C. Given the many changes made in the legislation in the last Congress to accommodate the interests of database users, any additional changes must

be viewed with great care and caution.

Mr. Chairman, as you are well aware, the "Collections of Information Antipiracy Act" was amended time after time in the 105th Congress in response to concerns raised by the user community. CADP did not object to those changes. Our members supported the final version of the Collections of Information Act that was passed twice by the House in the last Congress. That version was fair and effective; it carefully balanced the legitimate interests of database users and providers.

We are wary, however, that other changes beyond those incorporated into last year's final bill may upset that fragile balance. We cannot so dilute the legislation as to (1) undermine its effectiveness as a tool against database piracy; or (2) risk comparability with what is becoming the world standard-the EU Directive. Thus, we remain fully committed to working with the Subcommittee and other interested parties in resolving any additional legitimate concerns that may persist, but must review any new changes with special care and caution. The database community cannot-and will not-accept just any legislation.

In that regard, we are weighing carefully your new "fair use" language.61 We recognize that there is interest in the Administration and the user community for a new provision governing fair or transformative uses. Clearly, the burden is on the proponents to demonstrate why the new language is needed. This burden should not be met by vague claims about how the old language fails to protect their ability to make "transformative," or "value-added" uses of the hard work of the original compiler.62 If a second compiler "creates" a new product by using a substantial portion of a protected collection of information and that use harms the market for the original collection, then such use should be actionable. Users should not be free under the guise of "transformative," or "value-added" actions to make market-destructive uses of another's collection. Should the Subcommittee determine that a new "fair use" provision is needed, we will work with the Subcommittee and other interested parties to perfect the language in § 1403(a)(2).

Mr. Chairman, we understand that there is a continuing interest among skeptics of the bill in deleting or altering the reference to "potential market" in H.R. 354. CADP adamantly opposes deletion of the "potential market" language from the bill. The legislation must provide protection against harm to potential, as well as actual markets. Business people need to plan ahead. Consideration of potential markets and derivative uses of database products are highly relevant factors when a business decides to proceed with a particular project. As the Register of Copyrights told this Subcommittee in October, 1997:

[L]ooking only to actual markets would be too restrictive; those who invest in creating information products should have some leeway to recoup their investment over time by exploiting those products in various markets.63

It is essential that the “potential market" prong be retained in the legislation. Moreover, we will approach any change to the bill's "potential market" language with care and caution, especially given that the legislation was amended last year to provide that harm to a potential market is only a consideration with respect to for-profit uses. This is a significant change inasmuch as the ability to market to a potential market is a relevant consideration in business planning, irrespective of whether such a market is for-profit or nonprofit in nature. It impacts directly on those database providers both in and out of CADP whose primary markets are nonprofit-such as those who market to educational institutions.

Nonetheless, in an effort to reach consensus on this legislation and speed it toward enactment, in the past, CADP has expressed a willingness to consider the deletion of the reference to "current and demonstrable plans" from the definition. CADP is willing-albeit with some reluctance and trepidation-to once again consider such a deletion. We believe that this change, combined with the existing case law interpreting the phrase "potential market," should put to rest all concerns regarding the breadth of this phrase.

61 § 1403 (a)(2).

62 For example, proponents of this type of change should demonstrate why it is needed given that (1) H.R. 354 already contains the elements of fair use like provisions, see, e.g., supra pages 33-36, and (2) the bill does not prohibit: (a) any use or extraction that does not harm the collection's market; or (b) any use where any resulting harm is indirect or collateral. See, e.g., H. Rep. No. 105-525 at 8 (discussing that the legislation is not intended to cover indirect harm to the market for a product).

63 Peters statement, supra note 10, at 13-14.

VII. Congressional Power

Mr. Chairman, we believe a review of the text of the Constitution and relevant case law reveals ample authority under the Commerce Clause (Art. 1, §3, cl. 3) to support congressional enactment of legislation such as H.R. 354. In the past, Congress has used its Commerce Clause power in virtually every area of federal legislation ranging from civil rights to environmental to trademark legislation. Applying this power in the current context is entirely consistent with past congressional exercises of that authority. The constitutional history of our trademark laws provides an extremely apt illustration of Congress's exercise of its Article I, section 3, cl. 3 power.

Although it is now firmly established that the Commerce Clause forms the constitutional source of power undergirding our trademark law, that was not always the case. In fact, that law was voided by the United States Supreme Court in its landmark 1879 decision, the Trade-Mark Cases, 100 U.S. 82 (1879). According to the Court, the first trademark law unconstitutionally premised trademark protection on the Patent/Copyright Clause of the Constitution because trademarks were neither "discoveries nor writings" as required by Art. 1, §8, cl. 8. Significantly, all subsequent federal trademark laws have been premised on the Commerce Clause.64

Congress may use its power under the Commerce Clause to enact legislation such as H.R. 354. Trademarks are indicia of origin that regularly travel in and affect interstate commerce. It seems equally clear that collections of information are items of commerce and it is beyond debate that the U.S. database community provides a wealth of these informational products to users both here and abroad. Just as Congress has chosen to protect trademarks under the Commerce Clause, it has the power to protect valuable compilations that are the product of substantial effort and money from harmful misappropriations.

VIII. Conclusion

Mr. Chairman, American database producers need legislation to protect them, and we need it now. Our goal is not to "lock up" data, or prevent access to information; it is to protect our work product from the commercial harm caused by free riders and thereby assure the continued availability of valuable resources. Your bill represents a welcome and important step towards accomplishing that goal. We look forward to working with you and your colleagues in enacting a database protection quickly. Thank you for giving us the opportunity to share our views with you.

APPENDIX A

1. WARREN PUBLISHING, INC.'S Television and Cable Factbook. The Factbook is a directory containing business profiles of all U.S. cable TV systems, licensed broadcast video facilities (i.e., full-power TV stations) and related industries and services (program suppliers, equipment manufacturers, regulatory agencies, et al.). The Factbook is comprised of 3 volumes totaling more than 5,000 pages annually and also is available on CD-ROM.

In addition to the print products, the databases used to produce the Factbook are widely used by various sectors of the U.S. telecommunications business and academic communities. Warren Publishing makes electronic sales of the Factbook databases to clients for analyses on their own computers, and performs customized analyses upon commission by clients.

Warren Publishing assigns 18-20 full-time employees to the Factbook. They gather, verify, edit and format data for use in both the print and electronic versions. Two other people are employed full-time for sales and fulfillment of customized reports and databases, representing more than one-third of Warren's total workforce. In addition, Warren Publishing annually hires an average of 10 independent con

64 Significantly, just three years ago, Congress used it's Commerce Clause powers to enact a form of unfair competition legislation to protect intangible rights in investment from misappropriation or "free-riding." In 1995, it passed the "Federal Trademark Dilution Act," Pub. L. No. 104-98, which prohibits the use of a famous name in a manner that dilutes the name despite the absence of consumer confusion:

Even in the absence of confusion, the potency of a mark may be debilitated by another's use. This is the essence of dilution. Confusion leads to immediate injury. While dilution is an infection which, if allowed to spread, will eventually destroy the... mark. The concept of dilution recognizes the substantial investment the owner has made in the mark and the commercial value and aura of the mark itself, protecting both from those who appropriate the mark for their own gain. H.R. Rep. No. 104-374 at 3 (1995) (emphasis added).

The Commerce Clause provides the constitutional basis for the anti-dilution statute; it does the same for the Collections of Information Antipiracy Act.

tractors to input data from returned Factbook questionnaires. Warren spends tens of thousands of dollars and man-hours each year on original research conducted through mailed questionnaires and telephone surveys.

2. REED ELSEVIER'S MDL Information Systems ("MDL") produces a range of databases that, taken together, offer chemists an electronic library that covers chemical suppliers and pricing, handling and safety information for 100,000 chemical products, organic chemistry syntheses and preparative methods, xenobiotic transformations and compounds, and structural and biological activity data for 70,000 drugs. MDL is a U.S. based company with more than 330 employees worldwide that creates, produces and distributes databases and computer programs used around the globe by, among others, the pharmaceutical and chemical industries, as well as by government and education organizations involved in basic scientific research.

3. THE THOMSON CORPORATION'S POISINDEX. This invaluable database provides medical professionals, usually emergency room physicians or poison control specialists, with immediate access to comprehensive listings of toxicological informationa crucial tool to complement their years of experience and training. Authorized users have unlimited access to this information at their own facilities 24 hours a day, 365 days a year. POISINDEX enables them, for example, to identify a substance that a child may have ingested and then to provide instructions for critical, immediate care. Treatments guided by this specialized database have helped save thousands of lives since POISİNDEX was created over twenty-three years ago.

POISINDEX contains about 1,000,000 entries describing substances such as drugs, chemicals, commercial and household products and biological materials. More than 30 professionals with training in nursing, pharmacology, toxicology and medicine are responsible for reviewing these substances and obtaining pertinent information on them. In addition, more than 200 practicing clinicians from over 20 countries participate in the editorial process as members of the POISINDEX editorial board. The database lists each substance and up to four full-text documents detailing its clinical effects, treatment measures, degree of toxicity and other relevant information. Software engineers develop computer software to store, edit, sort and retrieve the data and to maintain, test, produce and support the database.

4. SKINDER-STRAUSS ASSOCIATES' Lawyers Diary and Manual. Attorneys in New Jersey, New York, Massachusetts, Florida and New Hampshire routinely use the Lawyers Diary, or Red Book, as their daily reference and directory for information regarding courts, judges, government agencies, and the members of the bar. Practicing lawyers rely upon its comprehensive and accurate databases to assist them with their day-to-day communications, and many regard the Red Book as their most essential source for this information. A third-generation, family-owned business, Skinder-Strauss has more than 40 full-time employees who are actively engaged in the daily activities of data collection, verification, editorial compilation, research and data entry. The various databases managed by the company require contact with more than 400,000 individuals and entities at least once a year. All contact and verification research is initiated by the company through extensive direct mail, telemarketing and other proactive efforts. These initiatives involve the expenditure of significant sums, thousands of man-hours and the pride and dedication of those so engaged.

5. PHILLIPS BUSINESS INFORMATION, INC. provides a broad range of information products for distinct business markets, including more than 35 directory and directory related products. For example, the Phillips Satellite Industry Directory and accompanying Satellite Industry Directory Buyers Guide is just the type of informational product that, given the fast growing satellite marketplace, is vital to maintaining our leadership in the global arena. It links the reader to more than 6,000 decision-makers in satellite operations, equipment manufacturing, transmission service, broadcasting, and more.

The directory also provides users with exhaustive industry profile sections which include service offerings, key personnel, and contact information. It also offers easyto-use index pages detailing satellite systems, satellite operators, services offered, and geographic locations, and includes listings of industry regulators, agencies and companies providing satellite products and support services. In addition, Phillips' Satellite Industry Directory is the first to offer a web site index to leading companies in the satellite industry.

Compiling this directory requires one full-time project manager and up to one dozen freelance researchers to gather, inspect, and update more than 6,000 names, addresses and telephone numbers, plus an independent contractor to assist with programming.

6. THOMAS PUBLISHING CO., located in New York City, has published industry information products for a century. Its 400 employees, with a payroll of more than $21,000,000 per year, publish 24 major buying guides, 29 product news magazines,

two product information exchange services, a magazine on factory automation, three software comparison guides, and a publication to help buyers select the most costefficient transportation modes for their inbound freight. Its Register of American Manufacturers compiles purchasing information about 155,000 companies, classified under more than 60,000 product and service headings.

The Thomas directories are primarily supported by advertising. In that connection, independent entities throughout the United States solicit advertising orders, provide advertising related material, as well as editorial information to the company. Those organizations are paid in excess of $50,000,000 for their services.

7. THE AMERICAN MEDICAL ASSOCIATION'S (AMA) Physician Masterfile. This comprehensive database contains information regarding approximately 800,000 physicians, including both AMA members and non-members. Its physician demographic data-including state medical licensing and educational information-helps protect the public from fraud and abuse by enabling the ready confirmation of the credentials of those holding themselves out as physicians. The Physician Masterfile's unique physician identifiers allow many industries to bring up-to-date information to physicians regarding the availability of new drugs and their side effects, and to protect the public in the event of drug recalls by the Food and Drug Administration. 8. THE MCGRAW-HILL COMPANIES is a global publishing, information, media, and financial information services conglomerate with 16,000 employees located in over 40 states and 30 countries. The McGraw-Hill Companies has developed and publishes a significant number of databases for the education, construction, business, industry, financial and professional markets, which are available in print or electronically through online services, over the internet or on CD-ROM. Millions of professionals, analysts, researchers, investors and students rely on databases produced by The McGraw-Hill Companies to make critical decisions.

For example, the Standard & Poor/DRI's US Central Database(USCEN) includes 23,000 series of U.S. economic, financial and demographic statistics. Coverage includes data on U.S. trade, population, production, income, housing, employment, and finance. USCEN is one of the largest available economic databases in the world. Substantial collections of information begin in the 1940's; some date as far back as 1900. Major private source data from both DRI and third-party sources-including public information-gives the database added value. Like many of Standard & Poor/ DRI's economic databases, there is significant commercial value associated with access to complete and accurate historical data, particularly when analyzing trends in the economy over time.

9. THE NEW YORK STOCK EXCHANGE, INC. ("NYSE”) is the world's largest stock exchange for the trading of equity products. As an agency-auction market, the NYSE brings together public buyers and public sellers, giving both the maximum opportunity to interact and trade directly with each other without the unnecessary expense of first having to trade with a dealer. By bringing all buyers and sellers together at a central location, the buyers and sellers interact to arrive at a point where the highest bidder meets the offer of the lowest seller, thereby achieving efficient pricing that is the standard relied upon worldwide. Prices and quotations for 3,400 listed securities are dynamically updated and made available to thousands of vendors, broker-dealers and investors and to over 100 countries.

The NYSE licenses 65 its real-time database to brokerage houses and on-line securities traders; market data vendors such as Reuters and Bloomberg, television networks like CNBC, dozens of internet sites, and individual investors. Moreover, NYSE has helped set an industry trend of disseminating market data to the widest possible audience. For example, in 1997, it was the first market to make real-time market data available on cable television. Non-professional investors can receive NYSE real-time market data for $5.25 month. In addition, market data more than 15 minutes old is available without charge on the NYSE's website (www.nyse.com), as well as numerous other internet sites.

Mr. COBLE. Thank you, Ms. Winokur.
Professor Lederberg.

65 As a market for securities, NYSE must make its data available pursuant to Section 11A of the Securities and Exchange Act of 1934, and its contracts for the provision of real-time data streams are monitored closely by the SEC. The SEC approves the contracts and the fees that the NYSE charges for market data, requiring that the Exchange make its market data available on terms that are fair, reasonable, and not unreasonably discriminatory.

STATEMENT OF JOSHUA LEDERBERG, PROFESSOR, SACKLER FOUNDATION SCHOLAR, THE ROCKEFELLER UNIVERSITY

Mr. LEDERBERG. I'm grateful, Mr. Chairman, for this opportunity to comment on behalf of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine, [the "Academies"], as well as the Association for the Advancement of Science. Our written testimony for the record will elaborate on the legal issues.

With my own voice I offer you the perspectives of a professor, former president of Rockefeller University, from a long career as a researcher in molecular genetics and bioinformatics, as an advisor to Government science agencies and scientific publishers; and not least as a creator and active user of both commercial and not-forprofit scientific databases. I've been an advisor to some of these enterprises, including some that Ms. Winokur is very familiar with but I'm here formally representing only the Academies and the AAAS.

Access free of unreasonable incumbrance to and use of factual data is essential for furthering our understanding of nature, the medical and technical progress to the validation of scientific claims and the kinds of things Ms. Winokur was just talking about. Indeed, the currently thriving public domain for data fostered by Government policies that nourish research and guarantee full and open access to data benefits all downstream users, including the commercial database industry.

At this time, barring instances of gross piracy, there is no crisis in the development of new databases, commercial or otherwise. Significant legal, technical and self help protection measures to protect proprietary databases are already available. We support the adoption of new diplomatic initiatives and new legal measures as may be needed to address egregious wholesale database piracy. However, we are opposed to responses to those grievances which go beyond solving that problem and would erect unprecedented and unjustified new rights in factual data. These would undermine our Nation's successful research and education system and put a heavy hand on the scale of legitimate competing interests.

We appreciate the changes to H.R. 354 since last year's bill but along with the administration and other critics—and I was particularly impressed by Mr. Pincus's testimony-we find that the legislation as currently proposed still needs some remediation.

Our objections to H.R. 354 in its current form include an overly and unnecessarily broad scope of protection for factual data, one that would supersede copyright for collections of works of authorship; an insufficient carve-out for not-for-profit scientific and educational users; an incomplete Government data exemption, particularly for Government databases disseminated by the private sector; the retroactive application of the legislation; the unduly long term of protection in light of the breadth and depth of the scope of protection; the blanket prohibitions on traditional, legitimate commercial, value-added uses; the lack of reasonable limitation on the inordinate market power conferred by this legislation on sole source data providers; and absent or vague definitions of important terms. There was reference to understanding ex ante what the boundaries of the legislation would be. I will confess to understanding