Prior to the drafting of Article 2B of the Uniform Commercial Code ("U.C.C."), courts applied Article 2: Sales, by analogy, to transactions that involved licensing of software agreements. The courts used the "predominant feature test" to reach these decisions. This resulted in varying decisions among the states which is contrary to the need for uniformity within the software industry. Pursuant to Article 2B, a license is a "contract that expressly authorizes, prohibits or controls access to or use of information, limits the scope of the rights granted, or affirmatively grants less than all rights in the information, whether or not the contract transfers title to a copy of the information and whether or not the rights granted are made exclusive to the licensee." A sale, on the other hand, is an exchange of goods, which consists of the passing of title from the seller to the buyer for a price certain. As can be seen from the very definition of each of these words, the two differ greatly. However, because the law governing licensing of software agreements is scarce, the courts were forced to use what was available. Distinguishing a license from a sale is critical in light of the intentions of the inventors of the software. Inventors of software desire to retain the power to control the distribution of their software, and favor granting a license, as opposed to making a sale. Despite this, the need to relate to the "modern information economy" is crucial. This Comment proposes that Article 2B is precisely what the commercial industry needed, in light of the great influence that the commercial industry has on the economy, and in light of the rapid growth of information technology. Part I of this Comment illustrates the need for Article 2B within the commercial industry. Part II examines the scope of Article 2B and Article 2. Part III analyzes the distinction between the remedies afforded under Article 2B and those afforded under a sales transaction. Finally, this Comment concludes that Article 2B reflects the need for a license-sale distinction by providing remedies that are distinct from the remedies afforded under Article 2.
Rhonda Salleé, The Perpetuation of Litigation Within the Commercial Industry: Soon Brought to a Screeching Halt, 16 J. Marshall J. Computer & Info. L. 421 (1998)