Why Article 2 Cannot Apply to Software Transactions
102 Pages Posted: 21 Mar 2001
The Uniform Computer Information Transactions Act (UCITA) reconciles traditional state commercial law with federal copyright law for software transactions. Some commentators claim that UCITA is unnecessary because the "sale of goods" rules in U.C.C. Article 2 deal adequately with software transactions. This article challenges that view.
It analyzes all of the major components of the Article 2 transactional model, showing where they are incompatible with federal law when applied to software transactions. Article 2 purports to be a "preemptive, systematic and comprehensive enactment of an entire field of law." This article shows that so many of its main conceptual components are repudiated by federal law that it is nonsensical to apply Article 2 to software transactions, even in the mass market.
The article also digests the major case law on this issue. Few cases actually hold that Article 2 applies to a software license, and the ones that do so do not discuss the Copyright Act. Modern cases that consider the Copyright Act have decided that Article 2 is not appropriate for software licenses. And if Article 2 is inapplicable, then a shrinkwrap software license is fully enforceable under common law rules. Contrary to some claims, UCITA does not validate otherwise unenforceable shrinkwraps. Instead, it imposes procedural rules to ensure informed consent in making a license, but does not prohibit mass market licensing altogether since doing so would risk turning many licensees into copyright infringers.
Keywords: Uniform Computer Information Transactions Act, UCITA, software, software license, shrinkwrap licenses, Linux, Uniform Commercial Code, Article 2, sale of goods, last shot rule
JEL Classification: K12
Suggested Citation: Suggested Citation