ous threat to the continued availability of crucial information that makes the Internet the invaluable research and educational tool it is today. We therefore hope you will reconsider this approach, and would welcome the opportunity to discuss these issues with you further. Very truly yours, CC: The Honorable Howard Berman, Ranking Member JILL LESSER, Director, INFORMATION TECHNOLOGY ASSOCIATION OF AMERICA, Hon. HOWARD BERMAN, Committee on the Judiciary, House of Representatives, Washington, DC. DEAR CONGRESSMAN BERMAN: On behalf of some of the commercial entities concerned with the Collections of Information Antipiracy Act, including the Information Technology Association of America, the Online Banking Association, and the Computer and Communications Industry Association, I am replying to your request at the March 18 hearing for comments on the Administration's testimony on H.R. 354. The Administration's testimony does three things: it articulates principles which should guide database legislation; it identifies problems with H.R. 354 from the perspective of those principles; and for some of these problems, recommends specific legislative solutions. As a general matter, we agree with the principles articulated; we agree that the problems identified are indeed problems; and we agree with many of the specific solutions proposed. At the same time, although the Administration's testimony is generally very thoughtful, it has not addressed some significant problems with H.R. 354. For example, it does not address the liability of online service providers for the distribution of infringing databases. This issue needs to be addressed, whether or not the Administration's proposal to substitute "distribute" for "use" is adopted. The inclusion of a title limiting the copyright liability of service providers in the Digital Millennium Copyright Act demonstrates both that this is a significant issue and that it is capable of resolution. Further, although the specific solutions proposed by the Administration will no doubt improve the bill, in several cases the solutions offered do not solve the problems they were intended to address. For instance, the Administration proposes changes to the core prohibition in Section 1402 that narrow its scope. However, these changes are not sufficient to preserve many legitimate uses of information. As Professor Charles Phelps explains in Section III.C. of his testimony, H.R. 354 would impose liability for the taking of a qualitatively substantial, but quantitatively insubstantial, part of a database. While the statute specifically permits use of one item of information, the use of just two or three items of information could be prohibited. Moreover, H.R. 354 could prohibit use of these two or three items of information even if the database publisher invested minimal resources in the collection of these particular facts. H.R. 354 simply requires substantial investment in the database as a whole, not substantial investment in the part taken. Professor Phelps' specific proposals addresses this overbreadth warrant serious consideration. Additionally, for some critical issues, the Administration testimony identifies the problem but does not propose a concrete solution. This is the case with permitted uses and sole source databases. The absence of proposed solutions is not surprising, these are perhaps the most serious problems with the bill, and they are not capable of easy resolution. At the hearing you jokingly referred to a compulsory license, but that may well be the only effective way of dealing with the sole source issue. This extreme relief is necessitated by the extreme prohibition contained in this legislation. We directly disagree with the Administration testimony concerning a few significant issues. There has been no showing whatsoever that the civil liability created by H.R. 354 will be insufficient to prevent the database piracy which is its target. Criminal sanctions, therefore, are completely unjustified. They are likely to cast a pall over lawful business activity without measurably deterring unlawful conduct. We also disagree with the testimony's support for protecting databases already in existence. Rather, we concur with the testimony's statement that "[b]ased on a strict economic analysis, coverage of such databases is not necessary-the investment occurred without the legal protection.” Administration Testimony at 21. " Finally, we disagree with the Administration's interpretation of what it calls the "minimalist" bill placed in the Congressional Record by Chairman Hatch. The Administration understands this bill "to bar only misappropriation of an entire database. Administration Testimony at 47 n.5. We read the bill more broadlyas also barring misappropriation of discrete parts of a database that by themselves meet the definition of a database. This broader reading might cause the Administration to reverse its conclusion that the "minimalist" bill is "too narrow as a policy matter." Id. Indeed, we believe this alternative bill to be a more appropriate template for database protection than H.R. 354. We look forward to working with the Subcommittee and the Administration on this important issue. Sincerely, cc: Chairman. Howard Coble Honorable Members of the Courts and Intellectual Property House Subcommittee MARC A. PEARL. Mr. Andrew Pincus, General Counsel, Department of Commerce ASSOCIATION OF RESEARCH LIBRARIES, Washington, DC, April 1, 1999. Hon. HOWARD COBLE, Chairman, Subcommittee on Courts and Intellectual Property, House of Representatives, Washington, DC. DEAR MR. CHAIRMAN: This letter is in response to the request made at the March 18 hearing on H.R. 354, for a review of the Administration's testimony on the "Collections of Information Antipiracy Act." We very much appreciate the opportunity to provide additional comment on the legislation on behalf of five of the Nation's library associations. The library associations agree with the Administration position that there is a need for legal protection against commercial misappropriation of collections of information where other legal protections and remedies are inadequate and that there should be effective legal remedies against "free-riders." In addition, we agree that as drafted, provisions in H.R. 354 are "too broad" and accomplish much more than targeting "troubling acts of commercial misappropriation." Overall, the library associations agree with the majority of the Administration's comments on H.R. 354. Most of the concerns with H.R. 354 raised by the Administration mirror those included in our testimony on the legislation. We believe that the six principles articulated in the Administration statement propose a balanced approach to additional protections for databases. The problems enumerated by the Administration address most of the significant but not all of the concerns of the library associations and others in the not-for-profit sectors. These concerns are detailed in much of the testimony by representatives of the library, higher education, and scientific and research communities during the March 18 hearing. We find that the Administration's proposed changes are extremely helpful, though several do not fully address the complexity of selected issues. Key issues are listed below. 1) Breadth of legislation: The Administration notes that section 1402 is overly broad and the term It use" is "simply too broad and ambiguous." The Administration suggests that a focus on conduct such as "troubling acts of commercial misappropriation" is more appropriate. The Administration further suggests that the term distribution be used in lieu of "use," and that the concepts of actual and potential market are problematic. We completely agree with the Administration that the section is too broad and that the legislation should target inappropriate conduct, e.g. commercial free-riding. The Administration suggested a revision of substituting "distribution" for "use" that would improve the legislation. We share the concern that terms such as extraction and use are problematic. There are a number of ways by which these concerns could be addressed which merit further discussion and review. For example, one revision which solves part of this problem was included in Dr. Phelps' statement. 2) Government Information: The library associations and our members have a long history of working with the federal government in support of preserving access to government data. The Administration testimony identifies some of the thorniest and most complex issues raised by the legislation such as "data capture" or government databases mandated by statute that include private sector data. The notion of urging agencies to comply is noteworthy as is disclosure of source but more consideration of these issues is required. The Administration statement notes that in the context of the recent revision to Circular A-110, uniform access requirements on government agencies are not recommended. Indeed, this revision has proven to be highly controversial thus any statutory changes in this arena should be subject to congressional hearings and debate. 3) Sole Source: The Administration identifies issues relating to sole source databases as problematic and worthy of addressing. We understand that tackling this issue is extremely difficult but believe that as the Administration notes, “it will be important that any database protection legislation incorporate provisions that guard against the possibility that sole source database providers will employ their new rights to the detriment of competition in related markets." The alternative draft bill, the "Database Fair Competition and Research Promotion Act of 1999" placed in the Congressional Record by Sen. Hatch addresses the issue of sole source. Further evaluation of the different approaches would be helpful. 4) Duration of Protection: We agree with the Administration that "there is no single, optimal term of protections for the wide range of products subject to protections as 'databases' or 1collections of information." We continue to be concerned that a 15-year term of protection may be excessive. As noted by the Federal Trade Commission in their review of H.R. 2652, the predecessor to H.R. 354, "it is unclear that a 15-year term is necessary in order to protect incentives to produce all types of databases." The useful commercial life of some data, like stock prices, can expire in a matter of hours, if not minutes. Like the Administration, we believe that there is a significant risk that language in H.R. 354 could result in the perpetual protection of a database or collection of information. We agree that a deposit system may be unwieldy and raises a number of economic concerns. The Administration's suggestion of, for example making older versions of a database publicly available, is a step in the right direction but given the complexity of this issue, additional consideration is necessary. 5) Reasonable Uses: The inclusion of new language for "reasonable uses" in H.R. 354 is a modest step in the right direction in addressing a serious concern of the library and education community and the Administration. As noted by the Administration, the library associations, and Dr. Phelps, the provision as drafted falls short of what is required to continue to conduct a wide range of currently reasonable and customary research and education activities. The Administration did not address several issues, in particular, the phrase "individual acts," which is extremely problematic. As H.R. 354 moves through the legislative process, it will be important to examine the full range of concerns such as those noted above. 6) OSP Liability: The Administration statement does not address issues of online service provider liability. The alternative draft bill, the "Database Fair Competition and Research Promotion Act of 1999" and Senator Hatch's Discussion Draft both include a provision that exempts online service providers from liability. Comparable provisions are needed in H.R. 354. 7) Alternative Proposals: We do not agree with the Administration statement that the "minimalist" approach taken in the draft bill, the "Database Fair Competition and Research Promotion Act of 1999" "appears to only bar misappropriation of an entire database." We believe that an opportunity to fully examine all approaches to commercial misappropriation of collections of information would be productive. We look forward to working with Members of the Subcommittee on this legislation. Please let me know if there is additional information that we can provide. Sincerely, JAMES G. NEAL, Dean, University Libraries, Johns Hopkins University, AMERICAN LIBRARY ASSOCIATION, AMERICAN ASSOCIATION OF LAW LIBRARIES, cc: Members of the Subcommittee on Courts and Intellectual Property Hon. HOWARD COBLE, Chairman, BALL RESEARCH, INC., East Lansing, MI, March 30, 1999. Subcommittee on Courts and Intellectual Property, House of Representatives, Washington, DC. DEAR CHAIRMAN COBLE: Ball Research, Inc. is pleased to submit the following comments for the record of your hearing on H.R. 354, "The Collections of Information Antipiracy Act." Ball Research, located in East Lansing, Michigan, creates and maintains a comprehensive database containing valuable information on the field performance of agricultural chemicals. Ball Research has also developed and maintains proprietary software programs to access databases. Since starting the business in my home in 1985, 1 have developed a successful small agribusiness. We recognize the need to protect against the commercial predation of databases and applaud you for your leadership in this effort. At the same time, however, we are concerned that H.R. 354 in its present form would seriously endanger our company's ability to continue doing business. This is because much of the data gathered by Ball Research, which is now in the public domain accessible to anyone, would no longer be available at any price-to Ball Research nor to anyone else. Ball Research collects data from research conducted on public lands with funds appropriated by Congress under the federal land grant laws. Ball compiles the data from over 39 different federal land grant colleges into a uniform, computerized database which provides valuable information to agricultural chemical firms, as well as government and research scientists. The databases created by Ball Research show how various chemicals used in agriculture perform in a wide range of climatic conditions, soil types and other variables that differ from one region of the country to another. Generally, we believe that databases created with substantial government funding should not be included in the protections provided by your bill. Clearly, once taxpayers have paid for the generation of this data, it is in the public interest that the fruits of this research are widely available. This principle is especially true in Ball Research's situation. The preparation of the data we access is largely funded by the Department of Agriculture under federal land grant laws. For more than a century, the government had promoted agricultural research at land grant colleges with the aim of assuring that this research translates into practical applications and new technologies, benefiting our society as a whole. To restrict public access to the results of this research directly conflicts with the vision of this long-standing federal policy. We, therefore, urge you to make the necessary revisions to your bill to assure that this particular class of publicly-funded research-that is conducted with funding under the federal land grant college laws-will remain in the public domain. Thank you for your consideration of our views. Sincerely, KENNETH W. LINVILLE, Ph.D., President. LICENSING INFORMATION IN THE GLOBAL INFORMATION MARKET: FREEDOM OF CONTRACT MEETS PUBLIC POLICY 1 BY PAMELA SAMUELSON 2 AND KURT OPSAHL 3 INTRODUCTION Expectations run high that a global marketplace will emerge in which electronic contracts will be made in cyberspace to provide electronic information to customers via digital networks, all of which will be paid for with electronic currencies.4 A necessary precondition of such markets is an international consensus on when an exchange of electronic messages has formed a contract and how far information providers can go in enforcing contractual terms that brush up against, if not conflict, with public policies such as those embodied in intellectual property law. While scenarios of electronic agents negotiating contracts in cyberspace may seem like science fiction to some, there is already in existence in the U.S. a model law to permit the making of such contracts.5 Proponents of this model law, which is known as Article 2B of the Uniform Commercial Code (UCC), hope to export it to the international community.6 The broadest aspiration of Article 2B is to promote commerce in the information economy just as Articles 2 and 2A of the UCC have done, at least in the U.S., in promoting commerce in the manufacturing economy.7 To accomplish this, Article 2B applies to far more than futuristic electronic contracts. At one time, it would have regulated all transactions in information. In its current iteration, it encompasses all "computer information transactions," which includes "computer software, multimedia or interactive products, computer data, Internet, and online distribution of information".9 The paradigmatic transaction of Article 2B is a license,10 as contrasted with a sale of copies which has long been the prototypical transaction in the marketplace for printed works. Among other things, Article 2B would validate mass-market licenses such as those typically found under the plastic shrink-wrap of boxed software which inform the reader that loading the enclosed code onto one's hard-drive constitutes an agreement to terms of the license.11 Given the well-known American reverence for the free market, it should not be surprising that the drafters of Article 2B initially sought to limit public policy limitations on contracts to those that were unconscionable. 12 Unconscionablity is a very difficult threshold to meet because it requires that terms be shockingly oppressive, 1 An earlier version of this paper will be published in the European Intellectual Property Review. 2 Professor of Law and of Information Management, University of California at Berkeley. 3 Research Fellow to Prof. Samuelson; Juris Doctor 1997, University of California at Berkeley School of Law. 4 See generally, William J. Clinton & Albert Gore, Jr., A FRAMEWORK FOR GLOBAL ELECTRONIC COMMERCE, (July 1, 1997) [hereinafter Framework]; Lynn Margherio, U.S. Dept. of Commerce, THE EMERGING DIGITAL ECONOMY, (April 1998). 5 Uniform Commercial Code article 2B, §§ 2B-102(a)(221), 2B-111, 2B-204 (Draft, Feb. 1. 1999). 6 The Framework, supra note 1, calls for a global uniform commercial framework. Article 2B explicitly answers that call, citing to the Framework in the Preface. See U.C.C. art. 2B Preface (Draft, Aug. 1, 1998). 7 The Preface to Article 2B begins with the following epigraph: "It is timely now to adapt [the UCC's] framework to the digital era and to the new information products and services that will increasingly drive Global Electronic Commerce.... Article 2B can be a strong first step toward a common legal. U.C.C. art. 2B Preface (Draft, Aug. 1, 1998) (quoting Letter from CSPP (a coalition of eleven major manufacturing companies)) (Nov. 19, 1997). Article 2 of the U.C.C. has_promoted the growth of larger and more national markets for the manufacturing economy. See Fred H. Miller, The Uniform Commercial Code: Will the Experiment Continue?, 43 MERCER L. REV. 799, 808 (1992) (noting the U.C.C.'s "substantive excellence" and discussing its success in promoting national uniformity. 8 See U.C.C. art. 2B, § 2B-103 (Draft, Aug. 1, 1998). 9 See U.C.C. art. 2B, § 2B-103 (Draft, Feb. 1, 1999), Reporter's Notes § 2. 10 See Robert W. Gomulkiewicz, The License is the Product: Comments on the Promise of Article 2B for Software and Information Licensing, 13 BERKELEY TECH. L.J. 891 (1998) (arguing that Article 2B must affirm licenses in order to prove beneficial). 11 U.C.C. art. 2B, § 2B-208 (Draft, Feb. 1, 1999). 12 According to Raymond Nimmer, the Reporter for the drafting committee, this occurs only when "the competing public interest has sufficient strength and clarity that it precludes the exercise of transactional choice by the parties." See Raymond T. Nimmer, Breaking Barriers: The Relation Between Contract and Intellectual Property Law, 13 BERKELEY TECH. L.J. 827 (1998). |