What would you say if your elected representatives quietly and surreptitiously deleted 50-year-old rules for how consumers and businesses are treated in many legal disputes involving sales of goods, and didn't bother enacting new laws to govern those transactions? Well, if you live in Oklahoma, you should say what you will because that's exactly what's already happened in your state.
Some rather strange things have been going on in the Oklahoma legislature lately, including the intriguing story that Microsoft has been crafting the state's amendments to one of those useless, and now possibly dangerous, anti-spyware laws. But as much as I'd like to examine that issue, right now I must focus on a much more obscure piece of Oklahoma legislation that was actually passed in 2005 but is just now being brought into the light of day.
In its 2005 regular session, the Oklahoma legislature enacted HB 2028, a measure primarily devoted to adopting routine amendments to Article 1 of the Uniform Commercial Code. (The venerable UCC, the law that for decades has governed all kinds of business disputes, is in theory supposed to be enacted in a uniform fashion in all 50 states so that the same basic rules apply everywhere.) But tucked into the bill, in a way that was very unlikely to be noticed, were a few amendments to UCC Article 2, the law that relates to the sale of goods. Oklahoma changed the definition of goods covered by Article 2 to say it "does not include information," and the definition of a sales contract added language that excludes a "license of information" from the scope of Article 2.
Now, this may not seem like a big deal. After all, "goods" and "information" certainly do describe two pretty different things, so what's the issue? Well, it's a software problem. Or, more precisely, it's the problem of whether software -- and the infinite variety of everyday goods that certainly contain a software component like computers, cars, TVs, iPods, microwaves, etc. -- will or will not still be covered by UCC Article 2.
"What is wrong with the substance of these changes is that they create even greater uncertainty about the law governing transactions in software," says Jean Braucher, a law professor at the University of Arizona. "The changes may or may not exclude software from Article 2. Neither 'information' nor 'license' is defined. If the new exclusions are interpreted to mean that Article 2 does not apply to software, then there is no statute governing these transactions in Oklahoma, and the courts will have to use judge-made law on a case-by-case basis."
This is by no means a new issue -- the argument over whether software should be excluded from the scope of Article 2 has been going on for years. On one side, of course, are the software companies who don't want any of the obligations or liabilities that the producers of all other kinds of goods must accept. In opposition to "information" being excluded from Article 2 is a loose coalition of organizations on the customer side centered on AFFECT, Americans for Fair Electronic Commerce Transactions. And if those battlelines sound familiar, they should, because this is simply another front in the UCITA war. (Full disclosure, for any who don't already know it: I am a long-time member of AFFECT and a very long-time critic of UCITA.) And, just as we ultimately saw with UCITA, here too the opponents believe all they need is a fair opportunity to explain the real issues to state legislators in order to defeat it.
"We were deeply disappointed to learn these controversial provisions were enacted in Oklahoma without those who oppose them having a chance to air their views," says Miriam Nesbit, president of AFFECT and legislative counsel for the American Library Association. "We have brought forward our concerns about the Article 2 scope language in a number of states and have been successful in convincing the legislatures not to make such a change. For example, in 2005 similar measures were defeated in both Kansas and Nevada. I believe that we might well have prevailed in Oklahoma had we had the chance to make our arguments."
AFFECT's biggest concern is that -- if indeed software and at least some "smart" goods that contain software are no longer covered under UCC Article 2 -- what law will instead govern such products? Well, the only alternative on the books anywhere (in Virginia and Maryland) is UCITA, so a judge in Tulsa for example might now interpret the information exclusion in Article 2 as an invitation to apply UCITA principles instead. That is presumably what those -- whomever they may be -- who slipped though this stealth piece of legislation in Oklahoma intended.
Either way, though, losing the protections of Article 2 when it's totally unclear what will replace them is a complete negative for Oklahoma consumers and businesses. "Prior to this change we had a clear body of law that tells Oklahoma consumers and small business what to expect when they buy goods," says Gail Hillebrand, senior attorney for Consumers Union. "Now when they buy something contains software or a chip, the body of the product can be under one set of laws while the brains are under some unknown law yet to be developed. So what's in it for consumers is cost, uncertainty, and the fact that it will be harder for you to enforce any rights you still do have."
One would like to assume that the great majority of legislators who approved HB 2028 last year had no idea what a disservice they were doing their constituents. And it would certainly be nice if they'd correct their mistake now, but, hey, the next politician I see who's willing to admit to being suckered will be the first. So it might be best if we all focus on making sure the legislators in the other states know that what was done to UCC Article 2 in Oklahoma is not OK.
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