STATEMENT OF

MICHAEL K. KIRK
EXECUTIVE DIRECTOR

AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION

TO THE

SUBCOMMITTEE ON COURTS AND
INTELLECTUAL PROPERTY

COMMITTEE ON THE JUDICIARY

UNITED STATES HOUSE OF REPRESENTATIVES

ON

H.R. 2652, THE COLLECTIONS OF INFORMATION ANTIPIRACY ACT

AND

H.R. 2696, THE VESSEL HULL DESIGN PROTECTION ACT

OCTOBER 23, 1997

The American Intellectual Property Law Association (AIPLA) appreciates the opportunity to present its views on H.R. 2652, the "Collections of Information Antipiracy Act," and H.R. 2696, the "Vessel Hull Design Protection Act."

The AIPLA is a 10,000 member national bar association whose membership primarily consists of lawyers in private and corporate practice, in government service, and in the academic community. The AIPLA represents a wide and diverse spectrum of individuals, companies and institutions involved directly or indirectly in practice of patent, trademark, copyright, and unfair competition law, as well as other fields of law affecting intellectual property.

The AIPLA supports H.R. 2652. It is a major step forward in providing needed protection for the database industry. At the same time, H.R. 2652 also addresses the concerns expressed by the scientific, library, and educational communities. We believe that H.R. 2696 represents a significant initial step in resurrecting sui generis design protection legislation. Existing law does not provide adequate, practical protection for the designs of useful articles, including the design of boat hulls. The AIPLA welcomes this initiative, but would urge that H.R. 2696 be expanded to cover the range of industrial designs protected by its predecessors in earlier Congresses.

H.R. 2652, THE COLLECTIONS OF INFORMATION ANTIPIRACY ACT

Databases are the quintessential product of the information age, and the United States is, by far, the largest and most important producer and provider of databases in the world. According to an authoritative reference in this field, the Gale Directory of Databases, the U. S. produces 64.2% of all the world's databases. Compared to the 6,000+ databases produced in the U.S., only nine other countries produce more than 100 databases (Australia, Canada, England, France, Germany, Italy, Japan, Netherlands, and Spain). Although there are no precise measures of the size of the overall U.S. database industry, estimates by market research firms indicate total sales are at least $20 billion and could be as much as $200 billion. Thus, protection of databases is important to the economic welfare of the United States.

Of the approximately 11,000 databases listed in the Gale Directory, almost all are electronic in form. For example, 52% or 5,950 are made available online, while almost 3,000 are on CD-ROM, 1,000 on diskette, and 700 on magnetic tape. These numbers demonstrate the importance of ensuring that databases in electronic form are provided the necessary protection. As will be explained, copyright law does not provide adequate protection for electronic databases.

Why Database Protection is Needed

Electronic databases not only represent the overwhelming majority of databases currently in commerce, but as we look forward to the future of database delivery via the Internet, they represent the most important type of database upon which new protection should focus. Indeed, online databases delivered through, or available via, the Internet will be the most important for the future of the database industry. Databases fall under the definition of "compilations" in section 101 of the Copyright Act. The definition requires that preexisting data must be "selected, coordinated, or arranged" in such a way that the resulting work as a whole constitutes an original work of authorship. Many, if not most, electronic databases have neither original selection nor original arrangement, so the necessary authorship required by the Copyright Act and clarified in the Feist decision is missing. Feist Publications v. Rural Telephone Service Co., 499 U. S. 340 (1991). A printed database may have "thin" protection under copyright law -- which, in itself, is a reason for a new type of protection -- but electronic databases arguably have none.

Selection

Database producers include government, for-profit organizations, and not-for-profit organizations (primarily professional associations and universities). The subject-matter of databases includes business, health/medical, law, news, scientific and technical, etc. In all of these areas, database producers strive to completely cover their subject area as defined. Indeed, the hallmark of a good database service is that it provides exhaustive coverage. Once the idea or concept of a given database has been decided upon based on consumer or professional demand, a systematic approach is then used to assure that all relevant subject matter is collected for the database. There is no "soft" selection and little independent judgment once the definition has been developed and the rules for subject matter coverage established. Thus, for the majority of electronic databases there is no original selection as called for by the Supreme Court in Feist. "To that end, the [copyright] statute dictates that the principal focus should be on whether the selection, coordination, and arrangement are sufficiently original to merit protection." ... "Originality requires only that the author make the selection or arrangement independently (i.e., without copying that selection or arrangement from another work), and that it display some minimal level of creativity." Feist, 499 U.S. 340, 358 (1991).

Coordination and Arrangement

Although Section 101 of the Copyright Act refers to selection, coordination, or arrangement, the language of decisions typically shortens this to selection and arrangement. Coordination, as interpreted by the courts tends to be assimilated into the concept of arrangement (as exemplified by the quotation above from the Feist Case), so in terms of requirements for copyrightability, they should be considered together. In the case of electronic databases, the database producer provides neither coordination nor arrangement. This, in fact, is provided by the search software system.

In the print age, arrangement of a printed database was important because this provided usefulness and value to the user. (This continues to be true for printed databases today, such as those that have been the subject of recent court decisions.) A good example from 1876 was the creation of West's system under which the law was organized into a grand scheme of topics and sub-topics. But today, arrangement is provided by the database software that is used to provide on-line access to a given database.

The term "loading" a database is often heard. In fact, this refers to a process by which the coordination and arrangement of a database is put into a form determined by the search software designer. Further, today's databases have several "levels" of arrangement and several "views" of various internal arrangements, most of which the user never sees. Many databases today are "relational," a concept of arrangement and coordination of data which is understandable and usable only by experts. Yet, the whole purpose of this complexity is to make the search software easy to use. The user sees none of this complexity in coordination and arrangement. Also, most database producers today do not develop their own software. They use search software now available from dozens of vendors. Some search software "engines" are used by several hundred database publishers. And in some cases a single online search software engine is used for hundreds of databases produced by others. (Knight-Ridder's Dialog system is an example.)

Indeed, at the dawning of the era of electronic databases in the 1950s, it was recognized that arrangement and coordination, so absolutely important for printed databases, would become irrelevant with electronic databases. Research in the l950s suggested that instead of structuring databases according to precise categories designed to help a user easily find information, with electronic databases, what was then referred to as "post-coordinate indexing," would be the primary means for structuring and arranging databases. The term "post-coordinate indexing," captured the notion that the subject matter grouping into which a given article or fact should be "arranged" would be determined by the user at the time of searching an electronic database. The user, with his or her search query, would use particular words and concept terms connected by boolean or other operators to locate the information sought. In other words, arrangement and coordination in the copyright sense would be irrelevant for electronic databases. Of course, this has turned out to be true for electronic databases since the 1960s. For example, even highly structured (arranged) printed databases were completely changed when converted to electronic form. Data entries were simply made in accession number order with none of the arrangement characterized by the printed versions. A number of index terms were originally assigned and then in later years, full-text systems blossomed and every single significant word of a document became a means of access. In electronic databases, coordination and arrangement as observed by a user only occurs when the user enters a search query. One might even claim that it is the user who provides the arrangement.

Why Are Database Producers Only Now -- In the Last Two Years -- Asking for Non-Copyright Protection?

It is true, as some have claimed, that the number of databases produced and the number of database producers has continued to grow. Indeed, in the last year for which data is available (1996), the Gale Directory reports that both the number of databases and the number of producers expanded. In fact these numbers have grown from 8,159 entries in 1991, the year of the Feist decision, to 11,337 in 1996, the last year for which such data is available. (The number of vendors has, incidentally, gone down.) So the question arises as to why database producers need protection of the type provided in H.R. 2652, since the industry seems to be healthy and growing. The fact that the database industry only recently has begun to press for database protection may be partially related to lack of understanding of the implications of Feist on the part of executives, and of the nature of electronic databases on the part of their attorneys. However, the main reason is that the need for greater protection has been forced by the rapid movement of technology -- primarily changes in network architecture and changes in bandwidth.

Changes in Network That Have Created
a Need for Database Protection

Until the last two years, all of the 5950 online databases delivered their service via closed network architecture. Anyone using Dialog, LEXIS/NEXIS, Orbit, WESTLAW or one of the other online services in the early and mid-1990s was accessing these systems via such closed network architecture until very recently. Within this network architecture, security was relatively easy to maintain, and it was very difficult for unauthorized users or pirates to break-in. Now, every major service is moving to delivery via the Internet and World Wide Web and is facing the problems inherent in the open architecture exemplified by the new digital networks. Most major services delayed moving in this direction because of concerns about security and protection of their databases from unauthorized use and piracy, but both market and technological changes are forcing them to make the move. And so, as they move into a more exposed position, the need for more legal protection has become painfully obvious. The old technological protections are no longer adequate. Further, although licensing is broadly used, it does not provide the degree of protection it formerly provided because of these technological changes. In addition, many of the new types of services involve one-at-a-time uses instead of the annual subscription agreements that have been the standard for the electronic database industry since its inception.

Changes in Bandwidth That Have Created
a Need for Database Protection

Even though there are new technological protections, such as encryption, that have been developed for use in the open network environment, changes in bandwidth that have occurred, and more importantly, those that are forecast within the next few years, have dramatically expanded the risk of providing database services via the Internet and World Wide Web. This risk is primarily related to bandwidth, i.e., the speed of transmission between providers and users. The Gale Directory provides data on the average number of records for databases, but only gives a range for the size of each record. Based on computations using this data, it is reasonable to assume, for purposes of illustration, that the average database contains around 2 billion characters of data, i.e., 2 gigabytes. (If we exclude the very large databases, the average would be smaller.)

At the time of Feist, most online users were using modems that would have required, at 24 hours per day, over 154 days -- almost six months -- to download (i.e., to steal) the average database. Even though modem speed has increased steadily since Feist, it would still, today, take (using a 33.6KB modem) 5.5 days to download such a database. Thus, it has been quite easy to stop theft of a database. A normal user does not download data continuously. Such theft is easy to spot and easy to stop. Even if not detected immediately, only a small portion of a database could be extracted. But, the situation is fast changing. With the speeds that are now being used in applied research applications, and for a few commercial applications, that same database that took almost six months to completely download ten years ago, will be able to be downloaded completely in 1.7 minutes. Within a few more years, this time will be down to seconds. Thus, the environment within which database producers and database service providers are operating is being revolutionized. It is thus quite easy to see why that industry needs and is now seeking additional statutory protection.

Technological Protection

Earlier reference was made to technological protections. As you know, some claim that technological protection will obviate the need for statutory protection for database producers. However, technological protection does not eliminate the need for legal protection, just as physical protection for personal and real property does not eliminate the need for personal and real property laws. Further, there are several problems with the use of technological protection, over and above problems related to bandwidth. First, technological protections (including encryption, for example) increase the costs of access to and delivery of information. Second, they make use of databases more difficult and time-consuming and may tend to discourage use. Third, exclusive use of technological protection could lead to over-protection and thus impact permitted uses by non-profit educational, scientific, and research users. And, fourth, no technological protection scheme is foolproof. In many cases they are invitations to discover a means for bypass.

Specific Comments on H.R. 2652

In his Copyright treatise, Professor Nimmer points out that protection for databases "may in certain circumstances be available under a theory of unfair competition," and this assertion was quoted by Justice O'Connor in the Feist opinion. Feist, 499 U.S. 340, 354 (quoting M. Nimmer & D. Nimmer, Copyright, § 3.04, P. 3-23 (1990). The AIPLA believes that basing new database protection on the unfair competition doctrine of misappropriation is an appropriate legislative response to the problems of unprotected databases.

The I.N.S. decision, which created the doctrine of misappropriation, was based on a direct competitive relationship between the plaintiff and defendant. International News Service v. Associated Press, 248 U.S. 215 (1918). Over the years, some courts have dropped the direct competition requirement. But even if one considers this to be a requirement, today's reality is that the technology of the Internet and World Wide Web has so empowered individual users that they can -- almost instantaneously -- be in direct competition with a database producer. Indeed, with today's technology, anyone who wishes to -- with only modest resources -- can be a direct competitor. And since electronic databases are not copyrightable subject matter, misappropriation is especially applicable where there is a substantial taking.

Other requirements of existing state misappropriation law are likewise inapplicable, especially since some of these requirements -- "hot news" is an example -- are based on the need to avoid preemption under 17 U.S.C. 301. Congress has the power, we believe, to establish a new federal misappropriation statute without hewing to inapplicable state law limitations.

Section 1201 of H.R. 2652 covers situations where harm is done to the database producer's actual or potential market either as a result of extraction of all or a substantial part, or of use of all or a substantial part in commerce. This is at the heart of the reason for the misappropriation doctrine. Even though the original I.N.S. case involved parties who were in direct competition, the gravamen of the court's decision was to protect a plaintiff against the harm done by a defendant's misappropriation. We believe §1201 provides a solid basis for protecting databases. Further, it would only apply in instances where a person had built a collection through the investment of substantial monetary or other resources. This is a proper criterion for protection.

Section 1202 covers five exceptions to §1201. Subsection (a) provides that individual items of information (facts) can be extracted, as can insubstantial parts of a database. Subsection (b) provides that no one is prohibited from independently gathering the same information or data that comprise a protected database. We strongly support both subsections (a) and (b). Indeed, subsection (b) is at the heart of the concept of protection embodied in this bill. Collections of information under this bill do not lock up public domain data or make data inaccessible for use by scientists and others. Subsection (b) makes it clear that any person can independently gather the same information. The claim is made that in some circumstances it would be too costly to obtain such older information, or that it is nearly impossible to find all of it. But that it is precisely the benefit to society that this bill would protect. The fact that a person made a substantial investment in collecting such information means that it is now available for all to use. If they had not made the original investment, the data would not now be available in usable form for scientists, professionals in all fields, library users, etc. Yet, others presenting testimony before this subcommittee are claiming that in such cases the information should be made freely available, thus undermining the incentives that are at the heart of this bill.

Subsection (c) covers the use of information for verification. Although we agree with this in principle, we believe further consideration is needed of the language of this subsection. For example, as now written, it would allow someone to prepare an incomplete, inaccurate collection covering a given subject area, and then use someone else's fully developed collection to transform and improve that collection from one that is, for example, 5% accurate and 50% complete, to one that is 100% accurate and 100% complete. We believe such activity should be a violation of §1201 because it would actually entail a substantial taking. Further, there would be no reason to do this but for commercial motivation.

Subsection (d), which addresses not-for-profit educational, scientific, or research uses, is responsive to the concerns expressed by the scientific and educational community. It does not limit use to insubstantial parts, but allows extraction or use of substantial parts or all of a database. We believe that this provision completely responds to the concerns expressed by the library, scientific, and educational communities.

Subsection (e) covers news reporting. It permits extracting or using information for the sole purpose of news reporting. We have concerns about this subsection. Not because of the exception for news reporting, but because the current language is ambiguous. An example may help. In the early years of the NEXIS online news database service, the primary customers were news organizations -- newspapers, TV stations, and wire services. The NEXIS database was used for background information related to breaking stories, feature articles, and editorials. A major industry segment was built by this original online news service and by the many other competitive news services which exist today. The purpose of such online database services is to provide archived information, not breaking news. Thus, the language of subsection (e) needs to clarify that when a database is used for purposes of extracting breaking news, the exception would apply, but not when it is used for extracting archival information. This reality must be accommodated.

Section 1203 covers exclusions, specifically: (a) government collections of information, and (b) computer programs. We support both exclusions, but we have some concerns about the scope of subsection (a). Even though the Paperwork Reduction Act requires that no government information be disseminated on an exclusive basis, federal procurement laws and regulations provide for exclusive use of information developed under a government contract by the contractor if the contracting officer approves. This allows de facto exclusive ownership of government information. We recommend that the legislative history of subsection (a) clarify that the intention of this section is to ensure that a government contractor or grantee would not be able to exercise any monopoly control over any government collection of information.

Section 1204 indicates that the Act will apply only to acts of misappropriation affecting interstate commerce. Given the constitutional basis for this bill, we support this definition. It is difficult to imagine any prospective database producer who would make a substantial investment in building a collection for the purpose of vending it only within a single state.

Civil remedies are covered in §1206 and criminal remedies are covered in §1207. We have reviewed both sections and fully support them as proper and appropriate legal remedies for violations of §1201.

H. R. 2696, THE VESSEL HULL DESIGN PROTECTION ACT

H. R. 2696 addresses the inadequacies of existing intellectual property laws protecting the designs of useful articles, specifically the design of boat hulls. While some protection for industrial design is available under existing patent, trademark and copyright laws, certain lacunae exist. Legislation to correct these deficiencies has been introduced in a number of Congresses, most recently the 102nd Congress in 1991. Indeed, H.R. 2696 represents a limited version of the industrial design bill, H.R. 1790, introduced in the 102nd Congress.

Unlike H.R. 1790 which, with a few exceptions, would have generally protected the original designs of useful articles, the "Vessel Hull Design Protection Act" is limited to the design of a boat hull or component part of a boat hull. It is a legislative response to the void resulting from the Supreme Court's ruling in Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 171 (1989) that the "anti-splashing" or "anti-plug molding" statute of the state of Florida was invalid under the doctrine of Federal preemption. The fact that Congress had left the subject matter protected by the Florida statute in the public domain was held to preclude states from enacting such protection. In fact, at least ten other states had adopted similar statutes which fell with the Bonito Boats decision. The Court noted that it was for Congress to determine whether a new federal law was needed to protect industrial designs. The AIPLA believes that designers should not suffer having the results of their creative talents freely copied by those who invest none of their own time, energy, and resources in the creation of designs, not only for boat hulls, but, with very few exceptions, for designs of all useful articles.

H.R. 1790 and its predecessors protecting industrial designs of useful articles have generally enjoyed support from a broad and diverse spectrum of interests. The AIPLA has supported general industrial design protection legislation along the lines of H.R. 1790 since 1982. We believe that design legislation can be crafted that will not only protect boat manufacturers and designers, but that will also provide needed stimulus for all American designers to create improved product designs to successfully compete in global markets. In this regard, we noted that the European Commission has proposed a Design Directive and Regulation to strengthen design protection in the European Union and that several of our major trading partners currently protect against the copying of product designs. The United States should protect its designers equally well and not cede the field to our global competitors. Accordingly, the AIPLA believes that H.R. 2696 should be broadened to protect essentially the same scope of industrial designs protected by H.R. 1790.

There are a number of issues presented in H.R. 2696 and its predecessors, however, which we believe need further study. For example, the exclusion contained in previous bills for designs "dictated solely by a utilitarian function of the article" embodying the design is not contained in H.R. 2696. We note that this exception would not exclude protection of designs dictated partly or even substantially by the utilitarian function of the article that embodies it. Thus, its inclusion in a design bill would not exclude protection of otherwise qualifying boat hull designs. However, in those cases where a design is totally functional, we question whether it should not be a subject for protection only under the patent laws.

Another issue raised by H.R. 2696 involves the question of whether constructive knowledge that a design is protected should be sufficient to create liability for engaging in the manufacture, importation, or sale of such an article. In addition, we question whether the election of remedies provision in section 1229 is appropriate. Under this section, the issuance of a design patent or a copyright registration would terminate any protection of a design under this bill. We have doubts about the need for such an election and we question the wisdom of this approach.

CONCLUSION

AIPLA believes that H.R. 2652 represents a major step forward in providing the type of protection needed by the database industry while sensitively responding to the needs and concerns of the scientific, library, and educational communities. It is a balanced bill and each side will undoubtedly find it lacking some provisions that they would like to see. However, it is this excellent balance that makes it legislation which we strongly support. H.R. 2696 is an encouraging first step toward providing adequate protection for the creative efforts of American designers, however, we believe it should be expanded to cover essentially the same range of industrial designs protected by H.R. 1790, 102nd Congress. We would like to work with the Subcommittee as these bills proceed through the Congress to assist in any way we can.