UCITA, Revisited?

[David Farber <dave () farber net>]

Begin forwarded message:

From: Richard Forno <rforno () infowarrior org>
Date: June 20, 2005 7:26:46 PM EDT
To: Blaster <rforno () infowarrior org>
Cc: Dave Farber <dave () farber net>
Subject: UCITA, Revisited?


CONCERNS OVER CLICKWRAP
International Law May Affect U.S. Civil Suits, Groups Fear
http://www.abanet.org/journal/ereport/jn3soft.html

BY JASON KRAUSE

An effort to settle international jurisdiction questions in disputes  
over
business contracts has raised concerns that the result will add too much
snap to so-called clickwrap agreements on computer software.

The U.S. State Department will negotiate new agreements as part of  
the Hague
Convention on Exclusive Choice of Court Provisions. Negotiators are  
to meet
this month with the Hague Conference on Private International Law to  
discuss
the convention, which negotiators hope will settle the question of which
courts will hear international disputes over business contracts.

However, an informal coalition of consumer interest groups,  
librarians and
telecommunications companies has opposed language in the current  
draft. They
say that, as drafted, the Hague convention could force companies or
organizations involved in litigation with foreign entities to defend
themselves in foreign jurisdictions.

Specifically, they believe that clickwrap agreements, which are  
contracts
that buyers implicitly accept when they open a software package or  
download
software, would be binding worldwide. Since few people read clickwrap
agreements, foreign businesses may be able to slip choice-of- 
jurisdiction
clauses into the agreements. The coalition argues companies would
effectively be able to "venue shop" around the globe.

The central disagreement between the software industry and the consumer
advocate groups, librarians and Internet companies opposing them is  
over the
definition of a non-negotiated contract. However, the computer software
industry argues it is impossible to even discuss the issue because no
definition exists in U.S. law. Mark Bohannon, general counsel with the
Washington, D.C.-based Software & Information Industry Association,  
says,
"We’d have to create a definition out of whole cloth." The association
represents the interests of software companies.

State Department negotiators say that the U.S. approach will be to  
try to
create a document that is in line with American law. They say it  
would be
nearly impossible to get anything ratified by the U.S. Congress—the next
step after The Hague finishes its negotiations—if the document changes
American law.

"My general approach is that in those issues that are not resolved under
U.S. law, we will try to maintain the status quo," says Jeffrey Kovar,
assistant legal adviser for private international law for the  
department.
Kovar will be negotiating the agreement for the U.S. "This is not a  
workable
forum to create new innovations in American law."

The coalition says the current draft is better than earlier attempts,  
but
members still think the language would be dangerous for American  
software
buyers. "We’re not as panicky as we were five years ago," says Manon  
Ress,
director of information society projects with the Consumer Project on
Technology, a Washington, D.C.-based consumer interest group. "The Hague
convention was originally like the Brussels convention, which would have
brought [European Union]-like regulations to the world. That would  
have been
a disaster."

The quest for an international convention to create binding  
international
judgments has been ongoing for several decades. A 1971 Hague  
convention fell
apart after parties failed to agree whether there ought to be separate
bilateral agreements between individual countries to support the Hague
Convention Treaty. By 1992, a new meeting was convened to settle the
question, but the rise of the Internet at the end of that decade  
threw the
convention into disarray. U.S. opposition and general confusion over  
how the
Internet would affect business agreements effectively put  
negotiations on
hiatus.

The current convention is very narrow in scope, addressing the rules of
jurisdiction in international business contracts. However, opponents  
argue
the treaty is uncannily similar to the Uniform Computer Information
Transactions Act, a proposed uniform law that would have regulated  
the sale
of software. Because of concerns that UCITA would give too much power to
software companies in choosing which jurisdiction would hear legal  
disputes
in contracts, the ABA declined to endorse the law, and it effectively  
died.

"This is a lot like a global UCITA," Ress says. "It’s bigger in reach,
though smaller in scope. Who wants non-negotiated contracts around the
world?"

The software industry argues that the current draft agreement is not  
like
UCITA, and in fact allows parties to void any choice of court  
provisions in
a contract if the contract is contrary to their nation’s principles  
or law.
Besides, they say, clickwrap agreements are already binding under  
U.S. law.
For example, in Mortgage Plus Inc. v. DocMagic Inc., No. 03-2582-GTV- 
DJW (D.
Kan. 2004), the court held that by clicking on an icon on a computer  
screen,
the plaintiff was bound to a forum selection clause in an online  
agreement,
and the case was moved from Kansas to California.

In some regards, the U.S. delegation has been helped by the delay  
caused by
the rise of the Internet. The U.S. has long been accommodating in  
enforcing
judgments from international courts on American citizens and  
corporations,
except for cases where a foreign court’s ruling impedes principles  
like due
process or free speech. International courts have been less likely to
enforce American judgments, and they had little incentive to change. But
with the delays, negotiators have gradually agreed to a narrower focus,
which is more favorable to the U.S. "We’d like to level the playing  
field,"
Kovar says. "But since we’ve been enforcing judgments here, we had no
leverage."

Kovar says his hope is to create an agreement analogous to the New York
Convention on Arbitration of 1958, which successfully created binding
arbitration agreements between entities from almost every country on the
globe.

"Our goal is to achieve something similar," he says. "It may be that  
parties
would prefer to go to court, but today they can only be sure arbitration
agreements are binding, and so they go that route."



©2005 ABA Journal






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