Vanderbilt Law Review
January, 1997
50 Vand. L. Rev. 51
LENGTH: 36072 words
ARTICLE: Intellectual Property Rights in Data?
J.H. Reichman* and Pamela Samuelson**
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* Copyright Copyright 1997 by J.H.
Reichman, Professor of Law, Vanderbilt University, and Pamela Samuelson.
** Professor of Law and of Information Management, University of California at Berkeley.
The Authors wish to thank Rochelle
C. Dreyfuss, Rebecca Eisenberg, Paul Edward Geller, Wendy Gordon, Marci
Hamilton, Peter Jaszi, Jessica Litman,
Charles McMannis, Charles Nelson, and many others who commented on
earlier drafts or otherwise provided
helpful suggestions. Thanks also go to Paul Uhlir, Stephen Berry, and
members of the United States National
CODATA Committee and members of the National Research Council's
"Bits of Power" study committee.
We are also grateful to Harlan Onsrud
and Dennis Karjala for organizing the Specialist Meeting on Law,
Information Policy and Spatial Databases
at Arizona State University on October 28-30, 1994 and to Brian
Kahin and Charles Neeson for organizing
the Conference on Information, National Policies and International
Infrastructure at Harvard Law School
on January 28-30, 1996, at which the Authors made presentations
covering the implications of proposals
that led to the development of this Article.
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SUMMARY:
... The international
intellectual property system founded on the Paris and Berne Conventions
in the late
nineteenth century has been dominated
by the patent and copyright paradigms, which articulate the legal
protection of technological inventions
and of literary and artistic works, respectively. ... Data compilers in
the
United States and the United Kingdom
had, in the past, experienced some success in protecting their
investments in publicly distributed
compilations by means of copyright law. ... The copyright laws of most
developed countries exclude functionally
determined databases and do not protect disparate data even when
a given compilation as a whole happens
to satisfy the eligibility requirements of those laws. ... To be sure,
data providers, including members
of the scientific community, could decide not to exercise proprietary rights
in certain databases, for example,
those funded by government agencies. ... For example, if the data
extracted by the user are the data
responsive to his or her online query, one can always argue that the
extraction was qualitatively substantial.
... The possibility therefore exists that publishers may assert the right
to control uses of noncopyrightable
components of databases that would otherwise have been subsumed
within the general right to use
the same database had it qualified for copyright protection. ... As applied
to
traditional scientific works covered
by copyright law, such an exception made sense because only the author's
individual style was protected,
and not his or her data, findings, or ideas. ...
TEXT:
I. Introduction
The international intellectual property
system founded on the Paris and Berne Conventions in the late
nineteenth century n1 has been dominated
by the patent and copyright paradigms, which articulate the legal
protection of technological inventions
and of literary and artistic works, respectively. Although this
patent-copyright dichotomy was never
as strictly observed abroad as in the United States, n2 it
nonetheless charted a relatively
clear theoretical line of demarcation between legal incentives to create
and
the public interest in free competition.
n3 Any publicly disclosed technologies or information products that
failed to meet the eligibility requirements
of the domestic patent and copyright laws became public domain
matter that anyone could freely
appropriate. n4
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n1 See Paris Convention for the Protection
of Industrial Property, Mar. 20, 1883, as last revised at Stockholm
on July 14, 1967, 21 U.S.T. 1583,
828 U.N.T.S. 305 ("Paris Convention"); Berne Convention for the Protection
of Literary and Artistic Works,
Sept. 9, 1886, as last revised at Paris, July 24, 1971, 828 U.N.T.S. 221
("Berne
Convention"). The international
intellectual property system was recently strengthened and broadened by
the
Uruguay Round of multilateral trade
negotiations whose intellectual property component, known as the "TRIPS
Agreement," builds on the Paris
and Berne Conventions. See Final Act Embodying the Results of the Uruguay
Round of the Multilateral Negotiations,
Marrakesh Agreement Establishing the World Trade Organization, signed
at Marrakesh, Morocco, Apr. 15,
1994, Annex 1C, Agreement on Trade-Related Aspects of Intellectual
Property Rights ("TRIPS Agreement"),
in Results of the Uruguay Round 6-19, 365-403 (GATT Secretariat ed.,
1994).
n2 J.H. Reichman, Legal Hybrids Between
the Patent and Copyright Paradigms, 94 Colum. L. Rev. 2432,
2455-65 (1994) (discussing hybrid
intellectual property regimes adopted outside the United States).
n3 See J.H. Reichman, Charting the
Collapse of the Patent-Copyright Dichotomy: Premises for a Restructured
International Intellectual Property
System, 13 Cardozo Arts & Enter. L. J. 475, 480-96 (1995) (explaining
how
the patent and copyright paradigms
have historically balanced competition and innovation policies). For a
different and more restrictive view
of the economic function of copyright, see generally Glynn S. Lunney, Jr.,
Reexamining Copyright's Incentives-Access
Paradigm, 49 Vand. L. Rev. 483 (1996).
n4 Copyright law protects only original
works of authorship that manifest some creative expression. See 17
U.S.C. <sect> 102(a) (1994 ed.);
Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340,
363-64 (1991) (holding that white-page
listings of a telephone directory lacked sufficient creativity to qualify
for copyright protection as an original
work of authorship). Patent law requires that a technical device or
process be novel and nonobvious.
See 35 U.S.C. <sect><sect> 102-03 (1994 ed.) (discussing conditions
for
patentability). Devices or designs
not meeting copyright or patent law standards that are disclosed in publicly
distributed products are generally
considered freely appropriable. See Bonito Boats, Inc. v. Thunder Craft
Boats, Inc., 489 U.S. 141, 167-68
(1989) (striking down Florida statute forbidding use of "plug molds" in
the
manufacture of boat parts as disruption
of federal patent policy concerning subject matter Congress left in the
public domain); Sears, Roebuck &
Co. v. Stiffel Co., 376 U.S. 225, 231-32 (1964) (preventing use of Illinois
unfair competition law to block
the free copying of an unpatentable "pole lamp"); Compco Corp. v. Day-Brite
Lighting Inc., 376 U.S. 234, 237-38
(1964) (indicating that state unfair competition laws may not protect
unpatented designs embodied in publicly
available products in the absence of confusion about the source of
origin). See also Reichman, 94 Colum.
L. Rev. at 2448-53 (cited in note 2) (discussing positive and negative
economic premises of the dominant
paradigms).
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By the end of the twentieth century,
in contrast, this line of demarcation had empirically broken down. The
developed market economies, including
the United States, enacted numerous special purpose intellectual
property laws to protect industrial
designs, plant varieties, integrated circuit designs, and other matter
that
typically failed to meet the eligibility
requirements of either the patent or copyright models. n5 The latest, and
arguably most deviant, examples
of this trend toward "sui generis" intellectual property rights n6 are
the European- and United States-sponsored
initiatives in both national and international forums calling for
creation of a new form of legal
protection for the contents of databases. n7
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n5 See, for example, Semiconductor
Chip Protection Act of 1984, Pub. L. No. 98-620, 98 Stat. 3347 (1984),
codified at 17 U.S.C. <sect>
901 et seq. (1994 ed.); Plant Variety Protection Act, Pub. L. No. 91-577,
84
Stat. 1542 (1970), amended by Pub.
L. No. 96-574, 94 Stat. 3350 (1980) and by Pub. L. No. 103-349, 1087
Stat. 3136 (1994), codified as amended
at 7 U.S.C. <sect><sect> 2321 et seq. (1994 ed.). See also Rochelle
Cooper Dreyfuss, Information Products:
A Challenge to Intellectual Property Theory, 20 N.Y.U. J. Int'l L. &
Pol.
897, 899 (1988). The United States
is the only developed country that has never enacted special laws to
protect either industrial designs
appealing to the eye or functionally determined industrial designs known
as
"utility models." See, for example,
J.H. Reichman, Industrial Designs and Utility Models Under the European
Communities' Proposed Initiatives:
A Critical Appraisal, paper presented to the Third Annual Conference on
International Intellectual Property
Law and Policy, Fordham University School of Law (Apr. 20-21, 1995) (on
file with Vanderbilt Law Review).
See generally Reichman, 94 Colum. L. Rev. at 2453-500 (cited in note 2).
n6 Sui generis means "of its own
kind or class." Black's Law Dictionary 1434 (West, 6th ed. 1990). The
literature refers to special purpose
intellectual property laws deviating from the patent and copyright
paradigms as "sui generis" regimes.
See, for example, Pamela Samuelson, Creating a New Kind of Intellectual
Property Law: Applying the Lessons
of the Chip Law to Computer Programs, 70 Minn. L. Rev. 471 (1985)
(discussing the sui generis character
of the Semiconductor Chip Protection Act).
n7 See Directive 96/9/EC of the European
Parliament and of the Council of 11 March 1996 on the Legal
Protection of Databases, 1996 O.J.
(L 77) 20 ("E.C. Directive on Databases" or "Final E.C. Directive"). Even
before the E.C. Directive on Databases
was finalized, the European Commission submitted a proposal based on
the then-pending draft to the World
Intellectual Property Organization ("WIPO") Committee of Experts for
International Treaty Provisions
on the Legal Protection of the Contents of Databases. See Proposal Submitted
by the European Community and its
Member States to the World Intellectual Property Organization Committee
of Experts on a Possible Protocol
to the Berne Convention, Sixth Session, Geneva, WIPO Doc. BCP/CE/VI/13,
February 1-9, 1996 ("European Proposal
on Databases"). The United States submitted a similar proposal to the
WIPO Committee of Experts in May,
1996. See Committee of Experts on a Possible Protocol to the Berne
Convention, Proposal of the United
States of America on Sui Generis Protection of Databases, Geneva, May
22-24, 1996, WIPO Doc. BCP/CE/VII/2-INR/CE/VI/2,
May 20, 1996 ("U.S. Proposal on Databases"). The U.S.
proposal was submitted to WIPO even
before Congressman Carlos Moorhead introduced legislation in Congress
for a new form of legal protection
for the contents of databases on May 23, 1996. See Database Investment
and Intellectual Property Antipiracy
Act of 1996, H.R. Rep. No. 3531, 104th Cong., 2d Sess. (1996). A draft
treaty on the legal protection of
databases was made public on August 30, 1996. See Basic Proposal for the
Substantative Provisions of the
Treaty on Intellectual Property in Respect of Databases, Memorandum
Prepared by the Chairman of the
Committee of Experts, August 30, 1996 ("WIPO Draft Database Treaty"), to
be considered by the Diplomatic
Conference on Certain Copyright and Neighboring Rights Questions, Geneva,
Switzerland, December 2-20, 1996.
The Conference postponed action on the Draft Database Treaty. See
WIPO Doc. CRNR/DC/88, Dec. 20, 1996.
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These initiatives aim to rescue database
producers from the threat of market-destructive appropriations by
free-riding competitors who contributed
nothing to the costs of collecting or distributing the relevant data. n8
Unlike the classical intellectual
property models, which seek "to promote the Progress of Science and
the useful Arts," n9 the database
laws do not condition protection on a showing of some creative or technical
achievement. Rather, these laws
would protect anyone who makes a substantial investment in the
development of a database against
unauthorized extractions, uses, and reuses of the whole or substantial
parts of its contents. n10
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n8 See, for example, E.C. Directive
on Databases, 1996 O.J. (L 77) at 20 (cited in note 7) (noting, in Recital
7,
the high cost of database development
and the low cost of appropriating content as an important factor
favoring sui generis protection).
In the absence of special legislation, courts will sometimes stretch existing
legal regimes to avoid such appropriations.
Prior to the Supreme Court's decision in Feist Publications, Inc. v.
Rural Telephone Service Co., 499
U.S. 340 (1991), some federal courts had extended copyright protection
to
unoriginal data compilations on
a "sweat of the brow" theory. See Jane C. Ginsburg, Creation and Commercial
Value: Copyright Protection of Works
of Information, 90 Colum. L. Rev. 1865, 1868-69 nn.13-14, 18951900
(1990) (citing cases where courts
found works copyrightable due to the amount of labor expended by the
plaintiff and discussing the history
of "sweat work" as the basis for copyrightability). For the tensions in
foreign
law, see, for example, Alain Strowel,
Droit d'auteur et copyright: divergences et convergence--etude de droit
compare, 29-30, 264-66, 391-474
(E. Bruylant, 1993); M. Frank Gotzen, Grand orientations du droit d'auteur
dans les Etats membres de la C.E.E.
en matiere de banques de donnees, in Banques de Donne Droit et d'Auteur
85-98 (IRPI ed., 1987).
n9 U.S. Const., Art. I, <sect> 8, cl. 8.
n10 See, for example, E.C. Directive
on Databases, 1996 O.J. (L 77) at 20-21 (cited in note 7) (Recitals 7-12).
See also Charles Clark, General
Counsel of the International Publishing Copyright Council, The Copyright
Environment for the Publisher in
the Digital World 7 (1996) (stressing present "legal vacuum" facing publishers
and the importance of E.U. database
protection laws for future investments).
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The Authors of this Article are not
unsympathetic to many of the goals that the sui generis database regimes
are meant to achieve. We have elsewhere
argued that the traditional intellectual property models, as
supplemented by classical trade
secret laws, often fail to afford those who produce today's most commercially
valuable information goods enough
lead time to recoup their investments. The risk of market failure inherent
in
this state of chronic under-protection
tends to keep the production of information goods at suboptimal levels.
n11
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n11 See, for example, Reichman, 94
Colum. L. Rev. at 2525-27 (cited in note 2) (discussing this phenomenon
generally); Pamela Samuelson, Randall
Davis, Mitchell D. Kapor, and J.H. Reichman, A Manifesto Concerning
the Legal Protection of Computer
Programs, 94 Colum. L. Rev. 2308, 2337-41 (1994) (discussing this
phenomenon in relation to computer
programs).
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While this Article accordingly agrees
that database makers need a new form of legal protection, it contends
that the current European and United
States initiatives n12 are seriously flawed. Implementing these initiatives
would confer a far broader and stronger
monopoly on database developers than is needed to avert market
failure. It would create an exclusive
property rights regime of virtually unlimited duration n13 that would be
subject to few, if any, public policy
limitations. n14 It would jeopardize basic scientific research, n15 eliminate
competition in the markets for value-added
products and services, n16 and convert existing barriers to entry
into insuperable legal barriers
to entry. n17 The pending European and United States initiatives could
thus lead to relatively high prices
for the use of public goods. Economic efficiency, however, calls for very
low
prices for such use and favors minimum
incentives to provide the needed investment and services. n18 Serious
questions also exist about the constitutionality
of the pending U.S. legislation. By investing compilers of
databases with absolute and virtually
perpetual protection, this legislation would violate both the limited times
proviso of the Enabling Clause of
the Constitution n19 and its express justification for grants of intellectual
property rights in terms of the
advancement of scientific and technical progress. n20 The pending U.S.
legislation also undermines principles
embodied in the First Amendment that courts applying copyright law have
long sought to accomodate. n21
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n12 See E.C. Directive on Databases,
1996 O.J. (L 77) at 20-28 (cited in note 7); H.R. Rep. No. 3531 (cited
in
note 7).
n13 See notes 143-66, 225-35 and accompanying text.
n14 See notes 169-90, 248-65 and accompanying text.
n15 See notes 282-329, 451-88 and accompanying text.
n16 See notes 330-63 and accompanying text.
n17 See notes 293-97, 364-99 and accompanying text.
n18 See, for example, Robert Cooter
and Thomas Ulen, Law and Economics, 108-18 (Scott Foresman, 1988)
(recognizing alternative theories
based on nonintervention or restricting competition to single producers).
See
also Jeffrey K. Mackie-Mason and
Hal R. Varian, Economic FAQS About the Internet, J. Econ. Perspective 75,
85-89 (1994).
n19 U.S. Const., Art. I, <sect> 8, cl. 8.
n20 The authors generally favor a
flexible interpretation of the Enabling Clause of the Constitution, such
as
that put forward in Rochelle Cooper
Dreyfus, A Wiseguy's Approach to Information Products: Muscling
Copyright and Patent Into a Unitary
Theory of Intellectual Property, 1992 S. Ct. Rev. 195 (1993). The claim
advanced in this Article is that
the database proposals conflict with even this flexible approach.
n21 See notes 50-55 and accompanying text.
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This Article proposes either the
use of unfair competition principles to protect database contents, or the
adoption of an intellectual property
regime based on more refined liability principles, rather than on exclusive
property rights, n22 that would
reconcile the need for legal incentives to invest with a calculus of net
social
benefits. Either approach would
provide those who develop commercial databases with enough lead time to
recoup their investments and make
sufficient profits to enable further investments. At the same time, these
alternatives would not retard scientific
research or educational activities, impede the development of
follow-on products and services,
or otherwise create legal barriers to entry.
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n22 See notes 410-50 and accompanying
text. A property entitlement or right precludes third parties from
appropriating the object of protection,
whereas a liability rule regulates the means by which they can engage
in certain potentially harmful acts
on certain conditions. See generally Guido Calabresi and A. Douglas
Melamed, Property Rules, Liability
Rules, and Inalienability: One View of the Cathedral, 85 Harv. L. Rev.
1089
(1972) (discussing the differences
between property entitlements, liability rules, and inalienability rules).
If one
has "rightful possession of some
thing--such as an automobile or a home under an exclusive property right
another person ordinarily cannot
take it without permission;" but under a liability rule, others may engage
in
acts that "create risks of harm
and thus constitute probabilistic invasions of property interests"--for
example--nuisances, while obligating
them to pay damages for harm under specified circumstances. Louis
Kaplow and Steven Shavell, Property
Rules Versus Liability Rules: An Economic Analysis, 109 Harv. L. Rev. 713,
716 (1996).
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To understand why some form of legislative
action is necessary, Part II of this Article will discuss the limited
proprietary rights available to
database compilers under existing legal regimes, whose rules were formulated
in
the pre-digital era. This Part will
show how digital technologies have destabilized the status quo and why
this
threatens investments in compilations
of data. n23 Part III will report on current initiatives to adopt a sui
generis intellectual property regime
covering noncopyrightable database contents. n24 This Part traces the
evolution of the pending legislative
initiatives from a modest set of early proposals sounding in unfair
competition law to an absolute monopoly
reinforced by ancillary technological means of enforcement. n25 It
also shows that current proposals
for international treaty provisions to protect database contents are
consistent with other U.S. and E.U.
initiatives that would confer ever broader and stronger protection on
digital information products. n26
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n23 See notes 30-94 and accompanying text.
n24 See 95-281 and accompanying text.
n25 See notes 108-90, 222-65 and
accompanying text (stressing intensive lobbying efforts by U.S. and U.K.
database producers to this end).
n26 See notes 191-265 and accompanying text.
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Part IV will analyze the adverse
implications of current database protection proposals for science and
education, for competition in the
market for value-added information products and services, and for other
socially desirable reuses of information.
n27 It emphasizes the ways in which the current initiatives undervalue
the abiding importance in the information
age of a relatively free flow of information as a precondition for
technological progress and democratic
social discourse. n28
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n27 See notes 281-83 and accompanying text.
n28 See also James Boyle, Shamans,
Software and Spleens: Law and the Construction of the Information
Society i-iv (Harvard U. Press,
1996).
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Part V will explain why the exclusive
property rights approach embodied in current proposals should be
abandoned in favor of either an
appropriate unfair competition law or, preferably, the pro-competitive,
market-enhancing principles of a
more refined liability regime. n29 This Part will discuss the principal
elements
of such an alternative framework
for protecting the contents of databases from market-destructive
appropriations without creating
legal barriers to entry or unduly interfering with the open exchange of
data
among scientists. It will also show
that a sound legal framework for protecting the contents of
databases cannot be formulated without
solid and continuing inputs from the scientific and educational
communities.
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n29 See text accompanying notes 400-88.
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II. Historical Context of the Current Initiatives
The success of private-sector technological
development in the United States has stemmed in good measure
from massive public investments
in basic research and development that were made after the late 1950s in
response to cold war pressures and
national security interests. n30 This strategy provided funding for
academic institutions and specialized
laboratories whose research products often paved the way for private
industrial applications. n31 That
federal funding largely defrayed the costs of collecting and disseminating
raw
scientific data merits particular
attention in this context. n32 To the extent that this country became the
world's leading producer of technological
goods, the government's role in ensuring the free and open supply of
data to the scientific community
on favorable economic conditions was a constant, but seldom articulated,
stabilizing factor.
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n30 See generally Carnegie Commission
on Science, Technology and Government, Technology and Economic
Performance: Organizing the Executive
Branch for a Stronger National Technology Base (1991).
n31 See, for example, Rebecca S.
Eisenberg, Patents and the Progress of Science: Exclusive Rights and
Experimental Use, 56 U. Chi. L.
Rev. 1017, 1018 (1989) (recognizing that academic research has attracted
and
accelerated the commercial development
of biomedical discoveries which could be marketed commercially).
n32 See, for example, Committee on
Issues in the Transborder Flow of Scientific Data, U.S. National
Committee for CODATA, and National
Research Council, Bits of Power: Issues in Global Access to Scientific
Data 1-24 (National Academy Press)
(forthcoming 1997) ("Bits of Power") (discussing technical, economic, and
legal impediments to the free flow
of scientific and technical data in electronic environments). Some
government data compilations, of
course, serve as "raw material" for valueadding providers who claim
proprietary rights in the end products.
See note 289 and accompanying text (discussing protection strategies
of such firms).
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A. Information Goods in the Pre-Digital Era
The government generates data in
two ways: directly, as when agencies compile information in the course
of
their missions, and indirectly,
through grants or other subsidies to researchers, particularly for scientific
endeavors. n33 The resulting compilations
have generally not been regulated by intellectual property norms.
This observation follows in part
because copyright rules forbid the U.S. government from copyrighting
works generated by its employees,
n34 and in part because norms widely shared by members of the scientific
and educational communities favor
relatively unfettered extractions and reuses of data. n35 Only in cases
where members of these communities
authored discursive scientific works or otherwise participated in applied
technological innovation were they
likely to encounter legal rules governing commercial applications of data.
n36 In such cases, existing legal
institutions proved relatively stable in the pre-digital epoch, and the
scientific
community, among others, has taken
this stability largely for granted.
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n33 See, for example, Bits of Power at ch. 4 (cited in note 32).
n34 See 17 U.S.C. <sect> 105 (1994
ed.) ("Copyright protection under [Title 17] is not available for any work
of the United States Government,
but the United States Government is not precluded from receiving and
holding copyrights transferred to
it by assignment, bequest, or otherwise.").
n35 See, for example, Anne W. Branscomb,
Who Owns Information? From Privacy to Public Access 159-73
(Basic Books, 1994). See also Dorothy
Nelkin, Science as Intellectual Property: Who Controls Research? 5-6
(Macmillan, 1983); Harvey Brooks,
The Research University: Doing Good, and Doing It Better, Issues in Sci.
&
Tech. 49, 50-51 (Winter, 1988);
J.H. Reichman, Computer Programs as Applied Scientific Know-How:
Implications of Copyright Protection
for Commercialized University Research, 42 Vand. L. Rev. 639, 641-48,
710-23 (1989).
Most compilers of scientific data
have been more concerned about obtaining credit or recognition for their
contributions than about securing
the economic fruits of their efforts. Both international copyright law
under
the Berne Convention and the domestic
laws of most developed countries require that authors of literary works
obtain a "moral right" to proper
attribution for their published creations. See, for example, Berne Convention,
Art. 6bis (cited in note 1). Congress
has so far declined to comply with this obligation except with regard to
visual or graphic artists. See 17
U.S.C. <sect> 106A (1994 ed.) (creating protection for the authors of
visual
art). This leaves the question of
attribution largely to the vagaries of unfair competition law.
n36 Until the 1980s, there was a
fairly clear-cut distinction between theoretical and applied science in
the
universities, and the inclination
to patent or otherwise commercialize research results was less pronounced
than at present. Even where patenting
had taken root, a well-established judicial tradition denied patent
protection to mathematical formulas,
mental steps, and data as such, including mathematical algorithms. See,
for example, Robert P. Merges, Property
Rights Theory and the Commons: The Case of Scientific Research, 13
Social Phil. and Pol. Found. 145
(1996); Pamela Samuelson, Benson Revisited: The Case Against Patent
Protection for Algorithms and Other
Computer Program-Related Inventions, 39 Emory L. J. 1025, 1028-29
(1990) (considering the patentability
of mathematical algorithims).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
In the private sector, by contrast,
commercial compilers of data have long suffered from a risk of market
failure owing to the intangible,
ubiquitous and, above all, indivisible nature of information goods. n37
Compilers
could, of course, secure the commercial
value of some data sets by keeping them secret or by only
revealing them in the course of
a confidential relationship, as routinely occurs with regard to firms engaged
in
industrial applications of scientific
discoveries. In such cases, trade secret laws or equivalent laws of
confidential information provide
innovators and investors with no exclusive property rights. n38 Rather,
they
permit third parties to reverse-engineer
any unpatented industrial product by proper means in order to reveal
the process by which it was obtained,
and to use that process to manufacture equivalent goods. n39
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n37 Information goods have the properties
of so-called public goods: they are ubiquitous, inexhaustible, and
indivisible or nondepletable. A
second comer's use of a new information good does not diminish or exhaust
it.
Once disclosed to the world, anyone
can use an information good without the originator's permission and
without reimbursing him or her for
the costs of research and production. See, for example, Cooter and Ulen,
Law and Economics at 108-18 (cited
in note 18). Unless the state limits the ability of third parties to copy
a
given literary production and sell
the copied good for less than the originator, neither the author nor the
publisher may have sufficient incentives
to create or invest in the dissemination of cultural and information
goods. See, for example, Paul Goldstein,
1 Copyright: Principles, Law and Practice <sect> 1.2 (Little, Brown,
2d ed. 1996); William Kingston,
Innovation, Creativity and Law 83-85 (Kluwer Academic Publishers/Dordrecht,
1990). See also Ejan MacKaan, Economics
of Information and Law 115-17 (Kluwer-Nijhoff, 1982) (noting
market distortions ensuing from
public good problems and uncertainties that would require a higher expected
return).
n38 See, for example, Restatement
(Third) of Unfair Competition <sect><sect> 39-45 (1993) (restating
the
norms of trade secrecy law). Some
countries that lacked trade secret laws as such would protect information
disclosed in confidence against
abuses
of that confidence. See, for example, Allison Coleman, The Legal
Protection of Trade Secrets 5-28
(Sweet & Maxwell, 1992); Eric Golaz, L'imitation servile des produits
et de
leur presentation: etude comparee
des droits francais, allemand, belge et suisse 267-79 (Librairie Droz,
1992).
n39 See, for example, Kewanee Oil
Co. v. Bicron Corp., 416 U.S. 470 (1974); Uniform Trade Secrets Act, 14
ULA <sect> 1(4) (1985) ("U.T.S.A.").
See generally J.H. Reichman, Overlapping Proprietary Rights in
University-Generated Research Products:
The Case of Computer Programs, 17 Columbia-VLA J. L. & Arts 51,
93-98 (1992).
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To the extent that an innovative
product derived from commercial applications of scientific data kept that
were under actual or legal secrecy,
a competitor always remained free to generate the same data and to
apply them to similar products or
uses. Legal liability attached only to third parties who engaged in improper
means of reverse engineering, such
as bribing employees or resorting to industrial espionage. n40 In such
cases, the free-riding offender
had to compensate the innovator only for lost profits likely to accrue
during the
hypothetical period that would have
been required to reverse engineer the product in question by honest
means. n41
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n40 See, for example, Restatement (Third) of Unfair Competition <sect> 43 (cited in note 38).
n41 See, for example, id. <sect> 45.
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Trade secret law thus provides qualifying
originators with no legal immunity from direct competition. It merely
confers a "head start," that is,
an uncertain period of natural lead time during which originators seek
to recoup
their investment in research and
development while establishing their trademarks as symbols of quality that
consumers recognize. In this and
other respects, trade secret law operates as a liability regime that
discourages certain types of conduct
rather than as an exclusive property right that may create a
legal barrier to entry. n42
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n42 See note 22. For an analysis
of trade secret law as a default liability regime governing relations between
originators and borrowers of subpatentable
innovations, see Reichman, 94 Colum. L. Rev. at 2334, 2335-44,
2519-29 (cited in note 2). The injunction
available under trade secret law applies only to the party who
improperly obtained the undisclosed
know-how, but it never impedes other parties from reverse engineering
that know-how by proper means. An
injunction valid against the world would presumably be held
unconstitutional in the absence
of a patent. See, for example, Rockwell Graphics Systems, Inc. v. D.E.V.
Industries, 925 F.2d 174 (7th Cir.
1991). See also David D. Friedman, William M. Landes, and Richard Posner,
Some Economics of Trade Secret Law,
5 J. Econ. Persp. 61-62 (Winter 1991) (discussing the difference
between patent and trade secret
protection).
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Once data are disseminated to the
public in print media, however, they normally forfeit even the limited
protection of trade secret laws
and related laws of confidentiality, except insofar as two-party contracts
may
otherwise provide. n43 Not surprisingly,
commercial compilers in such cases have found it difficult to
appropriate the fruits of their
investment unless either copyright laws or unfair competition laws afford
them a
limited shelter against wholesale
duplication. n44
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n43 See notes 86-94 and accompanying text for further discussion of two-party contracts.
n44 The classic American decision
on unfair competition protection for compilations of information was
International News Service v. Associated
Press, 248 U.S. 215, 237-42 (1918) (enjoining news service from
appropriating hot news from competing
newspapers under certain circumstances). The extent to which state
or federal unfair competition laws
can still provide some supplementary relief against the unauthorized copying
of commercially valuable data that
are not protected by trade secret or copyright laws remains an unsettled
question. See, for example, Jane
C. Ginsburg, No "Sweat"? Copyright and Other Protection of Works of
Information After Feist v. Rural
Telephone, 92 Colum. L. Rev. 338, 367-74 (1992) (questioning Congress's
constitutional authority to protect
compiled data outside the limits of the Patent-Copyright Clause); Wendy
J.
Gordon, On Owning Information: Intellectual
Property and the Restitutionary Impulse, 78 Va. L. Rev. 149, 165
(1992) (proposing the creation of
a misappropriation tort for malcompetitive copying that would provide
supplemental protection); Dennis
S. Karjala, Misappropriation as a Third Intellectual Property Paradigm,
94
Colum. L. Rev. 2594, 2601-08 (1994)
(focusing on misappropriation to fill the gap of protection between
patent and copyright law). But see
Leo J. Raskind, The Misappropriation Doctrine as a Competitive Norm of
Intellectual Property Law, 75 U.
Minn. L. Rev. 875 (1991) (identifying gaps in the analytical framework
of the
misappropriation doctrine). Unfair
competition law has sometimes been available in Europe to protect data
compilations. See, for example,
J.H. Reichman, Electronic Information Tools--The Outer Edge of World
Intellectual Property Law, 25 Int'l
Rev. Indus. Prop. & Copyright L. 446, 450 nn. 2, 11-16 (1993). See
also
Golaz, L'imitation Servile at 239-55
(cited in note 38).
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Data compilers in the United States
and the United Kingdom had, in the past, experienced some success in
protecting their investments in
publicly distributed compilations by means of copyright law. n45 One line
of
decisions expressed concern that
without copyright protection there would be inadequate incentives to invest
in socially desirable compilations
of data that require industrious effort to produce. n46 The decisions
protecting compilations on a "sweat
of the brow" rationale, however, n47 violate a basic premise of the mature
copyright paradigm, which claims
to protect only the original expression that authors embody in information
products. n48 The U.S. Supreme Court
recognized this principle in its 1991 decision in Feist Publications, Inc.
v. Rural Telephone Service Co.,
which repudiated the "sweat of the brow" rationale for protecting compilations
of data. n49
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n45 See Ginsburg, 90 Colum. L. Rev.
at 1873-93 (cited in note 8) (discussing the historical protection of "low
authorship" of works in the United
Kingdom and the United States).
n46 See, for example, Leon v. Pacific
Telephone & Telegraph Co., 91 F.2d 484 (9th Cir. 1937) (protecting
telephone listings). See also Robert
C. Denicola, Copyright in Collections of Facts: A Theory for the Protection
of Nonfiction Literary Works, 81
Colum. L. Rev. 516, 528, 539-40 (1981) (commenting on the need to
encourage production of these works
and to minimize unjust enrichment).
n47 This rationale provides copyright protection based upon the labor expended by the compiler. See note 8.
n48 See, for example, Paul Edward
Geller, Copyright in Factual Compilations: U.S. Supreme Court Decides Feist
Case, 22 Int'l Rev. Indus. Prop.
& Copyright L. 802, (1991) (noting that the United Kingdom remains
"the most
significant exception to this consensus").
n49 499 U.S. at 359-60. The implications
of Feist are explained generally in Dreyfuss, 20 N.Y.U. J. Int'l L. &
Pol. 897 (cited in note 5), Ginsburg,
92 Colum. L. Rev. at 338 (cited in note 44), and Pamela Samuelson, The
Originality Standard for Literary
Works Under U.S. Copyright Law, 42 Am. J. Comp. L. 393 (Supp. 1994).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
Functionally dictated collections
of data or other compilations that do not manifest a creative selection
or
arrangement are, therefore, at least
in principle, ineligible for copyright protection. n50 Even when compilers
of
data satisfy the originality requirement,
moreover, copyright law affords them only weak protection because
ancillary rules exclude their ideas
and factual discoveries n51 from the scope of the copyright monopoly. In
addition, numerous exceptions to
and limitations on the copyright owner's exclusive rights also favor certain
uses of protected works, such as
those for face-to-face teaching activities, library and archival uses,
and
other public interest pursuits.
n52 In U.S. copyright law, there is also a general "fair use" exception
"for purposes such as criticism,
comment, news reporting, teaching . . . scholarship, or research." n53
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n50 See 17 U.S.C. <sect> 102(a),
(b); Feist, 499 U.S. at 359-60 (finding that copyright protection extends
only to those portions of a data
compilation that are original to the author and not to the facts themselves);
Guy Tritton, Intellectual Property
in Europe 213-14 (Sweet & Maxwell, 1996) (noting the robust standard
of
originality in some E.U. countries,
especially Germany). The E.C. Directive on Databases recognizes this same
principle, and uses it as a point
of departure for its sui generis regime. See E.C. Directive on Databases,
1996
O.J. (L 77) at 20, 25 (cited in
note 7) (Recitals 4-12 and art. 3(1)).
n51 See 17 U.S.C. <sect> 102(b);
Feist, 499 U.S. at 361-64 (allowing a second comer to use disparate data
in value-adding directory of its
own making).
n52 See, for example, 17 U.S.C. <sect><sect>
108 (reproduction by libraries and archives), 109(a) (first-sale
doctrine), 110(a) (face-to-face
teaching activities), 110(b) (broadcasts of nondramatic literary or musical
works for certain educational purposes),
114 (limiting rights and scope of protection in sound recordings), 115
(compulsory license for musical
works recorded on sound recordings), 117 (archival uses of computer
programs), 118 (exemptions for use
by noncommercial broadcasters), 120 (right to photograph architectural
works).
n53 17 U.S.C. <sect> 107 (1994
ed.). While the availability of other statutory exceptions usually varies
with
the nature of the subject matter
at issue, the fair use exception applies to all subject matter categories.
Even
so, overriding the copyright owner's
exclusive rights in the name of fair use remains an atypical result
contingent on a judicial evaluation
of the special "purpose and character of the use," the "nature of the
copyrighted work," the "amount and
substantiality of the portion used" and the "effect of the use upon the
potential market for or value of
the copyrighted work." See, for example, 17 U.S.C. <sect> 107 (listing
factors
to be considered); Campbell v. Acuff-Rose
Music, Inc., 114 S. Ct. 1164, 1169-79, 127 L. Ed. 2d 500, 525
(1994) (finding a commercial parody
a fair use within the meaning of the <sect> 107); Harper & Row
Publishers, Inc. v. Nation Enterprises,
471 U.S. 539, 569 (1985) (finding the use in question not fair under
<sect> 107).
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Taken together, these and other features
of the mature copyright paradigm usually afford protection only
against wholesale copying of the
original selection and arrangement underlying any eligible compilation
of data.
This, in turn, greatly diminishes
the value of copyright protection even to database publishers who satisfy
the
eligibility criteria. The exclusive
reproduction and derivative work rights, as construed by the Supreme Court,
will not normally prevent unauthorized
extractions of disparate data for either competing or value-adding uses.
n54 In the United States, this doctrine
of weak or "thin" protection for factual works has been reinforced by
first amendment concerns, which
some courts and commentators view as further mandating broad access to
the disparate facts that result
from a compiler's efforts. n55
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n54 See 17 U.S.C. <sect><sect>
106(1), (2) (1994 ed.); Feist, 499 U.S. at 349-51 (discussing the limitation
of copyright of factual compilations);
Key Publications, Inc. v. Chinatown Today Publishing Enterprises, Inc.,
945 F.2d 509, 514 (2d Cir. 1991)
(noting that copyright protection with respect to factual compilations
after
Feist appears "thin"); Kregos v.
Associated Press, 937 F.2d 700, 707 (2d Cir. 1991) (holding that a variant
format for baseball game data did
not infringe copyright in original format); Victor Lalli Enterprises, Inc.
v. Big
Red Apple, Inc., 936 F.2d 671, 674
(2d Cir. 1991) (holding that charts of winning numbers from gambling
activities did not meet standards
for copyright protection); Bellsouth Advertising & Publishing Corp.
v.
Donnelley Information Publishing,
Inc., 999 F.2d 1436, 1446 (11th Cir., 1993) (holding that the use of a
telephone directory as a guide for
business solicitation did not violate copyright standards). If courts strictly
apply Feist at both the eligibility
and scope of protection phases, and thus continue to reject stronger
protection based on "sweat-of-the-brow"
investment theories, the effect is to "strip[ ] . . . away or sharply
reduce[ ] . . . the copyright protection
afforded a variety of 'information products,' from directories and mailing
lists to computerized databases."
Ginsburg, 92 Colum. L. Rev. at 339 (cited in note 44). See also Denicola,
81
Colum. L. Rev. at 516 (cited in
note 46) (advocating compiler's copyright to overcome lack of incentives);
Ginsburg, 90 Colum. L. Rev. at 1907,
1924 (cited in note 8) (advocating copyright protection of low-authorship
factual works, including databases,
but proposing compulsory license for derivative users of data).
n55 See, for example, Feist, 499
U.S. at 354 (stressing adverse effects on free flow of information by
"creating . . . monopolies in public
domain materials"); Harper & Row v. Nation Enterprises, 471 U.S. 539
(1985)
(stressing first amendment interest
in unrestricted availability of facts); Financial Information, Inc. v.
Moody's
Investors Service, Inc., 808 F.2d
204, 207 (2d Cir. 1986) (stressing "risk of putting large areas of factual
research material off limits and
threatening the public's unrestrained access to information"). See also
Philip H.
Miller, Note, Life After Feist:
Facts, the First Amendment, and the Copyright Status of Automated Databases,
60 Fordham L. Rev. 507, 509 (1991)
(discussing the relationship between the freedom guaranteed by the First
Amendment and the author's right
to copyright); Michael J. Haungs, Copyright of Factual Compilations: Public
Policy and the First Amendment,
23 Colum. J. Law & Soc. Probs. 347, 364 (1990) (discussing "the tension
between copyright law and the First
Amendment's protection of free exchange of ideas . . ."); Denicola, 81
Colum. L. Rev. at 540 (cited in
note 46) ("Copyright does not significantly interfere with first amendment
values . . . ."). For the view that
legal protection of facts and data as such is consistent with the First
Amendment on certain conditions,
such as the availability of noncommercial fair use and compulsory licenses,
see Ginsburg, 92 Colum. L. Rev.
at 384-87 (cited in note 44).
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Footnotes- - - - - - - - - - - - - - - - -
Lately, however, some federal appellate
courts have begun to rebel against Feist and to reinstate stronger
copyright protection for factual
compilations and databases by subtle doctrinal manipulation. n56 As our
previous work has shown, these cyclical
fluctuations between states of under- and overprotection are a
characteristic response to borderline
subject matters that fit imperfectly within the classical patent and
copyright paradigms. n57
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n56 See, for example, CCC Information
Services, Inc. v. Maclean Hunter Market Reports, Inc., 44 F.3d 61, 65
(2d Cir. 1994) (noting the low threshold
of originality required for copyright protection); Warren Publishing, Inc.
v. Microdos Data Corp., 52 F.3d
950, 956 (11th Cir. 1995) (holding that the high degree of correlation
between
compilations violated copyright
law). See also Samuelson, 42 Am. J. Comp. L. at 397-413 (cited in note
49).
n57 See, for example, Reichman, 13 Cardozo Arts & Enter. L. J. at 512-17, 513 n.176 (cited in note 3).
Factors pulling for over- or underprotection
already exist on both sides of the classical line of demarcation
[between the patent and copyright
subsystems]. On the copyright side . . . for example, a broad derivative
work right sometimes overprotects
by favoring overlapping claims to incremental innovation while restricting
access to ideas, methods and processes
by indirect means and for a very long duration. . . . Yet,
underprotection can result from
the inability of copyright-like models to protect the internal dynamic
features
of technological innovation, in
which idea and expression merge, and also from the lack of any exclusive
right
to control end use . . . . Similarly,
on the industrial property side . . . , "overprotection results from the
progressive monopolization of ever
smaller aggregates of inventive activity, which elevate social costs in
return for no clearly equilibrated
social benefits. Yet, the nonobviousness standard and its variants can
also
induce states of chronic underprotection
by excluding the bulk of the incremental innovations that underlie
today's most promising technologies."
Id. (quoting Reichman, 94 Colum. L. Rev. at 2504 n.401 (cited in note 2)).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
B. Destabilizing Trends in the Information Age
By the late 1980s, digital technologies
and new telecommunications networks had combined to produce "the
greatest changes in the way information
is distributed since the invention of printing by movable type in the
fifteenth century." n58 The use
of computers made it economically feasible to collect, store, manage, and
deliver huge amounts of data at
a time when continuously expanding databases have become the building
blocks of knowledge, especially
in the observational sciences. n59 Electronic databases further blur
the line between the collection
and application functions by allowing users to make their own tailor-made
extractions from the mass of data
available in the collection as a whole. In other words, digital technologies
break through the functional rigidities
of print media by providing users with "extraction tools that enable them
to sort and arrange data in ways
meaningful to them." n60 By thus extending "the manipulative abilities
of the
information user's mind," these
tools allow users to "add . . . immense value to what would otherwise be
masses of incoherent, disparate
data." n61
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n58 Leslie A. Kurtz, Copyright and
the National Information Infrastructure in the United States, 18 Eur. Intell.
Prop. Rev. 120 (1996).
n59 See, for example, Bits of Power at ch. 4 (cited in note 32).
n60 Gregory M. Hunsuker, Raising
a Toll Fence to Protect the "Noncreative" Labors of Database Makers: The
European Database Directive, Fordham
Intell. Prop., Media & Enter. L. J. (forthcoming, 1997).
n61 Id. See also text accompanying notes 328-54 (discussing these issues).
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Moreover, the latest value-adding
data products, once disseminated worldwide via the Internet and other
media, frequently lead to the rapid
production of new technical innovations, which result in the generation
of
more data. Electronic publishing
thus broadly advances the revolutionary process that computerization began,
and it makes both data and research
results potentially available at very low cost all over the world. n62
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n62 See, for example, Paul A. David
and Dominique Foray, Accessing and Expanding the Science and
Technology Knowledge Base, 16 Sci.,
Tech. & Ind. Rev. 3, 38-59 (OECD ed., 1995); Paul Ginsparg, Winners
and Losers in the Global Research
Village, paper presented to Conference held at UNESCO headquarters, Paris,
Feb. 19-23, 1996 (1995) ("UNESCO
Paper") (on file with the Authors). See also Cristiano Antonelli, The
Economic Theory of Information Networks,
in Cristano Antonelli, ed., The Economics of Information Networks
5-28 (Elsevier Science Publishing
Co., 1992).
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As this digital and telecommunications
revolution created vast new markets for electronic information goods
and tools, n63 it outpaced the legal
infrastructure, which remains geared to the slower-moving print media.
n64 This strain manifests itself
in two contradictory ways. Sometimes digital technology aggravates
the basic market failure characteristic
of information goods and thus deepens a chronic state of
underprotection. This occurs, for
example, when second comers download the originator's data and enter the
market with a competing product
that free-rides on the originator's investment. n65 At other times, however,
digital technology so thoroughly
overcomes the threat of market failure that it endows the initial investor
with
abnormal market power that can result
in a chronic state of overprotection. This occurs, for example, when
sole-source data providers charge
monopolistic prices or oblige libraries and research institutions to accept
terms and conditions that effectively
waive both the special privileges and the fair use exceptions set out in
the Copyright Act of 1976. n66
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n63 See, for example, Hunsuker, European
Database Directive (cited in note 60) (quoting sources that
estimate the value of the global
information industry will reach $ 3 trillion by early in the next century);
W.
Joseph Melnick, A Comparative Analysis
of Proposals for the Legal Protection of Computerized Databases:
NAFTA vs. the European Communities,
26 Case W. Res. J. Int'l L. 57, 59 n.14 (1994) (quoting sources that
estimate the E.C. database market
at $ 10.2 billion, which represented about 30% of the world market in
1994).
n64 See, for example, Intellectual
Property and the National Information Infrastructure: The Report of the
Working Group on Intellectual Property
Rights 211 (Sept. 1995) ("U.S. White Paper") (noting the difficulty in
keeping intellectual property laws
up-to-date with technology); Commission of the European Communities,
Green Paper on Copyright and the
Challenge of Technology: Copyright Issues Requiring Immediate Action COM
(88) 172 Final (June 7, 1988).
The Authors have elsewhere argued
that the legal problems presented by electronic databases are assimilable
to those of industrial designs,
computer programs, plant varieties, biogenetically engineered products,
and
numerous other forms of designdependent,
subpatentable innovations that fall into a widening penumbra
between the increasingly obsolete
patent and copyright paradigms. See Reichman, 94 Colum. L. Rev. at
2504-58 (cited in note 2) (proposing
a third intellectual property paradigm based on liability principles);
Samuelson, Davis, Kapor, and Reichman,
94 Colum. L. Rev. at 2365-2420, 2429-31 (cited in note 11)
(proposing such a regime for computer
programs).
n65 See, for example, CCC Information
Services Inc., 44 F.3d at 72 (stating that CCC took "virtually the entire
compendium" of Maclean's used car
valuations and "effectively offered to sell its customers Maclean's Red
Book through CCC's database"); Warren
Publishing, Inc., 52 F.3d at 955 (indicating that statistically,
Microdos's work contained from 96
to 99% of Warren's data on nationwide cable television services), vacated
on other grounds, 67 F.3d 276 (11th
Cir. 1995).
n66 See, for example, U.S. Congress,
Office of Technology Assessment, Finding a Balance: Computer
Software, Intellectual Property,
and the Challenge of Technological Change 166-79 (U.S. G.P.O., 1992)
(describing controversy surrounding
the conduct of software licensors in obliging libraries to abrogate "rights
described in the copyright law");
U.S. Congress, Office of Technology Assessment, Intellectual Property Rights
in an Age of Electonics and Information
163 (U.S. G.P.O., 1986) ("OTA Report"); William R. Cornish, Copyright
in Scientific Works (Scientific
Communications, Computer Software, Data Banks): An Introduction, in Max
Planck Gesellschaft, ed., European
Research Structures--Changes and Challenges: The Role and Function of
Intellectual Property Rights 50
(1994) (despite case for a measure of free reprography for purposes of
academic research, "academic institutions
are regarded as relatively soft targets by publishing interests [in
U.K.], which have looked at them
as suitable points for inserting initial wedges"). See generally Reichman,
25
Int'l Rev. Indus. Prop. & Copyright
L. at 461-68 (cited in note 44); Marshall Leaffer, Engineering Competitive
Policy and Copyright Misuse, 19
U. Dayton L. Rev. 1087, 1094 (1994) (noting the judicial criticism of some
software copyright plaintiffs for
engaging in monopolistic practices).
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
1. The Vulnerability of Publicly Distributed Electronic Databases
Only modest familiarity with the
capabilities of digital technologies is required to understand the vulnerabilities
of publicly distributed electronic
databases to market-destructive appropriations. n67 Once compilations of
data are electronically disseminated
in databases that are made available to the public, second comers
can easily and cheaply copy or manipulate
the contents of such databases and disseminate the resulting
products to large numbers of people.
n68 With access to global information networks becoming ubiquitous in
developed nations, compilers of
publicly disseminated databases face diminishing prospects for commercial
success unless they obtain the legal
or technical means to thwart egregious forms of free-riding. n69
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n67 See, for example, Final E.C.
Directive, 1996 O.J. (L 77) at 20 (cited in note 7) (describing the need
for
granting legal protection to the
makers of databases in Recitals 7-12); Information Industry Association,
Database Protection: An Industry
Perspective on the Issues (Aug. 1995) ("IIA Report").
n68 IIA Report at 3 (cited in note 67).
n69 See, for example, id. at 32.
See also U.S. White Paper at 130-54, 177-90 (cited in note 64); Paul Heald,
The Vices of Originality, 1991 Sup.
Ct. Rev. 31 (1992).
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When, moreover, second comers employ
existing technology to make different selections from, and
arrangements of, the data n70 contained
in electronically published databases, they may avoid infringing the
originator's own copyrights, if
any, and in some jurisdictions, even qualify for copyrights of their own
in the
resulting products. Second comers
can then exploit their versions in competition with the database provider
from whom they appropriated the
data. n71 Because of the widespread availability of scanning and other
conversion equipment, even print
compilations can readily be converted to electronic form and manipulated
with the same electronic information
tools. n72
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n70 See, for example, Samuelson, Davis, Kapor, and Reichman, 94 Colum. L. Rev. at 2414 (cited in note 11).
n71 See, for example, Jessica Litman,
After Feist, 17 U. Dayton L. Rev. 607, 609 (1992) ("Under the Supreme
Court's analysis [in Feist], a competitor
would be infringing no copyright if it simply stole the data and left the
base."); Pamela Samuelson, Legal
Protection for Database Contents, 39 Communications of the ACM
(forthcoming Dec. 1996).
n72 At first, the European Commission
proposed a sui generis right only for electronic databases. See
Commission of the European Communities,
Proposal for a Council Directive on the Legal Protection of
Databases, COM (92) 24 final--SYN
393, art. 1 (1992) ("First E.C. Proposal on Databases"). The Commission
did not explain why later drafts
of the database directive broadened the term "database" so that the sui
generis right would apply to print
data compilations as well as electronic databases. See E.C. Directive on
Databases, art. 1(2), 1996 O.J.
(L 77) at 24 (cited in note 7). It is reasonable to assume, however, that
the
publishing industries must have
brought scanning technologies and the like to the Commission's attention.
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To the extent that government-generated
or university-generated data remain noncommercialized, their
vulnerability to technically refined
means of accessing, downloading, or duplication may be of relatively little
importance. Presumably, the originators
want the broadest possible distribution of their data sets. Even here,
however, there are some concerns
that are likely to grow over time. For example, governments may impose
cost recovery conditions on the
use of data that third parties who obtain unauthorized access could
avoid. n73 Additionally, unauthorized
users who introduce errors into a new product could also inadvertently
corrupt the original database, perhaps
leading to liability. n74
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n73 See, for example, Executive Office
of the President, Office of Management and Budget Memorandum by
Alice M. Rivlin, Implementing the
Information Dissemination Provisions of the Paperwork Reduction Act of
1995
(Sept. 29, 1995) ("OMB Implementing
Memo"); notes 307-09 and accompanying text.
n74 See, for example, Bits of Power at ch. 3 (cited in note 32).
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Over time, moreover, the distinction
between "pure" or noncommercialized data and data applied to industrial
pursuits seems likely to break down,
as has routinely occurred in other disciplines, notably computer science
and biotechnology. n75 Universities
and other research institutions may view data compilations generated in
the course of research as potential
revenue sources, especially in an era of declining government support for
research endeavors, just as they
have done with regard to patentable inventions. n76 As more scientific
data
are commodified, the data collectors
must necessarily distinguish between sources that are made publicly
available without charge and those
that are not. n77 Otherwise, even the providers that do not charge for
data could disrupt contractually
controlled applications of their own data downstream, not to mention the
risk
that the non-charging government
or academic generator might inadvertently infringe on third parties'
proprietary domains.
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n75 See, for example, Allen Newell,
Response: The Models Are Broken! The Models Are Broken!, 47 U. Pitt. L.
Rev. 1023, 1026 (1986) (discussing
the lack of a gap between basic and applied science as regards computer
program algorithms and noting that
the patent system has traditionally rewarded only industrial applications
of
scientific discoveries). See also
Joseph Straus and Rainier Moufang, Deposit and Release of Biotechnological
Material for the Purpose of Patent
Procedure 95 (Nomos Verlagsgesellschaft, 1990) (discussing
biotechnological research and development);
Dan L. Burk, Biotechnology and Patent Law: Fitting Innovation to
the Procrustean Bed, 17 Rutgers
Comp. & Tech. L. J. 1, 33-34 (1991) (noting the difficulty in distiguishing
products from processes for patentable
biotechnological inventions).
n76 See notes 283-97 and accompanying
text (discussing hypothetical benefits to science from commodifying
data collections).
n77 See, for example, John Browning,
Cyber View: Playing Facts and Loose, Sci. American 30, 32 (June 1996)
(warning about unintended effects
of legal restrictions on searching and gathering data).
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A related trend is for some governments
around the world to commercialize their data, regardless of whether
other governments follow suit. n78
As this occurs, the former will become concerned about the vulnerability
of
their data even if the latter are
not. By the same token, the providers that still choose not to charge for
their
services will increasingly come
into contact with--and, perhaps, conflict with--the legal and technical
fences that states bent on commercializing
data may erect. As one observer put it, "the division between the
two regimes" could become "a dam
over which information will not easily flow," whereas worldwide economic
growth seems to require that "more
than perhaps any other commodity, data must be allowed to move without
barriers." n79
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n78 See Bits of Power at ch. 4 (cited in note 32) ("The Trend Toward Markets: Good or Bad for Science").
n79 Charles von Simson, Feist or
Famine: American Database Copyright as an Economic Model for the
European Union, 20 Brooklyn J. Int'l
L. 729, 768 (1994). In this context, governments that have not
commercialized data in the past
may decide to do so in order to have rights to trade when seeking access
to
data collections that are commodified
elsewhere. The asymmetry likely to occur if one government can take all
of another's data while restricting
the appropriation of its own data may give rise to data trade wars.
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To the extent that databases are
commercialized, whatever their origin, the refined digital technologies
that
enhance the compiler's power to
collect and disseminate the data contained in the database have equally
enhanced the free-riding competitor's
power to appropriate the fruits of the compiler's investment. n80 The
second comer who purchases the originator's
product, say, in the form of a CD-ROM, may electronically
extract and recompile the data in
question at a fraction of the originator's collection and distribution
costs.
The second product may then be sold
for less than the first, because its publisher has contributed nothing
directly or indirectly to the costs
of research and production. Digital technology also enables second comers
to
extract and recombine the originator's
data into value-adding products that improve on the original or that
compete in different and sometimes
distant market segments. n81 In some cases, third parties may simply
extract the compiler's data in order
to make them available over telecommunications networks, a gesture that
can destroy any residual incentives
to invest. n82
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n80 If the second comer independently
generates its own data, or combines its inputs with the first comer's
data to produce value-adding applications,
the former contributes knowledge, capital, and skilled efforts to the
data-generating communities' overall
endeavor. These second comers who do not merely duplicate or "clone"
the first comer's product are hardly
free-riders even when they do not contribute directly to the first comer's
production costs under a licensed
royalty transaction. See generally Reichman, 94 Colum. L. Rev. at 2521-23,
2535-39 (cited in note 2).
n81 See generally Samuelson, Davis,
Kapor, and Reichman, 94 Colum. L. Rev. at 2417-20 (cited in note 11)
(proposing a market-oriented legal
regime for protection of industrial designs of software).
n82 In one recent case, for example,
a database maker spent about $ 10 million to compile some ninety-five
million residential and commercial
listings from some 3,000 telephone directories. A purchaser who paid a
minimal amount for compact discs
of these listings electronically extracted the data and then made their
listing
available over the Internet. ProCD,
Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996). See also Hunsucker,
European Database Directive (cited
in note 60).
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2. Relative Invulnerability of Many Privately Controlled Electronic Databases
While none of the legislative initiatives
under review have spawned an empirical study of the economics of the
database industry, all the anecdotal
evidence--including evidence recently collected by the National Research
Council--suggests that the market
for commercially distributed databases is almost universally characterized
by a distinct absence of competition.
n83 The reasons for this phenomenon have yet to be clarified. Perhaps
the most plausible explanation is
that startup and servicing costs have typically proved so high in relation
to
the relatively small size of specialized
user markets that it has discouraged second comers from hazarding the
risks of entry. n84 Whatever the
truth of this hypothesis, once the threshold level of investment has been
crossed, the first comer tends to
take the relevant market segment as a whole. The private database industry
is thus largely characterized by
niche marketers who supply and dominate specific market segments. n85
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n83 See National Research Council, Bits of Power at ch. 4 (cited in note 32).
n84 See id.
n85 See id.
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When a database maker is the sole
source for the data in question, and substitute databases cannot readily
be compiled from public domain sources,
digital technology can greatly strengthen a supplier's already
formidable market power. By restricting
access to identifiable online subscribers, for example, and by "placing
conditions on access and [using
technology] to monitor . . . customer usage," the publisher can largely
restore
the power of the two-party contractual
deal that the advent of the printing press had appeared to destroy.
n86 In effect, publishers in this
position may not need copyright law at all, even if they qualify for protection.
They may prefer contractually to
reject the state-imposed cultural bargain n87 and override both its fair
use provisions and its specific
exemptions favoring the public interest in teaching and research. n88
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n86 Litman, 17 U. Dayton L. Rev.
at 611 (cited in note 71) ("Indeed, a large number of on-line database
. . .
publishers availed themselves of
those strategies well before the Feist decision.").
n87 See, for example, Peter A. Jaszi,
Goodbye to All That--A Reluctant (and Perhaps Premature) Adieu to a
ConstitutionallyGrounded Discourse
of Public Interest in Copyright Law, 29 Vand. J. Transnat'l L. 595, 599-600
(1996) (stressing the "economic
and cultural bargain between authors and users . . . at the heart of U.S.
copyright law, as reflected in the
Patent and Copyright Clause [of the Constitution], and a parade of Supreme
Court precedents . . . "). See also
Robert A. Kreiss, Accessibility and Commercialization in Copyright Theory,
43
UCLA L. Rev. 1, 6-22 (1995) (discussing
the incentive structure of copyright law).
n88 See notes 52-53 and accompanying
text; Reichman, 25 Intl. Rev. Ind., Prop. & Copyright. L. at 461-67
(cited in note 44) ("Public Interest
at Odds" with the "Two-Party Deal"); Jane C. Ginsburg, Copyright Without
Walls?: Speculations on Literary
Property in the Library of the Future, 42 Representations 53, 60-63 (Spring
1993). The resulting social harm
is magnified by the absence of competition.
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Moreover, electronic publishers may
have virtually no transaction cost problems to overcome because digital
technology enables them to track
and charge for every instance of electronic access, even for browsing and
scientific uses that were previously
exempt. n89 The resulting market power then allows the publisher to
impose monopoly prices and potentially
oppressive terms on users, including libraries, academies, institutes,
and research centers, and to ignore
the social consequences that ensue from the inability of research
organizations to pay for such access.
n90
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n89 Paul Goldstein, Copyright's Highway--From
Gutenberg to the Celestial Jukebox 223-24 (Hill & Wang, 1994);
Jessica Litman, The Exclusive Right
to Read, 13 Cardozo Arts & Enter. L. J. 29, 31-32 (1994) (reviewing
the
National Information Infrastructure
Task Force Draft Report and arguing that its recommendations would
enhance copyright owners' control
over uses of digitalized works).
n90 See OTA Report (cited in note
66) (stressing similar concerns); Kurtz, 18 Eur. Intell. Prop. Rev. at
124
(cited in note 58). See also notes
298-319 and accompanying text.
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Whether contractual attempts to reduce
users' access to scientific and cultural products that copyright laws
had promoted in the past will survive
legal challenges on such grounds as federal pre-emption of state law or
misuses of copyright (allied to
antitrust law) remains to be seen. n91 Equally unclear is the role that
libraries
will play once information providers
"can connect directly to the user" via digital transmission over
telecommunications networks. n92
Some observers see the changing role of libraries as grounds for allowing
publishers virtually unfettered
discretion to impose contractual conditions on libraries' access to networked
transmissions. n93 Others see the
dependence of users on digital transmissions for the future
acquisition of scientific knowledge
as grounds for generalizing some of today's library and fair use privileges
to
online users everywhere. n94 In
any event, the foregoing analysis shows that digitalized transmission of
data
over telecommunications networks
may do more than expose originators to free-riding duplication. In many
other cases, it may foster the potential
abuse of market power or the misuse of an intellectual property right.
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n91 See, for example, Kreiss, 43
UCLA L. Rev. at 32-34 (cited in note 87) (discussing the argument that
all
copyrighted works should be accessible);
Leaffer, 19 U. Dayton L. Rev. at 1106-07 (cited in note 66) (arguing
antitrust law is properly the "sole
regulator" of anti-competitive conduct in copyright cases); David A Rice,
Public Goods, Private Contract and
Public Policy: Federal Preemption of Software License Prohibitions Against
Reverse Engineering, 53 U. Pitt.
L. Rev. 543, 622-28 (1992) (considering whether preemption analysis is
affected by contract context or
relationship). See also Tritton, Intellectual Property in Europe at 411-35,
635-63 (cited in note 50). But see
17 U.S.C. <sect> 108(f)(4) (allowing contractual obligations to override
specified library privileges).
n92 Ginsburg, 42 Representations at 60 (cited in note 88).
n93 See, for example, id. at 60-63
(suggesting that publishers may condition libraries' access to digitally
delivered information on compliance
with a variety of restrictions, regardless of principles such as fair use,
and
that information providers need
not resort to libraries as conduits for digital information in the future
except,
perhaps, as a "full-service 'help-line'
"). But see Jane C. Ginsburg, Surveying the Borders of Copyright, 41 J.
Copyright Soc'y, 322, 325-26 (arguing
for some legal restraints on such contractual conditions).
n94 See, for example, Goldstein,
Celestial Jukebox at 230 (cited in note 89) ("Exemptions and compulsory
licenses for research and educational
uses recognize the transcendent claim these uses have on a copyright
system whose founding premise is
that a culture can be built only if toilers in the vineyard are free to
draw on
the works of their predecessors.");
Marci A. Hamilton, The TRIPS Agreement: Imperialistic, Outdated, and
Overprotective, 27 Vand. J. Transnat'l
L. 613, 623-33 (1996) (emphasizing the need to construct a "free-use
zone . . . in the on-line era").
For the view that developing countries should formulate tailormade doctrines
of
misuse to govern information providers'
contracts, see J.H. Reichman, From Free Riders to Fair Followers:
Global Competition Under the TRIPS
Agreement, N.Y.U. J. Int'l L. & Pol. (forthcoming 1997).
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III. The Drive for Legal Protection of Databases
The copyright laws of most developed
countries exclude functionally determined databases and do not protect
disparate data even when a given
compilation as a whole happens to satisfy the eligibility requirements
of
those laws. n95 This leaves a perceived
gap in the worldwide intellectual property system, at least to the
extent that commercial data providers
cannot rely on contracts and encryption devices to prevent the
technically refined forms of free-riding
discussed above. n96 Proposals are, therefore, being put forward to
protect noncopyrightable databases
under ad hoc or sui generis intellectual property regimes that
deviate from the classical patent
and copyright models underlying the Paris and Berne Conventions. n97 These
proposals are, in turn, logical
constituents of a larger project to create a national and global information
infrastructure that is pending at
both the domestic and international levels. n98
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n95 See notes 50-57 and accompanying
text. This principle was incorporated into the TRIPS Agreement of
1994, art. 10, in Results of the
Uruguay Round at 370-71 (cited in note 1), which requires copyright protection
when "the selection or arrangement
of . . . contents constitute intellectual creations," but stipulates that
such
protection "shall not extend to
the data or material itself." Id.
n96 The extent of the "gap" is controversial,
in part because the U.S. dominates the world market, despite its
lack of legal protection for the
contents of databases. The U.K., which is the only country in Europe that
confers full copyright protection
on virtually all databases, dominates the market in the European Union.
See,
for example, Debra B. Rosler, The
European Union's Proposed Directive for the Legal Protection of Databases:
A
New Threat to the Free Flow of Information,
10 High Tech. L. J. 105, 139 (1995) (identifying the growing
regional disparity within the European
information industry). Increasingly, moreover, "a vigorous contract
regime may afford the information
provider the incentive to seek, develop, and commercialize information
that,
under a copyright regime might not
have been worth pursuing." Ginsburg, 41 J. Copyright Soc'y at 325-26
(cited in note 93). In the absence
of empirical data to clarify the underlying economic realities the need
for
database protection remains speculative.
Compare Laurence M. Kaye, The Proposed E.U. Directive for the
Legal Protection of Databases: A
Cornerstone of the Information Society?, 12 Eur. Intell. Prop. Rev. 583
(1985) (viewing legal protection
as economically indispensible) with von Simson, 20 Brooklyn J. Int'l L.
at
767-68 (cited in note 79) (predicting
that protected database producers will lose ground on the world market
to producers operating under more
competitive conditions).
n97 See notes 5-11 and accompanying
text. For the official line of demarcation between "writings" and
"products" that underlies the Paris
and Berne Conventions, see note 1, and its gradual disintegration under
pressure from a proliferating set
of hybrid (i.e, sui generis) regimes that deviate from the patent and copyright
models, see Reichman, 13 Cardozo
Arts & Ent. L. J. at 480-551 (cited in note 3). See also Reichman,
94
Colum. L. Rev. at 2448-2519 (cited
in note 2).
n98 See notes 202-21 and accompanying text.
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The impetus for the database initiative
came from the Commission of the European Communities, whose
member states have embraced a policy
of commercializing government-generated data. n99 This policy is
diametrically opposed to the traditional
policy of the United States, which has favored free and open access
to scientific data. n100
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n99 While the Commission claims that
a key motive is the need to harmonize E.U. law, critics debunk this claim
because Article 10 of the TRIPS
Agreement partly performed this function, and because the E.C.'s database
regime, as finally adopted, actually
discourages harmonization on the crucial issue of fair use. See, for
example, Charles R. McManis, International
Intellectual Property Protection and Emerging Computer
Technology: Taking TRIPS on the
Information Superhighway, Vill. L. Rev. (forthcoming 1996). The predominant
objective, among those stated, is
to increase the share of European database producers in the world market.
See, for example, First E.C. Proposal
on Databases at 2-14 (cited in note 72) (Explanatory Memorandum
emphasizing goal of promoting E.C.
database industries). See also E.C. Directive on Databases, 1996 O.J. (L
77) at 20 (cited in note 7) (noting
in Recital 11 that "there is at present a very great imbalance in the level
of
investment in the database sector").
n100 See, for example, Bits of Power at 1 (cited in note 32). See also notes 33-36 and accompanying text.
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Starting in the 1990s, the Commission
of the European Communities began to reevaluate the legal status of
databases, especially electronic
databases, in the process of formulating an overall strategy for information
technologies known as the Information
Market Policy Action Program (IMPACT). n101 The Commission found
that European database producers
had to overcome several comparative disadvantages in order to
expand their share of the world
market and to catch up with the U.S. industry, which dominated the market
and was growing at a faster rate
than its European counterpart. To overcome these disadvantages, the
Commission stressed the need for
a single, integrated market, undistorted by differing regulatory approaches,
and for higher levels of intellectual
property protection, tailored to the needs of potential investors in database
production, which might stimulate
additional investment in this sector. n102 Another unstated premise in
the
Commission's thinking was, perhaps,
that privatizing the government's role in the collection and distribution
of
data might also generate income
streams that could help to offset the shrinking availability of public
funds for
research and development.
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n101 See, for example, Commission
of the European Communities, 1991 Report on the IMPACT Program: Main
Events and Developments in the Electronic
Information Services Market, COM (93) 156 final (1991);
Commission of the European Communities,
Working Program of the Commission in the Field of Copyright and
Neighboring Rights, COM (90) 584
final (1990); Rosler, 10 High Tech. L. J. at 105, 107, 110-13 (cited in
note
96). The IMPACT program specifically
addressed the goal of improving the position of the European Union's
member countries in the emerging
global market for information goods. Among the strategies it endorsed were
proposals to strengthen intellectual
property rights, to protect new technologies, and to stimulate both
international trade and European
economic development.
n102 See, for example, First E.C.
Proposal on Databases at 2-4 (cited in note 72); Rosler, 10 High Tech.
L. J.
at 109-10, 13339 (cited in note
96) (citing authorities). The Commission stressed the vulnerability of
database
publishers to market failure, but
devoted little or no published attention to the countervailing risk of
technologically induced overprotection.
The Commission did nonetheless attempt to avert overprotection of
database contents by a requirement
that sole-source database providers license their data on fair and
non-discriminatory terms. See First
E.C. Proposal on Databases at art. 8(1) (cited in note 72). But, this plan
was foiled by the Council of Ministers
at the last moment. See notes 133, 187-88 and accompanying text.
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The Commission decided both to harmonize
the domestic copyright laws insofar as they applied to compilations
of data and to require that the
member states also adopt sui generis intellectual property laws to protect
the
contents of noncopyrightable electronic
databases. n103 In this regard, the Nordic countries had already
experimented with short-term, copyright-like
protection of noncopyrightable compilations--known as the
Nordic "catalogue rule"--with a
view to curbing commercial piracy without extending full copyright protection
to borderline literary productions
that lacked creative authorship. n104 Accordingly, in 1992, the
Commission proposed an innovative
directive to protect such databases that was "loosely modelled on the
Nordic catalogue rule, and more
directly and strongly protects electronic information tools." n105 A greatly
amended version of this proposal
was adopted by the Council of Ministers and the European Parliament in
July
1995 n106 which, with only modest,
technical changes, took effect on March 11, 1996. n107
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n103 See E.C. Directive on Databases,
1996 O.J. (L 77) at 25-27 (cited in note 7) (arts 3-6 (copyright), 7-11
(sui generis right)). For earlier
versions, see First E.C. Proposal on Databases (cited in note 72); Commission
of
the European Communities, Amended
Proposal for a Council Directive on the Legal Protection of Databases,
COM (93) 464 final--SYN 393 (1993)
("Amended E.C. Proposal on Databases"); Common Position (E.C.) No.
20/95, adopted 10 July 1995, with
a view to adopting Directive 95/ /E.C. of the European Parliament and of
the Council of the European Union
on the Legal Protection of Databases (95/C/288/02), 1995 O.J. (C 288) 14,
14-21 ("E.C. Common Position").
n104 See, for example, Gunnar Karnell,
The Nordic Catalogue Rule, in E.J. Dommering and P.B. Hugenholtz,
eds., Protecting Works of Fact 67-72
(Kluwer Law & Taxation, 1991) (analyzing the history and scope of
protections of the Nordic Catalogue
Rule). Laws implementing this regime "prohibit slavish reproduction, in
whole or in part, of 'catalogues,
tables, and similar compilations in which a large number of particulars
have
been summarized,' including databases,
for ten years after first publication. . . . Industrious effort and
investment rather than creativity
are the prerequisites . . . ." Reichman, 94 Colum. L. Rev. at 2492-93 (cited
in note 2) (quoting Karnell, The
Nordic Catalogue Rule in Dommering & Hugenholtz eds., Protecting Works
of
Fact at 67-72 and noting pre-digital
ambiguities of this law).
n105 Reichman, 94 Colum. L. Rev.
at 2493 (cited in note 2). See also Jean Hughes and Elizabeth Weightman,
E.C. Database Protection: Fine Tuning
the Commission's Proposal, 14 Eur. Intell. Prop. Rev. 147, 148 (1992)
(indicating that the Directive goes
beyond the Nordic rule and protects against re-use of the data compiled).
n106 See generally E.C. Common Position, 1995 O.J. (C 288) at 14-29 (cited in note 103).
n107 See E.C. Directive on Databases,
1996 O.J. (L77) at 25 (cited in note 7). The Directive as finally adopted
may be subdivided into five parts:
(1) a list of sixty "Recitals" or premises that underlie this legislation;
(2) a
small group of definitional articles
that apply across the board (arts. 1-2); (3) a set of provisions regulating
the treatment of databases under
the member states' domestic copyright laws (arts. 3-6); (4) a set of
provisions requiring these same
states to provide the new, sui generis intellectual property right for
noncopyrightable databases (arts.
7-11); and (5) a final group of "common provisions" that apply to both
copyright and the sui generis laws
(arts. 12-16). The copyright provisions in the E.C. Directive on Databases
reserve full copyright protection
only for those databases in which "the selection or arrangement of . .
.
contents . . . constitutes the author's
own intellectual creation," and they forbid states to apply other
eligibility criteria, such as the
"industrious effort" (or "sweat-ofthe-brow") criterion heretofore recognized
by
courts in the United Kingdom. See
E.C. Directive on Databases, art 3(1), 1996 O.J. (L 77) at 25 (cited in
note
7). The drafters also specify that
copyright protection extends only to the author's creative selection and
arrangement, and not to the contents
of the database as such. Id. art. 3(2). These eligibility and scope of
protection clauses thus restate
familiar doctrines recognized in most domestic copyright systems (except
for
that of the United Kingdom, where
broad copyright protection of electronic databases will be cut back) and
pose fewer new questions than the
sui generis regime.
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In the following Sections, we track
the evolution of the European Database Directive ("E.C. Directive" or "Final
E.C. Directive") in considerable
detail, for two principal reasons. First, this legislative history illustrates
how a
modest, pro-competitive initial
proposal for sui generis protection has been transformed into a virtually
absolute monopoly by the backdoor
lobbying efforts of publishers and by the coordinated efforts of U.S. and
E.U. officials to propogate a protectionist
strategy for the global information infrastructure. As will become
apparent in Part IV, there was wisdom
in earlier drafts of the E.C. Directive upon which we think a better sui
generis law could be built. Second,
this legislative history also reveals how radically the world intellectual
property policymaking arena has
changed in the last several years. In this climate, it is literally possible
for an as yet unimplemented legislative
initiative of one government to become an international minimum
standard for other governments before
most people affected by it, including the scientific and educational
communities, even know that proposals
for new intellectual property rights have been put on the table.
A. The European Union's Initial Project
Collections of data, including those
relatively unstructured collections of primary interest to science, have
never fit comfortably within the
romantic notion of authorship that once dominated European copyright law
or
even within the more pragmatic conceptions
of "originality" that pervade modern copyright laws, such as that
of the United States. Behind this
conceptual resistance there lies a profound concern that facts and ideas
constitute building blocks of intellectual
discourse that should not (and some contend cannot constitutionally)
be removed from the public domain.
n108 In this context, the scientific community's own commitment to the
free and unrestricted flow of data
n109 represents an important subchapter in a larger discourse that, in
this
country, at least, is rooted in
the First Amendment. n110
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n108 See, for example, Bits of Power
at ch. 3 (cited in note 32) ("Data in science are like bricks, and the
theoretical concepts are the mortar
that connects them to give the subject its structure."). See also notes
50-55 and accompanying text.
n109 See Bits of Power at ch. 4 (cited in note 32).
n110 See notes 50-55 and accompanying
text. See also Ginsburg, 92 Colum. L. Rev. at 338 (cited in note 44);
Litman, 17 U. Dayton L. Rev. at
607 (cited in note 71); Melvin B. Nimmer and David Nimmer, 1 Nimmer on
Copyright <sect><sect> 1.10C[2]
and 1.10 D (Matthew Bender, 1996).
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With these constraints in mind, the
Commission of the European Communities pursued two objectives. One was
to harmonize the rules of the member
states with regard to copyrightable databases. The other was to fill a
perceived gap in existing intellectual
property regimes with regard to electronic compilations of data, which
appeared particularly vulnerable
to market-destructive appropriations.
1. The Copyright Provisions
The copyright provisions in the E.C.
Directive are, at first glance, less remarkable than the sui generis regime
that it attempts to introduce for
the first time. The most obvious change was the adoption of an "intellectual
creation" standard for copyrightable
databases marketed anywhere within the European Union, and
rejection of the United Kingdom's
"sweat of the brow" standard of eligibility for future databases. n111
But the
E.C. Directive's copyright component
also extended database authors' exclusive rights to encompass
temporary reproductions, online
transmissions, and certain other uses, while later drafts authorized member
states to adopt some restrictions
on the scope of these exclusive rights. n112 A closer look at this last
provision suggests that its real
intent was to limit the power of member states to apply, let alone extend,
traditional copyright exceptions,
including exceptions for private or research uses, n113 on which the scientific
and educational communities have
long relied. n114
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n111 See E.C. Directive on Databases,
art. 3(1), 1996 O.J. (L77) at 25 (cited in note 7). See note 48 above
concerning the U.K. standard. In
the final E.C. Directive on Databases, the copyright owner's exclusive
rights
are broadened to include "temporary
or permanent reproduction by any means and in any form, in whole or in
part" as well as "any communication,
display or performance to the public" either of the original database or
of
"the results of . . . any translation,
adaption, arrangement and any other alteration." See E.C. Directive on
Databases, art. 5(a), (b), (d),
(e), 1996 O.J. (L 77) at 25 (cited in note 7).
n112 For restrictions on the scope of protection, see id. art. 6(2).
n113 The Directive, authorizes member
states to exempt "reproduction for private purposes of a
non-electronic database." Id. art.
6(2)(a). This would seem to mean that this same exemption does not apply
to electronic databases, even though
academic institutions and research organizations have long taken it for
granted with respect to print media.
To be sure, a "lawful user of a database" (i.e., a subscriber, licensee
or
purchaser of a CD-ROM) will "not
require the authorization of the author" for acts inherently "necessary
for the
purposes of access to the contents
of the database and normal use of the contents." Id. art. 6(1). Moreover,
private use via networked transmissions
constitutes the primary market for any electronic databases, whether
or not copyrightable. Yet, the absence
of any "private use" exception for electronic databases covered by
copyright laws, however logical,
makes other exceptions for teaching and research activities correspondingly
more important. The Directive expressly
confines these to "use for the sole purpose of illustration for teaching
or scientific research . . . to
the extent justified by the noncommercial purpose to be achieved." Id.
art. 6(3).
Lest there be any doubts about the
drafters' true intentions, the Directive expressly denies states the right
to
derogate from this provision when
implementing "other exceptions to copyright which are traditionally
authorized under national laws."
Id. art. 6(2)(d). It then ups the ante by paraphrasing the Berne Convention's
own strictures against so-called
public-interest exceptions that unreasonably prejudice the rightholder's
legitimate interests or that conflict
with a normal exploitation of the database. Id. art. 6(3).
n114 The advent of a number of new
technologies, including photocopying machines, computer programs, and
optical scanners, have unsettled
the public policy limitations on copyrights, such as the fair use doctrine,
in
recent years. See generally American
Geophysical Union v. Texaco, Inc., 60 F.3d 913 (2d Cir. 1995) (holding
that systematic photocopying of
articles for commercial research purposes infringed copyright); Sega
Enterprises Ltd. v. Accolade, Inc.,
977 F.2d 1510 (9th Cir. 1992); Pamela Samuelson, Fair Use for Computer
Programs and Other Copyrightable
Works in Digital Form: The Implications of Sony, Galoob, and Sega, 1 J.
Intell. Prop. L. 49 (1993). These
technologies enable copies for private research uses to displace commercial
markets. See, for example, Goldstein,
Celestial Jukebox at 129-30 (cited in note 89) ("The risk has grown that
'private' copies will displace the
retail sales and rentals of the authorized originals from which publishers,
record
companies, and motion picture producers
earn their revenues."). The extent to which private photocopying of
journals for research purposes without
compensation remains a fair use, however, is controversial from a global
perspective. See, for example, Cornish,
Copyright in Scientific Works, in Gesellschaft, ed., European Research
Structures at 47-50 (cited in note
66) (stressing that academics "who are also authors, find their interests
. .
. and . . . judgment . . . pulled
in two directions on these issues" and no settled solution has emerged);
Jane
C. Ginsburg, Reproductions of Protected
Works for University Research or Teaching, 39 J. Copyright Soc'y 181,
188-89, 192-211 (1992) (discussing
legal license regimes and collection societies). But see L. Ray Patterson
&
Stanley W. Lindberg, The Nature
of Copyright: A Law of User's Rights 191-96 (U. Georgia, 1991) (arguing
that
private use for nonprofit purposes
is always allowed).
Digital technologies may make it
possible to overcome most of the transaction cost problems that have lately
been used to justify application
of the fair use exception in practice. See, for example, Wendy J. Gordon,
Fair
Use as Market Failure: A Structural
and Economic Analysis of the Betamax Case and Its Predecessors, 82
Colum. L. Rev. 1600 (1982); Goldstein,
Celestial Jukebox at 16 (cited in note 89) (evaluating public and private
benefits test of fair use in terms
of transaction costs). See also id. at 223-24, 230 (while "celestial jukebox
may reduce transaction costs" and
lessen "perceived need for a safety valve such as fair use," the enduring
importance of "exemptions or compulsory
licenses for educational and research uses" remains clear).
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While the precise mesh of these provisions
in administrative and judicial practice remains to be seen, the
drafter's protectionist thrust is
unmistakable. Prior to the E.C. Directive, the broad exemptions and immunities
afforded copies made for teaching
and research activities under most domestic copyright laws were engrafted
onto the Berne Convention's exclusive
reproduction right and, within limits, appeared to lie outside the normal
range of exploitative activities
reserved to authors. n115 A separate provision in Article 10(2) of the
Berne
Convention then authorized certain
other uses of works "by way of illustration for teaching," such as
face-to-face teaching activities
and educational broadcasts, which did not apply to "mere scientific research."
n116 These uses were roughly analogous
to "annotations," which are permitted by article 10(1) of the Berne
Convention. n117
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n115 Under the relevant provisions
of the Berne Convention, an author's exclusive reproduction right (as set
out in Article 9(1)) is subordinated
to domestic legislation "permitting the reproduction of such works in certain
special cases" (by dint of Article
9(2)). The Article 9(2) exceptions should not, in principle, conflict with
"normal exploitation" or "unreasonably
prejudice the legitimate interests of the author" (as also required by
Article 9(2)). See Berne Convention,
arts. 9(1), (2) (cited in note 1). See also World Intellectual Property
Organization Guide to the Berne
Convention 56-57 (1978) ("WIPO Guide") (suggesting a system of compulsory
licensing with equitable remuneration
when "fair uses" unduly harm the copyright owner; and stressing freedom
of each country to provide for educational,
cultural, social, and economic needs.)
n116 See Berne Convention, art. 10(2) (cited in note 1); WIPO Guide at 60 (cited in note 115).
n117 See Berne Convention, art. 10(1) (cited in note 1).
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In contrast, the copyright provisions
of the E.C. Directive seem to recognize "illustration for teaching or
scientific research" as the "sole
purpose" for which the educational and scientific communities may invoke
"fair
use." n118 In other words, the E.C.
Directive expands the limited exception for annotations and
educational performances, drawn
from Article 10(2) of the Berne Convention, to scientific research. n119
It
then avoids any general fair use
provision, analogous to Article 9(2), which applied to copies "for personal
or
scientific use," n120 and which,
in the context of databases, should permit scientific use of the content,
without permission and on favorable
terms. n121 On the contrary, the Directive also implies that any other
claim of fair use by these communities
would inherently "prejudice . . . the rightholder's legitimate interests
or
conflict with normal exploitation
of the database." n122
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n118 See E.C. Directive on Databases,
arts. 6(2)(b), (d), 6(3), 1996 O.J. (L 77) at 25 (cited in note 7). Article
6(2)(d) allows states to make "other
exceptions to copyright which are traditionally authorized under national
law . . . without prejudice to points
(a), (b), and (c)." Id.
n119 Berne Convention, art. 10(2)
(cited in note 1) (permitting "quotations" and other uses of literary and
artistic works "by way of illustration
in publications, broadcasts or sound or visual recordings for teaching,
provided such utilization is compatible
with fair practice.")
n120 WIPO Guide at 56 (cited in note 115).
n121 The drafters of the Directive
have thus singled out one of the numerous exceptions recognized by the
Berne Convention (whose language
was narrowly drawn lest it overshadow the others) and converted it into
the sole exception allowed for science
and education under the Directive's copyright provisions. The same
procedure will then be caried over
to the sui generis regime. See notes 170-179 and accompanying text.
n122 See note 118.
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The inescapable conclusion is that,
in the drafters' minds, these provisions should narrow the educational
and
scientific communities' ability
to invoke "fair use" with respect to copyrightable databases under prior
law. In
this and other respects, the E.C.
Directive's copyright provisions are thus the first concrete measures in
a
larger project for the recasting
of copyright law as applied to transmissions over networked systems of
telecommunications n123 that would
greatly reduce the pre-existing public interest exceptions of particular
interest to the educational and
scientific communities. n124
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n123 In effect, these provisions
implement, with respect to eligible databases, the Commission's pending
and
highly protectionist approach to
online transmissions of copyrightable works in general, which are on the
agenda for a diplomatic conference,
hosted by the World Intellectual Property Organization (WIPO), scheduled
for December 1996. See text accompanying
notes 209-14. With due regard for differences in legal technique,
they also reflect the goals expressed
in the Information Infrastructure Task Force's White Paper on the
National Information Infrastructure
and in the pending amendments to United States copyright law that it has
inspired. See note 64.
n124 The appropriateness of the copyright
law's traditional "economic and cultural bargain," see notes 50-55
and accompanying text, for the digital
environment has been called into question, given that publishers in this
medium can electronically monitor
and track most uses without high transaction costs. See, for example, U.S.
White Paper at 82 (cited in note
64). See also American Geophysical Union v. Texaco, Inc., 37 F.3d 92 (2d
Cir.
1994) (finding that the availability
of a licensing scheme affected the fair use determination). Trade-driven
economic policies have further weakened
the consensus on which that cultural bargain previously depended.
See Jaszi, 29 Vand. J. Transnat'l
L. at 599 (cited in note 87) (criticizing replacements of "cultural bargain"
theory of copyright law with new,
trade-driven goal, which seeks to "enhance . . . the wealth and overall
financial well-being of companies
which invest in the production of and distribution of copyrighted works").
See
also David Nimmer, The End of Copyright,
49 Vand. L. Rev. 1385 (1995).
The U.S. Register of Copyright may
be right in observing that "license or access fee structures may be
developed that will take into account
the proportion of total uses that qualify as fair use . . . and certain
acts
of decryption may be excused if
the ultimate purpose is to make fair use of the work." Marybeth Peters,
The
National Information Infrastructure:
A Copyright Office Perspective, 20 Colum.-VLA J. L. & Arts 341, 354
(1996). But the impetus to enter
voluntary agreements that provide preferential treatment to certain users
depends in part on the legal constraints
otherwise applicable as baseline rules. If these rules tend to create or
reinforce powerful monopolies, there
is little reason to expect that "consumers will be charged lower prices
in
exchange for giving up fair use,
first sale, and other rights" or that the grant of strong copyright protection
for
digital works will ensure that the
scientific and educational communities can access digital works at affordable
rates. See, for example, Hamilton,
27 Vand. J. Transnat'l. L. at 628-29 (cited in note 94) (stressing need
to
recreate cyberspace parallels to
fair use lest "the limited monopoly currently afforded copyright owners
. . .
become an 'absolute monopoly' over
the distribution of and access to copyrighted information once such
information is routinely transmitted
online") (quoting Association of Research Libraries, Intellectual Property:
An
Association of Research Libraries
Statement of Principles 1 (May 1994)); Pamela Samuelson, Copyright Grab,
Wired 4.01 at 134, 191 (Jan. 1996).
See also Kurtz, 18 Eur. Intell. Prop. Rev. at 134 (cited in note 58). From
this perspective, the single most
troubling aspect of the White Paper (and the legislative proposals it has
spawned) is that so many qualified
observers reach the conclusion that it favors "reducing the application
and
scope of the fair use doctrine in
cyberspace." McManis, International Intellectual Property Protection (cited
in
note 99) (citing authorities).
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2. The Sui Generis Provisions
Having resolved these copyright issues
more or less to their satisfaction, the Commission initially approached
the database industry's demands
for sui generis legal incentives with commendable caution. It did not,
for
example, uncritically propose yet
another hybrid exclusive property right based on modified patent and
copyright principles, like those
that have increasingly challenged both classical intellectual property
theory and
the competitive ethos from which
it arose. n125 Rather, the Commission affirmed its preference for a regime
based on modified liability principles--one
that would deter certain types of socially undesirable conduct
without vesting exclusive property
rights in data as such. n126 Unfortunately, even the Commission's
earliest proposals along these lines
were flawed by contradictory elements drawn from the exclusive rights
model, n127 while overwhelming lobbying
pressures converted the final version into one of the least balanced
and most potentially anti-competitive
intellectual property rights ever created.
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n125 See generally Reichman, 13 Cardozo
Arts & Enter. L. J. at 512-17 (cited in note 3). See also John H.
Barton, Adapting the Intellectual
Property System to New Technologies, in Mitchel B. Wallerstein, Mary Ellen
Mogee, and Robert A. Schoen, eds.,
The Global Dimensions of Intellectual Property Rights in Science and
Technology 249 (National Academy
Press, 1993) (evaluating more positively the emergence of hybrid
intellectual property rights).
n126 See First E.C. Proposal on Databases
at arts. 1(1), 2(5) (cited in note 72); Commission of the European
Communities, Explanatory Memorandum
to the Proposal for a Council Directive on the Legal Protection of
Databases, COM (92) 24 final--SYN
393 21-22, 25, 35, 41 (1992); Amended E.C. Directive on Databases at
arts. 2.2, 6 (cited in note 103)
(all stressing the goal of protecting the compiler's industrious effort
and
investment against parasitic appropriation
by competitors). A true liability regime aims primarily to restore and
preserve the bases for healthy competition
by discouraging certain market-distorting forms of conduct that
prevent innovators from appropriating
the fruits of their investment. See, for example, Reichman, 94 Colum.
L. Rev. at 2434-42, 2495-96, 2504-558
(cited in note 2); text accompanying notes 431-50.
n127 For example, the definition
of "in substantial part" in early drafts of the E.C. Directive on Databases
was
heavily reliant on the exclusive
rights concepts of copyright law. See First E.C. Proposal on Databases
at art.
1(3) (cited in note 72); Amended
Proposal on Databases at art. 11(8) (cited in note 103). See also note
130.
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The Commission's initial approach
was premised on the absence of a harmonized system of unfair competition
legislation to safeguard "the investment
of considerable human, technical and financial resources" in the
making of databases that "can be
copied or accessed at a fraction of the cost needed to design them
independently." n128 The logical
solution was, therefore, to codify a new type of unfair competition law.
Such
a law, loosely modelled on existing
laws that protected trade secrets or confidential information, would repress
conduct amounting to the "misappropriation"
of an electronic database producer's investment without imposing
either legal barriers to entry or
the social costs of actual or legal secrecy. n129 To this end, the Commission
proposed simply to forbid the "unfair
extraction" of data from an electronic database for commercial purposes
without the second comer's having
expended independent effort to collect and verify similar information.
The
first proposed draft E.C. Directive
accordingly provided a ten-year period of lead time in which the database
maker could recoup his or her investment
in a noncopyrightable electronic database while preventing copiers
from engaging in for-profit extraction
or reutilization of the factual contents, in whole or in substantial part.
n130
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n128 First E.C. Proposal on Databases (recitals 5-6) (cited in note 72).
n129 Compare Restatement (Third)
of Unfair Competition at <sect><sect> 39-45 (cited in note 38) (restating
the norms of trade secrecy law);
Gordon, 78 Va. L. Rev. at 221-24 (cited in note 44) (proposing the tort
of
"malcompetitive copying").
n130 See First E.C. Proposal on Databases
at arts. 1(1), 2(5), 9(3) (cited in note 72). Technically, the right
arose with the creation of the database
and lapsed ten (now fifteen) years from the date it was first lawfully
made available to the public. The
provision forbidding unauthorized reuse of the compiler's factual contents
closed a gap in the Nordic catalogue
rules, which case law had not yet resolved. See notes 104-105 and text
accompanying. Already at this first
draft stage, however, the language chosen to implement the Commission's
"unfair competition" approach was
contradicted by other language describing the database maker's "exclusive
right to prevent unauthorized extraction
and reutilization" of contents.
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The Commission's "unfair extraction"
criterion seemed to invite case-by-case judicial distinctions between
pro-competitive activities, especially
independent investment in the generation of a competing electronic
database (which was roughly analogous
to reverse engineering by honest means), and market distorting forms
of electronic copying (which were
roughly comparable to industrial espionage, commercial bribery, and other
types of "parasitical" or free-riding
behavior that unfair competition laws interdict). It may also have opened
the door to case-by-case judicial
evaluation of unauthorized extractions deemed "fair" because they advanced
non-commercial educational and scientific
pursuits, although neither the draft E.C. Directive nor the
Commission's Explanatory Memorandum
about it specifically endorsed this proposition. In any event, the
drafters further diluted the database
maker's new right against "unfair extraction" by engrafting some express
user's rights upon it and by adopting
explicit measures to safeguard the public interest in free competition.
For example, the drafters apparently
envisioned that lawful users of an electronic database could make a
limited reuse of its contents even
for some commercial purposes, as might occur in value-adding uses. n131
There was also no clear means for
database creators to extend control over the initial compilation by making
subsequent changes to it, although
the extent to which this omission resulted from a drafting oversight
remains unclear. n132 Above all,
price competition was directly encouraged. Second comers could choose
between independently compiling
their own databases from scratch or invoking a statutory compulsory license
against any sole-source provider
of data in electronic databases, with a view to competing against that
provider while paying reasonable
royalties for the use of the extracted data. n133
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n131 See First E.C. Proposal on Databases at art. <sect> 8(4) (cited in note 72).
n132 For the possibility of perpetual
protection introduced in later versions, see notes 147-48 and
accompanying text.
n133 See First E.C. Proposal on Databases
at art. 8(1), (2) (cited in note 72). See also Amended E.C. Proposal
on Databases at art. 11(1), (2)
(cited in note 103).
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Of course, if multiple data providers
serviced a given market segment, the draft E.C. Directive's
pro-competitive thrust was satisfied
without recourse to a compulsory license. The opportunity to choose
among providers, however, seems
rarely to occur in practice because the bulk of all electronic compilations
of
data reportedly emanates from sole-source
providers, and this "niche" marketing appears characteristic of both
the private and public sectors.
n134 In all such cases, the compulsory license would lie, and
originators, including public bodies
benefitting from a natural monopoly, would be obliged to grant licenses
for
commercial reexploitation of the
data in question on fair and nondiscriminatory terms. n135 The liability
principles loosely embodied in the
first draft of the E.C. Directive thus created no legal barriers to entry.
Arguably these principles may even
have lessened existing economic barriers to entry by empowering would-be
competitors to borrow data at reasonable
rates when the cost of independently regenerating them appeared
too costly or otherwise inefficient
as a business strategy. n136
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n134 See notes 83-94 and accompanying text.
n135 First E.C. Proposal on Databases at art. 8(1), 8(2) (cited in note 72).
n136 In this respect, the early draft
seems to have anticipated some of the findings concerning the
pro-competitive characteristics
of liability-based intellectual property regimes that legal theory was
investigating at about the same
period of time. See, for example, Samuelson, Davis, Kapor, and Reichman,
94
Colum. L. Rev. at 2308 (cited in
note 11) (proposing a market-oriented approach); Reichman, 94 Colum. L.
Rev. at 2432 (cited in note 2) (discussing
pro-competitive characteristics of liability based regimes).
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Absent from this framework, however,
were any explicit exceptions favoring educational and scientific users,
assuming these were not implicitly
"fair" uses under the basic "unfair extraction" criterion of the draft
E.C.
Directive, an omission that the
European Parliament singled out for criticism. Although the legislative
history
does not explain why the drafters
ultimately rejected this criticism, n137 a reasonable inference from all
the
evidence is that the Commission
believed further exceptions and immunities would unduly weaken database
publishers' incentives to invest
under a regime that already implemented a procompetitive strategy. If so,
the
Commission erred in at least two
respects.
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n137 See Commission of the European
Communities, Amended Proposal for a Council Directive on the Legal
Protection of Databases, COM (93)
464 final--SYN 393 4 (1993) ("Second Explanatory Memorandum")
(declining to accept parliamentary
request for special exemptions in favor of education and research).
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First, the Commission seems to have
assumed that a more competitive market would intrinsically satisfy the
needs of the scientific and educational
communities. A National Research Council Report shows, however, that
basic science has organizational
and operational needs that often differ from those a competitive market
is
geared to meet. n138 Experience
demonstrates, indeed, that basic science may not be able to pay the market
rate for data even when it is competitively
determined. Important research projects may consequently
languish for lack of affordable
data unless non-market mechanisms (such as subsidies) or legal
constraints on publishers (such
as fair use exceptions) close the gap. n139
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n138 See Bits of Power at ch. 4 (cited in note 32).
n139 Id. See notes 301-15 and accompanying text.
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Second, the drafters optimistically
assumed that their concern for the public interest in free competition
was
still a paramount legislative value
in developed market economies. They thus underestimated the ability of
powerful lobbies, working largely
behind closed doors, to convert their rudimentary liability framework into
a
potent exclusive property right
from which their preferred public interest safeguards would be totally
excised.
B. The European Union's Final Product
The European Commission's ingenious
project had already suffered considerable erosion by the time the
Amended Proposals were put forward
in 1993. n140 The project's conversion from a relatively weak liability
regime to a strong exclusive property
right, however, occurred during the closed proceedings of the European
Council of Ministers, which produced
the Common Position of July 10, 1995. n141 This version, with minor
technical alterations, became the
final E.C. Directive on Databases, adopted on March 11, 1996, which the
European Union member states must
promptly convert into domestic intellectual property laws and regulations.
n142
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n140 For example, the Amended Proposal
seemed to grant the same exclusive rights to makers of
noncopyrightable databases as those
granted to copyrightable databases. See Amended E.C. Proposal on
Databases (cited in note 103); Reichman,
94 Colum. L. Rev. at 2494-98 (cited in note 2) (analyzing and
criticizing these proposals).
n141 See E.C. Common Position, 1995
O.J. (C 288) (cited in note 103). See also Kaye, 12 Eur. Intell. Prop.
Rev. at 583 (cited in note 96) (approving
this version); Hunsuker, European Database Directive (cited in note
60) (approving this version).
n142 See E.C. Directive on Databases,
arts. 7(1), 1996 O.J. (L 77) at 25 (cited in note 7) ("Member States
shall provide for a right for the
maker of a database . . ."); id. art. 16(1), 1996 O.J. (L 77) at 27 (requiring
Member States "to comply with this
Directive before 1 January 1998").
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1. Abolishing the Public Domain
As finally enacted, the sui generis
right conferred on qualifying database makers is no longer couched in terms
of "unfair" or even "unauthorized"
acts or uses. n143 Rather, the database maker obtains an exclusive "right
to
prevent extraction and/or reutilization
of the whole or of a substantial part, evaluated qualitatively and/or
quantitatively, of the contents
of that database." n144 This two-pronged exclusive right, which now
applies to both electronic and nonelectronic
databases, n145 lasts for an initial period of at least fifteen years.
Any compiler who makes a database
available to the public, however, may continually renew that right for
additional fifteen-year terms if
the compiler has made additional investments in the database. n146
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n143 See notes 129-30 and accompanying text.
n144 E.C. Directive on Databases,
art. 7(1), 1996 O.J. (L 77) at 25 (cited in note 7). As compared to earlier
drafts, the Final E.C. Directive
seems to strengthen publisher rights by omitting two provisions that were
present in earlier drafts: one that
would have permitted brief quotations from database contents, and another
that would have allowed database
makers to include in their databases biographical references, abstracts,
or
brief quotations from another database
without permission. See First E.C. Proposal on Databases at art. 4(1),
7(1), 1996 O.J. (L 77) at 25-26
(cited in note 72); Amended E.C. Proposal on Databases at art. 4(2), 7(1)
(cited in note 103). Also seeming
to strengthen publisher rights in databases is a recital in the Final E.C.
Directive indicating that users
who obtain database contents by online transmission will not have acquired
a
copy in which rights of the database
owner would be exhausted. Final E.C. Directive on Databases, 1996 O.J.
(L 77) at 23 (cited in note 7) (Recital
43).
n145 See E.C. Directive on Databases
at art. 1(1), 1996 O.J. (L77) at 24 (cited in note 7) ("This Directive
concerns the legal protection of
databases in any form."). Both the First E.C. Proposal on Databases, art.
1(1)
(cited in note 72) and Amended E.C.
Proposal on Databases at art. 1(1) (cited in note 103) covered only
electronic databases. The Common
Position found this distinction unworkable, and could not justify differing
levels of protection on this basis.
See, for example, Hunsuker, European Database Directive (cited in note
60)
(citing authorities and adding that
"today's high speed scanners and optical character recognition software
make electronic conversion of non-electronic
databases almost as easy as electronic conversion of electronic
databases").
n146 See E.C. Directive on Databases,
art. 7(1), 1996 O.J. (L 77) at 25 (cited in note 7) (providing initial
fifteen-year term from date of completion),
art. 7(2), 1996 O.J. (L 77) at 26 (extending protection for an
additional fifteen years if the
database "is made available to the public in whatever manner" before expiration
of the initial term), and art. 7(3),
1996 O.J. (L 77) at 26 (allowing fifteen-year renewals for "any substantial
change, evaluated qualitatively
or quantitatively, to the contents of a database . . . from the accumulation
of
successive additions, deletions
or alterations, which . . . result in . . . a substantial new investment").
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The Final E.C. Directive does not
condition sui generis protection on any showing of a creative achievement
or
of a novel contribution to the prior
art, the classical bases for justifying legal derogation from free competition.
Rather, it merely requires the database
maker to prove that "there has been qualitatively and/or quantitatively
a substantial investment in either
the obtaining, verification or presentation of the contents" or in "any
substantial change resulting from
the accumulation of successive additions, deletions or alterations." n147
Because the E.C. Directive itself
provides no further guidelines for evaluating the requisite level of investment
in either case, this threshold will
remain uncertain, pending decisions by European courts applying the still
to
be drafted domestic database laws.
Nevertheless, there are no limits to the number of quantitative or
qualitative changes that will qualify
for such extensions, and any publisher who continues to make a
substantial investment in updating,
improving, or expanding an existing database can look forward to perpetual
protection. n148
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n147 See id. at art. 7.
n148 The current quest for perpetual
protection has an historical antecedent in the crown privileges and guild
monopolies of the medieval period.
Prior to enactment of the first modern copyright statute in the United
Kingdom, members of the Stationers'
Company recognized copyrights in publishers, not in authors. These rights
were said to be necessary to protect
publisher investments. See, for example, Mark Rose, Authors and
Owners: The Invention of Copyright
12 (Harvard U., 1993). During this period, publishers also claimed perpetual
exclusive copyrights in works printed
by them. Id. at 4. The E.C. Directive, like the Stationers' copyright,
recognizes rights in publishers,
and its broadened renewal-of-term provisions in the final version of the
European Directive may have the
effect of providing database owners with virtually perpetual rights to
the
data in their databases. See also
Clark, The Copyright Environment for the Publisher in the Digital World
at 5
(cited in note 10) (stressing importance
of a publishers' right as such).
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Although the sui generis right depends
on mere investment rather than on some palpable creative contribution,
the scope of protection that the
Final E.C. Directive affords investors in noncopyrightable databases now
appears roughly equivalent to that
afforded authors of copyrightable compilations. n149 This conclusion
follows from both the definitions
of the exclusive rights set out in the E.C. Directive itself and from the
Council
of Ministers' closed-door decision
to delete the initial proposal's compulsory license requirement for sole-source
providers from the Common Position
formulated in 1995. n150
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n149 See E.C. Directive on Databases,
arts. 3 and 5, 1996 O.J. (L 77) at 25 (cited in note 7). See also notes
118-24 and accompanying text (noting
that such protection is greater than that traditionally afforded to
authors.)
n150 See E.C. Common Position, arts. 8-9, 16(3), 1995 O.J. (C 288) at 20, 22 (cited in note 103).
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As defined in Article 7(2) of the
Final E.C. Directive, the investor's sui generis "extraction right" covers
even
temporary transfers to online receivers,
much like the author's broadened reproduction rights in copyright law
under Article 5(a). n151 The investor's
"reutilization right" covers online use or transmissions of data, including
those in value-adding or derivative
formats, much like the author's broadened "communications" rights under
article 5 (b), (d), and (e). n152
In this and other respects, including the omission of any requirement
for compulsory licenses against
sole source providers, n153 the drafters of the Final E.C. Directive have
integrated its sui generis regime
into the broader regulatory framework for national and international
information infrastructures that
the E.U. and U.S. intellectual property authorities are now jointly promoting.
n154
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n151 Compare E.C. Directive on Databases
at art. 7(2)(a), 1996 O.J. (L 77) at 26 (cited in note 7) (defining
"extraction" to mean "the permanent
or temporary transfer of all or a substantial part of the contents of a
database to another medium by any
means or in any form") with id. art. 5(a) (discussed in note 111 and
accompanying text).
n152 Compare id. art. 7(2)(b) at
26 (defining "re-utilization" as "any form of making available to the public
all
or a substantial part of the contents
of a database by the distribution of copies, by renting, by online or other
forms of transmission") with id.
arts. 5(b), (d), (e) at 25 (discussed in notes 111-12 and accompanying
text)
(discussing author's right to alter
or display to the public a copyrightable database). A database embodied
in a
hard copy and sold as such remains
subject to the first-sale doctrine even under the sui generis right. This
means that the database maker cannot
"control resale of that copy [by the vendee] within the Community."
Id., art. 7(2)(b) at 26. Moreover,
public lending of such a copy, say, by a library, "is not an act of extraction
or re-utilization." Id.
n153 A two-pronged strategy by lobbyists
opposed to the compulsory license provisions of the first two drafts
of the Directive may have succeeded
in wooing the Commission away from the automatic license provision.
One prong relied on the European
Court of Justice's recent decision in Radio Telefis Eireann v. Commission
of
the European Communities, 1 C.E.C.
400 (1995) (widely known as the Magill decision), which illustrated the
use of competition law to deal with
the abuse of a dominant position when a sole source provider of
information refused to license a
competitor. In Magill, the Court affirmed the Commission's finding of abuse
because the owner of a U.K. copyright
in television program listings refused to license the listings to a firm
that wished to publish a weekly
guide for television viewers. See, for example, Tritton, Intellectual Property
in
Europe at 638-48 (cited in note
50) (stressing that refusal to permit independent compilations by willing
third
parties transformed qualified monopoly
of copyright law to abusive, absolute monopoly). See also Sasha
Haines, Copyright Takes a Dominant
Position, 16 Eur. Intell. Prop. Rev. 401, 401 (1994) (noting that publishers
who claimed that the refusal to
license in Magill was not abusive ironically used Magill to argue no compulsory
license was needed even in the case
of sole-source providers). The other prong was to argue for a
several-year test period during
which compulsory licenses would not be available so that the Commission
could
gather evidence about licensing
practices to determine if there were sufficient abuses to warrant reintroducing
compulsory license provisions. See
E.C. Directive on Databases, art. 16 (3), 1996 O.J. (L 77) at 27 (cited
in
note 7).
n154 See note 7 and accompanying
text (citing 1996 WIPO documents favoring both an international database
regime similar to that proposed
by the U.S. and international copyright reforms concerning online transmissions
similar to that proposed by the
E.U.).
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On closer inspection, indeed, the
investor's scope of protection under the hybrid extraction right appears
paradoxically to exceed even that
afforded authors of traditional literary and artistic works under the classical
copyright paradigm of the Berne
Convention n155 in at least three important respects. First, it ignores
the
important distinction that copyright
law makes between "ideas" (a legal metaphor for the noncopyrightable
components of protected works, including
among other things, the facts or data they contain) and the
author's "expression" (a legal metaphor
for the protectable elements of style in an otherwise eligible work).
n156 The TRIPS Agreement makes this
distinction universally applicable to all copyrightable works,
including such borderline works as computer programs and factual compilations.
n157 Yet, the database law contains no such distinction. This means that,
in the universe of data generators, there is no evolving public domain
substratum from which either research workers or second comers are progressively
entitled to withdraw previously generated data n158 without seeking licenses
that may or may not be granted.
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n155 See, for example, Reichman,
13 Cardozo Arts & Ent. L. J. at 485-86, 492-96 (cited in note 3)
(summarizing the changes in copyright
protection of literary and artistic works since the 19th century with an
emphasis on the economic effects).
See also Sam Ricketson, The Berne Convention for the Protection of
Literary and Artistic Works 1886-1986
at 231-32 (Queen Mary College, 1987).
n156 See 17 U.S.C. <sect> 102(b). See also note 51 and accompanying text.
n157 See TRIPS Agreement, arts. 9(2),
10(1), in Results of the Uruguay Round at 370 (cited in note 1); J.H.
Reichman, The Know-How Gap in the
TRIPS Agreement: Why Software Fared Badly, and What Are the
Solutions?, 17 Hastings Comm. &
Enter. L. J. 763, 773-84 (1995) (discussing the effects of the Berne
Convention and the TRIPS agreement
on the copyright protection of computer software).
n158 See Jaszi, 29 Vand. J. Transnat'l
L. at 596 (cited in note 87) (expressing concern about lack of attention
to the public domain in current
copyright policy intiatives); Jessica Litman, The Public Domain, 39 Emory
L. J.
965, 967 (1990) (arguing that the
public domain has been undervalued in recent copyright case law); David
L.
Lange, Recognizing the Public Domain,
44 Law & Contemp. Probs. 147, 171-73 (1981) (arguing that the public
domain has been undervalued in recent
trademark and unfair competition case law).
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On the contrary, every independent
generation of data, however mundane or commonplace, will obtain
protection if it costs money, and
every regeneration or reutilization of the same data in updates, additions,
and extensions that cost money will
extend that protection without limit as to time. n159 As a consequence,
third parties can rarely avoid the
expense of regenerating preexisting data--in the way that they could always
use previously generated ideas,
however much it cost to develop them--unless the originator of the relevant
database has abandoned it or declined
to exercise his or her proprietary rights, much as occurs under
trademark laws. n160 To be sure,
data providers, including members of the scientific community, could decide
not to exercise proprietary rights
in certain databases, for example, those funded by government agencies.
This would not, however, change
the legal situation with respect to scientifically important data located
in
privately owned databases or in
those funded by public agencies, especially foreign agencies, that had
opted
to commercialize their data. n161
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n159 See notes 147-48 and accompanying text.
n160 See Lanham Trademark Act, 15
U.S.C. <sect><sect> 1052, 1059 (1994 ed.) (setting forth requirements
for registration of trademarks and
renewal of registration). However, there is an infinite array of trademarks,
and the use of marks to distinguish
quality producers inherently promotes competition without creating legal
barriers to entry. See generally
William M. Landes and Richard A. Posner, Trademark Law: An Economic
Perspective, 30 J. L. & Econ.
265 (1987). See also Paul J. Heald, Trademarks and Geographical Indications:
Exploring the Contours of the TRIPS
Agreement, 29 Vand. J. Transnat'l L. 635 (1996) (focusing on the
trademark provisions of TRIPS).
n161 OMB Implementing Memo at 95-22
(cited in note 73).
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The absence of any equivalent to
the idea-expression doctrine under the new sui generis regime means that
investors, in effect, obtain proprietary
rights in data as such, a type of ownership that the copyright paradigm
expressly precludes. Proponents
of the sui generis right downplay this finding by insisting that third
parties
always remain free to generate their
own databases. n162 But this opportunity exists only for data that are
legally available from public sources
and whose cost of independent regeneration is not prohibitively high in
relation to the gains expected from
the exercise. As for proprietary data not legally available for second
comers to exploit, there is no opportunity
to avoid the originator's exclusive rights to prevent extraction or
re-use of existing data. Even the
most avid apologists for the E.C. Directive concede that in such cases
the
investor's exclusive rights necessarily
vest in the data as such. n163
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n162 See, for example, IIA Report
at 29 (cited in note 67). See also Hunsuker, European Database Directive
(cited in note 60).
n163 See, for example, IIA Report
at 29 (cited in note 67) ("Admittedly, there may be situations in which
it
could be claimed that granting non-copyright
protection to compilations amounts to a monopoly on the facts
contained therein."). See also Hunsucker,
European Database Directive (cited in note 60).
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A deeper point is that, regardless
of whether it is theoretically possible to regenerate the data from publicly
available sources, investors in
database production can always deny third parties the right to use pre-existing
data in value-adding applications,
n164 even when the latter are willing to pay royalty-bearing licenses;
and
there is no escaping such licenses
unless the database publisher either declines to exercise his or her rights
or
engages in an abusive exercise of
market power. n165 In other words, except when the new proprietary rights
are abandoned or misused, the concept
of incremental or "cumulative and sequential innovation," which is
central to the development of modern
technological paradigms, n166 has been banished from the universe of
database production, despite
the economic waste and inefficiency inherent in such policies.
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n164 See notes 159-61 and accompanying text.
n165 A refusal to license, however,
coupled with a dominant position in the marketplace, could trigger an
antitrust violation or a related
charge of abuse of intellectual property rights. See, for example, E.C.
Directive
on Databases, art. 16(3), 1996 O.J.
(L 77) at 27 (cited in note 7). See also note 153 (discussing the Magill
decision).
n166 See, for example, Richard R.
Nelson and Sidney G. Winter, An Evolutionary Theory of Economic Change
255-62 (Harvard U., 1982) (discussing
the cumulative nature of technological advancements); Richard R.
Nelson, Intellectual Property Protection
for Cumulative Systems Technology, 94 Colum. L. Rev. 2674, 2676
(1994) (discussing the central concerns
surrounding the copying of computer software). See also Robert P.
Merges and Richard R. Nelson, On
the Complex Economics of Patent Scope, 90 Colum. L. Rev. 839, 881 (1990)
(discussing how the "scope doctrine
can be used to approximate the 'tailoring' function proposed by
economists.").
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2. Establishing Legal Barriers to Entry
A second, and closely related, way
in which the database investor's scope of protection under the E.C.
Directive exceeds that of authors
under the classical copyright paradigm is seen in the treatment of derivative
works. Under copyright laws, the
scope of an author's exclusive right to create a derivative work extends
only
to the original, expressive matter
added to the underlying work. One does not infringe an author's derivative
work right by copying ideas or information
that it (or the underlying work) contains or by appropriating from
the derivative work any pre-existing
expressive matter that has entered the public domain owing to the
expiration of the terms of protection.
n167
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n167 See, for example, 17 U.S.C.
<sect><sect> 101, 102, 103, 106, 501 (setting forth the subject matter
requirements and scope of copyright
protection for derivative works).
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The E.C. Directive recognizes no
such legal distinctions. As previously explained, it harbors no working
conception of a public domain whatsoever.
Unless local European courts, applying the domestic laws that
implement the E.C. Directive, take
pains to limit this omission, the upshot will be that each new extension
of
the database maker's exclusive rights
by dint of his or her "substantial investment" in updates, additions, and
revisions n168 will, in effect,
requalify that investor for protection of the database as a whole for additional
fifteen year periods. In other words,
this extended protection is not limited to the revised or added
matter--the "derivative work"--as
would occur under the copyright laws. This, in turn, reinforces the
monopolistic effects inherent in
the originator's ability to deny third parties the right to build incrementally
and
sequentially upon preexisting scientific
and technical knowledge, and it creates a further barrier to entry.
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n168 See notes 147-48 and accompanying text.
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A third way in which the scope of
protection for investors in database production exceeds that afforded
authors of copyrightable literary
and artistic works results from the much narrower range of applicable public
interest exceptions. n169 In effect,
the sole important exception available to all users of noncopyrightable
electronic databases under the E.C.
Directive is the right to extract or reutilize "insubstantial parts of
the database." n170 Reinforcing
this privilege is a provision nullifying any contractual override of it.
n171
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n169 For the general range of public-interest
exceptions under copyright laws, see notes 52-53 and
accompanying text.
n170 See E.C. Directive on Databases,
art. 8(1), 1996 O.J. (L 77) at 26 (cited in note 7). Member states,
however, may allow "extraction for
private purposes of the contents of a non-electronic database." Id. art.
9(a) (emphasis added).
n171 Id. art. 15 at 27.
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Yet, given that courts must judge
the substantiality of any extraction or reuse in qualitative as well as
quantitative terms, it remains to
be seen whether the formal right to take insubstantial parts will actually
benefit users. n172 For example,
if the data extracted by the user are the data responsive to his or her
online
query, one can always argue that
the extraction was qualitatively substantial. n173 Because this exception
applies only to "lawful users" of
the database (presumably subscribers to an online service or purchasers
of a
CD-ROM), in most cases it may merely
validate acts incidental to the uses for which one has paid. Although
the E.C. Directive's copyright provisions
spell out an elementary proposition of this sort, there is no parallel
to
it in the sui generis provisions.
n174 The possibility therefore exists that publishers may assert the right
to
control uses of noncopyrightable
components of databases that would otherwise have been subsumed within
the general right to use the same
database had it qualified for copyright protection.
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n172 Id. art. 8(1) at 26.
n173 Another factor affecting a determination
as to whether an appropriation is substantial is whether it
impedes normal exploitation of the
database. Id. art. 8(2). If database owners are prepared to charge for
every unit that a user might want,
is there any taking so insubstantial that a database owner could not argue
that it unreasonably interfered
with its normal exploitation of the market?
n174 See id. art. 6(1) at 25 (incidental to lawful use provisions).
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The final version of the E.C. Directive
also provides that a lawful user of a noncopyrightable database cannot
extract or re-use even insubstantial
parts of its contents in "repeated and systematic" ways that "conflict
with a normal exploitation of that
database or . . . unreasonably prejudice the legitimate interests of the
maker." n175 Arguably, this too
could preclude most value-adding uses of an insubstantial part of the
database, regardless of their commercial
or noncommercial purpose.
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n175 Id. art. 7(5). See also id.
art. 8(2) at 26 (forbidding any acts by lawful users that "conflict with
normal
exploitation" or "unreasonably prejudice
the legitimate interests" of its maker).
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Unlike previous versions of the E.C.
Directive, the final version also gives E.U. member states the option of
allowing certain limitations on
the sui generis right. n176 In particular, member states may authorize
extraction of a substantial part
of a noncopyrightable database "for the purposes of illustration for teaching
or
scientific research, as long as
the source is indicated and to the extent justified by the non-commercial
purpose to be achieved." n177 This
exception is available only to "lawful users" and it only applies to
"extractions" for such purposes,
not to reutilizations. Thin as it is, this exemption will become available
only in
those member states that opt to
enact it. n178
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n176 Id., art. 9 at 26. The first
two drafts of the E.C. Directive on Databases contained no authorization
for
the granting of any public policy
exceptions to the sui generis right. First E.C. Proposal on Databases at
art. 6
(cited in note 72); Amended E.C.
Proposal on Databases at art. 7 (cited in note 103). Although the European
Commission's Explanatory Memorandum
on the Amended Directive indicates that the European Parliament had
pressed for exemptions for educational,
scientific, and other nonprofit users, see Second Explanatory
Memorandum (cited in note 137),
it was not until the Common Position that member states were authorized
to
enact any limitations on the sui
generis right. Even so, there is evidence of residual concern within the
Council
about the potential negative impact
of the sui generis right on information flows. The Italian delegation,
which
decided to vote in favor of the
Common Position version of the Directive, drew attention to
the importance of the problems--which
are already in existence and will probably increase in the future as a
result of technological developments--surrounding
the issue of compulsory licenses as the only mechanism able
to contain the possibility of abuse
of dominant positions, not only between competitive undertakings, but also,
in particular, in respect of science,
education and the freedom of information, which could be subjected to
undue restrictions.
Memorandum from the Council Secretariat
to the Permanent Representatives Committee/Council, Brussels, 16
June 1995, Annex 1.
There are two other features to be
noted about the restriction of rights provision of the E.C. Directive on
Databases. One is that member states
were given at least nominal authority to apply some limited but
traditional copyright exceptions
to protected databases, see text accompanying notes 118-24, yet they were
not given any authority to extend
traditional exceptions of this sort to noncopyrightable databases. See
E.C.
Directive on Databases, art. 6(2)(d),
9, 1996 O.J. (L 77) at 25 (cited in note 7). The other is that, although
the Directive was intended to harmonize
the laws of member states concerning database protection, id. at 20
(Recitals (1) and (3)), it leaves
to the discretion of member states whether to adopt one or more of the
three
exceptions to the sui generis right,
id. art. 9 at 26, thus seeming to promote disharmony in national laws.
n177 Id. art. 9(b).
n178 See id. arts. 9, 9(b).
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This limited exception, drawn from
Article 10(2) of the Berne Convention concerning "quotations" and "use
of
works by way of illustration for
teaching," n179 yields a perverse effect in the realm of sui generis database
laws where data, facts, and other
noncopyrightable contents are the real objects of protection. As applied
to
traditional scientific works covered
by copyright law, such an exception made sense because only the author's
individual style was protected,
and not his or her data, findings, or ideas. Hence, teachers who made
excessive use of the first author's
stylistic features clearly infringed because they could extract the data
and
other noncopyrightable components
at will. As applied to the contents of databases, in contrast, the
exception permits a limited use
of "quotations" by both teachers and scientific researchers for purposes
of
illustration. n180 But it excludes
any broader "fair use" right to extract or reutilize the data or facts
for
nonprofit scientific or educational
pursuits, as would have been possible in appropriate cases under Article
9(2)
of the Berne Convention. n181 In
this respect, the Final E.C. Directive aligns both its copyright and sui
generis
provisions in cutting back on the
fair use doctrine under prior law. n182
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n179 See notes 115-17 and accompanying text.
n180 E.C. Directive on Databases art. 9. See also notes 118-19 and accompanying text.
n181 E.C. Directive on Databases,
arts. 8(2), 9(2); Berne Convention, art. 9(2). See note 114 and
accompanying text.
n182 See notes 115-24 and accompanying text.
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Even if a member state enacts this
provision, a scientific or educational user's exempted extraction must
satisfy the non-commercial purpose
test, and it must not exceed the quantum necessary to accomplish that
purpose lest it violate the general
obligation "not to perform acts which conflict with normal exploitation
or
that unreasonably prejudice [the
maker's] legitimate interests." n183 Because normal uses of educational
or
scientific databases in academic
and research institutions may not meet these tests, the optional exemption
for scientific and educational purposes
looks like a kind of fool's gold that merely permits illustration of
conclusions reached. On this reading,
the exemption would not extend to uses for other scientific or
educational purposes, such as browsing,
extraction, or use of the data for the purpose of reaching the
conclusions that one may then freely
"illustrate." n184
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n183 See E.C. Directive on Databases at arts. 8(2), 9(b) (cited in note 7).
n184 See, for example, McManis, International
Intellectual Property Protection (cited in note 99) (stating that
"any other substantial extraction
from an electronic database [besides illustration for teaching or scientific
research] will be infringing, irrespective
of whether the extraction is for a commercial purpose, such as market
research or private investment decisions,
or for a wholly non-commercial purpose, such as religious
canvassing, political polling, geneological
research, or pursuit of any . . . hobby or avocation."). Professor
McManis contrasts this provision
unfavorably with "the exceptions and limitations that safeguard the public
interest in copyright law." Id.
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Of course, local legislatures could
manufacture loopholes through which to widen this exception, n185 and
database publishers might
refrain from imposing harsh or oppressive terms and conditions that unduly
impinge upon scientific and educational
uses. The fact remains, however, that nothing in the E.C. Directive as
finally enacted requires such accommodations.
Its sui generis provisions contain no real equivalents of the
private use, fair use, and related
exceptions that traditional copyright laws afford scientific and educational
users of core literary and artistic
works. This is despite the fact that database publishers who acquire market
power through restricted online
transmissions have reportedly imposed questionable contractual conditions
on
libraries and academic subscribers
in the past. n186
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n185 See, for example, Hunsuker,
European Database Directive (cited in note 60) (stressing fact that article
9(b) speaks of extraction for the
purposes of illustration for teaching or scientific research, whereas article
6,
concerning copyrightable databases,
speaks of "the sole purpose of illustration for teaching or scientific
research").
n186 See note 90 and accompanying text.
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It follows that, under the E.C. Directive,
the most borderline and suspect of all the objects of protection ever
to enter the universe of intellectual
property discourse--raw data, scientific or otherwise--paradoxically
obtains the strongest scope of protection
available from any intellectual property regime except, perhaps, for
the classical patent paradigm itself.
n187 Nor are the breadth of protection, and the monopolistic power it
tends to breed, likely to be offset
by greater competition in the market for electronic databases, especially
now that the E.C. Directive as finally
adopted no longer contains the compulsory license requirement that had
initially been devised for this
purpose.
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n187 See generally Reichman, 13 Cardozo
Arts & Enter. L. J. at 488-89 (cited in note 3) (discussing economic
implications and contradictions
of such paradoxes).
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Formally, of course, third parties
still remain free to compile a database exactly like one already in commerce,
because independent generation of
the relevant data at one's own time and expense is always permitted. In
practice, this option ignores the
economic realities of the database industry. Startup costs are relatively
high,
the prospects for market-sharing
have seldom been realized, much valuable data is unavailable from public
sources, and the existence of one
complex database seems empirically to constitute a de facto barrier to
entry that is seldom overcome. This
lack of effective competition, with its inherent possibilities for
discouraging add-on products and
for encouraging abuses of market power, was downplayed by the Council of
Ministers, even though it had been
uppermost in the minds of the European Commission's own drafters a short
while earlier. Article 16 of the
Final E.C. Directive thus merely calls for three-year reviews to determine
whether existing antitrust laws
prove inadequate to deal with the "abuse of a dominant position or other
interference with free competition,"
in which case proposals for "nonvoluntary licensing" may once
again be considered. n188
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n188 See E.C. Directive on Databases, art. 16(3), 1996 O.J. (L 77) at 27 (cited in note 7).
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The fear of market failure and of
chronic underprotection that initially motivated the quest for a sui generis
regime to protect electronic databases
has thus given way to the creation of "mini-monopolies over
information." n189 This fear has
also given rise to a rent-seeking logic impervious to the public interest
in the
full and unrestricted flow of scientific
data. The original goal of providing some incentives to augment the
publishers' investment in compiling
electronic databases has generated a set of norms that could render many
scientific and technological undertakings
prohibitively expensive. As explained below, the short-term social
benefits of the E.C. Directive's
"extraction right" may thus conceal the long-term social costs of diminished
research and development capabilities
at scientific and educational institutions, including public and
semi-public institutions that are
already indirectly subsidizing private research and development. n190
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n189 Rosler, 10 High Tech. L. J.
at 138, 140 (cited in note 96) (stressing tendencies of "monopolists typically
to charge large premiums for their
goods").
n190 See, for example, id. at 141-43; Reichman, 94 Colum. L. Rev. at 2496-98 (cited in note 2).
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C. The United States and International Models
When the European Commission began
its deliberations concerning database protection in the early 1990s, the
climate in which intellectual property
policy discussions at both the national and international levels took place
differed from that prevailing today.
The fate of the Uruguay Round of Multilateral Trade Negotiations and its
intellectual property component,
the TRIPS Agreement, remained uncertain. The U.S. intellectual property
authorities had not yet begun to
survey the issues posed by widespread transmission of digitized information
over telecommunications networks.
n191 The Supreme Court had just denied copyright protection to telephone
directories in Feist, n192 and had
recently invalidated state protection of subpatentable industrial designs.
n193 These decisions proclaimed
renewed faith in a nineteenth century vision of the competitive
ethos without recognizing, let alone
addressing, the unresolved problems of appropriating returns from
investments in subpatentable information
goods under twenty-first century conditions. n194 Indeed, only a
few years earlier, the chairman
of the House Subcommittee on Intellectual Property had set very high
standards that would have to be
met before Congress would consider special interest pleas for additional
forms
of sui generis intellectual property
protection that deviated from the classical patent and copyright paradigms.
n195
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n191 The United States did not begin
to study, in any systematic fashion, the impact of digital technologies
on copyright law until mid-1993
when the Clinton Administration formed the National Information Infrastructure
Task Force which established a Working
Group on Intellectual Property Rights. The Working Group's report was
not finalized until September, 1995.
See U.S. White Paper at 1 (cited in note 64).
n192 See Feist Publications, 499 U.S. at 363.
n193 See Bonito Boats, 489 U.S. at 168.
n194 See, for example, Reichman,
25 Int'l Rev. Indus., Prop. & Copyright L. at 466-67, 472-75 (cited
in note
44) (suggesting that Feist raises
legitimate fears that those who disseminate information in hard copies
may
suffer from a chronic state of underprotection
that discourages investment).
n195 See Robert W. Kastenmeier and
Michael J. Remington, The Semiconductor Chip Protection Act of 1984: A
Swamp or Firm Ground?, 70 Minn.
L. Rev. 417, 438-42 (1985) (stating that proponents of new intellectual
property laws have the burden to
"show . . . that a meritorious public purpose is served by . . . proposed
congressional action," and setting
forth a four-pronged test of public interest that should be met in each
case).
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Against this background, the European
Commission's early drafts of a Directive concerning the legal protection
of databases adopted a defensive
posture with respect to foreign publishers whose principle base of
operations was outside the European
Union. In lieu of the national treatment clause that had become the
international standard prior to
the 1980s, n196 the Commission proposed a strict criterion of material
reciprocity. n197 Member states
of the European Union would, accordingly, extend the sui generis right
to
databases owned by foreign nationals
only if the nations from which they hailed adopted equivalent laws.
Databases made in countries having
no similar legislation would remain vulnerable to wholesale copying within
the European Union itself. n198
The decision to discriminate against foreign nationals operating in
non-harmonizing states was modelled
on the earlier and equally controversial decision by the United States
to
impose a material reciprocity clause
under the Semiconductor Chip Protection Act of 1984. n199 Although both
decisions rested on dubious
legal grounds even before the TRIPS Agreement was adopted, and even
though the Agreement rejects this
approach at least in spirit, n200 a version of the reciprocity provision
nonetheless entered the Final E.C.
Directive. n201
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n196 See, for example, Berne Convention
at art. 5(1) (cited in note 1); Paris Convention at art. 2(1) (cited in
note 1).
n197 See First E.C. Proposal on Databases
at art. 11(1) (cited in note 72) (making protection available to E.U.
nationals and nationals of countries
with equivalent laws); E.C. Directive on Databases, art. 11, 1996 O.J.
(L
77) at 26-27 (cited in note 7).
n198 See Simon Chalton, The Amended
Database Directive Proposal: A Commentary and Synopsis, 16 Eur.
Intell. Prop. Rev. 94, 99 (1994)
(stressing that national treatment would apply to copyrightable databases,
but
not to the extraction right). U.S.
commentators on the E.C. Directive on Databases have almost uniformly
condemned its reciprocity provision.
See, for example, IIA Report at 2, 25 (cited in note 67).
n199 See 17 U.S.C. <sect><sect>
902(a)(1)(A)-(C), 913, 914; Jay A. Erstling, The Semiconductor Chip
Protection Act and Its Impact on
the International Protection of Chip Designs, 15 Rutgers Comp. & Tech.
L. J.
303, 310 (1989) (discussing section
902(a) of the Act which provides two means by which a foreign nation
may qualify for reciprocal treatment);
Charles R. McManis, International Protection for Semiconductor Chip
Designs and the Standard of Judicial
Review of Presidential Proclamations Issued Pursuant to the
Semiconductor Chip Protection Act
of 1984, 22 Geo. Wash. J. Int'l L. & Econ. 331, 347-52 (1988) (describing
different interpretations of the
Act's requirement that a foreign nation provide non-discriminatory treatment
for
works of U.S. citizens or domiciliaries).
n200 See TRIPS Agreement, arts. 1(2),
(3), 2(1), 3(1), 4, 9(1), 39, in Results of the Uruguay Round at
367-70, 385 (cited in note 1); McManis,
International Intellectual Property Protection (cited in note 99); Paul
Edward Geller, Intellectual Property
in the Global Marketplace: Impact of TRIPS Dispute Settlement?, 29 Int'l.
Law. 99, 109-10 (1995).
n201 See E.C. Directive on Databases,
art. 11, 1996 O.J. (L 77) at 26-27 (cited in note 7). See also id. at 24
(Recital 56). At public meetings,
officials of the European Commission have stated that they retained the
reciprocity provision so that it
would prod other countries to adopt equivalent laws. Statement of Jens
Gaster,
Knowright '95, Vienna, Austria (Aug.
26, 1996).
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1. A Coordinated High-Protectionist Strategy
By 1995, however, when the European
Union's Council of Ministers met to adopt its Common Position on the
pending E.C. Directive, the climate
surrounding worldwide intellectual property policymaking had profoundly
changed. Universal intellectual
property standards embodied in the TRIPS Agreement had become enforceable
within the framework of a World
Trade Organization, n202 largely as the result of sustained pressures by
a
coalition of powerful manufacturing
associations in Europe, the United States, and Japan. n203 The success
of
this venture presages further alignments
of interests by U.S. and E.U. officials with a view to forging a
common, high-protectionist strategy
for intellectual goods in the post-TRIPS environment. n204
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n202 See, for example, Adrian Otten
and Hannu Wager, Compliance with TRIPS: The Emerging World View, 29
Vand. J. Transnat'l L. 391, 393
(1996) ("As a result of the TRIPS Agreement . . . the protection of intellectual
property has become an integral
part of the multilateral trading system, as embodied in the World Trade
Organization . . . ."); J.H. Reichman,
Universal Minimum Standards of Intellectual Property Protection Under
the TRIPS Component of the WTO Agreement,
29 Int'l Law. 345, 347-51 (1995) ("Beyond these
equal-treatment obligations, states
must accord to the nationals of other member states those international
minimum standards of intellectual
property protection that are comprised within the treatment provided for
in
this TRIPS agreement.").
n203 See, for example, Intellectual
Property Committee (USA), Keidanren (Japan), and UNICE (Western
Europe), Basic Framework on Intellectual
Property: Statement of the Views of the European, Japanese and
United States Business Communities
(1988). See also R. Michael Gadbaw, Intellectual Property and
International Trade: Merger or Marriage
of Convenience?, 22 Vand. J. Transnat'l L. 223, 235-37 (1989)
(discussing efforts to protect the
intellectual property rights of semiconductor producers).
n204 See, for example, Hanns Ullrich,
TRIPS: Adequate Protection, Inadequate Trade, Adequate Competition
Policy, in John O. Haley and Hiroshi
Iyori, eds., Antitrust: A New International Trade Remedy? 153, 184-207
(Pacific Rim Law & Policy Assoc.,
1995); Ralph Oman, Intellectual Property After the Uruguay Round, 42 J.
Copyright Soc'y 18 (1994) (approving
this trend). See generally Reichman, From Free Riders to Fair Followers
(cited in note 94) ("Competitive
Role of the Developing Countries in an Integrated World Market").
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Besides coordinating their efforts
in support of treaties that would expand or supplement the 1971 Revision
of
the Berne Convention, the United
States and European Union both submitted proposals for worldwide
protection of the contents of databases
under sui generis intellectual property regimes akin to that embodied
in the E.C. Directive. n205 They
have also proposed treaty language n206 to conform international copyright
law to the regulatory framework
for a global information infrastructure that was set forth in a controversial
White Paper recently prepared for
the U.S. administration, n207 and a version of these proposals was
embodied in a Draft Copyright Treaty.
n208
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n205 See U.S. Proposal on Databases
(cited in note 7); European Proposal on Databases (cited in note 7). See
also Mark Powell, The European Union's
Database Directive: An International Antidote to the Side-Effects of
Feist (paper presented to the Fourth
Annual Conference on International Intellectual Property Law & Policy,
Fordham University School of Law,
Apr. 11-12, 1996) ("Fourth Fordham Conference") (on file with the
Authors). Powell notes that the
E.C. Directive will be incorporated into the laws of Norway, Iceland, and
Liechtenstein under existing trade
agreements with the European Union; that "the Commission will encourage
Central and Eastern European countries
to adopt similar legislation" in their Association Agreements; that the
E.U.-Turkey Customs Union Decision
explicitly obliged Turkey to align its legislation on databases with the
Directive; and that its reciprocity
clause "will be used by the Commission as a bargaining chip" in dealing
with
third world countries. See id. at
5253.
n206 See Proposals of the European
Community and Its Member States to the Committee of Experts on a
Possible Protocol to the Berne Convention,
Geneva, May 22-24, 1996, WIPO Doc. BCP/CE/VII/1-INR/CE/VI/1,
May 20, 1996 ("E.U. Proposals for
GII"); Proposals of the United States on a Possible Protocol to the Berne
Convention, Geneva, May 22-24, 1996,
WIPO Doc. BCP/CE/VII/ -- ("U.S. Proposal to WIPO").
n207 In its White Paper on Intellectual
Property and the NII, the Clinton Administration sought a number of
amendments to the Copyright Act
of 1976 that would strengthen the rights of copyright owners. See U.S.
White Paper, Appendix 1 (cited in
note 64); National Information Infrastructure Copyright Protection Act
of
1995, S. Rep. No. 1284, 104th Cong.,
1st Sess. (1995); H.R. Rep. No. 2441, 10th Cong., 1st Sess (1995).
These would grant to copyright owners
a new "exclusive right of transmission," see U.S. White Paper at 212
(cited in note 64); a provision
to prohibit the development of technologies or services useful for decoding
encrypted transmissions (or the
tampering with other electronic safeguards) as a kind of copyright
infringement; and a provision outlawing
any alterations to "copyright management information, including the
terms and conditions for access
to online transmissions." See, for example, White Paper at 230-34. Very
similar
provisions are part of the Administration's
proposal for international treaty language to WIPO. See U.S.
Proposal to WIPO (cited in note
206).
Despite the innocuous appearance
of these and related proposals, they are very broadly drafted, perhaps
with
a view to indirectly overruling
numerous judicial precedents, including some that permit reverse-engineering
of
the noncopyrightable components
of computer programs. See, for example, Samuelson, Wired 4.01 at 190
(cited in note 124); McManis, International
Intellectual Property Protection (cited in note 99).
Adoption of these proposals might
also help to immunize copyright owners from claims of misuse for imposing
harsh or oppressive conditions on
users in the form of non-negotiable electronic contracts. See, for example,
McManis, International Intellectual
Property Protection (cited in note 99) (stressing proposal to limit removal
of
electronic "shrink wrap licenses"
as component of White Paper's overall efforts "to reduce . . . application
and
scope of fair use doctrine"). For
judicial and scholarly opposition to such licenses, see Charles R. McManis,
Intellectual Property Protection
and Reverse Engineering of Computer Programs in the United States and
European Community, 8 High Tech.
L. J. 25, 88-96 (1993) (concluding that contracts, or at least shrink-wrap
licenses, that prohibit reverse
engineering are preempted by federal intellectual property law); Julie
E. Cohen,
Reverse Engineering and the Rise
of Electronic Vigilantism: Intellectual Property Implications of "Lock-out"
Programs, 68 S. Cal. L. Rev. 1091
(1995). But see Raymond T. Nimmer, Reporter for the Drafting Committee
on
Uniform Commercial Code, Article
2B (licenses)), U.C.C. Revision: Information A.S.E. in Contracts (April
15,
1996) (arguing that proposed Art.
2B of U.C.C. should make such licenses presumptively valid); ProCD, Inc.
v.
Zeidenberg, 86 F.3d 1447 (7th Cir.
1996) (validating such licenses).
n208 See WIPO, Basic Proposal on
the Substantive Provisions of the Treaty on Certain Questions Concerning
the Protection of Literary and Artistic
Works to be Considered by the Diplomatic Conference, WIPO doc.
CRNR/DC/4, August 30, 1996 ("WIPO
Draft Copyright Treaty").
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A diplomatic conference hosted by
the World Intellectual Property Organization ("WIPO") convened to consider
these proposals in December 1996.
n209 The delegations to this conference were thus asked to convert the
WIPO Draft Database Treaty, prepared
by a Committee of Experts, n210 into a norm of international
intellectual property law, even
though the United States lacked any corresponding domestic regime as of
the
time of writing; n211 there has
been no empirical test of the controversial E.C. Directive in actual practice;
n212 and no preliminary reports
or studies evaluating even the economic justification for such
measures have been issued by WIPO
or any other reputable international institution. n213 This same
conference considered the adoption
of a supplementary agreement to the Berne Convention that would
convert the White Paper's vision
of a global information infrastructure into binding international minimum
standards, even though these controversial
proposals have yet to be endorsed by the pertinent congressional
committees. n214
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n209 See note 7. For a discussion
of the proposals, underlying these draft treaties, see, for example, Morton
David Goldberg, The Digital Agenda
in the U.S. and WIPO (paper presented to the Fourth Annual Conference
on International Intellectual Property
Law & Policy, Fordham University School of Law, Apr. 11-12, 1996)
("Fourth Fordham Conference")) (on
file with the Authors); Paul Waterschoot (Director, DG XV/E, European
Commission), Intellectual Property
and the Global Information Infrastructure--The E.U. Perspective, paper
presented to the Fourth Annual Conference
on International Intellectual Property Law & Policy, Fordham
University School of Law, Apr. 11-12,
1996) ("Fourth Fordham Conference"). See also Shira Perlmutter
(Associate Register for Policy and
International Affairs, U.S. Copyright Office), Developments in WIPO: A
Status Report on the New Instrument
and Protocol, paper presented to the Fourth Annual Conference on
International Inellectual property
Law & Policy, Fordham University School of Law (Apr. 11-12, 1996) ("Fourth
Fordham Conference").
n210 See WIPO Draft Database Treaty (cited in note 7).
n211 See notes 222-23 and accompanying text.
n212 See, for example, Powell, Fourth
Fordham Conference at 2-3 (cited in note 196) (objecting that "it is
questionable whether an international
instrument should be founded on a legal measure with no proven track
record and which contains such novel
legal concepts . . . especially since . . . neither database makers nor
users were satisfied with the compromise
reached in the Directive"). See also Samuelson, The N.I.I.
Intellectual Property Report, 37
Communications of the ACM at 17 (1994) (finding it "peculiar that the WIPO
experts should even consider recommending
a treaty on database protection when the idea for such a law is
so new and untested").
n213 See, for example, Powell, Fourth
Fordham Conference at 196 (cited in note 205) (stating that the
"economic case for the creation
of a right to prevent extraction and/or re-utilization of non-original
contents
by users has never been satisfactorily
explained").
n214 See notes 270-81 and accompanying
text. However, the delegations to the Geneva Diplomatic
Conference in December, 1996, rejected
or modified many of these proposals, and a more socially balanced
treaty was actually adopted. See
Draft WIPO Copyright Treaty, WIPO Doc. No. CRNR/DC/89, December 20,
1996, adopted by the Geneva Diplomatic
Conference on the same date.
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Against this background, the changes
to the E.C. Directive wrought in the Council of Ministers' Common
Position of 1995, including deletion
of the compulsory license provision (to which United States publishers
had
objected) and other measures that
strengthened the exclusive rights apparatus, n215 evidence the
coordinated strategies that the
Commission and the United States intellectual property authorities are
now
jointly pursuing. n216 If successful,
these strategies would gradually extend international norms
concerning the legal protection
of databases from the Berne Convention (or related instruments) to the
TRIPS
Agreement itself, which could give
them worldwide effect. n217 This is made expressly possible by Article
71(1) of the Agreement, which empowers
the Council for TRIPS to "undertake reviews in the light of any
relevant new developments which
might warrant modification or amendment of this Agreement." n218 If and
when the Council decided that the
proposals embodied in the WIPO Draft Database Treaty (if finally
adopted) n219 had become norms of
international intellectual property law, it would legitimize pressures
on
other WTO member states to recognize
similar measures in their domestic laws and lead eventually to their
formal incorporation into the TRIPS
Agreement. n220 This, in turn, would obviate the longterm effects of the
reciprocity clause in the E.C. Directive
by replacing it with a set of harmonized norms binding on all WTO
member states, like those already
adopted for semiconductor chip designs in articles 35-38 of the TRIPS
Agreement. n221
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n215 See, for example, Jens L. Gaster
(Principal Administrator, DG XV-E-4, European Commission), The New
E.U. Directive Concerning the Legal
Protection of Data Bases (paper presented to the Fourth Annual
Conference on International Intellectual
Property Law & Policy, Fordham University School of Law, Apr. 11-12,
1996) ("Fourth Fordham Conference")
(on file with the Authors) (conceding that "the sui generis right was
considerably strengthened during
the legislative process," and that attacks on the right to extract even
insubstantial parts of a protected
database were barely repelled).
n216 Besides proposing statutory
amendments to copyright law, the U.S. White Paper seeks to extend the
rights of copyright owners by, among
other things, interpreting the Copyright Act of 1976 as favoring strong
protectionist positions, particularly
with regard to the right to control unauthorized browsing of works in digital
form (said to be temporary copying
from a computer memory), to the inapplicability of the "first sale" doctrine
in the digital environment, and
to limitations on fair use in digital networked environments. See U.S.
White
Paper at 64-95 (cited in note 64);
17 U.S.C. <sect><sect> 101 (definition of "copies"), 107 (codification
of
fair use in terms of market interest),
109 (a) (first sale doctrine). Among the critics of the White Paper's
interpretations of existing law
are Litman, 13 Cardozo Arts & Enter. L. J. at 40-41 (cited in note
89); McManis,
8 High Tech. L. J. at 63-73 (cited
in note 207); Samuelson, 37 Communications of the A.C.M. at 23 (cited in
note 212). The White Paper also
takes the view that online providers are, or should be, strictly liable
for digital
transmissions of copyrighted works,
even if this obliges providers to serve as "copyright police" without regard
to their ability to perform such
functions. See, for example, U.S. White Paper at 114-24 (cited in note
64);
Samuelson, Wired 4.01 at 136, 190-91
(cited in note 124); McManis, 13 Cardozo Arts & Enter. L. J. at 68-70
(criticizing the view of the U.S.
White Paper).
The important question for the future
is not how to construe existing law so that it covers "electronic
browsing," "electronic lending,"
or the right to make "copies for private use," a concept that is less established
in U.S. copyright law than in some
foreign laws. See, for example, Jane C. Ginsburg, Putting Cars on the
"Information Superhighway:" Authors,
Exploiters, and Copyright in Cyberspace, 95 Colum. L. Rev. 1466, 1477
nn. 44-45 (1995). It may be that
one cannot simply transfer these and other exceptions to the national
information infrastructure without
unintended and possibly harmful effects on copyright owners, including
those scientists and academics whose
own proprietary rights are at stake. See, for example, Peters, 20
Colum.-VLA J. Law & Arts at
349-51 (cited in note 124). See also Ginsburg, 95 Colum. L. Rev. at 1468
(cited in
this note) (stating that "the perspective
of user rights . . . should remain secondary. Without authors, there
are no works to use"); Hugh C. Hansen,
International Copyright: An Unorthodox Analysis, 29 Vand. J.
Transnat'l L. 579, 584 (1996) (criticizing
those who would sacrifice the cause of author's rights to the generic
category of "users," including "Internet
users, developing nations, consumers, small competitors, and creators
of derivative works"). Arguably,
for example, "the entire concept of 'private copying' makes little sense
in a
world where the work is predominantly
marketed directly to the end users[,] . . . and the market for, or 'normal
exploitation of,' the work will
by and large be the private copying market." Ginsburg, 95 Colum. L. Rev.
at
1477-78 (cited in this note).
The important question is how to
recreate a "fair use" zone in cyberspace that protects the strong public
interest in ensuring that certain
uses and certain users, notably the scientific and educational communities,
are not priced out of the market
or forced to cut back upon the kind of basic research that has heretofore
played a crucial rule in U.S. economic
and technological growth. See, for example, Goldstein, Celestial Jukebox
at 230 (cited in note 89) (stressing
need for exemptions and compulsory licenses favoring "research and
educational uses" as transcendent
claim rooted in cumulative progress of knowledge); Hamilton, 27 Vand. J.
Transnat'l L. at 628-29 (cited in
note 94).
n217 In the meantime, the WIPO Draft
Database Treaty proposes to implement, in one form or another, "the
enforcement provisions of Part III,
Articles 41-61, of the TRIPS Agreement." See WIPO Draft Database Treaty
at 20-21 (cited in note 7) ("Notes
on Article 13"); id. at 21-28 ("Annex" reproducing TRIPS Agreement rules).
n218 TRIPS Agreement, art. 71, in
Results of the Uruguay Round at 402 (cited in note 1). See also id. arts.
68-69 at 400 (stating that the Council
for TRIPS shall "afford Members the opportunity of consulting on
matters relating to the trade-related
aspects of intellectual property rights" and that "members agree to
cooperate with each other with a
view to eliminating international trade in goods infringing intellectual
property
rights"). While parties to the Berne
Convention remain free to adopt higher copyright standards among
themselves, see Berne Convention
at art. 20 (cited in note 1) ("The Governments of the countries of the
Union
reserve the right to enter into
special arrangements among themselves, in so far as such agreements grant
to
authors more extensive rights than
those granted by the Convention, or certain other provisions not contrary
to this Convention."), these arrangements
would not become binding on other Berne Convention members in
the absence of a unanimous decision.
See id. at art. 27(3). Unless such standards were incorporated into the
TRIPS Agreement, parties to a special
arrangement under, or related to, the Berne Convention would run some
risk of having to extend the higher
standards to nonsignatory members of the WTO, under the most-favored-
nation clause of the TRIPS Agreement.
See TRIPS Agreement, art. 4, in Results of the Uruguay Round at 369
(cited in note 1). While applications
of Article 4 remain inherently uncertain, and this outcome would depend
on the interpretation of various
provisions in both the TRIPS Agreement and prior international agreements,
see note 1 and accompanying text,
the goal is clearly to develop "a model in the search for a global solution
regarding the protection of databases
which is presently discussed at WIPO." Gaster, Fourth Fordham
Conference (cited in note 215).
n219 See note 7.
n220 See TRIPS Agreement, art. 71(1) (cited in note 1).
n221 See id. arts. 1(3), 2(2), 3(1),
35-38, in Results of the Uruguay Round at 367-68, 384-85 (cited in note
1); Reichman, 29 Int'l Law. at 374-75
(cited in note 202). See also WIPO Draft Copyright Treaty at 1-2
(cited in note 208) (indicating
that the Committee of Experts considering the various draft treaties anticipates
such a result).
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2. The Pending United States Bill
The United States delegation submitted
its proposed treaty language concerning sui generis protection of
database contents to a duly constituted
WIPO Committee of Experts before any legislation to create such a
right had been placed before Congress.
n222 By the time the WIPO experts met to consider the U.S. proposal,
this embarrassing omission had been
rectified. n223 The congressional bill ("H.R. 3531" or "the Bill") proposing
a
domestic regime for noncopyrightable
databases articulates a far more protectionist strategy than that of the
E.C. Directive, however. This protectionist
bias then influenced the Draft Database Treaty that the WIPO
Experts recommended for consideration
at the Diplomatic Conference held December 1996. n224
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n222 U.S. database legislation was
introduced on May 23, 1996, see note 7, long after the U.S. had submitted
its proposed treaty language for
consideration at the WIPO Committee of Experts meeting, scheduled for May
22-24, 1997. The head of this delegation
also headed the NII Working Group, whose U.S. White Paper on
Intellectual Property and the NII
had anticipated the need for legislation to protect the contents of databases.
See U.S. White Paper at 153 (cited
in note 64). Was it merely a coincidence that the European Commission
submitted draft treaty language
for the proposed Berne Protocol mirroring the White Paper's recommendations
on contentious digital copyright
issues at the same time that the U.S. submitted draft treaty language on
protecting the contents of databases?
See U.S. Proposal on Databases (cited in note 7); Proposals of the the
European Community and its Member
States to the Committee of Experts on a Possible Protocol to the Berne
Convention, Seventh Sess., May 22-24,
1996, WIPO Doc. BCP/CE/1-INR/CE/VI/1 (May 20, 1996) at 3-5 ("E.C.
Protocol to the Berne Convention").
n223 H.R. Rep. No. 3531 <sect> 1 (cited in note 7).
n224 WIPO Draft Database Treaty (cited
in note 7). However, the Conference postponed action on this Draft
Treaty to a later date. See note
7.
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a. Towards Broader and Stronger Exclusive Rights
Under the Bill, as under the Final
E.C. Directive, a compiler would qualify for exclusive rights to prevent
extractions and reuses of the whole
or substantial parts of a database by dint of his or her having made
substantial investments in the collection,
assembly, verification, organization, or presentation of its contents.
n225 These exclusive rights would
attach automatically upon the expenditure of resources, and if the owner
continued to invest in updating
or otherwise maintaining the database in question, its twenty-five year
initial
term of protection could be continually
renewed without limit. n226 These provisions thus ignore the
constitutional Enabling Clause,
which requires intellectual property rights to be limited in time. n227
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n225 See H.R. Rep. No. 3531 <sect><sect>
2, 3(a) (cited in note 7); U.S. Proposal on Databases at 1.3, 3.1
(cited in note 7).
n226 See H.R. Rep. No. 3531 <sect><sect> 2, 3(a), (b), 6 (cited in note 7).
n227 U.S. Const., Art. I, <sect> 8, cl. 8.
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When scrutinizing the details of
the pending U.S. proposal, moreover, one first finds that its definition
of
"database" is much broader than
that of the E.C. Directive. n228 It contemplates, for example, that
noncopyrightable components of computer
programs could qualify for protection as databases, n229 and it
provides no apparent criteria for
excluding even facts or data compiled for scientific and historical works.
n230
Furthermore, H.R. 3531, like the
U.S. proposal to WIPO, would grant database makers a twenty-five year initial
term, which reflects the dissatisfaction
of U.S. industry groups with the shorter duration of the E.C. Directive.
n231
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n228 Compare, for example, H.R. Rep.
No. 3531 <sect> 2 (cited in note 7) (defining "database" as "a
collection, assembly, or compilation,
in any form or medium now or later known or developed, of works, data or
other materials, arranged in a systematic
or methodical way") with E.C. Directive on Databases, art. 1(2),
1996 O.J. (L 77) at 24 (cited in
note 7).
n229 Both the European Directive
and H.R. Rep. No. 3531 appear to exclude computer programs from database
rights. See E.C. Directive, art.
1(3), 1996 O.J. (L 77) at 24 (cited in note 7); H.R. Rep. No. 3531 <sect>
3(d)
(cited in note 7). But the U.S.
legislation indicates that insofar as the contents of a program include
material
that satisfies the definition of
database, those contents can be protected by the database law. See notes
370-85 and accompanying text for
further discussion of this issue.
n230 But see E.C. Directive on Databases,
1996 O.J. (L 77) at 23 (cited in note 7) (indicating, in Recital 45,
that the sui generis right should
not protect "mere facts or data"). For further discussion of the implications
of
the U.S. legislation for scientific
and historical works, see notes 386-94 and accompanying text.
n231 H.R. Rep. No. 3531 <sect>
6(a) (cited in note 7); U.S. Proposal on Databases at art. 6.1 (cited in
note
7). See IIA Report at 23 (cited
in note 67).
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The U.S. legislation also recognizes
an exclusive right to control the uses of database contents, not just
extractions and reuses of them.
n232 In addition, it reinforces all these exclusive rights by allowing
database makers further to control
any use that "adversely affects the actual or potential market for that
database" in addition to uses that
otherwise "conflict with the database owner's normal exploitation." n233
This specification, which is not
found in the E.C. Directive, has the potential for impeding virtually any
judge-made exceptions analogous
to "fair use" under copyright laws, because any such exception would
almost certainly affect the "potential
market" for any given database. n234 At the same time, the database
owner's potentially perpetual derivative
work right flowing from continuous updates, which is subject to no
public domain exceptions whatsoever,
becomes even easier to obtain than under the E.C. Directive. This is
because H.R. 3531 would condition
the renewal right merely upon "any change of commercial significance" to
the database contents and not solely
on additional "substantial investments." n235
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n232 See H.R. Rep. No. 3531 <sect>
4(a)(i) (cited in note 7); U.S. Proposal on Databases, art. 3.1, (cited
in
note 7).
n233 H.R. Rep. No. 3531 <sect> 4(b) (cited in note 7).
n234 This provision is thus consonant
with several other key provisions that greatly strengthen the scope of
protection in general. See notes
236-253 and accompanying text.
n235 See H.R. Rep. No. 3531, <sect> 6(b) (cited in note 7); note 147 and accompanying text.
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The pending bill subtly and powerfully
expands the database owner's scope of protection well beyond that of
the E.C. Directive's sui generis
regime by introducing an array of measures that, when read together, produce
formidable anticompetitive effects.
For example, the E.C. Directive's principal concession to users--the
exception for extractions of insubstantial
parts n236 --is ostensibly broadened in H.R. 3531 to permit uses or
reuses of insubstantial parts, n237
but it is then drastically narrowed in at least two ways. First, there
is a
new provision that not only forbids
"repeated or systematic use or reuse of insubstantial parts" (like the
comparable provision of the E.C.
Directive), n238 but also expressly forbids extraction or uses even of
insubstantial parts "that cumulatively
conflict . . . with . . . normal exploitation . . . or adversely affect
. . .
the actual or potential market."
n239 This latter clause acquires further teeth by means of still other
provisions
that seem to outlaw extraction or
reuse of even in substantial parts of a protected database in any
product or service that directly
or indirectly competes with the database from which it was extracted in
any
market, however distant. n240 Also
forbidden are extraction, use, or reuse of even insubstantial parts "by
or
for multiple persons within an organization
or entity in lieu of . . . authorized additional use or reuse . . . by
license, purchase, or otherwise."
n241
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n236 See E.C. Directive on Databases,
art. 8(1), 1996 O.J. (L 77) at 26 (cited in note 7). Gaster, Fourth
Fordham Conference (cited in note
215) (indicating that protection of the right to extract--but not to
reuse--an insubstantial component
was an integral part of the compromise that led to otherwise strengthened
protection).
n237 See H.R. Rep. No. 3531 <sect> 4(a)(ii) (cited in note 7).
n238 Id.; E.C. Directive on Databases,
art. 7(g), 1996 O.J. (L 77) at 25-26 (cited in note 7). See note 175
and accompanying text.
n239 See H.R. Rep. No. 3531 <sect><sect> 4(a)(i), (ii), 5(a) (cited in note 7).
n240 See id. <sect><sect> 4(a)(ii),
4(b). This restriction covers markets in which the database owner has a
demonstrable interest or expectation
in licensing or otherwise reusing the database, as well as markets in
which owners might reasonably expect
to find customers for the database. Id.
n241 Id. <sect> 4(b)(iv).
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Given such restrictions, one is hard
pressed to imagine unauthorized uses of an insubstantial component that
the drafters of the United States
model would deem legitimate. To forestall even this remote possibility,
H.R.
3531 allows publishers contractually
to override even the formal right of lawful users to extract or use
insubstantial parts in contrast
with the express nullification of similar contractual provisions in the
E.C.
Directive. n242 One knowledgeable
source reports that United States database publishers, angered by the
presence of this constraint in the
E.C. Directive, have every intention of exercising permissible contractual
overrides in practice. n243 A similar
intention seems manifest in the clause allowing publishers to impose
separate licenses for networked
use of a database within organizations, including nonprofit academic and
scientific institutions, which can
be construed as covering the extraction, use, or reuse even of insubstantial
parts. n244
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n242 See E.C. Directive on Databases,
art. 15, 1996 O.J. (L 77) at 27 (cited in note 7) (expressly voiding
contractual provisions to this effect).
See also IIA Report at 19-20 (cited in note 67) (criticizing this provision
from the U.S. perspective).
n243 See Powell, Fourth Fordham Conference
(cited in note 205). See also U.S. Proposal on Databases at art.
7(2) (cited in note 7) ("No Contracting
Party shall impair the ability to vary by contract the rights and
exceptions to rights set forth herein.").
n244 See H.R. Rep. No. 3531 <sect><sect>
4(a)(ii) (cited in note 7) (requiring authorization for repeated or
systemmatic extraction, use, or
reuse of insubstantial parts of a database in a way that conflicts with
the
owner's normal exploitation), 4(b)(iv)
(prohibiting multiple persons within an organization from using a database
in a way that conflicts with the
owner's normal exploitation without authorization through liscense or
otherwise).
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Taken together, these and other provisions
of H.R. 3531 reinforce the single most disturbing aspect of the E.C.
Directive, namely, that it precludes
formation of an evolving public domain from which third parties can freely
draw. n245 To this end, the bill
expressly confines permissible acts of "independent creation" to data or
materials not found in a database
subject to the proposed sui generis regime. n246 This restriction
applies regardless of whether the
unauthorized extraction or use is made for purposes of noncommercial
scientific endeavor or for commercially
important value-adding products that build incrementally on existing
compilations of data. Every unauthorized
use or reuse of existing data thus potentially violates the database
owner's unbounded derivative work
right. Furthermore, the existence of this potential violation is determined
without regard to the substantiality
of the second comer's own expenditure of effort or resources, to the
similarity or differences of the
latter's product or service, or to the public good aspects of the activities
undertaken. n247
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n245 See notes 155-66 and accompanying text.
n246 See, for example, H.R. Rep.
No. 3531 <sect> 5(b) (cited in note 7) ("Nothing in this Act shall in
any way
restrict any person from independently
collecting, assembling or compiling works, data or materials from
sources other than a database subject
to this Act.").
n247 Id. <sect><sect> 4 (outlining
the prohibitions of the Act), 5 (carving out two exceptions without regard
to the user's purpose, effort, or
resulting product), and 6.
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b. Perfecting an Absolute Monopoly
The absolute monopoly conferred on
database owners under the pending U.S. legislation is then perfected by
recognizing no public interest exceptions
whatsoever. Even the weak exception for extraction (but not reuse)
of database contents "for the purposes
of illustration for teaching or scientific research" that the E.C.
Directive allows E.U. member states
to enact n248 is omitted from both H.R. 3531 and from the U.S.
submission to WIPO. n249
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n248 See E.C. Directive on Databases,
art. 9(b), 1996 O.J. (L 77) at 26 (cited in note 7). See also id. at arts.
9(a) (allowing extraction for private
purposes from non-electronic databases), 9(c) (allowing extraction and
reuse for purposes of "public security
or an administrative or judicial procedure").
n249 See H.R. Rep. No. 3531 <sect>
5 (cited in note 7) (providing exceptions only for lawful users to extract,
use, or reuse insubstantial parts
of public or commercially-used databases and for use of data from sources
not subject to the Act); U.S. Proposal
on Databases at art. 5 (cited in note 7). The U.S. Proposal to WIPO
appears less watertight, because
it does permit contracting parties, "in their domestic legislation, to
provide
for exceptions to or limitations
on the rights," so long as such exceptions or limitations "do not unreasonably
conflict with a normal exploitation
. . . and do not unreasonably prejudice the legitimate interests of the
rightholder." U.S. Proposal to WIPO
at art. 5.3 (cited in note 206). Because the U.S. Proposal links this
exception to the notion of a "substantial"
taking for purposes of infringement and also to the express notion
that use of preexisting protected
matter is not an independent creation, see id. at arts. 3.1, 3.2, the drafters
clearly aim to forbid any exceptions
that permit extraction or use of a substantial part of the database for
any
purpose.
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The sole sop to science and education
in H.R. 3531 is a provision not found in the E.C. Directive that expressly
denies coverage to "a database made
by a government entity." n250 Because most databases of
primary importance to science are
funded by government agencies, this provision appears to recognize that
such databases merit different treatment
from those normally covered by the proposed sui generis regime. The
message is rendered ambiguous, however,
by language in the same provision to the effect that "any database
otherwise subject to this Act .
. . is not excluded herefrom because its contents have been obtained from
a
governmental entity." n251 This
provision seems to clarify that private firms that invest in data appropriated
from government sources will still
qualify for protection. It can also be read, however, as implicitly inviting
governmental agencies to derogate
from the traditional U.S. position, reiterated in a recent Office of
Management and Budget Directive,
which limits such agencies to the recovery of dissemination costs from
commercial applications of government-funded
data by the private sector. n252 If government entities moved
beyond cost-recovery principles,
the continued ability of scientists to access such data on favorable terms,
which current policy seeks to guarantee,
could then be called into question. n253
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n250 See H.R. Rep. No. 3531 <sect>
3(c) (cited in note 7) ("Except for a database made by a governmental
entity, any database otherwise subject
to this Act, is not excluded herefrom because its contents have been
obtained from a governmental entity.").
This provision has no counterpart in the E.C. Directive on Databases
because E.U. governments expect
to commercialize their databases. See note 78 above. See also WIPO Draft
Database Treaty at art. 5(2) (cited
in note 7) (allowing national legislation to determine the level of protection
for databases made by government
entities).
n251 H.R. Rep. No. 3531 <sect> 3(c) (cited in note 7).
n252 See OMB Implementing Memo (cited
in note 73) (cautioning agencies that use the services of private
contractors not to impose, or permit
the intermediary to impose, restrictions that interfere with the agencies'
own dissemination responsibilities;
and reiterating "the basic standard that agencies shall not charge use
fees
for government information which
exceed the cost of dissemination").
n253 See notes 293-94, 302-10 and accompanying text.
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Disregarding the status of databases
made by governmental entities, H.R. 3531 would render virtually any act
of "collecting, assembling, or compiling
. . . data . . . from . . . a database subject to this Act" a prohibited
or
infringing act. The perpetrator
can never justify such acts as incidental to other acts of independent
creation,
or as incidental to recognized public
interest exceptions, or even as legitimate means of building on preexisting
data sets. n254 Nor does H.R. 3531
express any concern that application of its exclusive rights might lead
to
abuse of a dominant position or
to other anticompetitive acts that might require "nonvoluntary licensing"
at
some point in the future. n255 On
the contrary, the bill expressly empowers publishers contractually
to override even the nominal right
of subscribers to use or reuse insubstantial parts of the database and
to
require "multiple persons within
an organization or entity"--presumably including scientific and educational
entities--to acquire additional
licenses or copies for authorized additional uses or reuses beyond their
initial
access rights. n256
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n254 See H.R. Rep. No. 3531 <sect><sect>
4, 5(a)(b) (cited in note 7). See notes 237-44 and accompanying
text (stressing built-in restrictions
on claiming use of an insubstantial part in practice).
n255 See E.C. Directive on Databases,
art. 16(3), 1996 O.J. (L 77) at 27 (cited in note 7) (requiring E.C.
Commission to report, at three-year
intervals, concerning these issues and the need to establish
"non-voluntary licensing arrangements").
n256 See notes 242-44 and accompanying
text. See also H.R. Rep. No. 3531 <sect> 4(b)(iv) (cited in note 7).
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Ancillary provisions of H.R. 3531
also embody some of the present administration's most controversial proposals
concerning the regulation of national
and global information infrastructures. n257 For example, it includes a
provision akin to that found in
the White Paper that would outlaw making or distributing any technical
device
(or performing any technical service)
the primary purpose or effect of which was to circumvent self-help
technological security measures
that publishers may rely on to protect the contents of their databases.
n258
Another provision inspired by the
White Paper would forbid tampering with database management information
attached to digital copies of the
database contents or otherwise distributing contents in a form that bears
false information about ownership
or other aspects of managing the relevant proprietary rights. n259
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n257 See note 207 and accompanying text.
n258 See, for example, H.R. Rep.
No. 3531 <sect> 10 (cited in note 7) ("Circumvention of Database Protection
Systems"); U.S. Proposal on Databases
at art. 8 (cited in note 7) (Prohibition of Protection--Defeating
Devices). See also U.S. White Paper,
Appendix 1 at 5 (cited in note 64); Pamela Samuelson, Technological
Protection for Copyrighted Works,
paper presented to the Thrower Symposium, Emory Law School (Feb. 22,
1996) (on file with the Authors)
(stating that, although digital technology "poses a serious challenge for
copyright owners because works in
digital form are vulnerable to uncontrolled replication and dissemination
in
networked environments," it is "not
just part of the problem; it may also be part of the solution").
n259 See, for example, H.R. Rep.
No. 3531 <sect> 11 (cited in note 7) ("Integrity of Database Management
Information"). See also U.S. White
Paper, Appendix 2 at 5 (cited in note 64).
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Self-help measures, such as encryption
for networked transmissions, often serve valid commercial purposes,
and they may become indispensable
for the protection of privacy. n260 Such measures may also, however,
unduly reinforce the publisher's
power to impose harsh contractual terms in two-party deals, n261 a prospect
that H.R. 3531 completely ignores.
There is also reason to fear that publishers will use these
measures to fend off legitimate
public interest challenges to the scope of protection obtained under the
proposed sui generis regime. If,
for example, decrypting a coded transmission is necessary to extract part
of a
database for noncommercial scientific
purposes, and the act of decryption itself constitutes a tort, n262
researchers are unlikely to explore
the possible availability of judge-made public interest exceptions to the
exclusive rights conferred by the
new regime. n263
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n260 See, for example, Branscomb, Who Owns Information? at 175-77 (cited in note 35).
n261 See notes 85-88 and accompanying
text. A solid body of scholarly opinion holds that "a combination of
technological restrictions (such
as encryption), contractual arrangements and criminal sanctions (for
unauthorized decryption)" raises
a far greater risk of overprotection than that of underprotection. McManis,
International Intellectual Property
Protection (cited in note 99); Kurtz, 18 Eur. Intell. Prop. Rev. at 120,
121,
124 (cited in note 58) (stressing
risk that a chronic state of overprotection could "choke off opportunities
for
academic research and educational
uses of intellectual property").
n262 See H.R. Rep. No. 3531 <sect><sect>
10 (cited in note 7) (prohibiting circumvention of database
protections without the database
owner's authorization), 12 (presecribing remedies, including damage awards,
for violation of <sect> 10).
n263 See notes 234-35 and accompanying text.
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In sum, by providing a longer period
of protection, more powerful exclusive rights, no public interest exceptions
or privileges, harsh criminal penalties
(as well as treble damages for willful infringements), n264 and ancillary
rules reinforcing self-help policing
of online transmissions, the proposed U.S. law would grant database owners
a more absolute monopoly than that
emanating from the E.C. Directive. In so doing, the drafters of H.R. 3531
take no notice of the role that
affordable, unrestricted flows of data have traditionally played in U.S.
science
policy or in other domains. The
proposed regime thus risks triggering a chain of unintended consequences
that
could ultimately compromise both
the foundations of basic science and the technological superiority of the
national innovation system. n265
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n264 See H.R. Rep. No. 3531 <sect><sect>
7(1), 8 (cited in note 7) (prescribing fines of up to $ 250,000 and
up to five years imprisonment for
certain first offense willful violations of the prohibited acts under <sect>
4;
id. <sect><sect> 12, 13 (prescribing
fine of up to $ 500,000 and up to five years imprisonment for violations
of
<sect> 11 with intent to defraud).
n265 David and Foray, 16 Sci. Tech.
& Ind. Rev. at 38-59 (cited in note 62) (national systems of innovation
studies).
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