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President Clinton signs Y2K Act into law

After a lengthy fight, legislation that will limit lawsuits sparked by the Year 2000 technology bug is signed into law by the president.

More than six months since it was introduced in the Senate, legislation that will limit lawsuits sparked by the Year 2000 technology bug was signed into law by the president, the White House said.

President Clinton's signature on the Y2K Act ends a lengthy stalemate over how to limit a potential flood of litigation arising from Year 2000 problems, which by some estimates could cost $1 trillion and cripple the economy.

Republicans pressed by high Back to Year 2000 Index Page tech and business interests have supported the bill, but Democrats, backed by trial lawyers and consumer protection groups, have argued that the measure is too lenient on businesses.

"Responsible companies fear that they will spend millions or more defending Y2K suits," the President said in a statement.

"Frivolous litigation could burden our courts and delay relief for those with legitimate claims. Firms whose productivity is central to our economy could be distracted by the defense of unwarranted lawsuits," according to Clinton's statement.

Although many Democrats and advocacy groups said the law will hurt consumers, Clinton said he was acting in the belief that "companies in the high-technology sector and throughout the American economy are serious in their remediation efforts and that such efforts will continue."

He described the bill as "extraordinary, time-limited legislation designed to deal with an exceptional and unique circumstance..."

He pointed out that his administration did fight to put consumer protections into the Y2K Act, making it "balanced and fair, protecting litigants who are injured and deserve compensation"

For example, the measure was modified to ensure that the Federal law leaves intact State law doctrines that protect unwary consumers and small businesses against unfair or illegal contracts and that public health, safety and the environment are protected, even if some firms are temporarily unable to comply fully with all regulatory requirements due to Y2K failures, according to the President.

Using digital signature technology, congressional leaders electronically signed the measure last week and sent it to the White House by email--marking the first time legislation has been signed over to the president without the use of paper or ink.

After the bill was sent to the White House, Sen. Christopher Dodd (D-Connecticut) said the country must remain diligent in protecting the economic growth enjoyed in part from the progress in the tech sector.

"The Y2K Act means resources can be dedicated toward fixing Y2K problems and fostering innovation, not diverted towards fighting frivolous lawsuits," he said.

The bill is the second measure related to the Year 2000 glitch signed into law by President Clinton. The first was the Year 2000 Information and Readiness Disclosure Act, which provides limited liability protections to encourage companies to share information about products, methods, and best practices, legal experts debated whether it protected consumer rights.

At that time, some members of Congress argued that bill didn't provide enough litigation protection, giving birth to the debate over the newest measure, the Y2K Act.

The Y2K Act was first introduced by Sen. John McCain (R-Arizona) in January. McCain is the chairman of the Committee on Commerce, Science, and Transportation, and is considering a presidential run in 2000.

A spokesperson from McCain's office said the Senator is extremely pleased the bill has been signed into law. "Now companies can focus on fixing Y2K problems rather than rushing to the court house."

As reported earlier, the Y2K Act aims to put a check on lawsuits by providing disputing parties with a 90-day "cooling-off" period to mitigate their grievances out of court. The measure would also set some caps on punitive damages for small businesses and protect government entities including municipalities, school, fire, water, and sanitation districts from punitive damages. The bill further aims to protect those not directly involved in a Year 2000 bug failure.

The measure aims to make it harder to file year 2000-related class-action lawsuits by increasing the monetary threshold for class-action lawsuits from $1 million to $10 million before a case can be moved to federal court.

The legislation also adds some consumer protection language that says in most cases a defendant is liable only for that proportion of the damage he or she may cause. The measure ensures, for example, that consumers can get full benefits in cases of bad faith.

The Year 2000 problem, also known as the millennium bug, stems from an old programming shortcut that used only the last two digits of the year. Many computers now must be modified, or they may mistake the year 2000 for the year 1900 and may not be able to function at all.