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Letter (February 1998) from IEEE to the Article 2B drafting commitee.

National Conference of Commissioners on Uniform State Laws
676 North St. Clair Street Suite 1700
Chicago, IL 60611
Re: UCC Article 2B

Dear Commissioners:

On behalf of the IEEE United States of America (IEEE-USA) and its 220,000 U.S. members who are electrical, electronics, and computer engineers, we wish to comment on Article 2B of the Uniform Commercial Code.

The IEEE-USA Intellectual Property Committee and the IEEE-USA Committee on Computers and Information Policy have reviewed your activities and find them very commendable. It is clear that your committee has worked hard during the past several years in trying to reach a uniform system for the licensing of intellectual property and computer software.

However, we have some recommendations which we believe may enhance your present draft. At this time, since the UCC 2B document is still in a state of flux, we will make specific recommendations but will not offer specific language. We will be happy to work with you at a later date to develop specific language. The following is a list of IEEE-USA's recommendations:

  1. Software proprietors should not be able to avoid the impact of the exhaustion doctrine by designating a transaction as a license or bailment rather than a sale when the transaction appears to be a sale.
  2. An owner of rights should be allowed to withhold authorization of some uses, where the action is reasonably calculated to achieve a legitimate objective of the owner. This is true as long as the limitation or restriction does not violate any specific prohibition imposed by federal statute. For example, a limitation and restriction imposed solely to prevent infringement of intellectual property rights should be rebuttably presumed reasonable. A price-fixing limitation, conditional restriction is conclusively presumed unreasonable.
  3. Self help protection can adversely affect the health and safety of people and property, and can endanger lives whether intentionally, unintentionally, or improperly activated. Those who embed self help protection in their software must be responsible for its operation, whether inadvertent or intentional and should not be disclaimable. That responsibility should not be limited by privity of contract but should extend to those persons who lawfully obtain the software or reasonably may be foreseen to be users of the software directly or indirectly.
  4. Contract terms that frustrate rights otherwise afforded by intellectual property law should not be enforceable.
  5. One should not be able to disclaim incidental or consequential damages in situations where there is a known defect undisclosed and the damage is of the type reasonably foreseeable.
  6. For mass markets and when the amount in controversy is within the Customer's home state's small claims court jurisdiction limit, then the Customer should be able to bring an action in the home state or if he cannot obtain personal jurisdiction of the defendant in his home state, then anywhere he can obtain jurisdiction over the defendant.

Please contact Scott Grayson, Manager of Career Activities, if you wish to discuss these matters further. He can be contacted at (202) 785-0017 ext 339 or via email at "Scott D. Grayson" <>.

Sincerely, John R. Reinert, D.M. IEEE-USA President

cc: Michael Andrews Ned Sauthoff Tom Suttle Scott Grayson Deborah Rudolph


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