Before the UCC and the UCITA, the first Act of U. S. government in regulating commerce is the “Commerce Clause” of the United States Constitution, which provides Congress with authority to regulate not only business, but any “intercourse” conducted between parties situated in different States. This power extends to all instrumentalities of interstate commerce (telephone, highways, radio, waterways), as well as to intrastate conduct that has an aggregate and substantial effect on interstate commerce (agriculture, employment and housing discrimination).
There are a number of differences between Article 2 of the Uniform Commercial Code and UCITA. The UCC Article 2 is designed to facilitate the sale, shipment and delivery of tangible goods, i. e. , movable personal property identified in a contract. The UCITA is intended to facilitate the “licensing” of intangible computer-related intellectual property, with an emphasis on permitting owners of software the ability to maintain control over their intellectual property forever.
In an ordinary sale, software, despite the presence of a “shrink-wrap” licensing contract, is considered the property of the buyer, after the transaction takes place, and the buyer is free to essentially ignore any portion of the agreement that prevents the buyer from exercising control over the software, including the right of resale. The Uniform Commercial Code (UCC) is a collection of modernized, codified, and standardized laws that apply to all commercial transactions with the exception of real property.
Developed under the direction of the National Conference of Commissioners on Uniform State Laws, the American Law Institute, and the American Bar Association (ABA), it first became U. S. law in 1972. Since that time, it has undergone a process of constant revision. Article 2 of the UCC covers such areas as sales contracts, performance, creditors, good faith purchasers, and legal remedies for breach of contract. Given its concern with the always important issue of contracts, small business owners need to be thoroughly acquainted with this section.
This is one of the most confusing and fiercely litigated sections of the UCC and this was the aspect that led to its revision. In any transaction, there is the aspect of the sale and the licensing of a product. These two concepts, though seeming not to be too different, are not that similar. The difference between selling a product and licensing it is that a sale is a complete and final transfer from a seller to a buyer, of all right, title and interest in and to the property identified in the contract.
A license, on the other hand, is the right to use the property of another under certain agreed-upon terms and conditions. Many of the provisions in the UCITA were first proposed as a modification to Article 2 of the UCC. The UCITA is extremely controversial. It stands hundreds of years of contract law “on its head”, so to speak. The UCITA interferes with the United States Copyright Act by effectively limiting what is known as the “First Sale Doctrine,” which permits a purchaser of a copy of the creative work of another, the right to resell that copy.
To this extent, the UCITA may be unconstitutional. This may be one of the reasons as to why UCITA was proposed as a separate entity; sometimes unconventional means are more productive than conventional means. This acts as a fall back for immediate remedy to situations. As Article 2 deals with contracts and purchases, UCITA acts as a form of checks and balances strategy within the same system and in turn enables the business society in the United States of America the comfort to freely trade with one another and with the outside world.