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ties? Unless this ambiguity is resolved in the negative, the chilling effect on the research enterprise will be further exaggerated.

In sum, these provisions would greatly discourage the use, reuse, and recompilation of data-the foundation of the research and education enterprise and would prevent libraries from supporting these endeavors. 3) The exemption for education and research activities, although improved, remains

far too narrow. H.R. 354 includes a new provision for “reasonable uses” which did not appear in H.R. 2652. This provision is a modest step in the right direction in addressing a serious concern of the library community, and we do appreciate its inclusion in H.R. 354. Yet, the provision as drafted falls short of what the library and academic communities require to continue to conduct a wide range of research and education activities.

Section 1403 states that "no person shall be restricted from extracting or using information for nonprofit educational, scientific, or research purposes in a manner that does not harm directly the actual market for the product or service." Very often, however, libraries and educational institutions are, in fact, the only market for particular databases or collections. Thus by definition research use of the content of such collections could be held to "harm directly the actual market” making the exemption of little practical value for the vast bulk of research and educational uses.

In addition, the new reasonable use exemption applies only to an “individual act of use or extraction of information done for illustration, explanation, example, comment, criticism, teaching, research, or analysis, in an amount appropriate and customary for that purpose.” As already noted however, researchers routinely build upon prior knowledge by using selected items from particular databases on multiple occasions over time. This practice would not be covered by the exemption. I would note that this practice, so crucial to the research enterprise, entails limited, selective use of particular data items; it does not entail copying entire databases and competing head to head in the commercial marketplace with the producer of the first database.

Finally, the new reasonable use exception is limited according to certain criteria. The fourth criteria states, “whether the collection from which the use or extraction is made is primarily developed for or marketed to persons engaged in the same field or business as the person making the use or extraction.” Most uses in the library and education communities would fall outside the scope of this exemption because as noted above, many times, the library and education communities are the only market for these collections.

Fueling our concern with this provision is the claim by proponents of the legislation that any harm, even one lost sale, could trigger liability under this statutory regime.

We do appreciate the inclusion of language that would reduce or remit monetary relief if an individual in a nonprofit educational, scientific, or research institution or library or archives believes that his or her conduct was permissible. Nevertheless, the exemption under this new regime for nonprofit institutions would not permit the library and education communities to engage in many activities that are lawful today. 4) The term of protection is, in effect, perpetual, at least for dynamic compilations

in electronic form, despite the addition of language that seeks to remedy this

problem. A new provision in H.R. 354 attempts to correct a serious problem identified in its predecessor, H.R. 2652. Proponents argue that the mere maintenance of a database or collection on a server should trigger another 15 year cycle of protection. The new provision in H.R. 354 attempts to correct this serious problem, by making older versions of databases available for use even though newer ones remain protected. The new language, however, falls short of fully addressing our concerns. Where dynamic electronic databases are concerned, the older versions may, as a practical matter, be unavailable—making the right of access recognized in the new language a hollow one.

Even if the new language were to be interpreted to permit librarians and researchers to extract 15-year old data items from the current or updated version of the database in which they are contained, there is no system in place whereby a librarian or user can determine which portion of a database is more than fifteen years old, thus no longer subject to protection. And if such a system could be established, as was debated last fall during the negotiations sponsored by Sen. Hatch, implementation would be impractical and the economic implications for libraries and educational institutions would be enormous. A library would need to check

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every use of information contained in a database to determine when the information was entered into the collection thus when it was no longer subject to protection. The burden on the institutions would be costly and extremely time consuming to discharge. It is staggering to imagine the implications for thousands of researchers and libraries across the country trying to determine if each and every use was permitted.

Finally, the FTC notes that "it is unclear that a 15-year term is necessary in order to protect incentives to produce all types of databases.'" 5 In particular, in some high-tech markets, product cycles are 6–18 months. The useful commercial life of some data, like stock prices, can expire in a matter of hours, if not minutes. The Commission also comments that the limited legal protection afforded to information to date has been provided only to time sensitive or “hot” information such as current stock quotations, sports statistics, and the like.

Thus, the new language incorporated in H.R. 354 does not solve one of the fundamental problems of database legislation of this type. Like its predecessor, the practical effect of H.R. 354 would be to jeopardize the continued existence of a vital "public domain” of information. Under such legislation, the movement of information from commercial sources would be slow and uncertain, at best. At the same time, as explained below, the approach taken in such legislation would threaten the continued availability of public domain government information for general public use and-specifically- for research and educational purposes. 5) The provision relating to government information requires modification to ensure

a continued, robust public domain and to ensure that information in govern

ment-mandated databases is not covered by this legislation. The library community supports the intent of the drafters to make more government information publicly available without restriction. Yet it will be important to ensure that the significant part of the universe of government information-data collected under statutory mandate-is not subject to these protections in any final legislation.

Many statutes mandate the collection and dissemination of certain types of data, e.g. securities information, environmental data, and labor statistics. This information is part of the public record and should be available for all to use. Moreover, the number of public and private partnerships in data collection is increasing. Under the terms of this legislation, companies which provide data to the government could exert property rights over this data. Thus some government information would become the intellectual property of private companies. Significant collections of government-mandated information which have been publicly available could become unavailable, available for a fee, and/or available with significant constraints on use and reuse.

This latter point is especially important. These companies would have the ability to exert downstream control over information in government-mandated databases under the terms of this bill. For example, almost any kind of transformative use, such as abstracting from one of these databases or combining some of the data from one collection with information from other sources to create a new and useful database, could trigger liability for third parties. The Department of Commerce states, "It is important that legislation not create inappropriate opportunities of incentives to "capture” government information or government-funded data with relatively small investments in maintenance, organization, or supplemental data.” 6 6) Provisions in H.R. 354 do not address concerns regarding sole source databases.

Although the bill permits individuals to collect information independently in order to compete in the commercial marketplace, such independent collection often is virtually impossible or is economically infeasible. Historical data or data for field experiments are two common examples. We understand that tackling this issue is extremely difficult. But by failing to address the sole source issue, the bill could create monopoly control over information of certain kinds.

For libraries and users there would be little recourse. The publisher or database producer is not obligated to permit transformative uses in a license nor is there any leverage in negotiating the license to moderate costs or permit downstream activities.

5 Federal Trade Commission, Letter to Chairman Bliley from Chairman Pitofsky, FTC, September 28, 1998, page 3.

6U.S. Department of Commerce, Letter to Sen. Leahy from Andrew Pincus, General Counsel, August 4, 1998, page 2.

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7) Provisions in the bill could lead to increased transactions costs in data use as

noted by the Department of Commerce. Finally, the library community shares the concern included in the Department of Commerce letter regarding the increased costs in use of data. The library community acquires and licenses well over $2 billion of information resources each year: We do not seek information for free and we understand that unauthorized digital copying can lead to piracy. America's libraries depend, in part, upon the well-being of those publishers. Throughout our history, libraries have been among the most voracious, lawful acquirers of published works. But we cannot support legislation that would impose new economic and administrative burdens on our institutions and on the Nation's research enterprise.

As noted in the Administration's letter of August 4, 1998 there are grounds for concluding that aspects of the “Collections of Information Antipiracy Protection Act,” "may increase transaction costs in data use, particularly in situations where larger collections integrate datasets originating from different parties or where different parties have added value to a collection through separate contribution of gathering, refining, and/or maintaining the data. This is especially important for large-scale data management activities, where public investment has leveraged contributions from the public and non-profit sectors.”?

In closing Mr. Chairman, we believe that if this legislation is enacted in its current form and with the current approach, it would fundamentally change the research enterprise and how members of this community use information and at what cost. The approach taken in H.R. 354 could lead to a licensing framework where facts, government information, and other information could not be used without permission and with additional costs for each use. The ability to tightly control uses of information including downstream, transformative uses would be at odds with a culture of building upon prior research and could undermine the basic mechanisms of scientific and educational data exchange.

Another model which has widespread support in the library, education, and commercial sectors is a more narrowly tailored bill. This draft, the Database Fair Competition and Research Promotion Act, is focused on outlawing the parasitical copying of commercial databases. This alternative would prohibit a person from fully duplicating a database and then engaging in head to head competition in the marketplace. It also would bar non-commercial online distribution of large quantities of data extracted from commercial databases. In addition, the draft tackles the thorny issue of sole source databases and monopolistic practices. And finally, and most importantly the draft bill would permit transformative, downstream uses of information contained in protected databases.

We look forward to working with the Subcommittee on these issues to ensure the appropriate balance between all communities and sectors.

The American Library Association is a nonprofit educational organization of 57,000 librarians, library trustees, and other friends of libraries dedicated to improving library services and promoting the public interest in a free and open information society.

The American Association of Law Libraries is a nonprofit educational organization with over 5,000 members dedicated to serving the legal information needs of legislators and other public officials, law professors, and students, attorneys, and members of the general public.

The Association of Research Libraries is an Association of 122 research libraries in North America. ARL programs and services promote equitable access to and effective use of recorded knowledge in support of teaching, research, scholarship, and community service.

The Medical Library Association is an organization of over 3,800 individuals and 1,200 institutions in the health sciences information field. MLA members serve society by developing new information delivery systems, fostering educational and research programs for health sciences information professionals, and encouraging an enhanced public awareness of health care issues.

The Special Libraries Association is an international association representing the interests of nearly 15,000 information professionals in 60 countries. Special librarians are information resource experts who collect, analyze, evaluate, package and disseminate information to facilitate accurate decision-making in corporate, academic, and governmental settings. The Association offers a myriad of programs and services designed to help its members serve their customers more effectively and succeed in an increasingly challenging exvironment of information management and

7 Department of Commerce, Letter to Sen. Leahy from Andrew Pincus, General Counsel, August 4, 1998, page 2.

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technology. SLA is committed to the professional growth and success of its membership.

Mr. COBLE. Thank you, Mr. Neal.
Mr. McDermott.
STATEMENT OF TERRENCE MCDERMOTT, EXECUTIVE VICE

PRESIDENT, THE NATIONAL ASSOCIATION OF REALTORS
Mr. McDERMOTT. Thank you, Mr. Chairman.

My name is Terry McDermott. As mentioned, I'm Executive Vice President of the National Association of Realtors. In that capacity I represent not only our 750,000 Realtor members but our 1,600 Realtor boards throughout the country and the 900 multiple listing services that we use to provide real estate information to all of our practitioners, buyers and sellers, and increasingly directly to consumers.

Our concern and our strong support for this bill is to allow us to continue to take one of the oldest and most significant databases in this country, founded in 1887 in San Diego, California, and continue to provide it to the marketplace as an orderly market tool, and to allow consumers to use MLS data from our database in order to make a more significant considered purchase in home ownership in this country.

As you all know, in 1998 we reached our third consecutive year of record existing home sales, 4.8 million, and almost 68 percent of home ownership levels in this country. We feel that the MLS system is one of the information resources why that market continues to grow and why this country continues to have the highest rate of home ownership.

Our concern and our strong support of this bill is based on the fact that real estate as an industry is extremely information sensitive and intensive. It does have significant intrinsic value. It also represents—the information itself represents a contractual agreement between the lister, or the home seller, and the agent. When it exists within the confines of our database it is in fact protected by that contract, it is protected by State licensing laws, and indeed it is protected by the code of ethics of the National Association of Realtors.

So the consumer sharing that data has many guarantees of protection of information and both its use for immediate service and its downstream use. If someone is allowed without the ability for us to recoup that information or protect it to strip it and use it for other information all of those protections for the consumer disappear.

Although we were founded in 1887 in the era of the quill pen and the typewriter, we have in fact today launched the Multiple Listing Service onto the Internet in 1997. Today Realtor.com, which is the collective information base of all the Realtor listings in the United States and represents 90 percent of the homes for sale in the United States, is in the top 20 Internet sites on the entire World Wide Web. We, in fact, have 475 million hits a month and service 7 million consumers in their search for housing throughout the United States.

We did that aggressively but also knowing under current law that we had some potential downstream liability for the theft or the piracy of that data. We have been challenged in court three times and currently have been successful. However, as everyone on the panel knows, protecting and adjudicating that on a copyright law basis is both lengthy and extremely expensive.

We think the ability to use the Internet to again take a hundred year old database and its intention and to continue to provide the marketplace with an orderly market tool that makes housing more accessible to the American people, that makes it less expensive to obtain, and gives us not only the highest rate of home ownership but a method of home ownership which is in fact enviable to most other real estate economies and markets throughout the world is definitely something that needs protecting.

We also want to protect the future. Six months in Internet days is 20 years in other markets and we want to be able to assure that as we develop more data and we are able to bring electronic commerce to the real estate transaction that we're able to utilize information to make the real estate transaction less expensive and more effective for the consumer.

That we'll be able to do so without concerns that we are in fact exposing even more sensitive information about that process to people who would use it for their own commercial ends without approval by the people who own it, either the owner of the property or the realtor who owns the contract listing, and not be able to use it to effectively enter into commercial relationships in which they had no participation and in fact have no liability.

The National Association of Realtors obviously strongly is in support of open competition, strongly in support of the protection of copyright and trademark laws. Obviously the term Realtor itself is well protected by that law and has been for more than a hundred years. But we also feel that we all need the protection in this new age of being able to aggressively pursue opportunities on the Internet without concern that others would take advantage of our relationship with the client and take significant advantage of the value of the data downstream.

Thank you, Mr. Chairman.

[The complete statement of Mr. McDermott follows.] PREPARED STATEMENT OF TERRENCE MCDERMOTT, EXECUTIVE VICE PRESIDENT, THE

NATIONAL ASSOCIATION OF REALTORS Good Morning. My name is Terry McDermott I am the Executive Vice President of the National Association of REALTORS® (NAR). We represent over 730,000 REALTORS® involved in all aspects of the real estate industry nationwide. I would like to speak to you today about the “Collections of Information Antipiracy Act.” First of all, I would like to thank Chairman Coble and Congressman Berman for their introduction of H.R. 354, as well as those members of the subcommittee who have cosponsored the bill. I want to assure you of NAR's commitment to support its passage this year.

Real estate is information sensitive. As reliance on sources of information increases, so does their value. REALTORS® have long used compilations of data relating to property listings collected by the Multiple Listing Services (MLS) located throughout the United States. In addition, NAR offers information on property listings to the public through its REALTOR.COM website. These services and long time practices are threatened by entities who pirate this information and utilize it to the detriment of REALTORS® H.R. 354 would prohibit this harmful practice.

REALTORS® believe in and welcome healthy competition. We do not believe that the ability to press a button and copy listings to another's site is healthy. It is, in fact unhealthy for both our profession and the consumer. REALTOR.COM gives the consumer a huge database of information useful to their homebuying and selling

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