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H.R. 1858 uses clearer language than H.R. 354, and omits the draconian new criminal penalties. H.R. 1858 thereby avoids the chilling effects of H.R. 354, and avoids expanding federal criminal law to include ordinary business disputes.

III. EXCLUSION OF PROTECTION FOR MISUSE OF DATA

We support the exclusion in H.R. 1858 of statutory protection for any database that has been misused. The doctrine of misuse is well-established in copyright law and H.R. 1858 wisely incorporates this doctrine into this database statute as well. The rationale is simple: misuse of rights over a database disqualifies the perpetrator from legal protection. Our legal system disfavors providing relief to wrongdoers under the doctrine of unclean hands. H.R. 1858 incorporates this principle.

H.R. 354, however, conspicuously bestows legal entitlements on those who misuse databases. Indeed, one of the original purposes of H.R. 354 was to overturn a Ninth Circuit decision that had found misuse by the American Medical Association (AMA) in control of a database. In Practice Management Info. Corp. v. AMA, 121 F.3d 516 (9th Cir. 1997), the Ninth Circuit denied the enforceability of an AMA copyright on the medical billing CPT coding system because the AMA had "misused" its copyright. As a result, the Ninth Circuit denied enforceability by the AMA of exclusive rights to the CPT database.

It was only two months later that the predecessor to H.R. 354 was introduced in the House, and six months later the AMA provided the key testimony in support of that bill. H.R. 354 bestows special federal entitlements even on those who are found to have misused their rights. H.R. 354 is apparently designed to benefit special interests such as the AMA by overfunding well-reasoned appellate decisions.

IV. DATABASE IS A COMMERCE ISSUE, NOT AN INTELLECTUAL PROPERTY ISSUE In the unanimous Supreme Court decision of Feist Publications v. Rural Telephone Service, 499 U.S. 340 (1991), the Court held that: "Facts, whether alone or as part of a compilation, are not original, and therefore may not be copyrighted...[O]riginality is a constitutionally mandated prerequisite for copyright protection." There is widespread agreement with this ruling, and it deserves credit in promoting the information-based economy that has benefited everyone in recent years.

In light of this unanimous decision, new federal protections for databases, as compilation of facts, should be addressed by this Subcommittee rather than the Subcommittee on Courts and Intellectual Property. Automatically generated databases of public domain facts are not a form of intellectual property, nor should they be. Rather, databases are compilations of data useful to individuals and businesses in

commerce.

H.R. 1858 recognizes that unfair copying of a database should be treated as an unfair or deceptive act or practice under section 5 of the Federal Trade Commission Act. Section 107(c) of H.R. 1858 recognizes that there is no intellectual property issue at stake with respect to databases. The attempt by H.R. 354 to create a new sui generis intellectual property right in databases is contrary to the Constitution. The extent to which the Constitution allows copyrights to cover factual compilations has already been delimited by the Feist decision.

Moreover, the sine qua non of intellectual property law is to encourage the creation of works that might not otherwise be created. The Constitution expressly includes this requirement in Article I, Section 8, clause 8: "To promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." The Supreme Court has repeatedly affirmed that the plain meaning of this clause is "the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in 'Science and useful Arts."" Mazer v. Stein, 347 U.S. 201, 219 (1954), which was quoted with approval in Harper & Row Publishers v. Nation Enterprises, 471 U.S. 539, 558 (1985). But H.R. 354 seeks to protect databases already in existence, for which no incentive is necessary. Its retroactive application violates the very purpose of intellectual property law, and thus amounts to a giveaway to a few special interests. H.R. 1858 properly applies only to a database "that was collected and organized after that date." Thus H.R. 1858 does not favor existing entrenched interests, and limits its protections to databases to which the incentive applies.

V. NEED FOR A TIME LIMITATION

Finally, I suggest that H.R. 1858 be modified to include a time limitation on the protections provided by this Act. Not even copyright or patent rights last forever; nor should new database rights be in perpetuity. Databases are being compiled at

an unprecedented rate, and it is far from clear that new federal protections of databases are even economically desirable.

The markets for databases of facts and other public domain information appear to demand timely updates to the databases, so I do not believe that new protections for old databases will promote commerce.

Five years of federal protection should give a more than adequate opportunity for a compiler of data to attain a return on its investment. Thereafter the public should not be prohibited from copying any uncopyrighted data for lawful and beneficial purposes.

Mr. Chairman, I am grateful for this opportunity to discuss the advantages of H.R. 1858. I appreciate the Members of this Subcommittee in drafting this superior legislation and holding this important hearing. We look forward to working with this Subcommittee on this legislation.

Mr. TAUZIN. I thank the gentlelady. The gentlelady was singing our jurisdictional song.

The Chair is now pleased to recognize Mr. Tim Casey, chief technology counsel for law and public policy at MCI WorldCom.

STATEMENT OF TIMOTHY D. CASEY, CHIEF TECHNOLOGY COUNSEL, LAW AND PUBLIC POLICY, MCI WORLDCOM Mr. CASEY. Thank you, Mr. Chairman and Mr. Bliley and other members of the subcommittee. Thank you for inviting MCI WorldCom to testify on behalf of H.R. 1858. As many of you have recognized, H.R. 1858 takes the right approach to database protection. It prevents the thefts of databases, but also maintains the public's access to information that promotes progress and innovation in this age of information.

My company builds and operates communications networks so we understand the legitimate need for protection from the theft of certain database products; but we also know very well what can happen when protection goes too far. That is why we like H.R. 1858 and its measured approach.

It doesn't start with overly broad protection and then attempt to exempt or carve out every important type of database or use of a database that anyone can think of. There are many databases and many uses of databases that could be considered harmful to the economy and the American public if protected in such a broad form. More importantly, we don't even know what they are yet, and we should not have to try to figure this out in advance. In relation to other legislation, we came up with an idea based on my mom's own interest in genealogy, and that resulted in an exemption for genealogical information. You can come up with a thousand other examples of information that should be exempted from overly broad protection, but the American public should not have to be doing that in advance of this legislation.

Sound legislation should begin with a narrow scope of protection and build on that base only to the minimal extent necessary. Like H.R. 1858, it lays a solid foundation upon which a new law can rest, not an unstable base. If the legislation is not well structured, Congress will spend many years trying to correct what could have been done right now.

H.R. 1858 contains exclusions and exemptions related to computer programs and the Internet because it has to. Telecommunications and the Internet depend heavily on databases that could otherwise be protected and therefore closed off from free public use.

A narrow approach by its very nature allows for derivations of those databases and uses that allow for innovation to continue.

A broad approach, by contrast, sweeps in and thereby prevents new and innovative uses of collections of information. Let me try to explain that within the context of the Internet. Most users of the Internet do not fully appreciate how much the underlying networks depend on databases. These networks will not operate without free and open access to thousands of databases that are necessary for everything from call routing to operator services to accurate billing. The Internet is just a combination of network computers and their databases, and as such is particularly dependent upon the open sharing of information.

Internet protocol addressing, data packet routing, conversion tables, protocol priority listings, file format information, and domain name registries are just a few examples of the type of functions performed within the Internet every minute of every day through reliance on what are presently publicly available databases, but which may not be if the wrong choice is made in terms of the legislative approach.

The Internet protocol upon which all Internet communications are based makes liberal use of databases. At the application level where many electronic commerce resources will reside and hopefully thrive, a wide variety of additional protocols and application types are used that require open access to open databases.

These types of data that must be shared to ensure that Internet users can communicate effectively are as varied as the applications themselves. People must be free to link to sites, to frame to sites, to collect information for their own use and to create new products and services such as the Yahoo! example that Chairman Tauzin used earlier.

Open access to the databases underlying the operation of the Internet has allowed it to grow and flourish. Any threat to the open access poses an unacceptable risk to the feature of this new medium and all the economic and societal benefits that is promises. H.R. 1858 is the correct approach because it does not require that every critically important use of the database be called out and exempted up front. We cannot and should not be required to bear the burden of anticipating the future. H.R. 1858 does not require us to do this to the same extent and assures that no self-interested party will be able to hold the Internet hostage by locking up databases which are vital to its operation.

As a pioneering leader in the communications industries, MCI WorldCom believes that H.R. 1858 meets the need of both the communication industries and the database industry without unduly upsetting hundreds of years of legal principles. H.R. 1858 will prevent the outright theft of valuable databases while leaving in place the access to information on which our economy and our society will increasingly depend.

Thank you, Mr. Chairman and members of the subcommittee, for inviting me to testify. I will be happy to take questions later. [The prepared statement of Timothy D. Casey follows:]

PREPARED STATEMENT OF TIMOTHY D. CASEY, CHIEF TECHNOLOGY COUNSEL, MCI WORLDCOM

Chairman of the Committee, Mr. Bliley, Subcommittee Chairman, Mr. Tauzin, and other Members of this Subcommittee, thank you for inviting MCI World Com to testify on behalf of H.R. 1858, the "Consumer and Investor Access to Information Act of 1999."

As you, Chairman Bliley, and the cosponsors of this bill have clearly recognized, the approach to database protection embodied in H.R. 1858 strikes the appropriate balance between the need to prevent the theft of collections of information and the equally important need to maintain public access to information to promote progress and innovation in this Age of Information-and beyond.

Although I am in the business of building and operating communications networks, I clearly understand that those who are engaged in the building of databases for a living must be provided some limited protection against the misappropriation of their investments.

In contrast to H.R. 1858's measured approach, alternative attempts at legislation began with an overly-broad scope of protection and then exempted, or carved out, one existing or potential use after another. To date, numerous examples continue to arise regarding uses of data that may be considered harmful to the economy and the American public if protected in this broad form.

It is a precept of sound legislation to begin with a narrow scope of protection and to build on that core protection only to the minimal extent necessary. Doing so lays a solid foundation upon which the new law can rest; doing otherwise, results in an unstable base which ultimately will not support the unwieldy structure above.

Though H.R. 1858 contains a number of exemptions, they have more to do with the need to clarify that certain types of databases must forever remain outside the scope of protection to be afforded. The innumerable databases upon which modern telecommunications and the Internet depend are one such example.

The principal risk associated with a broad scope of protection is the actual or potential outlawing of value-added uses, commonly referred to as "transformative" uses, which build on existing collections of information. A narrow approach by its very nature allows such innovation to continue, maintaining the public benefits flowing therefrom. A broad approach, by contrast, sweeps in-and thereby prevents-new and innovative uses of collections of information.

Most users of the Internet and telecommunications services—and even many of the providers of such services do not fully appreciate the underlying communication networks' dependency on databases. These networks will not operate without free and open access to thousands and thousands of databases necessary for everything from call routing to operator services to accurate billing. The Internet-which is just a combination of network computers and their databases-is particularly dependent upon the open sharing of information. Internet Protocol addressing, data packet routing, conversion (look up) tables, protocol priority listings, file format information, and domain name registries, are just a few examples of the types of critical functions performed within the Internet every minute of every day through reliance on what are presently publicly available databases.

To communicate using the Internet, a host computer (meaning any end point computer on the Net) must implement a layered set of communications protocols comprising the Internet Protocol suite. These include the Application Layer; the Transport Layer; the Internet Layer; and the Link Layer.

At the application level, where many electronic commerce resources will reside and hopefully thrive, a wide variety of protocols and application types are used that require access to open databases. The types of data that must be shared to ensure that Internet users can communicate effectively are as varied as the applications themselves.

Increasingly, protocols implemented in the Transport Layer will be relied upon to guarantee delivery of particularly important Internet communications. The individuals and businesses depending on electronic commerce for the accurate, timely delivery of their communications will also depend on unencumbered access to the databases supporting all such services.

Further, all these layers are based on Internet Protocol (IP), which is itself a constantly evolving standard that depends on access to publicly available databases.

Open access to the databases underlying the operation of the Internet has allowed it to grow and flourish. Any threat to that open access-however remote-poses an unacceptable risk to the future of this new medium and all of the economic and societal benefits it promises for every American.

H.R. 1858 is the correct legislative approach because it is impossible to determine every critically important use of a database that should be exempt from an overly

broad legislative approach. Indeed, we cannot-and should not be required to bear such a burden, and any legislative approach that imposes it will do more harm than good. H.R. 1858 assures that no self-interested party will be able to hold the Internet or the telecommunications networks hostage by locking up any databases which are vital to other parties' operations.

As a pioneering leader in the competitive telecommunications and Internet industry, MCI WorldCom believes that H.R. 1858 meets the needs of both the communications industry and the database industry without unduly upsetting traditional principles of intellectual property law. H.R. 1858 will prevent the outright theft of valuable databases while leaving in place the access to information upon which our economy and our society-increasingly depends.

Thank you, Mr. Chairman, members of the subcommittee, for inviting me to testify today. I would be very happy to answer any questions you may have.

Mr. TAUZIN. Thank you, very much, sir.

The Chair is now pleased to welcome Mr. James Neal, dean of libraries, Baltimore, Maryland, Johns Hopkins University Libraries. Next will be Mr. Henderson and then Mr. O'Brien and finally Donald Baptiste in that order. Mr. James Neal.

STATEMENT OF JAMES G. NEAL, DEAN OF LIBRARIES, JOHNS HOPKINS UNIVERSITY LIBRARIES, MILTON S. EISENHOWER LIBRARY

Mr. NEAL. Thank you, Mr. Chairman. I am testifying on behalf of the Nation's major library association which represents 80,000 librarians and libraries in every community throughout North America. Thank you for this opportunity to appear before the subcommittee on H.R. 1858.

We very much appreciate the leadership role that you, members of the subcommittee, and the Full Committee on Commerce have taken on issues relating to access to information in the digital environment. The preservation and continuation of balanced rights and privileges in the electronic environment are essential to the free flow of information and to the success of our library and education systems. As we construct legislation for the volatile digital environment, we must remember that there are only a few inches between a halo and a noose.

H.R. 1858 strikes a balance between the interests of selected database producers, while ensuring that legitimate and appropriate access to factual information continues. Data and information are the foundation of research, scientific, and technology programs. And these facts are essential to how members of our public use information in their daily lives.

To keep this balance, all sectors, public and private, must rethink and reconfigure services and business models to meet the challenges of a network environment. Last year this subcommittee recognized that modified copyright and intellectual property regimes would be a key component in how these differing sectors adapt to the digital environment.

This is critically important that all proposals be considered in light of the need for this balance and fairness to all communities. The library community understands that unauthorized digital copying can lead to piracy. We have invested significant amounts in educational campaigns within our communities and institutions, and we have purchased technology to ensure that adequate safeguards are in place.

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