Berkeley Technology Law Journal
Spring, 1999
14 Berkeley Tech. L.J. 793
LENGTH: 24417 words
ARTICLE: Database Protection at the Crossroads:
Recent Developments
and Their Impact on Science and Technology
By J. H. Reichman and Paul F. Uhlir*
© 1999 J.H. Reichman and Paul F. Uhlir.
* J.H. Reichman, Professor of Law, Vanderbilt University School of Law and Paul F. Uhlir, National Research Council, Washington, DC. An early version of this paper was presented to the Symposium on The Changing Character, Use, and Protection of Intellectual Property, German-American Academic Council in Cooperation with the U.S. National Academy of Sciences and the Max Planck Institute for Foreign and International Patent, Copyright and Competition Law, Washington, D.C., Dec. 3-4, 1998, and to the Conference on Law in the Information Society, Istituto per la Documentazione Giuridica, Comitato Nazionale della Ricerca, Florence, Italy, Dec. 2-5, 1998. The views expressed in this article are the authors' and not necessarily those of the National Academy of Sciences or the National Research Council.
SUMMARY:
... This article explores the potentially
adverse impact that the emerging legal infrastructure could have on scientific,
technical, and educational users of factual data and information - as well
as on other sectors of the information economy - unless suitable adjustments
are made. ... Let us suppose that a scientist or engineer lawfully
obtained a printed copy of a chemical handbook or of a scientific article,
with appended data, that was published in a peer-reviewed journal. ...
But plagiarism is not the same as copyright infringement; the reuse of
facts and data is clearly permitted in copyright law; and another author's
popularized version of a prior researcher's factual findings remains perfectly
legal. ... The net result, as Professors Reichman and Samuelson pointed
out in an earlier article, is that, under the U.S. database proposals,
as under the E.U. Directive, ... The foregoing discussion reveals
the extent to which the Hatch Database Discussion Draft evolved away from
the strong exclusive property right approach, adopted in the E.U. Directive,
toward a more balanced unfair competition approach that protected publishers
against piracy while consciously avoiding harm to science, education, and
other public-good uses of data. ... Unfortunately, the scientific community
will experience serious challenges to the policy of easy access to, and
unrestricted uses of data, regardless of the approach to database protection
that ultimately emerges from Congress and the legislation of other countries.
...
TEXT:
[*793]
This article explores the potentially adverse impact that the emerging legal infrastructure could have on scientific, technical, and educational users of factual data and information - as well as on other sectors of the information economy - unless suitable adjustments are made. It begins by explaining how efforts to accommodate the networked environment to the publishers' fears of market failure will impose a daunting array of legal and contractual restraints on the ability of scientists and engineers to access factual data and information in the near future. It then goes on to examine the most recent efforts to devise a sui generis intellectual property right in noncopyrightable collections of data that would suitably balance public and private interests. It also emphasizes the need to reconcile legal protection of databases with fundamental constitutional mandates concerning free speech and the progress of science. The article concludes with a warning that overly protective initiatives could compromise the research-based institutions that currently ensure the technological predominance of U.S. industry in the global marketplace.
[*794]
I. INTRODUCTION
The convergence of digital computing and telecommunications technologies has greatly expanded the already bright economic prospects for information goods of all kinds, but it has also unsettled the legal architecture on which the free market economies have previously been grounded. n1 Information products behave differently from the tangible, physical products of the Industrial Revolution; n2 and the legal paradigms that we have applied to balance incentives to create against both public good uses of [*795] information and the discipline of free competition are stretched past the breaking point. n3 We are thus challenged to rethink how best to structure competition for information goods in the emerging, worldwide information economy. n4
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n1. See, e.g., Julie E. Cohen, Lochner in Cyberspace:
The New Economic Orthodoxy of "Rights Management," 97 Mich. L. Rev. 462
(1998); Trotter Hardy, Property (and Copyright) in Cyberspace, 1996 U.
Chi. Legal F. 217 (1996); Robert P. Merges, The End of Friction? Property
Rights and Contract in the "Newtonian" World of On-line Commerce, 12 Berkeley
Tech. L.J. 115 (1997); Henry H. Perritt, Jr., Property and Innovation in
the Global Information Infrastructure, 1996 U. Chi. Legal F. 261 (1996).
n2. See, e.g., Kenneth J. Arrow, Economic Welfare
and the Allocation of Resources to Invention, in The Rate and Direction
of Inventive Activity 609, 616 (National Bureau of Economic Research ed.,
1962) (stressing that optimal utilization occurs when information is free,
while optimal information production occurs only when producers expect
to appropriate the economic value of their investments); see also Mark
A. Lemley & David McGowan, Legal Implications of Network Economic Effects,
86 Calif. L. Rev. 479, 591-608 (1995) (describing the economics of networks
as "still under construction").
n3. See generally, J.H. Reichman, Legal Hybrids
Between the Patent and Copyright Paradigms, 94 Colum. L. Rev. 2432 (1994)
[hereinafter Reichman, Legal Hybrids]; J.H. Reichman, Charting the Collapse
of the Patent-Copyright Dichotomy: Premises for a Restructured International
Intellectual Property System, 13 Cardozo Arts & Ent. L. J. 475 (1995)
[hereinafter Reichman, Charting]; Pamela Samuelson, Randall Davis, Mitchell
D. Kapor & J.H. Reichman, A Manifesto Concerning the Legal Protection
of Computer Programs, 94 Colum. L. Rev. 2308 (1994) [hereinafter Samuelson
et al.].
n4. See, e.g., Charles R. McManis, Taking TRIPS
on the Information Superhighway: International Intellectual Property Protection
and Emerging Computer Technology, 41 Vill. L. Rev. 207 (1996).
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The technological convergence that creates promising new markets for information goods also opens new opportunities for scientific and educational uses of data and information. However, a powerful movement to commodify data and information previously treated as a public good - that is, as an inexhaustible, indivisible, and ubiquitous component of the public domain n5 - could limit the ability of the scientific, technical, and educational communities to capitalize on such opportunities. The momentum generated by that movement would eventually have faced these communities with serious challenges even in the absence of a new intellectual property right in collections of data. The adoption of a strong property right in noncopyrightable collections of data by the European Union n6 - in a haphazard manner, with little serious economic or empirical investigation n7 - thus precipitated a crisis that was already well under way.
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n5. See Robert Cooter & Thomas Ulen, Law and
Economics 40-41 (2nd ed. 1997) (noting that public goods are both non-excludable
and non-rivalrous).
n6. 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 [hereinafter E.U. Directive].
n7. See J.H. Reichman & Pamela Samuelson,
Intellectual Property Rights in Data?, 50 Vand. L. Rev. 51, 72-95 (1997)
(tracing legislative history of the E.U. Directive). For different perspectives,
see, for example, Robert C. Denicola, Copyright in Collections of Fact:
A Theory for the Protection of Nonfiction Literary Works, 81 Colum. L.
Rev. 516 (1981) and Jane C. Ginsburg, Copyright, Common Law, and Sui Generis
Protection of Databases in the United States and Abroad, 66 U. Cin. L.
Rev. 151 (1997); G.M. Hunsucker, The European Database Directive: Regional
Stepping Stone to an International Model?, 7 Fordham Intell. Prop. Media
& Ent. L.J. 697 (1997). See also Wendy J. Gordon, On Owning Information:
Intellectual Property and the Restitutionary Impulse, 78 Va. L. Rev. 149
(1992).
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[*796] This article explores the potentially adverse impact that the emerging legal infrastructure could have on scientific, technical and educational users of factual data and information (as well as on other sectors of the information economy) unless suitable adjustments are made. Parts I and II explain how efforts to accommodate the networked environment to the publishers' and database makers' fears of market failure will impose a daunting array of legal and contractual restraints on the ability of scientists and engineers to access factual data and information in the near future. Part III examines the most recent efforts to devise a sui generis intellectual property right in noncopyrightable collections of data that would suitably balance public and private interests. Part IV emphasizes the need to reconcile legal protection of databases with fundamental constitutional mandates concerning free speech and the progress of science. It ends with a warning that overly protective initiatives could compromise the research-based institutions that currently ensure the technological predominance of U.S. industry in the global marketplace.
I. COMMODIFICATION OF DATA IN THE NETWORKED ENVIRONMENT: THE BIGGER PICTURE
Digital telecommunications networks enable publishers to control the uses of information goods directly by contract, without relying on state action to avoid market failure, n8 for the first time since the advent of the Guttenberg printing press. In effect, online delivery has "restored the power of the two-party deal" with regard to information goods and diminished the dependence of publishers on artificial legal fences that copyright laws and other related rights supplied in the print environment. n9
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n8. See, e.g., Paul Goldstein, Copyright's Highway:
From Guttenberg to the Celestial Jukebox 27 (1994) (stating that "copyright
was technology's child from the start [because] there was no need for copyright
before the printing press"); Wendy J. Gordon, Asymmetric Market Failure
and Prisoner's Dilemma in Intellectual Property, 17 U. Dayton L. Rev. 853
(1992) (relating economic justification of intellectual property rights
to the problem of market failure).
n9. See J. H. Reichman & Jonathan A. Franklin,
Privately Legislated Intellectual Property Rights: Reconciling Freedom
of Contract with Public Good Uses of Information, 147 U. Pa. L. Rev. 875,
897-99 (1999) (discussing "The Restored Power of the Two-Party Deal").
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Efforts to accommodate the pre-existing legal landscape to the new technologies are proceeding along several different fronts. For example, because the new technologies empower publishers to fence off information goods by means of encryption devices and other technical protection [*797] measures, n10 Congress has been persuaded to pass new laws making it a civil or criminal offense to disarm or tamper with these devices. n11 Would-be users must increasingly gain access to information goods via an electronic gateway where they are obliged to identify themselves and acknowledge the rights of the gatekeeper to the information goods, as, for example, expressed in copyright management information systems. n12 The new laws that defend the owner's encryption devices also forbid users from tampering with their intellectual property identity tags. n13
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n10. See, e.g., Julie E. Cohen, A Right to Read
Anonymously: A Closer Look at "Copyright Management" in Cyberspace, 28
Conn. L. Rev. 981, 983-89 (1996) (discussing technologies that copyright
owners may utilize to monitor and control access to information); see also
DanThu Thi Phan, Note, Will Fair Use Function on the Internet?, 98 Colum.
L. Rev. 169, 192, 192 n.167 (1998) (defining and discussing "digital watermarks").
See generally National Research Council, Cryptography's Role in Securing
the Information Society (Kenneth Dam & Herbert Lin eds., 1996); Mark
Stefik, Shifting the Possible: How Trusted Systems and Digital Property
Rights Challenge Us to Rethink Digital Publishing, 12 Berkeley Tech. L.
J. 137 (1997).
n11. Digital Millennium Copyright Act, Pub. L.
No. 105-304, 103, 403, 112 Stat. 2860, 2863, 2889 (1998) (codified at 17
U.S.C. 1201).
n12. See Reichman & Franklin, supra note
9, at 897-98 (stating that this "gatekeeping function is reinforced by
encryption devices, digital watermarking, and other self-help technical
measures that permit information providers contractually to impose their
own terms and conditions on access to information goods stored at any given
network site and on the uses to which end-users can put the information
they access").
n13. See Digital Millennium Copyright Act, Pub.
L. No. 105-304, 103, 112 Stat. 2860, 2863 (1998) (codified at 17 U.S.C.
1201).
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At the same time, the National Commissioners on Uniform State Laws have proposed a model contract law to govern computerized information transactions that all state legislatures would eventually adopt. These proposals, until recently embodied in a draft Article 2B of the Uniform Commercial Code ("U.C.C."), n14 would validate the publishers' standard form, non-negotiable contracts to which would-be users must assent in order to cross the electronic threshold and gain access to information de- [*798] livered online. n15 As matters stand, and despite mounting criticism from intellectual property scholars, the proposed model law would validate even "click on" or shrinkwrap licenses that ignored or attempted to override public interest exceptions that favored users or competitors, including the technical and scientific communities, under the pre-existing legal infrastructure. n16 For example, such contracts could override the right to make non-infringing uses of copyrighted works or the right to reverse-engineer subpatentable innovation, n17 and they could require payment for uses that courts had previously deemed fair uses under the federal copyright law. n18
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n14. See U.C.C. Article 2B - Licenses (Feb. 1999
Draft) (attempting to provide a common legal framework for transactions
in digital information and software licenses). In April 1999, the American
Law Institute, an original sponsor of this proposal, withdrew its support,
and the National Commissioners announced their intention to pursue the
project in the form of a model law governing computerized information transactions
rather than as an amendment to the U.C.C. See NCCUSL & ALI, NCCUSL
to Promulgate Freestanding Uniform Computer Transactions Act: ALI and NCCUSL
Announce that Legal Rules for Computer Information Will Not be Part of
U.C.C. (visited Apr. 23, 1999) <http://www.nccusl.org/pressrel/2brel.html>.
For convenience, citations herein continue to refer to draft Article 2B,
February 1999, the latest available version at the time of writing.
n15. Raymond T. Nimmer, the Reporter for Article
2B, justifies this approach. See Raymond T. Nimmer, Breaking Barriers:
The Relation Between Contract and Intellectual Property Law, 13 Berkeley
Tech. L. J. 827 (1998).
n16. See, e.g., Julie E. Cohen, Copyright and
the Jurisprudence of Self-Help, 13 Berkeley Tech. L.J. 1089 (1998); Jessica
Litman, The Tales that Article 2B Tells, 13 Berkeley Tech. L.J. 931 (1998);
Charles R. McManis, The Privatization (or "Shrink-Wrapping") of American
Copyright Law, 87 Calif. L. Rev. 173 (1999).
n17. See, e.g., Reichman & Franklin, supra
note 9, at 939-43, 947-51; see also Rochelle Cooper Dreyfuss, Do You Want
to Know a Trade Secret? How Article 2B Will Make Licensing Trade Secrets
Easier (But Innovation More Difficult), 87 Calif. L. Rev. 191 (1999); Mark
A. Lemley, Beyond Preemption: The Law and Policy of Intellectual Property
Licensing, 87 Calif. L. Rev. 111 (1999).
n18. See McManis, supra note 16, at 173 (addressing
the capacity of Article 2B to alter the existing balance embodied in copyright
law); Reichman & Franklin, supra note 9 , at 943-47.
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A third line of attack is to devise new intellectual property rights that, among other things, would serve to reduce potential tensions between state contract laws and the federal intellectual property system. As we shall see, copyright law expressly permits many uses of copyrighted works that publishers would like to restrict by means of online licenses. n19 The validity of such contracts may be questioned on the grounds that they disrupt the federal intellectual property system (preemption arguments) or overstep the constitutional guarantees of free thought and expression. n20
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n19. See 17 U.S.C. 102(b) (1994) (ideas not protectable),
107 (1994) (fair use), 108-121 (1994) (other exceptions and limitations).
n20. See 17 U.S.C. 301 (1994); see also Dennis
S. Karjala, Federal Preemption of Shrinkwrap and On-line Licenses, 22 U.
Dayton L. Rev. 511 (1997); 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 (1992).
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However, if Congress enacted a hybrid ("sui generis") intellectual property right to protect the contents of databases, like that adopted by the European Union, it would give legislative approval to forms of protection that were previously unknown or questionable under traditional intellec- [*799] tual property law. n21 The creation of new intellectual property rights in collections of data would thus make it harder to resist arguments that publishers who subject online delivery of databases to technical protection measures and to contracts of adhesion that limit previously legal uses had violated fundamental public policies derived from the copyright laws. In other words, the database protection laws seem to permit acts (and foster policies) that overtly contradict or override the limits previously established by copyright and other traditional legal models. n22
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n21. See E.U. Directive, supra note 6, arts. 7-10.
For U.S. proposals spawned by the E. U. Directive, see Collections of Information
Antipiracy Act, H.R. 354, 106th Cong. (1999); Collections of Information
Antipiracy Act, H.R. 2652, 105th Cong. (1998); Database Investment and
Intellectual Property Antipiracy Act of 1996, H.R. 3531, 104th Cong. (1996).
n22. See Reichman & Samuelson, supra note
7, at 84-95, 103-110.
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Taken together, the ability of publishers to combine technical protection measures with tailor-made contract laws and hybrid intellectual property rights is supposed to stimulate investment in online commerce and to foster overall economic development. n23 Critics fear, however, that the cumulative effect of these separate but well-coordinated legal initiatives will be to balkanize the information economy and to unduly restrict the use of unbundled information as raw materials of science and technology or as inputs into the production of value-adding or second generation information goods. n24
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n23. See, e.g., Nimmer, supra note 15; Hardy,
supra note 1.
n24. See supra notes 16 -17; Reichman & Franklin,
supra note 9, at 881 (stating that, to "ignore such discriminations as
these is to risk watching model laws, adopted to govern the virtual marketplace
for information goods, foster conditions that actually decrease innovation,
discourage competition, and stifle the traditional marketplace of ideas");
see also G.E. Evans & B.F. Fitzgerald, Information Transactions Under
U.C.C. Article 2B: The Ascendancy of Freedom of Contract in the Digital
Millenium?, 21 U. New S. Wales L.J. 404 (1998) (arguing for the government's
need to protect society given the recent shift of market power in the information
economy).
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II. POTENTIAL IMPACT OF THE DATABASE PROTECTION LAWS ON SCIENCE AND TECHNOLOGY
Let us suppose that a scientist or engineer lawfully obtained a printed copy of a chemical handbook or of a scientific article, with appended data, that was published in a peer-reviewed journal. These works currently at- [*800] tract copyright protection, and we shall assume that they meet the eligibility criteria of that body of law. n25
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n25. See 17 U.S.C. 101 (1994) (defining literary works), 102(a) (1994) (requiring original works of authorship), 103(b) (1994) (protection limited to original and expressive material added by author to a compilation); Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991) (limiting copyright protection of factual compilation to creative elements of selection, arrangement, and coordination).
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A. The User-Friendly Rules of Copyright Law
The rules of copyright law constitute a balanced regime of public and private interests. In retrospect, we are struck by the friendly treatment this body of law gives to users and competitors alike, notwithstanding the powerful bundle of exclusive rights it vests in authors and artists in order to stimulate the production and dissemination of creative works. n26
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n26. See 17 U.S.C. 106 (1994). See generally L. Ray Patterson & Stanley W. Lindberg, The Nature of Copyright: A Law of Users' Rights 47-56, 191-224 (1991); Joel Shelton Lawrence & Bernard Timberg, Fair Use and Free Inquiry: Copyright Law and the New Media (2d ed. 1989).
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For example, any scientist or engineer who lawfully obtained the book or article mentioned above could immediately re-use all the data and all the ideas disclosed in them because copyright law does not protect ideas or data, n27 nor does it protect against use of expression as such, but only against certain specified uses. n28 Indeed, another scientist or engineer could independently rewrite his or her own version of the same article and disseminate it because copyright law allows independent creation, and all the unprotected data are spread out before the second comer's eyes. n29
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n27. See supra note 25; Harper & Row v. Nation
Enterprises, 471 U.S. 539 (1985) (stressing First Amendment interest in
unrestricted availability of facts).
n28. See 17 U.S.C. 106, 106A (1994); Baker v.
Selden, 101 U.S. 99 (1879); Ralph S. Brown, Jr., Eligibility for Copyright
Protection: A Search for Principled Standards, 70 Minn. L. Rev. 579, 588-89
(1985) (noting that the Copyright Act, unlike the Patent Act, does not
confer any exclusive right to use the protected work, which helps explain
why copyrights are so casually granted).
n29. See, e.g., Paul Goldstein, Copyright 7.2.2
(2d ed. 1998) (noting that "conveying evidence" of independent creation
constitutes a perfect defense to an infringement action).
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A second scientist or engineer who needed to duplicate even the first author's creative selection and arrangement of data (if any) for non-profit research purposes could normally fall back upon the "fair use" provisions of current law. n30 A later researcher could also produce a follow-on article [*801] or book that borrowed the originator's unprotected factual information and data, but not his or her stylistic expression. n31 To be sure, the norms of world copyright law (but not necessarily U.S. law) favor attribution in such a case, as do the ethics of science. n32 But plagiarism is not the same as copyright infringement; the reuse of facts and data is clearly permitted in copyright law; and another author's popularized version of a prior researcher's factual findings remains perfectly legal. n33
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n30. See 17 U.S.C. 107 (1994) (codifying fair
use provisions); Campbell v. Acuff-Rose Music, Inc., 510 U.S. 564, 574-594
(1994) (stressing desirability of promoting transformative, preambular
uses under the fair use provision of 107); William F. Patry, The Fair Use
Privilege in Copyright Law 178-84, 416-17 (1985). However, the wholesale
duplication of a creative selection and arrangement for commercial purposes
is not permitted. See, e.g., CCC Info. Servs., Inc. v. Maclean Hunter Mkt.
Reports, Inc., 44 F.3d 61 (2d Cir. 1994); Reichman & Samuelson, supra
note 7, at 63 (citing authorities). But see Warren Publishing Inc. v. Microdos
Data Corp., 115 F.3d 1509 (11th Cir. 1995) (en banc) (allowing massive
extraction and re-use of commercial compilation for competitive purposes
and finding no eligibility for copyright protection).
n31. See 17 U.S.C. 102(b), 103(b) (1994); Harper
& Row v. Nation Enters., 471 U.S. 539 (1985); Key Publications, Inc.
v. Chinatown Today Publ'g Enters., Inc., 945 F.2d 509, 514 (2d. Cir. 1991)
(stressing "thin" copyright protection doctrine of Feist). See also Reichman
& Samuelson, supra note 7, at 63 (citing authorities).
n32. See 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. 4, art. 6bis (obliging member states to respect
moral rights of authors); Berne Convention Implementation Act of 1988,
Pub. L. No. 100-568, 102 Stat. 2853 (1988) (implementing this obligation
only indirectly).
n33. See Hoehling v. Universal City Studios,
Inc., 618 F.2d 972 (2d Cir. 1980); supra notes 31-32 and accompanying text.
However, if a second comer were to pass off his article as that of the
first scientist, grounds for invoking relief in unfair competition law
might also exist. See Lanham Act 43(a), 15 U.S.C. 1125 (1998).
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Most important, later scientists could combine the published data and factual information with other data and information into a multiple or complex interdisciplinary database without permission or additional payment to the originators. n34 This follows in part because only ineligible matter is at issue and in part because copyright law does not prohibit use as such, but only certain uses, such as reproduction or adaptation of protected expression, and it is also buttressed by the doctrine of fair use. n35
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n34. For the importance of this practice, in conjunction
with the sharing ethos of science, see J. H. Reichman, Why Science is Concerned
About an Intellectual Property Right in Databases, in AAAS Science and
Technology Policy Yearbook 1998 (Albert H. Teich et al. eds., 1998), at
291, 301; see also International Council for Science (ICSU), Position Paper
on Access to Databases, paper presented to the World Intellectual Property
Organization (Sept. 1997) (unpublished manuscript, on file with authors).
n35. See supra notes 26-31 and accompanying text.
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Even if scientists, engineers, or educators made classroom use of the protected expression for nonprofit purposes, these uses might well be fair [*802] or privileged uses under U.S. copyright law n36 and would possibly become subject to compulsory licensing under E.U. copyright laws. n37 Finally, having once purchased the book or the article, a scientist or engineer could sell it, lend it, or give it to others (first sale doctrine), n38 borrow it from a library, n39 use it as often as he or she liked for virtually any purpose, and make photocopies of it for scientific purposes under the fair use doctrine of U.S. law n40 or the private use doctrine of E.U. law. n41
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n36. See 17 U.S.C. 107, 110(1) (1994); but see
Princeton Univ. Press v. Michigan Document Servs., Inc., 99 F.3d 1381 (6th
Cir. 1986) (en banc), cert. denied, 520 U.S. 1156 (1997) (limits on copies
for classroom use).
n37. See, e.g., Berne Convention, supra note
32, arts. 9(2) (limits on reproduction right), 10(2) (use for teaching
purposes when consistent with fair practice); Guy Tritton, Intellectual
Property in Europe 191 (1996). See also Lucie Guibault, General Report
to the ALAI Annual Meeting (1998) (unpublished manuscript, on file with
authors) (discussing exceptions and limitations in European copyright law).
n38. See 17 U.S.C. 109(a) (1994) (first sale
doctrine).
n39. See id.; see also 17 U.S.C. 108 (1994) (reproduction
by libraries and archives).
n40. See 17 U.S.C. 107 (1994); supra note 30.
However, scientists and engineers working at for-profit institutions have
lesser photocopying privileges, at least when secondary markets for photocopies
and reprints are operational. See American Geophysical Union v. Texaco,
Inc., 60 F.3d 913, 926-931 (2d. Cir. 1994); Patry, supra note 30, at 190-94.
n41. See European Commission Green Paper on Copyright
and Related Rights in the Information Society, reprinted in 43 J. Copyright
Soc'y USA 50, 91 (1995) ("Most member states have introduced special legal
arrangements for <elip> private copying<elip>."). But see William
R. Cornish, Copyright in Scientific Works (Scientific Communications, Computer
Software, Data Banks): An Introduction, in European Research Structures
- Changes and Challenges: The Role and Function of Intellectual Property
Rights 50 (Max Planck Gesellshaft ed., 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 <elip> [have been] inserting initial wedges.").
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B. Unbalanced Rules of the Sui Generis Model
Now, let us suppose that the contents of the same chemical handbook or of the aforementioned scientific article were disseminated online and surrounded by technical fences as previously described. Suppose further that the contents of the book or article were protected by laws implementing the E.U.'s sui generis exclusive property right in noncopyrightable collections of data or by the U.S. version of that right, as set out in H.R. 2652, the Collections of Information Antipiracy Act (March 1998). n42 The House of Representatives adopted H.R. 2652, and the Subcommittee on Courts and Intellectual Property then attached it to the Digital Millennium [*803] Copyright Act, which became H.R. 2281, as sent to the Senate. n43 The database portion was dropped prior to Congressional enactment of that bill, however, and it was reintroduced with some modifications as H.R. 354 in January 1999. n44
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n42. See E.U. Directive, supra note 6; H.R. 2652,
105th Cong. (1998).
n43. See H.R. 2281, 105th Cong. (1998) (including
the database protection bill as Title V).
n44. See H.R. 354, 106th Cong. (1999).
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1. Basic Substantive Principles
The sui generis provisions of the E.U. Directive n45 protect the contents of any noncopyrightable database that is the product of substantial investment against extraction or reutilization of the whole or of any substantial part (evaluated quantitatively or qualitatively). n46 Hence, this law could protect the noncopyrightable data appended to the hypothetical article in question or collected in the handbook, which the publishers might eventually disseminate online, with or without an accompanying print version. n47
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n45. See E.U. Directive, supra note 6, arts. 7-10.
Besides a list of sixty "Recitals" or premises that underlie the legislation
and a small set of definitional articles that apply across the board (arts.
1-2), the E.U. Directive also harmonizes the treatment of copyrightable
databases in the member states' domestic laws. See id. arts. 3-6; Reichman
& Samuelson, supra note 7, at 76-79. There is a final group of "common
provisions" that apply to both copyrightable and noncopyrightable databases
(arts. 12-16). While the provisions harmonizing the protection of copyrightable
databases approximate the rules in the U.S., see supra notes 26-41 and
accompanying text, they lie beyond the scope of this article.
n46. See E.U. Directive, supra note 6, art. 7(1).
n47. For the very broad definition of databases,
see E.U. Directive, supra note 6, art. 1. For example, Reed Elsevier, Inc.
has been buying up scientific journals and has recently begun to deliver
scientific communications online.
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Such protection lasts as long as new investments are made in updates or maintenance; hence perpetual protection of dynamic databases becomes a likely result, despite a nominal fifteen-year term. n48 There are no exceptions for "reutilization" by scientific and educational bodies, and there are no mandatory exceptions for "extraction" for scientific and educational purposes (although states may adopt this exception for noncommercial purposes). n49 The member states implementing the Directive must permit [*804] extraction or use of an insubstantial part of a protected database. n50 However, the risks of invoking even this exception are high, because a would-be user has no way of knowing in advance whether a court will later find that the amount used was in fact qualitatively or quantitatively insubstantial. n51
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n48. See E.U. Directive, supra note 6, art. 10;
Reichman & Samuelson, supra note 7, at 85-86.
n49. See E.U. Directive, supra note 6, arts.
9, 9(b) (authorizing member states to allow extractions (but not reutilization)
"for the purposes of illustration for teaching or scientific research,
so long as the source is indicated and to the extent justified by the non-commercial
purpose to be achieved").
n50. See E.U. Directive, supra note 6, art. 8(1).
Member states may allow a broader exception for "extraction for private
purposes of the contents of a non-electronic database." Id. art. 9(a) (emphasis
added).
n51. See Reichman & Samuelson, supra note
7, at 90-91. See also id. at 87-95 (finding that the scope of protection
under the E.U. Directive exceeds that of copyright law because 1) no idea-expression
distinction is observed and no evolving public domain is generated, 2)
the equivalent of a "derivative work" right in dynamic databases is not
limited to new matter, and 3) the public interest exceptions are very narrow).
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U.S. bill H.R. 2652, later H.R. 2281 as part of the Digital Millennium Copyright Act, used different language to accomplish essentially the same result. It protected against use or extraction in commerce of all or a substantial part of a protected collection of information that is the product of substantial investment if such use or extraction would "cause harm to the actual or potential market" for a product or service that incorporated the collection. n52 For this purpose, the term "collection of information" was very broadly defined, n53 and during face-to-face negotiation in the Senate (in which the authors of this article participated directly), n54 the publishers claimed that a single lost sale would fit within this standard of harm to the market. Any substantial new investment in updates or maintenance would prolong protection beyond fifteen years, with no limit to the number of renewals. n55 The bill initially recognized no exceptions for science and education as such, but, at the last minute, a provision tacked onto H.R. 2281 held scientists and educators liable only for harm to "actual mar- [*805] kets," and not for harm to "potential markets" for their nonprofit uses of protected information. n56
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n52. H.R. 2652, 105th Cong. 1202 (1998); H.R.
2281, 105th Cong. 1302 (1998).
n53. See H.R. 2281, 105th Cong. 1301(1) (1998)
(defining "collection of information" to mean "information that has been
collected and <elip> organized for the purpose of bringing discrete
items of information together in one place or through one source so that
users may access them"); id. 1301(2) (defining "information" to mean "facts,
data, works of authorship, or any other intangible material capable of
being collected and organized in a systematic way"). See also id. 1301(3)
(defining "potential market" to mean "any market that a person claiming
protection <elip> has current and demonstrable plans to exploit or that
is commonly exploited by persons offering similar products or services
incorporating collections of information").
n54. See infra text accompanying notes 143-47.
n55. See H.R. 2281, 105th Cong. 1308(c) (1998).
The interpretation in the text was confirmed by the position that the publishers
took during face-to-face negotiations in the Senate. See infra text accompanying
notes 143-47.
n56. See H.R. 2281, 105th Cong. 1303(d) (1998).
An article attacking the proposed legislation that appeared in Science
magazine focused particular attention on the harm to science from a "potential
market" test. See William Gardner & Joseph Rosenbaum, Database Protection
and Access to Information, 281 Science 786-87 (1998).
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The situation was further complicated in January, 1999, when Chairman Howard Coble of the House Committee on the Judiciary's subcommittee dealing with intellectual property rights introduced a new version of the database protection bill, H.R. 354, n57 which modified the previous bill in at least two important respects. First, a serious effort was made to limit the term of protection to fifteen years, with little or no possibility of extension even in dynamic databases that are continuously updated. n58 Second, a new provision established an exemption for "additional, reasonable uses" by educational, scientific and research organizations, n59 which was loosely based on the "fair use" provisions of copyright law. However, this ambiguous provision would limit the proposed exception to "an individual act of use or extraction of information done for" specified purposes, n60 which apparently placed the burden of proof on the otherwise infringing researcher. n61
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n57. H.R. 354, 106th Cong. (1999). See also Hearings
on H.R. 354, the "Collections of Information Antipiracy Act" before the
House Subcomm. on Courts and Intellectual Property of the House Comm. of
the Judiciary, 106th Cong. (1999) [hereinafter Hearings] (statement of
the Honorable Howard Coble, Chair of the Subcommittee on Courts and Intellectual
Property).
n58. See H.R. 354, 106th Cong. 1408(c) (1999)
(limiting the term of protection to 15 years).
n59. Id. 1403(a)(2) (listing "Additional Reasonable
Uses").
n60. Id. 1403(a)(2)(A) (allowing individual act
of use or extraction "for the purpose of illustration, explanation, example,
comment, criticism, teaching, research, or analysis, in an amount appropriate
and customary for that purpose <elip> if [such an act] is reasonable
under the circumstances") Criteria for determining reasonable use, and
the limits thereon, are also set out. See id. 1403(a)(2)(A)(i)-(iv).
n61. See infra text accompanying notes 95-99
.
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Because one can read the new exception for scientific and educational uses set out in H.R. 354 broadly or narrowly, depending on how one interprets its latent ambiguities, it is instructive to assess the likely impact of the proposed legislation on science and technology as it stood at the end of 1998. We can then factor the proposed amendments into the analysis and compare them to certain promising proposals that emerged from face-to-face negotiations between stakeholders, held in the Senate under Senator [*806] Hatch's auspices in late summer of 1998. n62 Accordingly, if Congress had adopted H.R. 2281 at the end of 1998, and that law had subsequently been applied to online delivery of the data contained in the book or article that were previously discussed in connection with the workings of copyright law, n63 the following results would have been likely to occur.
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n62. See infra text accompanying notes 140-65.
n63. See supra text accompanying notes 26-41.
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2. The Resulting Legal and Practical Constraints
In principle, a second scientist or engineer could not make any uses of the information or data that were not permitted by the form-contract site licenses that regulated access to the online database from which they were extracted. n64 The site license could charge one price for accessing or consulting the database, a second price for downloading it, and a third price for using it or reusing it in other contexts. n65
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n64. While this constraint could occur under existing
law, the validity of such standard form contracts remains in doubt at the
present time, with some courts upholding them and other courts invalidating
them either on contracts grounds or under the doctrine of preemption. See
Reichman & Franklin, supra note 9, at 876 n.1 (citing cases). The adoption
of a model law governing computerized information transactions (like the
previously proposed Article 2B of the U.C.C.), see supra note 14, would
validate virtually all such contracts. See id. at 899-914 (criticizing
this approach and proposing a new doctrine of "public interest unconscionability"
to allow courts to reconcile freedom of contract with public-good uses
of information). However, most opportunities to challenge the validity
of such contracts as applied to either copyrightable or noncopyrightable
databases on existing grounds would vanish if Congress adopted a database
law along the lines of H.R. 2281, unless some other countervailing doctrine,
such as the proposed "public interest unconscionability doctrine" became
available. See Reichman & Franklin, supra note 9, at 947-51 ("Contracts
Restricting the Use of Noncopyrightable Collections of Data").
If, instead, H.R. 354 were adopted, or a variant
thereof that included a substantial exception for traditional scientific
purposes, see infra text accompanying notes 148-52, the opportunities to
challenge the validity of such contracts would depend on 1) the extent
to which the database law itself restricted contractual overrides (none
yet proposed, and all vigorously resisted by the publishers), and 2) the
availability of ancillary doctrines in contracts law, such as the proposed
"public interest unconscionability" doctrine. See infra text accompanying
notes 163-64 (discussing the doctrine of misuse); see generally Reichman
& Franklin, supra note 9, at 929-38 ("validating non-negotiable terms
that respect the balance of public and private interests").
n65. Cf. Reichman & Samuelson, supra note
7, at 117-24 ("Retarding the Progress of Science"). The electronic
publisher's growing capacity to charge for each and every use of online
data (or at least for every "hit" that accesses such data), and to track
and monitor every user <elip> means that it becomes increasingly capable
of serving <elip> as its own collection society, subject to no consent
decrees <elip> and no external regulation. Id. at 153. At a recent conference
on database protection in Italy that Professor Reichman attended, an Italian
professor related that the European Commission had charged him a high price
per page to consult official texts concerning antitrust laws and regulations
and about double that price per page to download the same information for
research purposes. See Tito Ballarino, Remarks at the University of Pavia
Conference on "Le banche dati (anche su Internet)," Pavia, Italy, Oct.
2-3, 1997; cf. Jessica Litman, The Exclusive Right to Read, 13 Cardozo
Arts & Ent. L. J. 29 (1994).
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[*807] Even though the second scientist or engineer normally would have paid to access the data and information (and they are not copyrightable by definition), he or she could not use them in ways not permitted by the terms and conditions of that site license, which, in turn, would now be supported by a duly enacted federal intellectual property law. n66 Absent some constitutional override, the second comer could not, therefore, independently generate a similar article or study based on the same material without permission, even though the relevant data were now revealed to the public. n67 Because the data no longer entered the public domain, n68 he or she would need to obtain a new grant or substitute funding to repeat the collection process, in which case scarce funds would have been used to duplicate the creation of knowledge already in existence. This, of course, contradicts the norms of science, which favor building on previous discoveries and the sharing of research results. n69
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n66. See supra note 64.
n67. See H.R. 2281, 105th Cong. 1303(b) (1998)
(declining to "restrict any person from independently gathering <elip>
or using information gathered <elip> by another person through the investment
of substantial monetary or other resources"); id. 1305(e) (allowing unrestricted
licensing agreements). See also H.R. 354, 106th Cong. 1403(c), 1405(e)
(1999) (the same in this respect, but attenuated in impact owing to fair-use-like
provisions set out in 1403(a)). For possible constitutional overrides,
see infra text accompanying notes 182-97.
n68. Cf. Reichman & Samuelson, supra note
7, at 84-90 ("Abolishing the Public Domain"). Under H.R. 354 , however,
data would enter the public domain after fifteen years. See supra note
58 .
n69. See National Research Council, Bits of Power:
Issues in Global Access to Scientific Data 1, 132 (1997) (stressing importance
of scientific norms that favor the sharing of data and the cumulative process
of acquiring scientific knowledge) [hereinafter Bits of Power].
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In many instances, the data will be based on one-time events that later scientists and engineers could not physically regenerate, in order to fall within the permitted acts of independent creation under the database protection laws. n70 Even when regeneration remained feasible, the cost in rela- [*808] tion to the niche market of likely users would normally be so high that few second comers would willingly regenerate the data. n71 Hence, sole-source providers are likely to remain a dominant feature of the database landscape, real competition will continue to be the exception, and the strong property rights given database proprietors would potentiate existing barriers to entry. n72
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n70. See supra note 67.
n71. See, e.g., Bits of Power, supra note 69,
at 114-24.
n72. See id.; Reichman & Samuelson, supra
note 7, at 90-95 ("Establishing Legal Barriers to Entry"), 124-30 ("Impeding
Competition in the Market for Value-Adding Products and Services"). But
see Laura D'Andrea Tyson & Edward F. Sherry, Statutory Protection for
Databases, in Hearing on H.R. 2652 Before the Subcomm. on Courts and Intellectual
Property of the House Comm. on the Judiciary, 105th Cong. (1997) (testimony
of Laura D'Andrea Tyson, Consultant, Reed-Elsevier, Inc.) (contesting the
strength of barriers to entry in database industry). New studies by the
National Research Council later in 1999 will attempt to cast further light
on these issues.
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Later scientists and engineers could not combine data legitimately accessed from one commercial database with data extracted from other databases to make a complex new database for addressing hard problems without obtaining additional licenses and permissions. This remains, perhaps, the single most critical problem for scientific and technical research. n73 Despite reassurances to the contrary from leaders of the international publishing community to leaders of the scientific community at a recent meeting in Paris, n74 lawyers representing publishers at face-to-face negotiations held in the Senate late in 1998 continued to insist that this customary and traditional scientific practice would, in principle, violate their redistribution rights. n75 Another critical factor is that there would never be a sale that exhausted the publisher's rights, only a license, which the proposed model laws of computerized information transactions would make perpetual. n76
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n73. See ICSU Position Paper, supra note 34; infra
notes 110-14 and accompanying text.
n74. Trip report by Ferris Webster, Chair, ICSU/CODATA
Group on Access to Data and Information, International Council for Science
(1998) (on file with authors).
n75. Whether the new exceptions proposed in H.R.
354 would alter this result remains to be seen. See supra notes 58-60,
and accompanying text. See also infra text accompanying notes 140-46.
n76. See U.C.C. 2B-502 (Feb. 1999 Draft) (allowing
prohibition of any transfer of mass-market licensed goods); Karjala, supra
note 20, at 538; Reichman & Franklin, supra note 9, at 965. Unless
otherwise restrained, such licenses could override the limited duration
clause that H.R. 354 finally introduced. See supra note 58.
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No one could combine "substantial" amounts of data or information into a more efficient follow-on product without a license; the licensor [*809] would labor under no duty to grant such a license: and the sole-source provider would not want any competition from follow-on products. n77 This also suggests, however, that the price would not be set so high as to encourage independent creation of the same data, when otherwise feasible. If so, and potential producers of follow-on products tended to invest in other activities, it would further discourage competition and innovation. n78
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n77. See Reichman & Samuelson, supra note
7, at 124-30. Cf. Feist Publications, Inc. v. Rural Tel. Serv. Co., 499
U.S. 340 (1991) (sole-source proprietor of telephone directory denied permission
to another directory compiler who wished to combine the data in the former's
directory with data from numerous others whose owners had given their consent).
n78. See supra notes 71-72.
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So long as natural and artificial barriers to entry remained high, scientists and engineers must pay artificially high prices to access commercial databases in the absence of competition. The enactment of strong exclusive property rights (complemented by strengthened contractual rights if the proposed model law were also adopted n79) thus seems likely to reinforce the pervasive sole-source character of the marketplace and exert further upward pressure on prices. n80
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n79. See supra notes 14 -15 and accompanying text.
n80. Cf. Bits of Power, supra note 69, at 121-23
(chronicling failed attempt to privatize Landsat data in the 1980s, when
prices of Landsat images rose from about $ 400 per image to $ 4,400 per
image, a price at which the joint venture "was able to attract some commercial
and federal customers, but few academic or independent researchers").
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Meanwhile, scientists and engineers who paid to access protected databases could not routinely lessen overall transaction costs by lending, borrowing, or transferring the data they extracted to others working on a common problem. This follows because there would never be a sale or transfer under some equivalent of the "first sale" doctrine of the copyright (and patent) laws, n81 only a license that would logically restrict further transfers without any time limit. n82 Scientists and engineers who continued to share data once acquired without obtaining permission and without paying additional fees for such heretofore traditional or customary uses would "harm the market" that the database proprietor presumably secured by dint of the proposed legislation. n83
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n81. See supra notes 38, 76.
n82. See Reichman & Franklin, supra note
9, at 964-65.
n83. See H.R. 2281, 105th Cong. 1302 (1998).
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The data would not enter the public domain for at least fifteen years, and possibly never, if the private party were to continue to invest in main- [*810] tenance or updates of a dynamic database. n84 Even data that nominally entered the public domain at expiry of the fifteen year term could remain unavailable in practice if would-be users lacked means to identify and isolate those data within the larger mix of protected and unprotected data comprising a dynamic collection. n85 If such data were rendered technically identifiable, nothing would prevent the proprietor from using electronic fencing devices and standard form contracts to further preclude extraction even after the intellectual property right had expired. n86
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n84. See id. 1308(c).
n85. See Jane C. Ginsburg, U.S. Initiatives to
Protect Works of Low Authorship, paper presented to New York University
Conference on "Intellectual Products: Novel Claims to Protection and Their
Boundaries," Engelberg Center on Innovation Law and Policy, La Pietra,
Italy (June 25-28, 1998) (unpublished manuscript, on file with authors)
(arguing that publishers should identify the expired components of protected
compilations).
n86. See Reichman & Franklin, supra note
9, at 897-913, 947-51.
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Moreover, unless proper precautions are taken, there is considerable risk that data generated or funded by the U.S. government would become privatized in ways that unduly restricted access on onerous terms and conditions. n87 If this were allowed to happen, taxpayer-financed data would be sold back to science and education at monopoly prices, with the likelihood that additional state subsidies would be needed to defray the costs. In the European Union, where governments intend to commercialize publicly funded data, insufficient thought has been given to this problem in general and to the impact on science and technology in particular. n88
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n87. See, e.g., Hearings, supra note 57 (statement
of Andrew J. Pincus, General Counsel, U.S. Department of Commerce), at
13-20 (arguing for broad exemptions for government-funded data and warning
about the "potential for "capture" of government-generated data) [hereinafter
Statement of Pincus].
n88. See, e.g., Peter N. Weiss & Peter Backlund,
International Information Policy in Conflict: Open and Unrestricted Access
versus Government Commercialization, in Borders in Cyberspace 300, 303
(Brian Kahin & Charles Nesson eds., 1997). See also supra note 65.
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A common thread uniting all the foregoing observations is the lack of any limits on the power of providers who benefit from legal protection of databases to impose any licensing terms or conditions they wish on access to, and use of, their products. In principle, the database provider could override by contract even the few exceptions and limitations contained in the bill, including the public's right to use insubstantial parts of a database. n89
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n89. See H.R. 2281, 105th Cong. 1303(a), 1305(e) (1998). But cf. E.U. Directive, supra note 6, art. 8(1). This E.U. privilege may not be overridden by contract, see id. art. 15. United States publishers opposed the ban on contractual overrides of this provision in the E.U. Directive, and indicate that they intend to override it when permitted. See 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) (unpublished manuscript, on file with authors).
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[*811] The net result, as Professors Reichman and Samuelson pointed out in an earlier article, is that, under the U.S. database proposals, as under the E.U. 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. n90 When the provisions added to the latest bill, H.R. 354, n91 are factored into the analysis, the end result is only slightly improved, at least in appearance if not in practice.
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n90. Reichman & Samuelson, supra note 7 at
94.
n91. H.R. 354, 106th Cong. (1999). See supra
notes 58-61 and accompanying text.
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The first significant change mentioned above, which would more clearly inject protected data into the public domain after fifteen years, n92 is of course a move in the right direction. However, the drafters still ignore the difficulties of identifying and accessing data whose term of protection had technically expired, an issue that was widely discussed last year. n93 The bill also ignores the power of database providers to override formal access to data that nominally entered the public domain by combining adhesion contracts with electronic fencing devices. n94
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n92. See id. 1408(c) (1999) (limiting the term
of protection to 15 years).
n93. See supra note 85 and accompanying text;
Statement of Pincus, supra note 87, at 25-27 (questioning ability of users
"to distinguish unprotected data entries from protected data entries" and
fearing "de facto perpetual protection").
n94. See H.R. 354, 106th Cong. 1405(e) (1999)
(allowing freedom of contract); Reichman & Franklin, supra note 9,
at 899-914.
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The second major change is a good faith effort to address some of the concerns of the scientific and educational communities by means of new, "fair-use-like" provisions. n95 However, these provisions are both ambiguous and too narrowly drawn. n96 By placing the burden of proof on scientists [*812] and engineers, whose "individual acts" of "reasonable" use remain subject to scrutiny case by case, n97 they would continue to exert the chilling effect on research n98 that seems inherent in any "fair use" approach to a database law that does not otherwise provide the many other safeguards familiar from copyright law. Hence, as we explain below, a different kind of approach, one not strictly linked to the "fair use" concept, will be needed to ensure that a sui generis database regime does not harm customary and traditional scientific activities. n99
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n95. See H.R. 354, 106th Cong. 1403(a) (1999).
n96. See, e.g., Hearings, supra note 57 (statement
of James G. Neal, Dean, University Libraries, Johns Hopkins University)
("Exemption for education and research <elip> remains far too narrow.")
[hereinafter Statement of Neal]; id., (testimony of Charles E. Phelps,
Provost, University of Rochester, for AAU, ACE, and NASULGC) ("Exception
for non-profit educational activities contains a broad, vague condition
that vitiates its protection.") [hereinafter Testimony of Phelps].
n97. See id.
n98. See, e.g., Hearings, supra note 57 (testimony
of Joshua Lederberg, Nobel laureate, on behalf of NAS, NAE, IOM and American
Association for the Advancement of Science (AAAS)) [hereinafter Testimony
of Lederberg].
n99. See infra text accompanying notes 151-55.
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Even if a satisfactory legal formula to avoid harm to science and education were found, that formula would remain largely ineffective if database providers could simply override it by contract or, in the alternative, if the publishers could just charge more for access if they knew that the state would require them to charge less for extractions and reuse by scientific and educational bodies. n100 In short, unless the bill expressly and adequately immunizes traditional scientific and technical pursuits, the only limit on the database providers in most instances is what a monopoly market will bear.
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n100. See, e.g., Reichman & Franklin, supra note 9, at 947-51; McManis, supra note 4.
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C. Long-term Implications of the Sui Generis Model
We believe that the long-term implications of the proposed regime are potentially very damaging for science and technology. All science operates on databases. The near-complete digitization of data collection, manipulation, and dissemination over the past thirty years has ushered in what many regard as the transparency revolution. n101 Every aspect of the [*813] natural world, from the nano-scale to the macro-scale, all human activities, and indeed every life form, can now be observed and captured as an electronic database.
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n101. See, e.g., Paul F. Uhlir, From Spacecraft to Statecraft: The Role of Earth Observation Satellites in the Development and Verification of International Environmental Protection Agreements, 2 GIS Law 1 (1995). While we emphasize the impact of database protection on science and technology in this article, we predict that the larger economy will likewise suffer if the anticompetitive effects we foresee should materialize. There is hardly any sector of the economy that is not significantly engaged in the creation and exploitation of digital databases, and many - such as insurance, banking, or direct marketing - are completely database-driven. See, e.g., Hearings, supra note 57 (statement of the Computer & Comm. Industry Assoc. of America and the Online Banking Association) (stressing how H.R. 354 threatens "legitimate reuse of information") [hereinafter Statement of CCIA et al.].
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According to Nobel laureate Joshua Lederberg,
data are the building blocks of knowledge and the seeds of discovery. They challenge us to develop new concepts, theories, and models to make sense of the patterns we see in them. They provide the quantitative basis for testing and confirming theories and for translating new discoveries into useful applications for the benefit of society. They also are the foundation of sensible public policy in our democracy. The assembled record of scientific data and resulting information is both a history of events in the natural world and a record of human accomplishment. n102- - - - - - - - - - - - - - - - - -Footnotes- - - - - - - - - - - - - - - - - -
n102. Testimony of Lederberg, supra note 98, at 5.
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1. Reversing the Transparency Movement
Science builds on science. In all areas of research, the collection of data sets is not an end in itself, but rather a means to an end, the first step in the creation of new information, knowledge, and understanding. As part of that process, the original databases are continually refined and recombined to create new databases and new insights. Typically, each level of processing adds value to an original (raw) data set by summarizing the original product, synthesizing a new product, or providing an interpretation of the original data. n103
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n103. National Research Council, Preserving Scientific Data on our Physical Universe 16 (1995).
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The processing of data leads to a not readily apparent paradox. The original unprocessed, or minimally processed, data are usually the most difficult to understand or to use by anyone other than the expert primary user. With every successive level of processing, the data tend to become more understandable and frequently are better documented for the nonexpert user. As the data become more highly processed, documented, and formatted for easier use, they also are more likely to attract copyright protection. n104
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n104. Id.; see also supra note 25.
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Yet, it is the raw, noncopyrightable data that are typically of greatest use and value to researchers, who can manipulate and experiment with the [*814] original measurements in pursuit of their own research goals. If strong intellectual property protection of noncopyrightable data sets, which previously had the least commercial marketability, weakened the still nascent impetus toward transparency, it could disproportionately affect the availability of data most commonly used in basic research and higher education.
2. Transaction Costs Unlimited
The success of the U.S. basic research and educational system is predicated on the relatively unfettered access to and use of factual information; on a robust public domain for data; and on easy re-use, recompilation, and value adding applications of data. Practically all databases developed in the pursuit of basic research and education are motivated by non-economic incentives such as the desire to create knowledge, the thrill of discovery, and the enhancement of professional status. n105 The new database laws, however, place an overriding emphasis on protecting original investments and on augmenting purportedly necessary economic incentives to create new databases. At the same time, they undervalue the adverse effects on scientific and technical progress, as well as the aggregate economic and social costs inherent in restricting and discouraging the downstream applications and transformative uses of noncopyrightable databases in general. n106
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n105. Cf., e.g., Bits of Power, supra note 69,
at 113 (comparing contributors and users of scientific data to non-market
models of "a family or clan, in which exchange is not monetized but depends
on social norms specifying expected and well-understood levels of contribution").
n106. See, e.g., Testimony of Phelps, supra note
96, at 3-4 ("The Academic Environment and Activities threatened by H.R.
354").
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The lack of any restraints on licensing, especially on sole-source data providers, adds to the dangers inherent in the creation of a strong exclusive property right in collections of data. n107 In particular, the ability of data providers to override by contract even the limited exceptions that the new law may grant to public-interest users, including scientists, engineers, and educators, is of great concern. Without a concomitant duty to deal fairly and reasonably with public-interest users, these combined powers could lead to high prices for data and to the imposition of harsh and oppressive [*815] terms concerning both access and subsequent uses of data that would especially disadvantage academic researchers. n108
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n107. See, e.g., Ginsburg, supra note 7, at 175
("When the data <elip> [are] not available elsewhere <elip> the potential
breadth of the potential market is very troublesome.").
n108. See, e.g., Testimony of Lederberg, supra
note 98, at 2-6 ("Progress in the creation and reuse of new knowledge for
the national good depends on the full and open availability of government
and government-funded data, and on fair and equitable availability of data
from the private sector."); Reichman & Franklin, supra note 9, at 943-47.
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Moreover, scientists and engineers will have
to defray increased transactional and administrative costs engendered by
the need to enforce the different legal restrictions on newly obtained
data, to institute new administrative guidelines regulating institutional
acquisitions and uses of such data, and by associated legal fees. Because
universities and government agencies are inherently conservative, risk-averse
institutions, they will err on the side of caution and place additional
limits on what researchers and educators can do in acquiring and using
data in order to avoid the possibility of costly litigation. n109
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n109. For the problems that university administrators
already foresee, see Testimony of Phelps, supra note 96.
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The proposed database law would severely discourage
the re-use, recompilation, and other value adding uses of data. Anytime
someone uses data in a "collection of information" protected by the proposed
law, that user becomes exposed to claims that he or she will have harmed
the database originator's actual or potential markets. n110 As a practical
matter, this means that once public-domain data are collected and used
for one purpose, such as to prepare a compilation of poisons and antidotes,
it will foster a strong disincentive to use the same data for other purposes
lest those uses violate the "harm to other markets" principle. By the same
token, database recompilers or value adders incur the risk of lawsuits
for infringement every time their new database resembles some pre-existing
database, whether those data were used or not. n111
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n110. See H.R. 354, 106th Cong. 1402 (1999).
However, unauthorized extractions or uses for nonprofit educational, scientific,
or research purposes incur liability only for harm to actual markets. See
id. 1403(a)(1).
n111. See, e.g., Statement of CCIA et al., supra
note 101; Ginsburg, supra note 85, at 23-24 (stressing need for publisher
to identify value-added contributions). The exception that permits anyone
to make use of "insubstantial parts" of a collection of information is
vitiated by the language inflicting liability for harm to the investor's
"actual or potential market." See supra notes 53-55 and accompanying text.
Because the user cannot know such matters in advance, the "potential harm"
test emasculates the "insubstantial parts" exception in practice.
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One of the most serious problems of all is the
risk of inhibiting the creation and exploitation of multiple-source data
products, which have be- [*816] come the scientific method
of choice for addressing hard new problems. Because research is increasingly
conducted by teams, often operating from different institutions, the pertinent
data "are drawn from multiple sources, recombined and merged with new data
to produce data sets that may lead to new and unanticipated findings."
n112 As Joshua Lederberg testified at a hearing on H.R. 354, the "recent
advent of digital technologies for collecting, processing, storing, and
transmitting data has led to an exponential increase in the size and number
of databases created and used. A hallmark trait of modern research is to
obtain and use dozens or even hundreds of databases, extracting and merging
portions of each to create new databases and new sources for knowledge
and innovation." n113
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n112. Testimony of Phelps, supra note 96, at
3.
n113. Testimony of Lederberg, supra note 98,
at 6. See also Testimony of Phelps, supra note 96, at 3 ("In the academic
community, <elip> databases are dynamic instruments: they are not only
sources of information, but they themselves - or components of them - become
ingredients in new products, both through the combination of multiple contemporaneous
data sets to produce qualitatively new products, and through the re-analysis
of prior data from new perspectives provided by new findings or new analytic
tools.").
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In this regard, the Administration itself predicted
that, under the current proposals, scientists and engineers would face
rising transaction costs when attempting to create complex databases from
multiple public and private sources. Also predicted are higher costs due
to the burdens of administering national data centers and of carrying out
related, large-scale management activities that currently benefit from
the policy of open and unrestricted access to scientific and technical
data. n114
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n114. See Letter from Andrew J. Pincus, General
Counsel of the U.S. Dept. of Commerce, to Senator Patrick J. Leahy, Ranking
Minority Member of the Senate Committee on the Judiciary (Aug. 4, 1998)
(on file with authors) [hereinafter Administration's Letter 1998].
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3. Endless Monopolies and Diminished Access to
Government Data
Because many data providers are sole-source and an exclusive property right would greatly strengthen the legal and economic protection of these mini-monopolies, the proposed legislation seems likely to raise the costs of data acquisitions to researchers and educators generally, not to mention other consumers. Those costs would either be passed on to the government and the taxpayer through increased research contract and grant requests, or they would simply diminish the resources available to researchers and education. If the costs and restrictions on all downstream or transformative data users - whether in the public or private sector - similarly increased (as feared by database proprietors opposed to strong [*817] protection), it would discourage socially and economically beneficial forms of exploiting factual data that have up to now been available from the public domain. n115
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n115. See Statement of CCIA et al., supra note
101, at 8-10 (noting that some commercial database providers oppose strong
protection owing in part to fears about consequences of sole-source market
structure).
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The fifteen year term (which is potentially much
longer because of loopholes favoring constantly updated, dynamic databases)
is particularly likely to hamper the progress of science and technology,
a prospect that troubles the Administration, too. n116 Such long delays
in unfettered access to and use of data will undermine the value of many
data sets for most fields of research, including research pertaining to
the formulation of government policy; and in other cases it will effectively
remove them from comparative analysis with other, openly available, concurrent
data sets. n117
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n116. See supra note 55 and accompanying text;
Statement of Pincus, supra note 87, at 21-27.
n117. Besides retarding scientific and technical
progress, the fifteen-year term has no apparent justification in the rapidly
moving commercial database industry either, where economic exploitation
of most data products is typically measured in months and years, and even
minutes and hours, rather than decades. See Statement of CCIA et al., supra
note 101, at 10.
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A fifteen year period appears completely arbitrary
and has not been seriously compared with other, potentially shorter, periods
of protection. n118 The proposed legislation thus defeats a primary, constitutionally
mandated purpose of intellectual property laws, which is to establish a
public domain that "promotes science and the useful arts," n119 from which
researchers, educators, and other downstream users can build on previous
contributions to further knowledge.
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n118. See, e.g., Ginsburg, supra note 85, at
30 (acknowledging soundness of lead-time criterion not adopted in E.U.
Directive); Reichman & Samuelson, supra note 7, at 145 (proposing lead-time
criterion and relating it to lack of actual or legal secrecy).
n119. U.S. Const. art. I, 8, cl. 8.
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The proponents of the legislation say that nothing
prevents a user or competitor from independently creating an equivalent
database. n120 But many databases cannot be recreated from scratch. Data
that are time-sensitive, unique, very old, or prohibitively expensive fit
this description. In research, this includes virtually all observational
data sets of transient natural phenomena, as well as data from very costly
or labor-intensive experiments. Furthermore, a basic underlying principle
in research and edu- [*818] cation is that the creation of new knowledge
should build on the base of existing data and information, and that scientists
and engineers should not have to duplicate previous factual compilations
or discoveries in socially and economically inefficient ways. n121 Protection
of investments in factual databases is not the only interest that the law
should seek to protect in this area.
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n120. See, e.g., Ginsburg, supra note 7, at 175.
n121. See, e.g., Statement of Lederberg, supra
note 98, at 4-5; Testimony of Phelps, supra note 96, at 3-4; Statement
of Neal, supra note 96.
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Public interest users in the United States are
likewise concerned about the applicability of the E.U. Database Directive
to government data and the potential restrictions on access to and use
of European public-sector data. Moreover, even though the proposed U.S.
legislation does expressly exempt government data from its scope of protection,
there are concerns that, as drafted, this exemption could be circumvented
in several ways. n122
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n122. See H.R. 354, 106th Cong. 1404 (1999);
see also, Statement of Pincus, supra note 87, at 13-20 ("Third Principle
- Preserve access to government data"). The federal basic research budget
alone is estimated to be over $ 19.5B/year, of which a sizeable fraction
is devoted to the creation, maintenance, dissemination, and analysis of
scientific and technical data. See Intersociety Working Group, American
Ass'n for the Advancement of Science Report XXIV: Research and Development
FY 2000 71 (1999). Moreover, the government at all levels produces data
of other importance to the nation, including economic growth, public health
and safety, regulatory requirements, cultural affairs, and many other functions.
All citizens have an interest in preserving full and open access to all
government data that are not otherwise restricted by national security,
privacy, or other legitimate limitations.
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This can occur, for example, if the contractors
or grantees are not expressly required either to provide their data back
to the government for public dissemination, or to make the data publicly
available themselves under appropriate terms and conditions. n123 Absent
such universal vigilance by the government, a lot of data produced as a
direct result of public funding could end up under proprietary control
of researchers or their institutions. Because most of the noncopyrightable
databases generated with government funding in the United States are actually
created by non-government employees, whether in academia or industry, the
failure of government agencies to enforce this exemption could have a far-reaching
impact on the full and open availability of publicly funded data. Indeed,
there is some risk that government agencies could increasingly view database
protection as an income-generating opportunity, like their European [*819]
counterparts. n124 As more university research is funded by private sources,
more data will likely be removed from the public domain in the form of
income-producing products.
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n123. See, e.g., Ginsburg, supra note 85, at
28 ("In the case of sole-source government information, public domain policy
favors making the information available to market rivals.").
n124. See supra note 88 and accompanying text.
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Still other legislation, if combined with increased
database protection, could further limit the principle of full and open
access to government data. For example, the Commercial Space Act of 1998
encourages NASA to purchase space and earth science data collection and
dissemination services from the private sector and to treat data as commercial
commodities under federal procurement regulations. n125 When coupled with
strong protectionistic measures, such as those contemplated by H.R. 354,
we could eventually witness the passing of substantial amounts of data
from the public domain of entire federal agencies. It also remains unclear
if the government concludes an arrangement with a private sector party
to disseminate public data or information, whether there will be adequate
safeguards that either promote competition or that require low-cost access
for public-interest users. n126
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n125. See Commercial Space Act of 1998, Pub.
L. No. 105-303 (1998).
n126. Cf. Statement of Pincus, supra note 87;
Ginsburg, supra note 85, at 27-29.
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4. Gaming the Cooperative Ethos
Finally, a high-protectionist regime tends to undermine scientific and technical cooperation over time and to exert a progressive chilling effect on data-intensive research. As scientists, engineers, and their employing institutions become more accustomed to a new legal regime that encourages the commercial exploitation of their own research data sets, the cooperative culture that has become the hallmark of so many fields of science will be threatened. n127 Universities have already indicated that they intend to commercially exploit databases, and they have obtained an exemption for state universities from the government data exception in the proposed legislation. n128 If scientific institutions in one segment of the research community try to commercially exploit their colleagues in other institutions or countries, still others will be tempted either to emulate such be- [*820] havior or to cut off cooperation. Either way, science and technology would suffer.
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n127. See, e.g., Bits of Power, supra note 69,
at 169-70 (urging the scientific community to organize its own administration
of data in order to preserve the sharing ethos).
n128. See H.R. 354, 106th Cong. 1404(a)(1) (1999)
(limiting the term of protection); Testimony of Phelps, supra note 96,
at 17 (noting that "universities and colleges are not only users of compilations
of information, they also act as creators of collections that should be
[entitled to] protection to the same extent as collections created by commercial
providers").
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Even if scientific data exchanges in established
cooperative research programs were allowed to continue among a select group
of principal investigators and an approved class of associated researchers,
it would become increasingly difficult for other researchers outside the
officially sanctioned group to obtain full and open access to the program
data. This result, of course, would discourage interdisciplinary research
and applications, contrary to the interests of technological innovation
and the advancement of knowledge.
If simple exchanges of data and access to single
databases became legally threatening or prohibitively expensive, imagine
the potential transactional burdens that ill-conceived laws could impose
on data compilers or users who needed to integrate data from multiple,
or even hundreds, of different sources. This brings us to what may well
be the most profound--and insidious--impact of the proposed legal regime
on science and technology: the lost opportunity costs that will be repeated
thousands of times each day across the basic and applied research communities.
If scientists and engineers must choose between spending a lot of administrative
time and a larger percentage of their valuable research grants on acquiring
data and doing other, less data-intensive work, they will increasingly
opt for the second route, despite the astounding yields that have so far
been harvested from data-intensive research under existing conditions.
For all these reasons, an overly protective database regime would seriously impede the use, reuse, and transformation of the factual data that are the lifeblood of science and technology. In a worst case scenario, this law would first disrupt the system of cheap access to upstream data for purposes of basic research, it would then lead to ever higher prices for the acquisition of data used in applied research, and finally, it would strangle the ability of value-adding researchers and industries to improve, transform, or develop follow-on databases and related information products. n129 These outcomes would, in turn, greatly reduce the downstream applications of scientific breakthroughs subject to exclusive property rights. In sum, putting a strong property right too far upstream too soon n130 could have a disastrous effect on the long-term competitiveness of the U.S. economy and [*821] would undermine a key comparative advantage this country enjoys in the high-tech sectors of the global marketplace.
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n129. See, e.g., Statement of CCIA et al., supra
note 101.
n130. Cf. Michael A. Heller & Rebecca S.
Eisenberg, Can Patents Deter Innovation? The Anticommons in Biomedical
Research, 280 Science 698-701 (1998).
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III. RECENT DEVELOPMENTS: THE QUEST FOR AN APPROPRIATE
UNFAIR COMPETITION APPROACH
Concern about these issues mobilized the scientific, educational and library communities to express their views both to Congress and to the World Intellectual Property Organization ("WIPO"). For example, the Presidents of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine sent several letters to the Administration and to leading members of Congress responsible for this legislation. n131 The International Council for Science ("ICSU") likewise intervened at relevant meetings of WIPO, and documents submitted by ICSU have played a prominent role in successful efforts to block rapid or premature efforts to launch an international treaty regulating databases modeled on the unbalanced E.U. Directive. n132 ICSU has also begun direct consultation with publishers' representatives, with a view to working out some common understanding applicable to database protection issues affecting the scientific community.
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n131. Letters from the three Academy Presidents
to Mickey Kantor, Secretary of Commerce (Oct. 9, 1996) and to Senator Orrin
Hatch, Chair of the Senate Committee on the Judiciary (July 10, 1998) (on
file with authors).
n132. See ICSU Position Paper, supra note 34;
Reichman & Samuelson, supra note 7, at 95-102, 110-13 (describing efforts
to have WIPO adopt a database protection treaty in 1996).
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Initial efforts in 1997 and early 1998 to slow
the legislative process in the U.S. House of Representatives were not successful.
The concerns of the scientific community were largely ignored by the House
Committee on the Judiciary's Subcommittee on Courts and Intellectual Property,
which first pushed H.R. 2652 (the "Collections of Information Antipiracy
Act") through the House in the spring of 1998 and then had that bill attached
to the Digital Millennium Copyright Act, H.R. 2281, in July 1998. n133
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n133. See H.R. 2652, 105th Cong. (1998); H.R.
2281, 105th Cong. (1998); see also Copyright Office, Report on Legal Protection
for Databases (1997), available at <http://lcweb.loc.gov/copyright/reports>.
For the latest position of the Copyright Office, see Hearings, supra note
57 (statement of Marybeth Peters, Register of Copyrights) (noting improvements
in H.R. 354, but stating that "it is important not to inhibit or raise
the cost of public interest uses" and that an "appropriate statutory balance
should result in optimizing the availability of reliable information to
the public") [hereinafter Statement of Peters].
- - - - - - - - - - - - - - - - -End Footnotes-
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[*822]
A. The Administration's Position
More recent developments, however, have been favorable to the interests of the scientific and educational communities. To begin with, an interagency review initiated within the Administration in the spring of 1998 produced a series of important position papers that supported the theses that the scientific community had already put forward. On August 4, 1998, the General Counsel of the U.S. Department of Commerce, Andrew Pincus, wrote Senator Patrick Leahy, Ranking Minority Member of the Senate Committee on the Judiciary, to advise that any new database legislation must avoid capture by private parties of government data and that "any effects [it may have] on non-commercial research should be de minimis." n134 This letter was sent as a consensus position of all departments and agencies of the Administration.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n134. Administration's Letter 1998, supra note
114.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Consistent with these views, the Administration
expressed concerns about possible increased transaction costs in data use,
particularly where larger collections integrate data sets originating from
different parties or where different parties have added value to a collection
through separate contributions<elip>. This is especially important for
large-scale data management activities, where public investment has leveraged
contributions from the private and non-profit sectors. n135 The letter
went on to express further concerns "that the <elip> exception for noncommercial
research and educational uses does not ensure that legitimate non-commercial
research and educational activities are not disrupted by the prohibition
against commercial misappropriation" and that sole-source providers might
unduly
burden "access and use" by this sector. n136 The Administration reiterated
most of these same concerns in testimony before the House Subcommittee
on Courts and Intellectual Property, at hearings concerning H.R. 354 on
March 18, 1999. n137
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n135. Id.
n136. Id.
n137. See Statement of Pincus, supra note 87.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
The Administration's initial letter of August
4, 1998, also referenced the Department of Justice's "serious constitutional
concerns that the First Amendment restricts Congress's ability to enact
legislation" of this kind, and that other constitutional obstacles would
have to be overcome. n138 [*823] These constitutional impediments
were elaborated in a 26-page memorandum by the Legal Counsel of the U.S.
Department of Justice, dated July 28, 1998, which detailed a serious indictment
of the sui generis model then pending before Congress. n139
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n138. Administration's Letter 1998, supra note
114.
n139. See Memorandum from William Michael Treanor,
U.S. Dept. of Justice, Office of the Deputy Ass't. Att'y. Gen., to William
R. Marshall, Associate White House Counsel, "Constitutional Concerns Raised
by the Collections of Information Antipiracy H.R. 2652" (July 28, 1998)
(on file with authors) [hereinafter DOJ Memorandum]. See also Letter from
Professor Marci Hamilton to Chairman Howard Coble (Feb. 10, 1998) (on file
with authors) (detailing serious Constitutional concerns) [hereinafter
Letter from Hamilton].
- - - - - - - - - - - - - - - - -End Footnotes-
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On September 28, 1998, moreover, the Chair of
the Federal Trade Commission ("FTC"), Robert Pitofsky, wrote the Chair
of the House Committee on Commerce, Tom Bliley, to express additional concerns
about the pending database legislation. n140 In particular, the FTC found
that "certain provisions within the proposed legislation raise concerns
about possible unintended, deleterious effects on competition and innovation,"
and that "the potential for anti-competitive use of a "collection of information'
is substantially increased when there is only a single source for the data."
n141
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n140. See Letter from Robert Pitofsky, Chair
of the Federal Trade Commission, to Tom Bliley, Chair of the House Committee
on Commerce (Sept. 28, 1998) (on file with authors).
n141. Id. at 7, 14.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Finally, it should be noted that the United States
Patent and Trademark Office ("USPTO") held a conference on April 28, 1998,
to reexamine database protection and access issues. In July 1998, it issued
a Report that, while endorsing a modified form of sui generis database
protection, expressed support for some of the concerns that the scientific
and educational communities had been voicing. n142
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n142. See U.S. Patent and Trademark Office, Report
on (and Recommendations from) April 1998 Conference on Database Protection
and Access Issues (1998).
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B. A Negotiated Discussion Draft in the Senate
In late July of 1998, the Chair of the Senate
Committee on the Judiciary, Senator Orrin Hatch, invited representatives
of some of the major stakeholder organizations and companies to participate
in strenuous negotiations, which lasted from the beginning of August through
early October. These negotiations were conducted under the leadership of
Senator Hatch's Counsel for Intellectual Property, Edward Damich, and with
the [*824] participation of the counterpart staffer in Senator Leahy's
office, Marla Grossman.
1. Clarifying the Demands on Scientific and Technical
Users
The U.S. Academies took the unusual step of participating directly in these negotiations. n143 They submitted a series of alternative proposals aimed at providing a balanced piece of legislation that would protect publishers against free-riding conduct and preserve the incentive to invest (through a true unfair competition approach) without creating a strong exclusive property right in collections of data and factual information. n144
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n143. The authors of this article represented
the National Academy of Sciences (NAS), the National Academy of Engineering
(NAE), and the Institute of Medicine (IOM) during these negotiations.
n144. See, e.g., National Academy of Sciences
et al., Proposed Amendments to H.R. 2281: Synopsis, Corrections, and Text,
submitted for consideration by the Senate Committee on the Judiciary (Aug.
11, 1998) (unpublished manuscript, on file with authors) [hereinafter NAS,
Synopsis]; National Academy of Sciences et al., Proposed Amendments to
H.R. 2281: Explanatory Memorandum (Part I) (Aug. 13, 1998) (unpublished
manuscript, on file with authors) [hereinafter NAS, Explanatory Memorandum];
NAS et al., Opponents' Revised Amendments to H.R. 2281 (Sept. 4, 1998)
(unpublished manuscript, on file with authors) (concerning (1) permitted
acts for scientific, educational, and research purposes; (2) exclusions;
(3) definition of "collections of information"; and (4) licensing).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Although the direct negotiations produced no
major breakthroughs or compromise solutions, they did succeed in clarifying
the different positions. It seems fair to say that, when exposed to direct
interrogation, the publishers' detailed demands more than justified the
scientific and educational communities' initial concerns. n145 Indeed,
in response to one hypothetical situation after another, the publishers'
representatives made it clear that the exclusive property right they championed
for the digital network system would in fact engender the kind of legal
and contractual demands on scientific, technical, and commercial users
of protected databases that critics of the proposed legislation had been
fearing and that are described in this article.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n145. For the latest iteration of the publishers'
position, see Hearings, supra note 57 (testimony of Daniel C. Duncan, Vice
President for Gov't. Affairs, Software and Information Industry Assoc.)
[hereinafter Testimony of Duncan]; Hearings, supra note 57 (testimony of
Marilyn Winokur, Exec. Vice President, Micromedex for Coalition Against
Database Piracy); Hearings, supra note 57 (testimony of the National Assoc.
of Realtors). See also Hearings, supra note 57 (statement of Michael K.
Kink, AIPLA); Hearings, supra note 57 (testimony of the Agricultural Publishers
Assoc.).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
[*825] Perhaps because the publishers'
actual demands amply confirmed the concerns that the Administration's own
position papers had expressed, the final phases of the negotiations, as
mediated by the Senate staffers, produced far-reaching modifications to
the database component of H.R. 2281. On January 19, 1999, Senator Orrin
Hatch placed in the Congressional Record a statement acknowledging that
"considerable progress" had been made during the aforementioned negotiations
and that, "in the end we were close to a workable compromise." n146 Senator
Hatch also put in the Record "a discussion draft that is identical to the
last of the discussion drafts <elip> [he had] offered last year." n147
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n146. See 106 Cong. Rec. S.316 (daily ed. Jan.
19, 1999) (statement of Senator Hatch on Database Antipiracy Legislation)
[hereinafter Statement of Hatch].
n147. See id. at S.322-26 (Chapter 14 - Protection
of Databases) [hereinafter Hatch Database Discussion Draft].
- - - - - - - - - - - - - - - - -End Footnotes-
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2. Compromise Proposals
The changes incorporated in the last Discussion Draft substantially reflected the Academies' own position. Although there is no way of knowing the degree of assent to all the various provisions it contained, it is worth reviewing the package of compromise proposals embodied in the last Hatch Database Discussion Draft of October 5, 1998. n148
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n148. See id. An abridged selection of these
points was used in a letter from the Presidents of the NAS, NAE, and IOM
to Howard Coble, Chair of the Subcommittee on Courts and Intellectual Property
of the House Committee on the Judiciary, March 9, 1999, and subsequently
in the testimony of Joshua Lederberg before the Subcommittee at its March
18, 1999 Hearing,. See supra notes 57, 114
- - - - - - - - - - - - - - - - -End Footnotes-
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First, the strong property right approach was
nudged closer to a true "misappropriation" (unfair competition) approach.
This was accomplished by conditioning liability on acts that "cause substantial
harm to the actual or neighboring market" of database proprietors, n149
and by inviting courts, in the draft legislative history, to determine
"substantial harm" in light of "whether the harm is such as to significantly
diminish the incentive to invest in gathering, organizing, or maintaining
the database." n150
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n149. See Hatch Database Discussion Draft, supra
note 147, 1302.
n150. Hatch Database Discussion Draft Proposed,
Conference Report Language, 1302, at 33 (on file with authors).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Second, a full exception that would immunize
customary scientific activities was adopted by the Senate staffers, in
place of the limited and unacceptable "fair use" approach that the Administration
had eventually rec- [*826] ommended. n151 A "fair use" approach,
modeled on copyright law, would fail because other basic copyright immunities
and exceptions, especially the idea-expression dichotomy, would not carry
over into the database protection environment. On the contrary, because
a database law protects collections of facts and data that are ineligible
under copyright laws (and because scientists perceive no valid distinction
between "data" and a "collection of data" in a dynamic electronic database),
basic research methods that were previously permissible would become infringing
acts under such a law. The burden would then fall on scientists and engineers
to show that a vague fair use exception should excuse some of these infringing
acts from whatever test of harm was adopted.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n151. See Administration's Letter 1998, supra
note 114; see also Memorandum from the Administration to the Senate Committee
on the Judiciary, Senate Draft Developments and Suggested Additional changes
to Address Key Concerns for Discussion (rev. Sept. 30, 1998) (on file with
authors).
- - - - - - - - - - - - - - - - -End Footnotes-
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In contrast, the Academies successfully argued
that customary and traditional scientific activities should remain untouched
and unhampered by any new database protection law, exactly as the government's
initial position paper had maintained. n152 To this end, section 1304 of
the final version of the Hatch Database Discussion Draft stated the following
proposition:
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n152. See Administration's Letter 1998, supra
note 114. However, the Government's latest position paper leans towards
the compromise "fair use" provision introduced in H.R. 354, which we judge
to be inadequate. See Statement of Pincus, supra note 87, at 29-31.
- - - - - - - - - - - - - - - - -End Footnotes- - - - - - - - - - - - - - - - -
Nothing in this chapter shall prohibit or
otherwise restrict the extraction or use of a database protected under
this chapter for the following purposes:
1)
for illustration, explanation, or example, comment
or criticism, internal verification, or scientific or statistical analysis
of the portion used or extracted; and
2)
in the case of nonprofit scientific, educational, or research activities by nonprofit organizations, for similar customary or traditional purposes. n153
Only if scientists, engineers or educators working at nonprofit organizations caused substantial harm to the database-maker by using unreasonable and non-customary amounts of the collection for a given purpose, or if they in fact produced a market substitute for the original, or otherwise sought to avoid paying for the use of research tools devised as such, would [*827] liability kick in. n154 On this approach, the burden fell on publishers to show that scientists had crossed the line of permitted, traditional, or customary uses, which were otherwise immunized. The guiding principle that science, technology, and education should be left no worse off after enactment than they were before, as proposed by ICSU, n155 would thus have been implemented.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n153. Hatch Database Discussion Draft, supra
note 147, 1304(a) (emphasis added).
n154. See id. 1304(b):
In no case may a use or extraction for a
purpose described in subsection (a) be permitted if the substantial harm
referred to in Section 1302 -
1. arises because the amount of the portion used
or extracted is more than is reasonable and customary for the purpose;
2. consists of the use or extraction being intended
to, or being likely to serve as a substitute for or to supplant all or
a substantial part of the database from which the extraction or use is
made or an adaptation thereof that is protected under this chapter;
3. arises because the extraction or use is intended
to avoid payment of reasonable fees for use of a database incorporated
into a product or service specifically marketed for educational, scientific,
or research purposes; or
4. arises because the use or extraction is part
of a pattern, system, or repeated practice by the same party, related parties,
or parties acting in concert with respect to the same database or a series
of related databases.
n155. See ICSU Position Paper, supra note 34,
at 2.
- - - - - - - - - - - - - - - - -End Footnotes-
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Third, additional immunities and exceptions favoring
certain instructional and library uses of databases were also defined,
n156 although more thought needs to be given to educational users generally
in this context. n157 Fourth, efforts were also made to reduce the likelihood
that private interests might permanently capture government-generated data,
n158 although more remains to be done on this score as well. n159
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n156. See Hatch Database Discussion Draft, supra
note 147, 1307.
n157. See also Statement of Phelps, supra note
96, at 16 (proposing exemption for non-profit teaching activities).
n158. See Hatch Database Discussion Draft, supra
note 147, 1305(a)-(c).
n159. See Statement of Pincus, supra note 87,
at 13-20 (detailed proposals concerning government-funded data and the
need to avoid its "capture" by commercial interests); Ginsburg, supra note
85, at 27-29.
- - - - - - - - - - - - - - - - -End Footnotes-
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Fifth, a clearly-worded duration clause ending
protection after fifteen years reduced (but did not altogether eliminate)
the risk of perpetual protection. n160 A rudimentary database deposit scheme
was also proposed, which increased the likelihood of data eventually entering
the public do- [*828] main, albeit in a cumbersome and, perhaps,
costly fashion. n161 If that route were taken, more incentives would be
needed to ensure that deposits were actually made. However, the Administration
favors developing other, simpler incentives to ensure the availability
of public domain data that are worth exploring. n162
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n160. See Statement of Pincus, supra note 87,
at 24-27.
n161. See Hatch Database Discussion Draft, supra
note 147, 1310(d); Statement of Pincus, supra note 87, at 24-27.
n162. See Statement of Pincus, supra note 87,
at 24-27 (discussing dated identity tags and statutory defenses to liability,
including lack of public availability of government-funded data); see also
Ginsburg, supra note 85, at 24.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Sixth, the need for some regulation of licensing
terms and conditions was expressly recognized. A series of provisions required
periodic studies of the misuse doctrine as applied to licensing agreements,
or to the use of technological measures that might frustrate the "permitted
acts" clause of the bill. Particular grounds for the study included sole-source
provider contracts that imposed unreasonable terms or conditions; tying
or other practices traditionally recognized as abusive; and practices shown
to have "prevented access to valuable information for research, competition,
or innovation purposes." n163 The draft legislative history then clarified
that courts were free to apply these same criteria to claims of misuse
arising after the time of enactment and need not "refrain from applying
the doctrine of misuse until the study is completed." n164 There was some
further possibility that criteria for evaluating the misuse of licensing
agreements might have ultimately been codified in the operative clauses
of the Act itself.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n163. Hatch Database Discussion Draft, supra
note 147, 4. See also id. 1306(a) (preserving doctrine of misuse). But
see id. 1306(e) (allowing licensors unrestricted freedom of contract).
n164. Hatch Database Discussion Draft, Proposed
Conference Report Language, supra note 150, at 36-37.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Finally, the draft legislative history to accompany
these measures also clarified the definition of databases in ways that
tended to exclude ordinary literary works, and it denied protection "to
any ideas, facts, procedure, process, system, method of operation, concept,
principle, or discovery, as distinct from the collection that is the product
of investment protected by this Act." n165 Needless to say, we think the
proposed database law should expressly codify these provisions. Indeed,
the fact that the bill's proponents oppose inclusion of such a basic limitation
in H.R. 2281 only serves to reinforce our concerns about the true nature
and extent of their intended exploitation of the legislation's most restrictive
provisions.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n165. Id. at 131.
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[*829]
C. Uncertain Future of the Database Protection
Law
The foregoing discussion reveals the extent
to which the Hatch Database Discussion Draft evolved away from the strong
exclusive property right approach, adopted in the E.U. Directive, toward
a more balanced unfair competition approach that protected publishers against
piracy while consciously avoiding harm to science, education, and other
public-good uses of data. Of course, not all the issues of concern to science
were addressed in a fully satisfactory manner; but given the need for compromise
and consensus, the ability of the staff to produce a relatively balanced
bill from such unpromising material as the House bill deserves commendation.
Perhaps the biggest unaddressed issue was that
of value-adding uses. The Discussion Draft did not resolve the tensions
between a dominant group of database publishers, who seek to control value-adding
uses of protected collections, and a dissident group of publishers and
allies, who believe value-adding uses should remain as unfettered as possible.
n166 On this point, the Academies proposed a scheme favoring easy use of
data for commercial value-adding purposes in exchange for the payment of
reasonable royalties under an automatic licensing scheme; n167 but neither
side would accept this approach. Nevertheless, under the misappropriation
approach to "substantial harm," as elaborated in the Draft Legislative
History, n168 courts could work out the criteria for balancing incentives
to invest against incentives to compete for the short run, and these case-by-case
solutions could be legislatively evaluated later on.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n166. Compare, e.g., Testimony of Duncan, supra
note 145, at 9-10 (presenting a case for broad scope of protection) with
Testimony of CCIA et al., supra note 101, at 6-8 (advocating less restricted
commercial reuse of data).
n167. See NAS, Synopsis, supra note 144, 1303(g)
(distinguishing use by competitors on distant markets from use in direct
competition for these purposes). See also Reichman & Samuelson, supra
note 7, at 146 (proposing "automatic license built into <elip> [a] modified
liability right itself"); Ginsburg, supra note 85, at 28 (proposing automatic
license for sole-source collections of government data to benefit "market
rivals").
n168. See supra note 150.
- - - - - - - - - - - - - - - - -End Footnotes-
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In the end, the Hatch Discussion Draft was not
adopted mainly because time ran out in which to remove the last remaining
wrinkles that prevented an agreed compromise. n169 As a result, the database
component of H.R. 2281, Title V, was stripped from the Digital Millennium
Copyright Act, which was enacted at the end of the legislative year. Work
on [*830] database protection has begun all over again under the
aegis of a new Congress, which convened in January 1999. n170
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n169. See supra note 146 and accompanying text
(expressing Senator Hatch's belief that considerable progress had been
made).
n170. See H.R. 354, 106th Cong. (1999); supra
text accompanying notes 57-61 .
- - - - - - - - - - - - - - - - -End Footnotes-
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During the fall of 1998, some members of the
coalition that had opposed H.R. 2281 drafted still another bill that sought
to implement unfair competition principles more aggressively than was contemplated
in the final Hatch Discussion Draft. n171 There exists some support for
this so-called "minimalist" unfair competition approach, which would protect
databases only against wholesale duplication for an indefinite period of
time. n172 However, this solution could easily degenerate into a de facto
exclusive property right conferring perpetual protection by the back door.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n171. See Statement of Hatch, supra note 146,
at S.320-22 (Proposed Bill to Amend Title 17, United States Code, to Promote
Research and Fair Competition in the Database Industry) [hereinafter Minimalist
Protection Bill of 1999].
n172. See Minimalist Protection Bill of 1999,
supra note 171, 1401, 1408.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
Whatever happens next, the final version of the
Hatch Discussion Draft constituted a milestone along the route towards
a more balanced model of database protection, and its lessons should inform
the next round of legislative deliberations. There is unofficial and anecdotal
evidence that the Japanese government may also embark upon a true unfair
competition approach, which, if true, would afford a unique opportunity
for the United States and Japan to present a united front to the rest of
the world. In that event, other countries would probably move in the direction
of a more balanced unfair competition regime, which might leave the E.U.
alone to continue its experiment with a strong property right, or to modify
its Directive so as to obtain a more balanced system of protection with
fewer social costs.
Unfortunately, the scientific community will
experience serious challenges to the policy of easy access to, and unrestricted
uses of data, regardless of the approach to database protection that ultimately
emerges from Congress and the legislation of other countries. As pointed
out at the beginning of this article, publishers can already control the
dissemination of data by combining technical protection measures with adhesion
contracts in the online environment, even without the adoption of specific
database legislation. n173 While the presence of an intellectual property
right would strengthen the publishers' position and put the scientific
and technical communities under grave legal disadvantages, n174 the absence
of an ex- [*831] clusive property right would not free them from
the need to rethink their whole approach to maintaining the unrestricted
flow of scientific and technical data in an emerging information economy.
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n173. See supra text accompanying notes 10-18.
n174. See Reichman & Franklin, supra note
9, at 911-14, 947-51 (exploring impact of online adhesion contracts with
or without a codified property right underneath).
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
We trust that two new studies by the National
Research Council, which are examining these issues, will shed further light
on the options for science when they are published in mid-1999. Meanwhile,
it seems clear that the scientific and technical communities will have
to consider ways of reconciling a greater degree of commercialization for
databases generated within the academic community with the need to maintain
privileged access to the same databases for scientific and other public
interest objectives. Universities and research institutions that generate
data will thus have to develop rules for disciplining grants and the uses
of data obtained from grants. Separate channels for the nonprofit distribution
of scientific and technical data may have to be created, with particular
rules for participating organizations. Ultimately, it may also prove desirable
to develop an extended licensing authority for certain classes of scientific
data, in order to administer these resources with low transaction costs
and uniform rules for commercial and non-commercial users. n175
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n175. Cf. Merges, supra note 1.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
In general, efforts must be made to preserve
the sharing ethos with respect to publicly-generated scientific data, to
encourage those who invest in the production of privately-generated data
to provide price discrimination in favor of the scientific and educational
communities, and to develop differentiated products for the non-profit
sector. n176 As the Academies recently explained, Congress should strive
to reconcile legitimate measures to repress parasitical copying of protected
databases with the equally legitimate needs of the scientific, technical,
and educational communities. These communities require:
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n176. See Bits of Power, supra note 69, at 166-71.
- - - - - - - - - - - - - - - - -End Footnotes-
- - - - - - - - - - - - - - - -
. access to data on fair and reasonable conditions;
. the ability to use the data accessed for research
or educational purposes; and
. freedom from contractual or technical interference
with these pursuits. n177
- - - - - - - - - - - - - - - - - -Footnotes-
- - - - - - - - - - - - - - - - -
n177. See NAS, Explanatory Memorandum, supra
note 144, at 9.
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These objectives will, in turn, require close
collaboration with governments. The goal is to ensure that data generated
at the taxpayers' ex- [*832] pense remain available at least for
scientific and educational purposes, and that efforts to stimulate greater
investment in the development of new databases do not end by creating barriers
to entry or otherwise discouraging follow-on innovation and public good
uses of the building blocks of knowledge.
IV. PRESERVING THE CONSTITUTIONAL BALANCE OF
INTERESTS IN THE NETWORKED ENVIRONMENT
Because everything on the Internet is potentially a "database" or a "collection of information" in our increasingly information-based economy, the law that protects collected information will determine the level of competition and prices in that economy. The EU Directive--and to almost the same extent its counterpart proposal pending in the United States n178 -- opt for a very high level of protection. These regimes buttress mini-monopolies of data and information that could threaten the advance of scientific and technical research, hinder the creation of legitimate new commercial information products, and hurt downstream consumer interests.
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n178. See E.U. Directive, supra note 6; H.R.
354, 106th Cong. (1999).
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A. The Competitive Ethos Under Attack
The fallacy behind most proposals for strong
forms of database protection is that they ignore the dual nature of data
and information as such. On one level, data function as a raw material
of the information economy, a basic ingredient of the public domain, from
which scientists and entrepreneurs both draw to fashion their respective
products. On a second level, data and information are bundled into downstream
products that attract intellectual property rights and related contractual
agreements. The mistake is to presume that strong intellectual property
rights that were empirically well-suited to downstream applications - mainly
derived from the patent and copyright models - are equally well-suited
to upstream regulation of the data as inputs into the process of innovation.
The opposite is true. If we balkanize the public
domain and make the transaction costs of recreating it by contracts prohibitively
expensive and complex, a dysfunctional legal system will impede the cumulative
and sequential development of technical paradigms by depriving routine
innovators of access to the building blocks of knowledge. n179
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n179. See Heller & Eisenberg, supra note
130; Suzanne Scotchmer, Standing on the Shoulders of Giants: Cumulative
Research and the Patent Law, 5 J. Econ. Perspectives 29 (1991); Reichman
& Franklin, supra note 9, at 884-88. Cf. generally Michael A. Heller,
The Tragedy of the Anticommons: Property in the Transition from Marx to
Markets, 111 Harv. L. Rev. 621 (1998) (showing that too many rights to
exclude produce anticommons effects as bad as the lack of any powers to
exclude).
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[*833] The truth is that traditionally
we have left small grain-size innovation to weaker forms of entitlement,
that is, to liability principles rooted in unfair competition law, rather
than strong property rights, and this has been a basic premise on which
the competitive economy of the industrial revolution was constructed. n180
These lessons are still germane to the information economy - lessons sounding
in reverse engineering and the reuse of ideas, rather than in legally supported
monopolies on products of routine innovation and investment.
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n180. See generally Reichman, Legal Hybrids,
supra note 3, at 2434-44; Reichman, Charting, supra note 3, at 485-96,
504-17.
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Until convincing evidence to the contrary accrues,
we should address the risk of market failure in the information economy
by erring on the side of underprotection rather than overprotection. This
follows because there is no real or potential shortage of investment in
this milieu once the causes of market failure are controlled; and it is
sound public policy, because we do not wish needlessly to encourage the
monopolization of the sources of factual data, to deter value-adding innovators,
or to retard the progress of science. n181
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n181. See generally J.H. Reichman, Solving the
Green Tulip Problem: Repackaging Rights in Subpatentable Innovation, paper
presented to New York University Conference on "Intellectual Products:
Novel Claims to Protection and Their Boundaries," Engelberg Center on Innovation
Law and Policy, La Pietra, Italy (June 25-28, 1998) (unpublished manuscript,
on file with authors).
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B. The Constitutional Dilemma
The inclination to place strong intellectual property rights in upstream collections of information is contrary to our entire intellectual property tradition and to our basic constitutional heritage. For some forty years, the late Professor Melville Nimmer, a leading authority on both copyright and First Amendment law, taught that copyright protection would violate First Amendment guarantees of free speech were it not for the judicial exclusion of ideas and facts from the reach of the exclusive property rights granted to authors and artists. n182 In 1976, Congress codified that exclusion [*834] in Section 102(b) of the General Revision of Copyright Law, n183 and in 1991, the Supreme Court, in Feist Publications, Inc. v. Rural Telephone Service, Co., n184 reconfirmed the constitutional prohibition against an exclusive property right in either facts or ideas.
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n182. See M.B. Nimmer & D. Nimmer, Nimmer
on Copyright 1.10 (1998); R.A. Smolla, Smolla & Nimmer on Freedom of
Speech 21:8 (1998); Robert C. Denicola, Copyright and Free Speech: Constitutional
Limitations on the Protection of Expression, 67 Calif. L. Rev. 283 (1983);
M.B. Nimmer, Does Copyright Abridge the First Amendment Guarantees of Free
Speech and Press?, 17 UCLA L. Rev. 1180 (1970); Alfred C. Yen, A First
Amendment Perspective on the Idea/Expression Dichotomy and Copyright in
a Work's "Total Concept and Feel," 38 Emory L.J. 393 (1989).
n183. See 17 U.S.C. 102(b) (1994).
n184. 499 U.S. 340 (1991).
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Proponents of H.R. 354 and its predecessors openly
concede that the "harm to actual or potential markets" test was drawn from
Section 107(4) of the 1976 Copyright Law, which codified its fair use provisions.
n185 This is a constitutionally dubious admission because the very purpose
of Section 107(4) is to confirm that protection of the author's market
interests in both primary and secondary markets constitutes the true goal
of the copyright law's exclusive rights, exactly as Judge Frank declared
in his famous opinion in Arnstein v. Porter. n186
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n185. 17 U.S.C. 107(4) (1994). See also Sony
Corp. v. Universal City Studios, Inc., 464 U.S. 417 (1984); Patry, supra
note 30, at 205-10.
n186. 154 F.2d 464 (2d. Cir. 1946), cert. denied,
330 U.S. 851 (1947). See generally Paul Goldstein, Copyright 7.1.1.2, 7.4.1.2
(1998) (discussing infringement in terms of protection of authors' market
interest).
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When transplanted to the database milieu, however,
the protection of mere investment in databases that do not rise to the
level of creative works of authorship against "harm to actual or potential
markets" n187 indirectly creates an exclusive property right in noncopyrightable
collections of data, which governs both primary and secondary markets.
Once collected, no one can make further use of the facts and data contained
in the collection without the compiler's permission, even though Section
102(b) of the Copyright Law states that facts and ideas are not fit subjects
of an exclusive property right.
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n187. H.R. 354, 106th Cong. 1402 (1999).
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True, H.R. 354 does allow "independent creation"
of databases in Section 1403(c) and Section 1403(a) exempts nonprofit educational,
scientific, and research uses from liability for causing harm to "potential"
markets and for certain other reasonable uses. n188 But such defenses in
the proposed database regime are no more curative of these constitutional
flaws than they would be in the copyright regime, for the reason that no
one can constitutionally oblige all persons not to use facts or ideas that
[*835] have been made available to the public. Facts and ideas that
the copyright law must leave to unrestricted public use cannot constitutionally
be withdrawn from public use under the First Amendment by a database law
that protects against extraction and use on both primary and derivative
markets. n189
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n188. See id. 1403(c), 1403(a)(1) (1999) (listing
"certain nonprofit educational, scientific, or research uses"); see also
id. 1403(a)(2) (listing "Additional Reasonable Uses").
n189. See Letter from Hamilton, supra note 139.
See also Malla Pollack, The Right to Know? Delimiting Database Protection
at the Juncture of the Commerce Clause, the Intellectual Property Clause,
and the First Amendment, 17 Cardozo Arts & Ent. L. J. 47, 67-74 (1999).
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In this connection, one should recall that the
copyright law, unlike the patent law, does not protect against use as such
of even the protected expression, as the Supreme Court established in Baker
v. Selden. n190 The protection of noncopyrightable data and facts against
use on both primary and secondary markets thus impermissibly disrupts the
balance established in the federal copyright and patent laws, which implement
the constitutional Enabling Clause. n191 Notwithstanding the public's right
to use facts and ideas under the First Amendment and notwithstanding the
constraints limiting Congressional action under the constitutional Enabling
Clause, H.R. 354 institutes copyright-like protection for the use of noncopyrightable
matter, creates a de facto derivative work right in noncopyrightable compilations,
and prohibits transformative uses - however pro-competitive in nature -
that harm this reserved or derivative market on the "potential harm" test.
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n190. See Baker v. Selden, 101 U.S. 99 (1879);
Brown, supra note 28 . Only those uses specified in the Act are protected.
17 U.S.C. 106, 106A (1994).
n191. See U.S. Const. art. I, 8, cl. 8; 17 U.S.C.
301 (1994) (preemption); Bonito Boats Inc. v. Thunder Craft Boats Inc.,
489 U.S. 141 (1989); Compco Corp. v. Day-Brite Lighting Inc., 376 U.S.
234 (1964); Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225 (1964).
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No invocation of unfair competition law can disguise
the fact that a "harm to actual or potential markets" test that does not
focus on unfair or improper conduct expresses the language of exclusive
property rights, which is exactly the function that Section 107(4) performs
in the Copyright Law. n192 The fact that it is often physically or economically
impracticable to regenerate scientific and research data from scratch only
enhances the potential restraints on free speech under H.R. 354 as it stands,
by risk- [*836] ing the withdrawal of facts and data as such from
the public domain. n193 The federal appellate courts have consistently
declared that avoiding the costs of regenerating known facts and ideas
constitutes a basic economic premise underlying the constraints on intellectual
property protection deriving from both the First Amendment and the Enabling
Clause. n194
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n192. 17 U.S.C. 107(4) (1994); supra note 185;
see also Letter from Professor Harvey Perlman, Co-Reporter, Restatement
(Third) of Unfair Competition Law (1994), to Senator Orrin Hatch, Chairman
of the Senate Committee on the Judiciary (Sept. 8, 1998) (on file with
authors) (explaining why neither H.R. 354 nor its predecessors are, in
fact, unfair competition laws) [hereinafter Perlman letter].
n193. See supra text accompanying notes 120-21.
n194. See, e.g., Feist Publications, Inc. v.
Rural Tel. Serv. Co., 499 U.S. 340 (1991); Harper & Row v. Nation Enter.,
471 U.S. 539 (1985). As the Department of Justice's Office of the Legal
Counsel recently affirmed, to the extent that the proposed legislation
would prohibit extractions or uses of substantial portions of factual compilations
by direct competitors, it is much more likely to be held constitutional
than if it would prohibit extractions or uses by potential consumers for
noncommercial purposes. By contrast, if the provision were construed to
provide protection against uses by potential consumers, and not simply
direct competitors, it would appear to be of almost limitless scope and
therefore to raise constitutional concerns that would appear insurmountable.
DOJ Memorandum, supra note 139, at 8.
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The broad definitions of both "collection of
information" n195 and "information" n196 in H.R. 354 aggravate these constitutional
infirmities by drawing "works of authorship" into the realm of a competing
and overlapping intellectual property right, and also by casting legal
doubts upon the future ability of third parties to make untrammeled use
of public domain matter. Anytime someone would use data, including historical
data, that are made available to the public contained in a "collection
of information" protected by the proposed law, that user would be exposed
to claims that he or she will have harmed the database originator's actual
or potential markets if that producer had also used the same or similar
data. This broad risk of liability cannot fail to have a chilling effect
on the use of known facts and noncopyrightable databases in both the commercial
and noncommercial spheres; and it is of little consolation to researchers
and educators that they must fear only harm they might cause to actual
markets, rather than to potential markets, as well. n197
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n195. See H.R. 354, 106th Cong. 1401(1) (1999).
n196. See id., 1401(2).
n197. See id., 1403(a)(1).
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C. Erring on the Side of Caution
In contrast, a true unfair competition approach would attach liability only when the third party harmed the database maker's actual or potential [*837] market by improper, unfair, or dishonest means. n198 Such an approach would not inhibit competitors who "harm" the market by honest and innovative means, and it would not impede true transformative uses that promote competition and the public interest in science and education. n199
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n198. Compare Restatement (Third) of Unfair Competition
Law 38 (1996) (rejecting general misappropriation doctrine) and Perlman
letter, supra note 192 with Gordon, supra note 7 (proposing tort of malcompetitive
copying).
n199. Cf. Reichman & Samuelson, supra note
7, at 137-45.
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The "actual or potential markets" test is thus
so broad that it would hinder fair competition simply because every successful
competitor harms a prior entrant's market by definition and because would-be
competitors would never know in advance when the use or extraction of protected
data may turn out to cause harm to some unknown potential market. In this
and other respects, the "harm to markets" test actually cloaks a reserved
market formula, in the manner of the exclusive rights to reproduce and
to prepare derivative works granted by the Copyright Law. n200 Use of this
formula in the database context invites other industries to apply for similar
protection against harm to their actual or potential markets; and the cumulative
anti-competitive effects of recognizing such special-interest protectionist
pleas could seriously undermine the ability of the United States to compete
in an integrated global marketplace.
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n200. See 17 U.S.C. 106(1)-(2) (1994).
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United States intellectual property law and policy
have traditionally mandated the unfettered use of noncopyrightable facts
and of subpatentable ideas, and have favored unbridled competition with
respect to the products of mere investment. n201 We shall undoubtedly experience
suboptimal investment in the production of databases if Congress fails
to protect publishers against certain forms of piratical conduct that threaten
to deprive them of the fruits of their investment. n202 But if we combat
this risk of market failure by enforcing strong monopolies in collections
of data, we may end up balkanizing the information economy by recreating
the medieval economic quandary in which products could not flow across
countries or continents because too many feudal monopolists demanded payments
every few miles down the road. n203
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n201. See Reichman, Charting, supra note 3, at
485-96 ("Negative Economic Premises Underlying the Dominant Legal Paradigms");
supra note 191.
n202. See, e.g., Tyson & Sherry, supra note
72; Hunsucker, supra note 7.
n203. Cf. Heller & Eisenberg, supra note
130; Heller, supra note 130.
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If we discourage follow-on innovation and public
good uses of the very databases whose development statutory legal protection
is supposed [*838] to stimulate, the end result may be bad for the
database industry as a whole n204 and devastating for our whole scientific
and technical innovation system, which depends on the relatively unrestricted
flow of factual data. Instead, we need a regime that loosely preserves
a balanced relationship between public and private interests, which courts
can develop gradually in response to the empirical conditions of the evolving
information economy. n205
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n204. See Testimony of CCIA et al., supra note
101.
n205. See also Pamela Samuelson (unpublished
and untitled essay, manuscript on file with authors) (explaining the need
for a national information policy detached from intellectual property policies);
Litman, supra note 16; Reichman & Franklin, supra note 9, at 968-70.
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In the Information Age, as in the Industrial
Revolution, we should continue to believe that competition is the lifeblood
of commerce, and we should accordingly structure all legal entitlements
so as to produce a high degree of competition and maximum dissemination
of data and information. If we err on the side of caution and underprotect
the building blocks of knowledge, we can always adjust the level of protection
upwards later on, in the face of compelling empirical evidence of real
economic harm.
But the opposite is not true. Acquired rights
and legislatively enacted monopolies cannot easily be eradicated. The wrong
decisions today could lessen the vitality of our research enterprise, weaken
the national system of innovation, and compromise our future technological
superiority, which all depend on maintaining an appropriate balance between
upstream and downstream uses of data and factual information.