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UCC Article 2B revision 

Hello:

I am not an attorney, but I am researching the development of UCC Article
2B for an article I am writing on licensing agreements for The
Acquisitions Librarian.  I am also monitoring the UCCLAW-L listserv.  All
of the drafts of Article 2B are on the UPenn website at
http://www.law.upenn.edu/library/ulc/ulc.htm . 

I can let you know what I've learned so far:

In the February 1998 issue of AALL Spectrum, Bob Oakley, Director of the
Law Library at the Georgetown University Law Center and AALL Washington
Affairs Representative, reports on the development of UCC Article 2B in
"Some Preliminary Comments on a New Issue for the Library Community" (14).
Commenting on the September 25, 1997 Draft of Article 2B, Oakley raises
several concerns about the implications of Article 2B for libraries.  I
have listed his concerns, and then examined the latest Draft of Article 2B
to verify them. 

In sum, Oakley raises three issues which appear to continue to be
problematic in the current Draft of Article 2B: 

1) Article 2B is neutral on the issue of the validity of contract
terms that are inconsistent with federal copyright law;

2) In the case of mass-market licenses and standard form contracts,
Article 2B does not currently specify that terms which limit licensees'
rights under copyright law must be called to licensees' attention for
separate assent;

3) Article 2B allows the restriction of transfer rights, and thus
validates contracts that override the First Sale doctrine. 

A more detailed discussion follows below.

Please let me know if you have suggestions or questions.

Rob Richards
-------------------------------------------------------------------------------
  		     Robert C. Richards, Jr., M.A., M.S.L.I.S
  
  		     Technical Services Librarian
  		     University of Colorado Law Library
                     Fleming Law Building
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  		     Campus Box 402
  		     Boulder, Colorado 80309-0402
  	             Telephone: (303) 492-7535
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                     E-mail:    rrichard@stripe.Colorado.EDU
  	             URL:       http://alexia.lis.uiuc.edu/~rrichard
-------------------------------------------------------------------------------

First, Oakley is concerned that the Draft is neutral on the issue of the
validity of contract terms that are inconsistent with federal copyright
law.  The April 1998 draft, like previous versions, does not specify that
contracts that conflict with federal copyright law are preempted (Oakley
14).  The Reporter's Note to Section 105 of the April 1998 Draft states,
"The approach of Article 2B has been to correspond state law to clear
rules of federal law where appropriate and to take no position
regarding controversial or context-determined rules whose application
cannot be predicted and must of necessity await determinations by
individual courts in particular cases or by congress as a general federal
policy question."

Second, "[t]he 2B drafting committee has endorsed shrink-wrap licenses" 
and clickable licenses, both of which licenses the committee calls
"mass-market licenses"  (Oakley 15).  In particular, Oakley is concerned
about the prospects of libraries being compelled to sign away fair use
rights protected by federal copyright law.  "AALL has tried to argue that
if mass-market licenses are going to be validated, when licensees give up
rights granted to them under the Copyright Act, at the very least it
should be called to their attention that that is what they are doing, and
they should have to separately indicate their agreement to such a term" 
(Oakley 15).  As far as I can tell from my preliminary examination of the
April 1998 draft, Article 2B does not currently specify that terms which
limit licensees' rights under copyright law must be called to licensees'
attention. 

Third, with regard to "standard form contracts," the typical type of
licensing agreement for electronic products, Oakley again argues that
terms that restrict licensees' rights protected by federal copyright law
should "be clearly brought to the attention of the licensee"  (Oakley
15-16).  Again, as I can tell from my preliminary examination of the April
1998 draft, Article 2B does not currently specify that terms which limit
licensees' rights under copyright law must be called to licensees'
attention. 

Fourth, Article 2B appears to allow the restriction of transfer rights,
and thus validates contracts that override the First Sale doctrine. 
Section 502 of the April 1998 draft (section 503 in earlier drafts) reads
in part:  "...a contractual restriction on transfer of a license or of
informational property rights is enforceable, and a transfer made in
breach of the restriction is ineffective..."  This provision would seem to
validate licenses in which libraries could be prevented from selling or
even lending the licensed product.

Earlier drafts of Article 2B, in the section on Access Contracts (formerly
section 614, section 615), had restricted licensees' ability to make
permanent copies of the licensed product.  This provision has been deleted
from the most recent draft.  The Reporter's Note to this section of the
April 1998 draft states that the section now "takes no position and
creates no default rule regarding the licensee's ability to make permanent
copies of the information accessed." 

Oakley had also been concerned about the scope of the Article, as
expressed in section 103 of earlier drafts, as covering "licenses of
information and software contracts" (Oakley 16).  Oakley noted that this
could potentially cover licenses for printed and microform products.  The
scope has been narrowed in recent drafts.  For example, the April 1998
draft, section 103, limits the scope of the Article to "any transaction
that creates a software contract, access contract, or license;" the
Reporter's Notes note that transactions for the acquisition of books,
newspapers, Magazines, videos and records are explicity excluded from the
scope of the article.  Microforms do not seem to be mentioned. 

I will continue examining the April 1998 draft, and communicate with
attorneys on the UCCLAW-L list, to verify Oakley's concerns about the lack
of a requirement to alert licensees to terms which restrict or eliminate
rights under federal copyright law.

-------------------------------------------------------------------------------

On Wed, 29 Apr 1998, Ann Okerson wrote:

> Thanks to David Dillard for sending along this message. We haven't
> discussed the Uniform Commercial Code (UCC)  on this list; if anyone,
> particularly the attorneys present, know about the subject and would like
> to speak up about the current revisions process, please do so and
> enlighten us all. 
> 
> Many thanks, Ann Okerson


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