In theory, under H.R. 354 in the year 2016, all of the entries except BB, FF, and KK lose protection-and can be copied in their entirety. The problem is that if the database is provided via on-line services, there may be no means for the user to know which entries are unprotected because they were original entries and which entries are protected because they are the result of maintenance investment within the past 15 years. One commentator has suggested that new entries by electronically "tagged," so that a user can readily determine what is protected and what is not, i.e. A B BB FF G H I J K KK Another possible solution would be to require any database producer that wanted to enjoy protection for a revision of their database after the fifteen year period to make (or have made) the original, no longer-protected database available in a reasonable format. This would be the electronic equivalent of the old copy of Wuthering Heights in the public library. The original database need not be as available as the new version--just as old library books usually are not as available as books at retail stores, but it should reach some standard of public access. APPENDIX B H.R. 354-PROPOSED RE-WORDING OF THE PROVISIONS ANALOGOUS TO FAIR USE IN COPYRIGHT LAW (with minimal edits) Sec. 1403. Permitted Acts and Uses (a) GATHERING OR USE OF INFORMATION OBTAINED THROUGH OTHER MEANS Nothing in this chapter shall restrict any person from independently gathering information or using information obtained by means other than extracting it from a collection of information gathered, organized, or maintained by another person through the investment of substantial monetary or other resources. (b) INDIVIDUAL ITEMS OF INFORMATION AND OTHER INSUBSTANTIAL PARTS Nothing in this chapter shall prevent the extraction or use of an individual item of information, or other insubstantial part of a collection of information, in itself. An individual item of information, including a work of authorship, shall not itself be considered a substantial part of a collection of information under section 1402. Nothing in this subsection shall permit the repeated or systematic extraction or use of individual items or insubstantial parts of a collection of information so as to circumvent the prohibition contained in section 1402. (c) USE OF INFORMATION FOR VERIFICATION Nothing in this chapter shall restrict any person from extracting or using a collection of information within any entity or organization, for the sole purpose of verifying the accuracy of information independently gathered, organized, or maintained by that person. Under no circumstances shall the information so used be extracted from the original collection and made available to others in a manner that harms the actual or potential market for the collection of information from which it is extracted or used. (d) NEWS REPORTING— Nothing in this chapter shall restrict any person from extracting or using information for the sole purpose of news reporting, including news gathering, dissemination, and comment, unless the information so extracted or used is time sensitive and has been gathered by a news reporting entity, and the extraction or use is part of a consistent pattern engaged in for the purpose of direct competition. (e) TRANSFER OF COPY Nothing in this chapter shall restrict the owner of a particular lawfully made copy of all or part of a collection of information from selling or otherwise disposing of the possession of that copy. Sec. 1404. Additional Reasonable Uses (a) CERTAIN NONPROFIT EDUCATIONAL, SCIENTIFIC, OR RESEARCH USES Notwithstanding section 1402, 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 referred to in section 1402. (b) GENERAL REASONABLE USES Notwithstanding section 1402, an individual act of use or extraction of information done for the purpose of illustration, explanation, example, comment, criticism, teaching, research, or analysis, in an amount appropriate and customary for that purpose, is not a violation of this chapter, if it is reasonable under the circumstances. In determining whether such a reasonable under the circumstances, the following factors shall be considered: (i) The extent to which the use or extraction is commercial or nonprofit. (iii) The extent to which and the manner in which the portion used or ex- (iv) 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. In no case shall a use or extraction be permitted under this paragraph if the used or extracted portion is offered or intended to be offered for sale or otherwise in commerce and is likely to serve as a market substitute for all or part of the collection from which the use or extraction is made. (B) DEFINITION For purposes of this paragraph, the term individual act' means an act that is not part of a pattern, system, or repeated practice by the same party, related parties, or parties acting in concert with respect to the same collection of information or a series of related collections of information. Renumber sections 1404 and subsequent Add to: Sec. 1401. Definitions (5) INDIVIDUAL ACT-The term "individual act" means an act that is not part of a 'pattern, system, or repeated practice by the same party, related parties, or parties acting in concert with respect to the same collection of information or a series of related collections of information. (1) In General.-Any person who violates section 1202 willfully either (A) for purposes of direct or indirect commercial advantage or financial gain, or (B) causes loss or damage aggregating $100,000 or more during any 1-year period to the person who gathered, organized, or maintained the information concerned, or (C) causes loss or damage aggregating $50,000 or more in any 1-year period to the person who gathered, organized, or maintained the information concerned, shall be punished as provided in subsection (b). (2) Inapplicability.-This section shall not apply to any employee or agent of a nonprofit educational, scientific, or research institution, library, archives, or law enforcement agency acting within the scope of his or her employment. (b) Penalties. (1) Any person who commits an offense under subsection (a)(1)(A) shall be fined not more than $250,000 or imprisoned for not more than 5 years, or both; (2) Any person who commits a second or subsequent offense under subsection (a)(1)(A) shall be fined not more than $500,000 or imprisoned for not more than 10 years, or both; (3) Any person who commits an offense under subsection (a)(1)(B) shall be fined not more than $250,000 or imprisoned for not more than 3 years, or both; (4) Any person who commits a second or subsequent offense under subsection (a)(1)(B) shall be fined not more than $500,000 or imprisoned not more than 6 years, or both; (5) Any person who commits an offense under subsection (a)(1)(C) shall be fined not more than $100,000 or imprisoned not more than 1 year, or both. (c) Victim Impact Statement.— (1) During preparation of the presentence report pursuant to Rule 32(c) of the Federal Rules of Criminal Procedure, victims of the offense shall be permitted to submit, and the probation officer shall receive, a victim impact statement that identifies the victim of the offense and the extent and scope of the injury and loss suffered by the victim, including the estimated economic impact of the offense on that victim. (2) Persons permitted to submit victim impact statements shall include (A) persons who gathered, organized, or maintained the information affected by conduct involved in the offense; and (B) the legal representatives of such persons. APPENDIX D POSSIBLE ADDITION TO § 1403 TO ADDRESS NATIONAL SECURITY/INTELLIGENCE CONCERNS Addition of new subsection (g) to § 1403 Permitted Acts: "(g) Nothing in this chapter shall prohibit an officer, agent, or employee of the United States, a State, or a political subdivision of a State or a person acting under contract of one of the enumerated officers, agents, or employees from extracting and using information as part of lawfully authorized investigative, protective, or intelligence activities." Proposed Legislative History to Accompany $1403(g): Intelligence gathering and national security activities are already shielded from liability by section 1402 in that these activities will not cause "harm to the actual or potential" market of the product. Section 1403 (g) is offered to further clarify and confirm that these activities and law enforcement activities fall outside the bill's reach. Subsection 1403(g) is not intended to permit law enforcement or intelligence agencies to use commercially available databases without liability where the use occurs in normal ministerial functions or publicly-known activities of the agency, if such use would cause harm to the market as detailed in section 1402. For example, section 1403 (g) would apply to covert or undercover investigative or intelligence activities where the officer, agent, or employee may be called upon to access databases-physically or through computer networks-without the knowledge of the database producer or the owner (or license holder) of that copy of the database. Section 1403 (g) helps make it clear beyond any doubt that law enforcement and intelligence agencies can continue to conduct any lawfully authorized activities without becoming liable under this Act. Mr. COBLE. Thank you, Mr. Pincus. I commend each of you, you both beat the red light. Ms. Peters, you base your view on the shortcomings of copyright law on several cases decided in the mid-1990's. Since you testified on the prior version of this bill just a couple of years ago in 1997, there does not seem to have been any new cases that have ruled against database producers based on an overly narrow scope of protection. Is it not possible that there is no longer a problem and that courts are not following the highly restrictive cases? MS. PETERS. I would argue exactly the opposite. I think that the court decisions for the most part were predictable, that the precedent has been set by these court cases, that the producers of databases know what courts find as the scope of protection and users know what seems to be allowed; therefore you don't see such more cases. That doesn't mean that the scope of protection isn't too narrow. It's just that with the precedential weight of the existing cases, why should others bring similar cases and be defeated? Mr. COBLE. Mr. Pincus, your testimony raises the issue of whether or not this legislation would pass constitutional scrutiny or muster. Your discussion focuses however only on the Copyright Clause. The bill is based on the Commerce Clause. Would the Trademark Act be constitutional under this analysis? Mr. PINCUS. Mr. Chairman, I think my testimony compares the situation here to copyright but our constitutional analysis I think is based-the concern is a first amendment based concern. That while the presence of express Constitutional authorization for copyright requires some resolution between the first amendment and the Copyright Clause, the absence of express Constitutional authorization for this form of protection, and the fact that we're dealing here with facts as opposed to creative works, creates a greater first amendment problem. Mr. COBLE. But is there a Constitutional authorization for the Trademark Act? Mr. PINCUS I think we're not worried about Constitutional authorization in terms of the Commerce Clause power. We're more worried about the limits on the Commerce Clause power that would apply in this context because we're dealing with speech regarding facts as opposed to in the trademark context where we're really dealing with the statute that has at least as one of its principal goals preventing false speech, which would be the attribution of a trademark which has an implied meaning-"This is made by Company X" on a product that isn't. Mr. COBLE. Expand for me, if you will, Mr. Pincus, on why you believe the "diminution of incentive" test from NBA v. Motorola is ill suited to provide basic protection. Mr. PINCUS. Our concern, Mr. Chairman, is that that's just a test that's very difficult for anyone who's thinking. Our goal is that the lines that are drawn between permitted and prohibited conduct be clear, as clear as they can. Obviously they can't be crystal clear in any context but that they be as clear as possible so that everyone knows where the lines are and we're not deterring conduct that is outside the scope of protection because people are afraid that they might be falling over the line. Here that test is really difficult for anyone to know ex ante how it will come out as opposed to a harm test, which is a much more straightforward test to apply. And we think especially a substantial harm test, as we urge, is a good enough proxy for the thought but something that's going to be a lot easier for courts to apply and people to figure out whether they've got a claim or not. Mr. COBLE. Ms. Peters, would you like to be heard on either of those two questions I put to Mr. Pincus? Ms. PETERS. No, it's okay. [Laughter.] Mr. COBLE. I too beat the red light so I will yield to my friend from California, Mr. Berman. Mr. BERMAN. I will not beat the red light but I will comply with it. [Laughter.] Mr. BERMAN. Thank you, Mr. Chairman. Just on the last exchange, Mr. Pincus, with the chairman, it just occurs to me--and it's probably an obvious answer, try not to make me look like the fool-what's the Constitutional basis for libel and slander laws, suing people for protected conduct which is false and defamatory and causes damages? Mr. PINCUS. What the court has said is that the Free Speech Clause doesn't protect false speech so false statements don't have Constitutional protection. Mr. BERMAN. Has the court spoken on the issue of theft of-I assume a misappropriation theory is sort of a tort theft, taking somebody else's work for your own use. Have they spoken on this? Mr. PINCUS. There are decisions. There's a Supreme Court case and there are lower court cases that have said that there can be a misappropriation tort in this context. I think the concern here is the definition of the tort and how broad the scope is and our feeling is the more the wrong that's created is focused in on Mr. BERMAN. I've got you. Let me just finish the rest of your sentence and see if I have it right. If you focus on distribution rather than use you define market in your fashion more clearly. You think you have a better chance of avoiding a court saying 'No, this is too intrusive on protected activity.' Mr. PINCUS. Right. We think that the focusing in on activity that really is in the mode of competitive harm, taking away the market from another person really gives you a lot more first amendment legs to stand on. Mr. BERMAN. Say that one more time. Just that last sentence one more time. Mr. PINCUS. Focusing in on harm, the competitive harm that misappropriation really traditionally focused on, which is taking away markets from the creator, gets you a lot closer to things that would be okay under the first amendment. I should hesitate to add, because I'm sure the Justice Department will want me to, that we couldn't opine on any particular measure until all the details were in place but we think that moves you much closer to a place where we're more comfortable. Mr. BERMAN. And then a question also comes up, if the focus here is trying to do something to encourage people to do the work, to create the database, to gather the information, to be a resource for lots of important things, is the problem use, or is the disincentive that we're trying to avoid, is the incentive that we're trying to encourage, as effectively done by focusing on distribution as it is on use? You obviously think it is. I mean you're for the idea of the |