ARCHIVED: Library Community Comments on Selected Sections of Article 2B

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October 8, 1998

Carlyle C. Ring, Jr., Chair
Raymond T. Nimmer, Reporter
Article 2B Drafting Committee
C/o National Conference of Commissioners on Uniform State Laws
211 E. Ontario Street, Suite 1300
Chicago, Illinois 60611

Dear Commissioner Ring and Professor Nimmer:

The four undersigned national library associations, on behalf of our seventy-five thousand collective members, have reviewed the latest draft of Article 2B of the Uniform Commercial Code and wish to offer our comments for consideration by the Drafting Committee. It is our belief that Article 2B has serious deficiencies which may be impossible to overcome. The library community's concerns about Article 2B range from questioning the underlying goals of the project itself to opposing specific provisions. In this letter we will offer comments related to our three principle substantive concerns: (1) the broad scope of Article 2B; (2) Article 2B's position of "neutrality" on federal preemption; and (3) the inadequate implementation of the Perlman "public policy" motion in the August 1st draft. We have also attached some section-specific comments.

The Scope of Article 2B is Too Broad and Even Extends "Licensing" to Books

We are not alone in our concern that the scope of Article 2B is overly broad. Our concerns about scope revolve around the concept of what is "information" subject to licensing. We were unnerved to learn that Article 2B as currently drafted would, at the discretion of publishers, apply to the distribution of books and other printed works of authorship and would, therefore, undermine the very function of libraries. We certainly cannot support a new legal system that would undermine our traditional operations. Furthermore, as Professor Trotter Hardy pointed out in his recent report to the Copyright Office, "Arguments that digital works are fundamentally different from analog works depend on an assumption that digital works are easily and cheaply copied." New technologies can effectively limit copying of digital works and "wrap" them so that they are more akin to a tangible book than an easily manipulated computer file. The Article 2B project should address the impact of these emerging technological protection measures. Transfers of these works should be considered "sales of copies" and, like printed materials, should be outside the scope of a licensing regime. We propose that Article 2B not apply to (1) printed materials at all or at least not those that are broadly distributed; nor to (2) digital works which are effectively protected from wholesale copying through technical protection measures.

Article 2B's Position on Federal Preemption Would Create Uncertainty

We are also concerned that Article 2B's position of "neutrality" on the question of federal preemption (2B-105) is not a sufficient guarantee that mass-market licensing restrictions will not be used to evade limitations of copyright law, such as the "fair use" and "first sale" doctrines or to effectively undermine the "public domain" status of works for which the term of copyright has expired. At the very least Article 2B lays a path straight toward the courtroom and years of costly litigation on these and related issues. As ardent defenders of these limitations of copyright law and the Constitutionally-based balance they reflect, libraries, understandably, do not relish this result. In order to limit potential follow-on litigation, we suggest that Article 2B include a non-exclusive list of license terms for which federal preemption should be presumed. We discuss this proposal further in the attached comments.

The Proposed Implementation of the Perlman "Public Policy" Motion is Inadequate

While we view passage of Professor Perlman's motion at the NCCUSL annual meeting as a very positive step toward bringing Article 2B into balance, we are disappointed with the implementation of the Perlman motion in the August 1st Draft, section 2B-105(b). We believe that it does not adequately reflect the sense of the house motion. The commissioners' considerable support of the Perlman motion reflects the importance of maintaining a court's ability to invalidate contracts that overly constrict the flow of information to the detriment of the public interest in innovation, competition, and free expression. We share the concerns of Professor Charles McManis on this issue and encourage the drafting committee to redraft section 2B-105(b) to more accurately reflect both the spirit and intent of the Perlman motion.

We appreciate the difficulty of the Article 2B drafting process, the complexity of the issues involved, and the years of hard and thoughtful work by the drafting committee, but Herculean effort is insufficient basis for our support of Article 2B. If Article 2B continues to extend validity of unprecedented use restrictions to mass-market transactions, non-copyrightable works, public domain information, and printed materials, then it threatens the advancement of knowledge that libraries are meant to facilitate and we may never be able to support its adoption.

We appreciate your consideration of our concerns and look forward to your comments.

Sincerely,

Duane E. Webster
Executive Director
Association of Research Libraries

David Bender
Executive Director
Special Libraries Association

Carol C. Henderson Executive Director, Washington Office American Library Association Robert Oakley Washington Affairs Representative American Association of Law Libraries

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Charles Alan Wright, President, ALI
Gene N. Lebrun, President, NCCUSL

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Library Community Comments on Selected Sections of Article 2B


 

 

Library Community Comments on Selected Sections of Article 2B
(August 1, 1998 Draft)
 (Ordered by Section)

 


2B-102(a)(13) 'Contractual use restriction' means an enforceable restriction created by contract on use of licensed information or informational rights, including an obligation of nondisclosure and confidentiality and a limitation on scope, manner, or location of use."

 

COMMENTS:

We are concerned that although the right to control "use" is not one of the exclusive rights of copyright, under Article 2B, by "licensing" rather than "selling" a work (even if millions of copies are involved) "use" restraints may become acceptable The key term in this provision is "enforceable restriction," because, if Article 2B is accepted, it will be the focus of future litigation.

 


2B-102(a)(32) "Mass-market" transaction means a transaction within this article that is a consumer transaction and any other transaction in information or informational rights directed to the general public as a whole under substantially the same terms for the same information with an end-user licensee. A transaction other than a consumer transaction is a mass-market transaction only if the licensee acquires the information or informational rights in a retail market transaction under terms and in a quantity consistent with an ordinary transaction in that market. A transaction other than a consumer transaction is not a mass-market transaction if it is:

(A) a contract for redistribution;

(B) a contract for public performance or public display of a copyrighted work;

(C) a transaction in which the information is customized or otherwise specially prepared by the licensor for the licensee other than minor customization using a capability of the information intended for that purpose;

(D) a site license; or

(E) an access contract.

COMMENTS:

Based upon this definition, it seems that libraries will never be considered licensees to a mass-market transaction. If it is at the publishers' discretion to make a particular work only available on the mass-market under a single-user license, then won't this jeopardize the archiving role of libraries and preclude acquisition by libraries of a wide range of works?

This is a serious problem. If a work is available on the mass-market, libraries should be able to legally acquire the work. We are not sure how best to address this problem within Article 2B but suggest that it may require an exception to allow libraries to purchase works on the mass-market or perhaps some sort of compulsory licensing system for libraries. We ask that you seriously consider these two options and are very interested in your comments.

 


2B-105(a) "A provision of this article which is preempted by federal law is unenforceable to the extent of such preemption."

COMMENTS:

This statement is true but not particularly helpful as a guide to the law on the subject. Libraries are looking for some affirmative statement that widely distributed information products that come with non-negotiable terms are not outside the reach of the first-sale and fair use doctrines merely because the publisher has labeled the transaction a "license." In addition, libraries are confident that specific limitations on the rights of copyright holders related to library preservation and inter-library loan will preempt non-negotiated license terms to the contrary, but an affirmative statement to that effect within Article 2B could help avoid any confusion.

In order to limit follow-on litigation, we suggest that Article 2B include a non-exclusive list of license terms for which federal preemption should be presumed. We would be happy to help in this effort. For example, "use" and "alienation" restrictions upon works of authorship that have fallen into the public domain (works whose copyright term has expired) are presumed to be preempted by copyright law; limitations on library lending of printed materials are similarly presumed to be preempted; etc.

 


2B-105(b) "A contract term that violates a fundamental public policy is unenforceable to the extent that it is invalid under that policy."

COMMENTS:

As stated in our cover letter, this provision does not accurately reflect the spirit and intent of the Perlman motion. Specifically we are concerned that the phrase "invalid under" does not correspond to "contrary to." Further we believe that listing the general categories of public policies to be considered would be a helpful guide to the courts. We ask that this provision be modified to either adopt the language of the Perlman motion itself or to otherwise state an equivalent rule.

 


2B-203(d)(2) "(d) if an offer and acceptance are in standard forms and one or both are conditional on acceptance of their terms, the following rules apply:

...(2) If a party agrees, by manifesting assent or otherwise, to a conditional offer effective under paragraph (1), it adopts the terms of that offer under Section 2B-207 or 2B-208, as applicable, except to the extent the terms conflict with the express agreement of the parties as to price and quantity."

COMMENTS:

This provision raises questions for libraries. Libraries often deal with standard forms. This provision seems to enable a licensor to change key terms of an agreement using a post-sale click-wrap license or other non-obvious method. If a library licenses access to an online database, can the licensor one month later change the terms of the agreement by posting an electronic notice each time a user access the database that says "The terms of this license have changed, continued use of this product are a sign of acceptance" ?

Suppose that each time a library patron accesses a database through the library, a clickwrap license appears directed at the patron with more restrictive terms than the agreement signed by the library, are the clickwrap terms enforceable against the user notwithstanding the library's negotiated terms to the contrary?

We ask that you spell out the consequences of this provision and limit the ability of licensors to easily change terms after an express agreement has been reached.

 


2B-502(1)(B) "(1) A contractual interest can be transferred unless the transfer: ... (B) would materially change the duty of the other party, materially increase the burden or risk imposed on the other party, disclose or threaten to disclose the other party's trade secrets, confidential information that is subject to an enforceable non-disclosure agreement, or materially impair the other party's property or its likelihood of obtaining return performance."

COMMENTS:

We are concerned about this provision and the tension it raises with the first-sale doctrine. Would this provision interfere with libraries' ability to exchange collections or even accept donations? We strongly believe that licensors should not be able to control the transferability of widely distributed copies of their products except to the extent they can do so under copyright law.