Mr. Chairman:
I am pleased to have the opportunity to present the views of the American Intellectual Property Law Association (AIPLA) on H.R. 354, the "Collections of Information Antipiracy Act."
The AIPLA is a national bar association of approximately 10,000 members engaged 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 the practice of patent, trademark, copyright, and unfair competition law, as well as other fields of law affecting intellectual property.
Introduction
The AIPLA supports the protection for collections of information or databases as set forth in H.R. 354. We expressed our support for H.R. 2652, the predecessor of this bill, in conjunction with hearings held in October 1997 and February 1998. The legislation has undergone significant revisions since our earlier expressions of support to address concerns raised by the educational, scientific and research communities as well as by the Administration and the Register of Copyrights. Although we have a few suggestions regarding specific provisions of the legislation, they relate principally to report language. We believe that you have done an admirable job in crafting a balanced approach to provide the needed incentives for the continued creation of databases in the United States as well as to ensure their protection in our major foreign markets.
The Need for Database Protection
The AIPLA believes that the need for protection of databases, created through the considerable investment of time and money, against those who would copy them without permission or compensation is settled. The Supreme Court's rejection of the "sweat of the brow" basis for protecting compilations under copyright in Feist Publications v. Rural Telephone Service Co., 449 U.S. 340 (1991) marked a sea change in the protection of databases. As detailed in Section I of the Report on Legal Protection for Databases (Report) prepared by the Copyright Office in 1997, for nearly two hundred years prior to Feist, American courts protected databases under copyright law against copying based on the compiler's investment of time, effort and money. After Feist, a compilation or database can be protected under copyright only if the selection, coordination, or arrangement of its contents satisfies the creativity standard of the copyright law. The reality of the gap created by Feist can perhaps best be appreciated when one realizes that the more comprehensive and complete and therefore valuable a database is, the less judgment will frequently be exercised in the selection, coordination or arrangement of its content and consequently the less likely that meaningful (if any) protection under copyright law will exist. Surely the adequacy of the existing regime for protecting databases under copyright must be questioned when it presumably grants greater protection to a smaller, highly selective database of arguably less general utility than to a large, all inclusive database of more general utility.
The problem is further compounded by the impact of Feist on the scope of copyright protection for databases. Stating that copyright in a factual database is "thin," the Supreme Court observed in Feist that a subsequent compiler is free to use the facts contained in another person's database as long as the selection and arrangement are not copied. In Bellsouth Advertising & Publishing Corp. v. Donnelly Information Publishing, Inc., 999 F2d 1436 (11th Cir. 1993), the Eleventh Circuit held, in a case where copyrightability had been stipulated by the parties, that the copying of all of the names, addresses and telephone numbers of advertisers in the plaintiff's yellow pages did not infringe, because the plaintiff's selection, coordination and arrangement was either unprotectable or not copied. The Report observes that most of the post-Feist appellate cases have found wholesale taking of information from copyrightable compilations to be non-infringing and that district court cases are trending in this direction.
Whether the problem is that databases simply do not possess the requisite creativity in their selection, coordination or arrangement to qualify for copyright protection or whether the problem is more that copyright in databases is "thin," the incentive to invest in the compilation and collection of large amounts of information and data for use by businesses, researchers and educators is at risk.
Other forms of protection for databases cannot close the gap created by Feist. Trade secret law is only available to protect databases used inside a business where the requisite level of secrecy can be maintained. Disclosure of a database through sale or an online service precludes resort to trade secret protection. While contract law has been used to protect databases against unauthorized use, the lack of privity with unrelated third parties and the lack of uniformity of contract law from one state to the next reduce its effectiveness.
State common law misappropriation is also mentioned as a possible basis for protecting databases, especially after the Second Circuit's decision in National Basketball Association v. Morotola, Inc., 105 F2d 841 (2d Cir. 1997). However, that case called for the information to be time-sensitive, or "hot," a criteria that could be fatal for the protection of a comprehensive, historical collection of information. Also, as with other forms of state law, the law of misappropriation which varies widely from state to state, would deny database compilers the uniformity and certainty needed to justify the substantial investments required for many of today's most useful databases.
Finally, technological protection is increasingly being looked to by database publishers. While technological protection may be an increasingly important means of protecting databases in the digital era, it is not a complete answer. Such means affect ease of use, increase costs, can be circumvented, do not prevent the use of a database that someone improperly obtains, and is primarily effective only for databases in electronic form.
There is another compelling reason for enactment of H.R. 354 and that is the European Database Directive adopted in 1996. The Directive requires the member states of the European Union to implement a sui generis form of protection for databases. Under the directive, an EU national or habitual resident who creates a database through substantial investment is given the right to prevent the extraction and/or re-utilization of all or a substantial part of the database. A database created in the United States by a company with insufficient European presence will only receive protection under the Directive if the United States offers comparable protection to EU databases. Failure of the United States to provide the arguably comparable protection of H.R. 354 will mean that United States-based database vendors will be increasingly placed in a disadvantageous competitive position vis-a-vis their EU counterparts in the large EU information market.
The issuance of the Database Directive was motivated in part by concern about the "very great imbalance in the level of investment in the database sector . . . between the Community and the world's largest database-producing countries." This willingness on the part of the European Union to promote investment in important market sectors was evidenced again just last month in "The follow-up to the Green Paper on the Community Patent and the Patent System in Europe." Noting that
the European Commission stated its intention to present, as soon as possible, a draft Directive to harmonize and clarify the patentability of computer programs and to encourage EU members of the European Patent Convention to take steps to modify that Convention to remove computer programs from the list of unpatentable inventions. The message is clear: the European Union is committed to amending EU intellectual property laws to strengthen the international competitiveness of European industry. The United States cannot afford to do less to promote its international competitiveness in the database arena.
The AIPLA is not alone in its conclusion that there is a need for protection of databases. The Clinton Administration
" . . . supports legal protection against commercial misappropriation of collections of information . . . there should be effective legal remedies against "free riders" who take databases gathered by others at considerable expense and reintroduce them into commerce as their own." (August 4, 1998 letter to Senator Patrick Leahy from Department of Commerce General Counsel Andrew Pincus)
In her testimony before this Subcommittee in October 1997, Register of Copyrights Marybeth Peters stated that the general level of protection previously available for databases under the "sweat of the brow" copyright approach should be restored and that the Copyright Office agrees that legislation to address the shortcomings in current law is desirable.
The Protection Provided by H.R. 354
The provisions of H.R. 354 reflect the continuing efforts by you, Mr. Chairman, to craft a balanced solution to fill the void which currently exists in the protection available for databases. H.R. 2652, as originally introduced in the 105th Congress, first set forth the misappropriation approach for the protection of databases. This approach, with clarifications, is continued in section 1402 of H.R. 354. It establishes civil and criminal remedies against any person who extracts, or uses in commerce, all or a substantial part of a collection of information gathered, organized or maintained by another person, so as to harm that other person's market for a product or service using that collection. Most of the improvements reflected in H.R. 354 over H.R. 2652 as introduced were already incorporated into H.R. 2652 in the version that passed the House last year.
Sections 1403 and 1404 set forth a number of permitted acts, limitations and exclusions to strike a balance with the prohibition set forth in 1402. Thus, section 1403 -
Section 1404 excludes from the prohibition of section 1402 -
The relationship of H.R. 354 to other laws is set forth in section 1405. In addition to expressly clarifying that nothing in H.R. 354 affects the rights, obligations, limitations, or remedies with respect to federal IP and antitrust laws as well as trade secret, privacy and contract law, section 1405 expressly pre-empts state rights equivalent to the rights contained in section 1402.
Section 1406 establishes civil remedies for a violation of section 1402, including temporary and permanent injunctions, monetary relief, and the destruction of copies of information extracted or used in such a violation. The bill provides special protections for non-profit, educational, scientific, and research institutions by providing for the award of costs and attorney's fees for actions brought against them in bad faith and the reduction or elimination of any monetary relief against the employees of such organizations who, with reasonable grounds, believed that their conduct did not
violate section 1402. Section 1407 sets out the criminal sanctions for a willful violation of section 1402, but exempts their application to employees of nonprofits acting within the scope of their employment.
Finally, section 1408 sets forth limitations on the commencement of both civil and criminal actions, including a limitation on bringing any action for the extraction or use of a collection of information that occurs more than 15 years after it was first offered for sale or used in commerce.
Suggestions for Clarifications
AIPLA believes that the prohibition against the misappropriation of collections of information in section 1402 is well crafted. At the same time, we recognize that the incentives provided by this protection must be balanced to ensure that the continued availability of information for educational and research needs is not unduly inhibited. We compliment you, Mr. Chairman, for the careful balancing act evidenced in H.R. 354. We offer only a few comments for clarifications in the report.
As a general matter, we note that the exceptions provided in section 1403, to the acts prohibited by section 1402, do not require that the copy of the collection of information from which an extraction is made and used be a lawfully-acquired copy. In this regard, we note that the exception contained in section 6 of H.R. 3531 required that the person extracting from a database be a lawful user of that database.
Turning now to the specific exceptions, we recognize that the Administration and others have argued that the bill should provide exceptions analogous to "fair use" principles of copyright
law, in particular to minimize any affects on non-commercial research. While we do not oppose such exceptions as a matter of principle, we would urge that any such exceptions be carefully crafted so as to not unduly dilute the incentives provided in section 1402 for the creation of databases.
In this regard, we recognize that the four factors listed in section 1403(a)(2)(A) to assist in determining whether a use or extraction of data is "reasonable under the circumstances" must necessarily be flexible. Too much flexibility, however, will result in uncertainty as to where the line is drawn for both database creators and users. For example, as regards the third factor, the inclusion of some illustrative examples or guidelines in the report regarding what degree of "difference" would (and would not) lead to a determination that an extraction was reasonable would be most helpful.
Similarly, in the fourth factor, further clarification of the purpose of the term "primarily" would be desirable. Would extraction from a database by a person in a business different from that for which the database was primarily developed, but which business was nonetheless a very significant user of the database, be exonerated by this factor?
In the last paragraph of section 1403(a)(2)(A), we would assume that the phrase "offered … otherwise in commerce" would not literally require an extracted portion to be offered in commerce. We would hope that the paragraph would deny the exception, for example, to a for-profit entity that
extracted portions of a database for use internally as a substitute for purchasing copies. Clarification would be helpful.
Finally, a word about the term of protection accorded to a collection of information. Section 1408(c ) provides that nothing shall prevent the use or extraction of information from a collection of information after 15 years from the date on which it was first offered for sale. The obvious question, in this era of electronic databases which are constantly updated with new information which would qualify for protection, is how will one determine what is 15 years old and therefore freely useable? We understand that there was some discussion last year of creating a deposit system within the Copyright Office. We believe that such a solution could be the answer, provided that a practical system could be developed that would not be unduly expensive or burdensome for database creators or users.
Conclusion
Mr. Chairman, the evolution of the legislation to fill the void left by the Feist decision has taken us ever closer to our goal. With H.R. 354, the AIPLA believes that we are indeed very near the balanced approach needed to reestablish the incentives for continued American leadership in the field while addressing the legitimate needs of users. We are ready to work with you and with other interested individuals and organizations to resolve any remaining issues to facilitate the prompt enactment of this important and needed legislation.