public policy, the court may refuse to enforce the contract, or it may enforce the contract without the impermissible term..."

However, the situations where the the court will set aside the "lex contractus" are limited in two ways. First, the terms of the contract must be inconsistent with public policies of the forum. Second, the court will set aside the lex contractus merely with respect to the terms of the contract, which are inconsistent with the public policies. Thus, the "lex contractus" will still govern the contract for the rest of the contract that complies with the public policies. This is called the technic of "depecage" or "problem selection".

The same issue may be raised at an international level, but rather than the public policies of American copyright law it would be the public policies of European copyright law, which would be questioned by the terms of the contract. The European court (in civil law countries - application of the "conflcit of law method") may then set aside the "lex contractus" in two ways. Either they will "characterize" the dispute at bar as a matter of copyright law and then applies the copyright-conflict law rule or they may raise the public policy exceptions, namely the law of immediate application (loi de police) or the public order exception (loi d'ordre public).

Alan Ragueneau
LLM Program UCLA 1999
DEA de Propriete Intellectuelle 1998, (France) <raguenea[_at_]student.law.ucla.edu> Received on Thu Jun 03 1999 - 17:01:19 GMT