Lapas attēli
PDF
ePub

the Thomson Corporation. I appear here today on behalf of the Coalition Against Database Piracy ("CADP"), of which the Thomson Corporation is a member.

The Coalition Against Database Piracy ("CADP") welcomes the opportunity to share with the Subcommittee its views on why Congress should enact fair database protection legislation, in general, and its views on H.R. 354, "The Collections of Information Antipiracy Act," in particular.1

I. Introduction

Mr. Chairman, CADP thanks you for your leadership in this important area. Our members are especially grateful for your recognition of the crucial role that databases play in our information society and the need for Congress to enact legislation to fill the gap in database protection under U.S. law.

CADP is an ad hoc group composed of small and large U.S. database providers who stand to suffer grievous harm-and whose thousands of employees' jobs will be at risk-if fair and effective federal database legislation is not enacted promptly. Its members include the American Medical Association; The McGraw-Hill Companies; the National Association of Securities Dealers; the Newsletter Publishers Association; the Newspaper Association of America; the New York Stock Exchange; Phillips Publishing International, Inc; Reed Elsevier Inc.; Silver Platter Information, Inc.; Skinder-Strauss Associates; the Software and Information Industry Association; the Thomas Publishing Company; The Thomson Corporation; and Warren Publishing, Inc.

CADP's members are an integral part of the U.S. database community. Today, the United States is the world leader in the creation and distribution of informational databases. Our members employ or represent many thousands of editors, researchers, and others who gather, update, verify, format, organize, index and distribute the information contained in their vast array of database products. They also invest millions of dollars annually in the hardware and software needed to manage these large bodies of information.

Mr. Chairman, your bill, H.R. 354, addresses a basic unfairness in our legal system: its failure to protect adequately the interests of those whose hard work and substantial financial investments result in the creation and dissemination of valuable databases. H.R. 354 is about eliminating the inequity in a legal regime that allows an unscrupulous competitor to copy with impunity the contents of someone else's compilation and then destroy the first compiler's market by selling a competing, less expensive product. It is also about rectifying the injustice that takes place when a dishonest customer or a "cyberprankster"-without permission-electronically copies and makes it freely available over the Internet. In sum, it is about helping restore fairness to the database marketplace.

CADP's goal is simple and straightforward: to deter piracy that causes commercial harm to database creators, while maintaining the traditional balance between the legitimate interests of owners and users of informational products.

Mr. Chairman, your bill, H.R. 354, is a crucial step towards striking the correct balance between the interests of both creators and users of collections of information. As discussed in greater detail below, CADP believes that:

(1) H.R. 354 contains the essential features of a database protection bill; and (2) Given that in the last Congress the Collections of Information Antipiracy Act was amended time and time again to accommodate the interests of the user community, any additional changes to last year's final bill must be viewed with great care and caution-otherwise, the bill may be so diluted as to undermine its effectiveness as a tool against database piracy. CADP believes the time for congressional action is now. The risks to database creators will only increase as our society becomes more and more dependent on computers and digitized information and as technology provides new and more efficient ways to reproduce and distribute information products. The need for prompt congressional action is also underscored by the recent adoption of a database protection directive by the European Union (“EU”).2 As discussed below, unless the U.S. enacts a database protection law that the EU deems comparable to the terms of its Directive, U.S. database producers will be at a distinct commercial disadvantage in the EU and beyond.

1H.R. 354, 106th Cong. (1999).

2 See Directive 96//EC of the Eur. Parl. and of the Council on the Legal Protection of Databases, Feb. 5, 1996 [hereinafter EU Directive].

II. Brief Overview of Database Industry

Databases available in this Information Age are a far cry from the traditional printed compilations that have existed for centuries-both in terms of content and methods of delivery. U.S. databases provide the world with information on everything from antidotes to poison, to prescription drugs, to the keys to building safer cars, to comprehensive compilations of patents and related information. They provide a vast array of comprehensive data vital to the successful operation of our economy-including information about health, communications, finance, banking, business, news, travel and defense.

By giving consumers and professionals accurate, thorough, and up-to-date tools, database creators play a crucial role in our information-driven society. The work that they do in collecting, compiling, arranging, standardizing, correcting, indexing, updating, cross-referencing, and verifying adds immense value to a mass of otherwise unintelligible, disparate data. Moreover, the investments of database creators in creating, organizing, and maintaining these products greatly reduce the time and effort consumers need to conduct important research and ensure the reliability of the facts included. Without the hard work of database producers, vast amounts of valuable and systematically organized information would be unavailable to many users who themselves could not replicate the financial and human investments made by the database compiler. Many American jobs depend on a healthy, vibrant U.S. database industry.3

III. Vulnerability of Databases

Although creating, maintaining and disseminating databases is expensive and time-consuming, copying and distributing databases without permission is cheap and easy. The advent of digital, high-speed computer networks adds greatly to the threat of piracy. Today, database pirates can use widely available technologies to make and print unauthorized copies of electronic databases and send them around the world. Internet users can duplicate and distribute large collections of information with the click of a mouse and at a fraction of the enormous costs of their development. This risk will only increase as our society becomes more dependent on computers and digitized information, and as technologies provide new and even more efficient ways to copy and distribute informational products.

Without effective legal protection, databases are easy prey for parasitic competitors who are free to unjustly-and harmfully-harvest the fruits of the creator's hard work. These risks are not limited to competitors' market-destructive acts. For example, LaMacchia v. United States demonstrates that non-competitors can engage in activities that inflict serious commercial harm on publishers. In LaMacchia, an MIT student uploaded commercial software (such as WordPerfect and Excel) onto an electronic bulletin board.5 He encouraged others to download these applications free of charge, and although unmotivated by any desire for pecuniary gain, his actions cost the affected software developers over $1 million in losses.6 The indictment against LaMacchia was dismissed because he acted without the commercial motive required in cases of criminal copyright infringement. In response, Congress passed the "No Electronic Theft (NET) Act."8

Regrettably, data pirates of all stripes have little to fear because existing U.S. law does not effectively deter such blatantly unfair practices. It is time for Congress to fill this gap in U.S. law.

IV. The Gap in U.S. Law

Although existing legal doctrines-including copyright, contract, and misappropriation law-all offer important protections, they are insufficient, particularly in today's digital world, to deter database piracy effectively. As the Register of Copyrights, Marybeth Peters, told this Subcommittee in the last Congress:

While various bodies of law. . . protect database producers, each falls short in coverage. The bottom line is that in many circumstances there is no legal recourse for a database producer when the essence of the value of the database, and the core of its investment, are taken without permission or compensa

3 Appendix A contains examples of databases produced by CADP members. These examples help to illustrate the importance of these products to our society.

4871 F. Supp. at 535 (D. Mass. 1994).

5 Id. at 536.

6 Id. at 536-37.

7 Id. at 545.

8 Pub. L. No. 105-147 (1997). Significantly, the NET Act offers no protection to uncopyrightable databases.

tion.

Since Feist, the source and extent of legal protection for the commercially valuable contents of databases has been uncertain, requiring reliance on a patchwork of different, individually insufficient legal theories. 10

New legal protection must be added to U.S. law to complement existing doctrines so that database creators will have the incentive to continue making the enormous expenditures necessary to produce, update and market reliable and innovative databases.

A. Copyright Law

For many years, database makers could take solace in the fact that some federal courts of appeals recognized the so-called “sweat of the brow" doctrine under which copyright protection was based on the compiler's significant hard work and investment in developing its compilation.11 In those circuits, "sweat of the brow" afforded compilers an important tool against the unauthorized takings by "free riders." That is no longer the case.

In Feist v. Rural Telephone Co., Inc., 499 U.S. 340 (1991), the Supreme Court discarded the sweat of the brow approach under copyright law and made it clear that a compilation will enjoy copyright protection only if it evinces sufficient "originality" in the manner in which its facts are arranged, selected or coordinated. 12 After Feist, the amount of time, effort and money expended by a compiler is irrelevant to a determination of whether or not a work qualifies for copyright protection.

Feist also noted both that facts were not copyrightable and even where protection exists for compilations, its scope is thin because it extends only to the original selection, arrangement and coordination of the database. The message given to the database community by Feist was clear: the factual contents of the database are not protected by copyright, and may be copied with impunity by data pirates. 13

Lower court interpretations of Feist have caused additional reasons for consternation in the database community. First, inconsistent decisions have caused database owners to speculate whether a federal court will afford a particular compilation any copyright protection at all. Initially, some database creators thought that they could take solace in Feist's statement that "the requisite level of creativity is extremely low; even a slight amount will suffice. The vast majority of works will make the grade quite easily. ." 14 Unfortunately, such has not always been the case. For example, two federal appellate courts have reached profoundly different results with respect to whether yellow page directories contain the necessary degree of originality to warrant_copyright protection. Compare Key Publications, Inc. v. Chinatown Today Publ'g. Enter., Inc., 945 F.2d 509 (2d Cir. 1991) (copyright protection held to exist) with Bellsouth Adver. & Publ'g. Corp. v. Donnelley Info. Publ'g., Inc., 999 F.2d 1436 (11th Cir. 1993) (en banc) (coming to the opposite conclusion), cert. denied, 114 U.S. 943 (1994).

More recently, the United States Court of Appeals for the Eleventh Circuit set off alarm bells in the database community when it ruled against Warren Publishing, a CADP member, in Warren Publ'g., Inc. v. Microdos Data Corp., 115 F.3d 1509 (11th Cir. 1997), cert. denied, 118 S.Ct. 397 (1997). The court denied any form of meaningful copyright protection to Warren's Television and Cable Factbook-a comprehensive directory of television and cable systems-despite the fact that the selection of cable systems in the Factbook used a unique definition of "cable system." 15 This decision raises grave concerns that the level of originality required for copyright protection may be far higher than the Supreme Court's language in Feist reasonably implied.

Second, post-Feist cases underscore the fact even where compilations meet the originality test, copyright law provides only "thin" protection and wholesale copying of the contents of these labor-intensive works is condoned. As the Copyright Office's

9 Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991).

10 The "Collections of Information Antipiracy Act": Hearing on H.R. 2652 before the Subcomm. on Courts and Intellectual Property of the House Comm. on the Judiciary, 105th Cong., 1st Sess., Statement of Marybeth Peters, Register of Copyrights, at 3-4 (Oct. 23, 1997) (emphasis added) (hereinafter Peters Statement]. See also H.R. Rep. No. 105-525, at 6-8 (1998).

11 "Throughout the nineteenth and well into the twentieth centuries, U.S. courts consistently recognized copyright protection for labor-intensive works of information . . ." The "Collections of Information Antipiracy Act": Hearing on H.R. 2652 Before the Subcomm. on Courts and Intellectual Property of the House Comm. on the Judiciary, 105th Cong., 1st Sess., Statement of Professor Jane Ginsburg, Morton Janklow Professor of Law, Columbia University, at 5 (Oct. 23, 1997) (footnotes omitted) (hereinafter Ginsburg Statement].

12 See Feist, 499 U.S. at 345.

13 See Id. at 349 (describing the exposure of factual content to unauthorized copying).

14 Feist, 499 U.S. at 345.

15 Warren Publ'g., 115 F.3d at 1520.

1997 Report on the Legal Protection of Databases states, "most of the post-Feist appellate cases have found wholesale takings from copyrightable compilations to be non-infringing. The trend is carrying through to district courts as well." 16

Third, post-Feist cases give short shrift to two key characteristics typical of many valuable databases-their thoroughness and the human and financial resources expended in creating and marketing them.

The greatest irony of all is that the more thorough the database, the more time, money and effort that goes into making it—and hence the more valuable it may be to a user-the more likely it is a court will find it lacks the requisite degree of originality to qualify for copyright protection.17 This result is inconsistent with sound public policy. 18

In sum, after Feist and the demise of the sweat of the brow doctrine, it has become increasingly clear that the copyright law is ill-equipped to protect informational products that are the result of substantial human, technical and financial re

sources.

B. Contracts

Although private contracts are very valuable in protecting the works of database creators, they do not provide protection at a level sufficient to induce the creation and distribution of diverse types of databases of the diversity that are increasingly in demand today. Contract law suffers from various infirmities, including:

⚫ it does not provide legal relief against malfeasors who have not entered into a binding contract with a database provider. "Once the information is accessed by someone not bound by the contract, any control over misuse is lost irrevocably;" 19 and

• it does not provide uniform coverage throughout the United States. While the contours of contract law are roughly equivalent across the 50 states, there are important variances among state contract schemes and there are circumstances under which the contract laws of two sister states may provide different results if applied to the same legal problem;20 and

⚫ state law solutions are of decreasing value given the global nature of electronic commerce.

C. Misappropriation

The common law tort of "misappropriation," derived from the Supreme Court's decision in International News Service v. Associated Press, 248 U.S. 215 (1918), has had an uneven history, at best, with respect to protecting copyrightable and uncopyrightable works from behavior that might fall under the general rubric of "copying."

Like the law of contract, the misappropriation doctrine is a creature of state law, and does not provide database providers with uniform, nationwide protection. In fact, the state misappropriation doctrine is even less uniform than state contract law. Moreover, state misappropriation laws may be available only in extremely narrow circumstances, particularly in light of the influential Second Circuit's recent decision in National Basketball Association v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997). There the Court indicated that given the breadth of the Copyright Act's preemption provision, the misappropriation doctrine is only available in those special

16 United States Copyright Office, Report on Legal Protection of Databases at 17 (1997) [hereinafter Copyright Office Report].

17 Cf. Warren Publ'g., Inc. v. Microdos Data Corp., 115 F.3d at 1518 (stating that by selecting the "entire relevant universe known to it," Warren made its directory commercially useful and therefore forfeited the protection of the Copyright Act).

18 Copyright Office Report, supra note 16 at 75 (“A database of meteorological, environmental or medical information, for example, must be comprehensive, accurate, and up-to-date, or the results could be injurious to health or safety. Subjective selection or a unique arrangement may impede the database's utility or ease of access.").

19 The "Collections of Information Antipiracy Act" Hearings on H.R. 2652 Before the Subcomm. on Courts and Intellectual Property of the House Comm. on the Judiciary, 105th Cong., 2nd Sess., Statement of Robert E. Aber, Senior Vice President and General Counsel, the NASDAQ Stock Market, Inc., on behalf of the Information Industry Association, at 9 (Feb. 12, 1998). Moreover, it has been recognized that "Even contract law has significant limitations when mass-marketed information products are sold to persons not in privity with the makers." J.H. Reichman and Pamela Samuelson, Intellectual Property Rights in Data, 50 Vand. L. Rev. 51, 137 (1997). 20 Compare Bussard v. College of St. Thomas, 200 N.W.2d 155 (Minn. 1972) (excluding evidence of prior negotiations when determining whether an agreement is integrated) with Masterson v. Sine, 436 P.2d 561 (Cal. 1968) (looking to all relevant circumstances including prior negotiations to determine whether an agreement is integrated).

and limited instances where, among other things, the information pirated is "time sensitive" or "hot news," and the defendant directly competes with the plaintiff 21

As a consequence, the doctrine's value to database producers is quite limited. Many databases do not disseminate "hot news," but instead contain information with far longer "shelf lives;" in fact, the contents may be of historical, long-term value.22 Additionally, as Congress' recent consideration of the NET Act reveals,23 commercial harm can be inflicted by competitors and non-competitors alike.

V. The Time for Congress to Act is Now

Mr. Chairman, the time for congressional action is now. Without appropriate legislative relief, the accumulated effects of domestically sanctioned piracy will cause the shrinkage of the U.S. database market, the loss of thousands of American jobs and the end of our worldwide preeminence in this area. Ultimately, everyone loses as the availability of valuable information products to the public decreases.

A. Technological Threats

The dawn of the Information Age has begun to change radically the way people do business. In "the old days," commercial customs developed over appreciably longer periods of time. If a user ordered a compilation from one of the CADP members, for example, it is very likely that papers would be exchanged and goods would be shipped according to terms which both parties understood from decades of trade

usage.

Imagine now that same transaction occurring at the speed of light as contract offers, acceptance and performance occur not through the mails, but over fiber-optic networks. Commercial practice-whether scrupulous or not-develops at a pace exponentially greater than that of just a decade ago. By the same token, the destructive effects of piracy that we see right now soon will become much, much worse, as the gap in our current law-a gap that Register of Copyrights Peters stated "is leading to real world consequences" 24—becomes more and more apparent to database pirates.

Before long, the shortcomings of our legal framework will cause irreparable harm to the database marketplace. Creating floppy disks (or, for that matter, CD-ROMs) requires little or no overhead when compared to the cost of publishing and distributing a printed volume or of assembling the data in the first instance. In Warren, for example, the Eleventh Circuit held that the copyright law effectively allowed the defendant to appropriate the entire contents of the Factbook, from which it then made a competing product. Similarly, in the ProCD case, the defendant loaded the database onto the Internet, from whence it could be downloaded by anyone with the desire to do so. In LaMacchia, the harm caused to the software owners from one pirate exceeded $1,000,000. Our current legal regime does not effectively deter such piracy, and fact patterns like those in Warren will proliferate unless Congress intervenes. The harm created by database piracy does not fall on the shoulders of producers alone; it inures to the detriment of everyone. First, scientific and academic research will be curtailed. In the current database market, many producers charge a much lower access fee (if any) to nonprofit institutions such as universities, and recoup those losses in their sales to commercial entities.25 Price differentiation makes economic sense, however, only if the for-profit market is secure and those who can acquire the database cheaply do not provide it to those who would otherwise have paid its original developer a higher price. As the cost of piracy becomes a greater part of doing business, this tiered pricing structure will level out-forcing database owners to charge colleges and libraries the same prices they ask of for-profit corporations. Protective legislation will preserve current pricing flexibility, to the benefit of database owners and users alike.

Second, as free-riders, database pirates—who have expended a fraction of the resources invested by the original compiler-cannot be expected to spend the monies

21 See National Basketball Ass'n. v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997) (emphasis added).

22 See H.R. Rep. No. 105-525, at 11 (1998) (recognizing the commercial value of investments that need to be made in order to create databases). See also infra note 40 and appendix A (discussing examples of CADP members' historical databases).

23 See discussion supra page 7.

24 Peters Statement, supra note 10, at 5. See also H.R. Rep. No. 105-525 at 8 ("Already today, the lack of appropriate protection has begun to have a negative impact, with several court decisions that have resulted in serious damage to markets, and producers exhibiting a reluctance to make their products widely available over the Internet or in other easily copied formats."). 25 The "Collections of Information Antipiracy Act": Hearing on H.R. 2652, Before the Subcomm. on Courts and Intellectual Property of the House Comm. on the Judiciary, 105th Cong., 1st Sess., Statement of Dr. Laura D'Andrea Tyson, Law and Economics Consulting Group, at 15 (Oct. 23,

« iepriekšējāTurpināt »