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Key e-commerce meeting opens

When online shoppers click "accept" to a music licensing agreement, what exactly have they agreed to and will that "contract" hold up in court?

When online shoppers click "accept" to a music licensing agreement or rip open a box of new software, what exactly have they agreed to and will that "contract" hold up in a court of law?

Those are just a few of the questions at the center of a three-day meeting in Emeryville, California, that kicks off today in an effort to update the Uniform Commercial Code (UCC) for the digital age. A far-reaching legal code, the UCC lays out buyers' and sellers' rights in every state.

Representatives from the software, banking, motion picture, and book publishing industries, as well as consumer advocates, librarians, and others will attend the meeting.

A 180-page-thick document known as Article 2B is expected to be added to the UCC, setting up the framework for organized interstate e-commerce--once it is adopted by all 50 states. Historically, the UCC unifies commercial law so that contracts between parties in different states are binding.

Currently, the UCC applies only to physical goods, not software, digital music, or database services. Article 2B is intended to starkly change this situation, giving vendors more control over the use of their intellectual property--and in some cases to protect them from legal liability when their product is corrupt or buggy, for example.

The National Conference of Commissioners on Uniform State Law is in charge of the updating the UCC, and its Article 2B drafting committee is expected to wrap up its work this weekend after four long years of debate. Then the document goes to the full NCCUSL for approval next summer. After that, the states will likely adopt the new provisions.

Even the Clinton administration has signaled its belief that the UCC needs to be updated to embrace electronic commerce. Its white paper on electronic commerce, released in July 1997, recommends that "the U.S. government should support the development of both a domestic and global uniform commercial legal framework."

Consumer advocates could be prominent this weekend. Some are expected to voice opposition to the changes, claiming that users will have a significantly harder time seeking redress for defective software and that software companies will be free to place all kinds of restrictions on users, such as prohibitions on writing product reviews on the Net.

Critics such as the Consumers Union say most of the terms software publishers impose on licensees won't be disclosed until after the product has been downloaded or removed from the package. The mere act of clicking an "I accept" button, or inserting a floppy disk into a computer would constitute a user's agreement to the entire terms.

But software companies say Article 2B balances the rights of companies and consumers and would require companies to check for viruses, and only limits their liability--and consumer lawsuits--for a virus that evades their tests.

The article also would further boost the use of digital signatures--stating that the identity authentication technology is a valid way to "sign" a licensing agreement to use digital products bought via the Net.

"At the end of the day we think it is a good idea to have a law from state to state because we all are on the Net now and people are engaging in e-commerce," said Marcia Sterling, vice president of business development and general counsel to Autodesk, which supports the current draft of Article 2B.

Moreover, if companies sell faulty products without bad warranties, consumers will reject those products, she added.

"You've got to have a fair contract and right to redress or if something doesn't work. Consumers need to have a right to what they are buying into," Sterling said. "At the end of the day the consumer will decide."

Reporter Dan Goodin contributed to this report.