SPEAKERS CONTENTS INSERTS
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62–506
2000
COLLECTIONS OF INFORMATION ANTIPIRACY ACT
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS AND INTELLECTUAL
PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
ON
H.R. 354
MARCH 18, 1999
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Serial No. 54
Printed for the use of the Committee on the Judiciary
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
COMMITTEE ON THE JUDICIARY
HENRY J. HYDE, Illinois, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
BILL McCOLLUM, Florida
GEORGE W. GEKAS, Pennsylvania
HOWARD COBLE, North Carolina
LAMAR S. SMITH, Texas
ELTON GALLEGLY, California
CHARLES T. CANADY, Florida
BOB GOODLATTE, Virginia
ED BRYANT, Tennessee
STEVE CHABOT, Ohio
BOB BARR, Georgia
WILLIAM L. JENKINS, Tennessee
ASA HUTCHINSON, Arkansas
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
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LINDSEY O. GRAHAM, South Carolina
MARY BONO, California
SPENCER BACHUS, Alabama
JOE SCARBOROUGH, Florida
JOHN CONYERS, Jr., Michigan
BARNEY FRANK, Massachusetts
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
MELVIN L. WATT, North Carolina
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
STEVEN R. ROTHMAN, New Jersey
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
THOMAS E. MOONEY, SR., General Counsel-Chief of Staff
JULIAN EPSTEIN, Minority Chief Counsel and Staff Director
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Subcommittee on Courts and Intellectual Property
HOWARD COBLE, North Carolina, Chairman
F. JAMES SENSENBRENNER, Jr., Wisconsin
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
WILLIAM L. JENKINS, Tennessee
EDWARD A. PEASE, Indiana
CHRIS CANNON, Utah
JAMES E. ROGAN, California
MARY BONO, California
HOWARD L. BERMAN, California
JOHN CONYERS, Jr., Michigan
RICK BOUCHER, Virginia
ZOE LOFGREN, California
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
MITCH GLAZIER, Chief Counsel
BLAINE MERRITT, Counsel
VINCE GARLOCK, Counsel
DEBBIE K. LAMAN, Counsel
ROBERT RABEN, Minority Counsel
EUNICE GOLDRING, Staff Assistant
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C O N T E N T S
HEARING DATE
March 18, 1999
TEXT OF BILL
H.R. 354
OPENING STATEMENT
Coble, Hon. Howard, a Representative in Congress from the State of North Carolina, and chairman, Subcommittee on Courts and Intellectual Property
WITNESSES
Duncan, Dan, Vice President, Government Affairs, Software & Information Industry Association
Henderson, Lynn, President, Doane Agricultural Services Company
Kirk, Michael, Executive Director, American Intellectual Property Law Association
Lederberg, Joshua, Professor, Sackler Foundation Scholar, The Rockefeller University
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McDermott, Terrence, Executive Vice President, the National Association of Realtors
Neal, James G., Dean, University Libraries, Johns Hopkins University
Peters, Marybeth, Register of Copyrights, Copyright Office of the United States, Library of Congress
Phelps, Charles, Provost, University of Rochester
Pincus, Andrew, General Counsel, United States Department of Commerce
Winokur, Marilyn, Executive Vice President, Micromedex, Inc.
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Duncan, Dan, Vice President, Government Affairs, Software & Information Industry Association: Prepared statement
Henderson, Lynn, President, Doane Agricultural Services Company: Prepared statement
Kirk, Michael, Executive Director, American Intellectual Property Law Association: Prepared statement
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Lederberg, Joshua, Professor, Sackler Foundation Scholar, The Rockefeller University: Prepared statement
McDermott, Terrence, Executive Vice President, the National Association of Realtors: Prepared statement
Neal, James G., Dean, University Libraries, Johns Hopkins University: Prepared statement
Peters, Marybeth, Register of Copyrights, Copyright Office of the United States, Library of Congress: Prepared statement
Phelps, Charles, Provost, University of Rochester: Prepared statement
Pincus, Andrew, General Counsel, United States Department of Commerce: Prepared statement
Winokur, Marilyn, Executive Vice President, Micromedex, Inc.
APPENDIX
Material submitted for the record
COLLECTIONS OF INFORMATION ANTIPIRACY ACT
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THURSDAY, MARCH 18, 1999
House of Representatives,
Subcommittee on Courts and
Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The subcommittee met at 11:05 a.m. in Room 2226 of the Rayburn House Office Building, the Honorable Howard Coble, chairman of the subcommittee, presiding.
Members present. Coble, Sensenbrenner, Goodlatte, Jenkins, Pease, Rogan, Bono, Berman, Lofgren and Delahunt.
Staff present. Majority: Mitch Glazier, Chief Counsel; Vince Garlock, Counsel; Eunice Goldring, Staff Assistant; Minority: Bari Schwartz, Minority Counsel.
OPENING STATEMENT OF CHAIRMAN COBLE
Mr. COBLE. Good morning, ladies and gentlemen. My friend Howard Berman, the ranking member, is on his way. In fact, he has just entered the room so we can continue.
Initially I want to apologize to you all. We tried to have this hearing convened in Room 2141, the home of the full Judiciary committee, but it was already taken by another subcommittee. This is why you all are elbow to elbow today. Hold me harmless for that because we did try to get a larger room.
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The Subcommittee on Courts and Intellectual Property will come to order. Today the subcommittee is conducting a legislative hearing on H.R. 354, the Collections of Information Antipiracy Act, which strikes a balance as the information age arrives. The balance provides adequate protection to assure that there is an incentive of companies to invest in the development of collections of information without inhibiting members of the scientific, library and research communities from carrying on their work.
This bill, as a compliment to copyright law, relies on unfair competition principles to prevent a party from misappropriating another's collection of information. In the event a person misappropriates a substantial portion of another's collection of information to the extent it will harm the original collector's ability to compete the misappropriator would be subject to injunction and damages.
This bill is nearly identical to the legislation which passed the House of Representatives not once but twice last year. H.R. 354 differs from last year's legislation in two ways. First, it clarifies that the term of protection for a collection of information is limited to 15 years. Second, the bill adopts fair use language to clarify the permissible uses for scientific, educational and research purposes.
106TH CONGRESS
1ST SESSION
H. R. 354
To amend title 17, United States Code, to provide protection for certain collections of information.
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IN THE HOUSE OF REPRESENTATIVES
JANUARY 19, 1999
Mr. COBLE introduced the following bill; which was referred to the Committee on the Judiciary
A BILL
To amend title 17, United States Code, to provide protection for certain collections of information.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ''Collections of Information Antipiracy Act''.
SEC. 2. MISAPPROPRIATION OF COLLECTIONS OF INFORMATION.
Title 17, United States Code, is amended by adding at the end the following new chapter:
''CHAPTER 14—MISAPPROPRIATION OF COLLECTIONS OF INFORMATION
''Sec.
''1401. Definitions.
''1402. Prohibition against misappropriation.
''1403. Permitted acts.
''1404. Exclusions.
''1405. Relationship to other laws.
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''1406. Civil remedies.
''1407. Criminal offenses and penalties.
''1408. Limitations on actions.
''§1401. Definitions
''As used in this chapter:
''(1) COLLECTION OF INFORMATION.—The term 'collection of information' means information that has been collected and has been organized for the purpose of bringing discrete items of information together in one place or through one source so that users may access them.
''(2) INFORMATION.—The term 'information' means facts, data, works of authorship, or any other intangible material capable of being collected and organized in a systematic way.
''(3) POTENTIAL MARKET.—The term 'potential market' means any market that a person claiming protection under section 1402 has current and demonstrable plans to exploit or that is commonly exploited by persons offering similar products or services incorporating collections of information.
''(4) COMMERCE.—The term 'commerce' means all commerce which may be lawfully regulated by the Congress.
''§1402. Prohibition against misappropriation
''Any person who extracts, or uses in commerce, all or a substantial part, measured either quantitatively or qualitatively, of a collection of information gathered, organized, or maintained by another person through the investment of substantial monetary or other resources, so as to cause harm to the actual or potential market of that other person, or a successor in interest of that other person, for a product or service that incorporates that collection of information and is offered or intended to be offered for sale or otherwise in commerce by that other person, or a successor in interest of that person, shall be liable to that person or successor in interest for the remedies set forth in section 1406.
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''§1403. Permitted acts
''(a) EDUCATIONAL, SCIENTIFIC, RESEARCH, AND ADDITIONAL REASONABLE USES.—
''(1) 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.
''(2) ADDITIONAL REASONABLE USES.—
''(A) IN GENERAL.—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 an act is reasonable under the circumstances, the following factors shall be considered:
''(i) The extent to which the use or extraction is commercial or nonprofit.
''(ii) The good faith of the person making the use or extraction.
''(iii) The extent to which and the manner in which the portion used or extracted is incorporated into an independent work or collection, and the degree of difference between the collection from which the use or extraction is made and the independent work or collection.
''(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.
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''(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.
''(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) 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.
''(d) 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.
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''(e) 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.
''(f) 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.
''§1404. Exclusions
''(a) GOVERNMENT COLLECTIONS OF INFORMATION.—
''(1) EXCLUSION.—Protection under this chapter shall not extend to collections of information gathered, organized, or maintained by or for a government entity, whether Federal, State, or local, including any employee or agent of such entity, or any person exclusively licensed by such entity, within the scope of the employment, agency, or license. Nothing in this subsection shall preclude protection under this chapter for information gathered, organized, or maintained by such an agent or licensee that is not within the scope of such agency or license, or by a Federal or State educational institution in the course of engaging in education or scholarship.
''(2) EXCEPTION.—The exclusion under paragraph (1) does not apply to any information required to be collected and disseminated—
''(A) under the Securities Exchange Act of 1934 by a national securities exchange, a registered securities association, or a registered securities information processor, subject to section 1405(g) of this title; or
''(B) under the Commodity Exchange Act by a contract market, subject to section 1405(g) of this title.
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''(b) COMPUTER PROGRAMS.—
''(1) PROTECTION NOT EXTENDED.—Subject to paragraph (2), protection under this chapter shall not extend to computer programs, including, but not limited to, any computer program used in the manufacture, production, operation, or maintenance of a collection of information, or any element of a computer program necessary to its operation.
''(2) INCORPORATED COLLECTIONS OF INFORMATION.—A collection of information that is otherwise subject to protection under this chapter is not disqualified from such protection solely because it is incorporated into a computer program.
''(c) DIGITAL ONLINE COMMUNICATIONS.—Protection under this chapter shall not extend to a product or service incorporating a collection of information gathered, organized, or maintained to address, route, forward, transmit, or store digital online communications or provide or receive access to connections for digital online communications.
''§1405. Relationship to other laws
''(a) OTHER RIGHTS NOT AFFECTED.—Subject to subsection (b), nothing in this chapter shall affect rights, limitations, or remedies concerning copyright, or any other rights or obligations relating to information, including laws with respect to patent, trademark, design rights, antitrust, trade secrets, privacy, access to public documents, and the law of contract.
''(b) PREEMPTION OF STATE LAW.—On or after the effective date of this chapter, all rights that are equivalent to the rights specified in section 1402 with respect to the subject matter of this chapter shall be governed exclusively by Federal law, and no person is entitled to any equivalent right in such subject matter under the common law or statutes of any State. State laws with respect to trademark, design rights, antitrust, trade secrets, privacy, access to public documents, and the law of contract shall not be deemed to provide equivalent rights for purposes of this subsection.
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''(c) RELATIONSHIP TO COPYRIGHT.—Protection under this chapter is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection or limitation, including, but not limited to, fair use, in any work of authorship that is contained in or consists in whole or part of a collection of information. This chapter does not provide any greater protection to a work of authorship contained in a collection of information, other than a work that is itself a collection of information, than is available to that work under any other chapter of this title.
''(d) ANTITRUST.—Nothing in this chapter shall limit in any way the constraints on the manner in which products and services may be provided to the public that are imposed by Federal and State antitrust laws, including those regarding single suppliers of products and services.
''(e) LICENSING.—Nothing in this chapter shall restrict the rights of parties freely to enter into licenses or any other contracts with respect to the use of collections of information.
''(f) COMMUNICATIONS ACT OF 1934.—Nothing in this chapter shall affect the operation of the provisions of the Communications Act of 1934 (47 U.S.C. 151 et seq.), or shall restrict any person from extracting or using subscriber list information, as such term is defined in section 222(f)(3) of the Communications Act of 1934 (47 U.S.C. 222(f)(3)), for the purpose of publishing telephone directories in any format.
''(g) SECURITIES AND COMMODITIES MARKET INFORMATION.—
''(1) FEDERAL AGENCIES AND ACTS.—Nothing in this chapter shall affect—
''(A) the operation of the provisions of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or the Commodity Exchange Act (7 U.S.C. 1 et seq.);
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''(B) the jurisdiction or authority of the Securities and Exchange Commission and the Commodity Futures Trading Commission; or
''(C) the functions and operations of self-regulatory organizations and securities information processors under the provisions of the Securities Exchange Act of 1934 and the rules and regulations thereunder, including making market information available pursuant to the provisions of that Act and the rules and regulations promulgated thereunder.
''(2) PROHIBITION.—Notwithstanding any provision in subsection (a), (b), (c), (d), or (f) of section 1403, nothing in this chapter shall permit the extraction, use, resale, or other disposition of real-time market information except as the Securities Exchange Act of 1934, the Commodity Exchange Act, and the rules and regulations thereunder may otherwise provide. In addition, nothing in subsection (e) of section 1403 shall be construed to permit any person to extract or use real-time market information in a manner that constitutes a market substitute for a real-time market information service (including the real-time systematic updating of or display of a substantial part of market information) provided on a real-time basis.
''(3) DEFINITION.—As used in this subsection, the term 'market information' means information relating to quotations and transactions that is collected, processed, distributed, or published pursuant to the provisions of the Securities Exchange Act of 1934 or by a contract market that is designated by the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act and the rules and regulations thereunder.
''§1406. Civil remedies
''(a) CIVIL ACTIONS.—Any person who is injured by a violation of section 1402 may bring a civil action for such a violation in an appropriate United States district court without regard to the amount in controversy, except that any action against a State governmental entity may be brought in any court that has jurisdiction over claims against such entity.
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''(b) TEMPORARY AND PERMANENT INJUNCTIONS.—Any court having jurisdiction of a civil action under this section shall have the power to grant temporary and permanent injunctions, according to the principles of equity and upon such terms as the court may deem reasonable, to prevent a violation of section 1402. Any such injunction may be served anywhere in the United States on the person enjoined, and may be enforced by proceedings in contempt or otherwise by any United States district court having jurisdiction over that person.
''(c) IMPOUNDMENT.—At any time while an action under this section is pending, the court may order the impounding, on such terms as it deems reasonable, of all copies of contents of a collection of information extracted or used in violation of section 1402, and of all masters, tapes, disks, diskettes, or other articles by means of which such copies may be reproduced. The court may, as part of a final judgment or decree finding a violation of section 1402, order the remedial modification or destruction of all copies of contents of a collection of information extracted or used in violation of section 1402, and of all masters, tapes, disks, diskettes, or other articles by means of which such copies may be reproduced.
''(d) MONETARY RELIEF.—When a violation of section 1402 has been established in any civil action arising under this section, the plaintiff shall be entitled to recover any damages sustained by the plaintiff and defendant's profits not taken into account in computing the damages sustained by the plaintiff. The court shall assess such profits or damages or cause the same to be assessed under its direction. In assessing profits the plaintiff shall be required to prove defendant's gross revenue only and the defendant shall be required to prove all elements of cost or deduction claims. In assessing damages the court may enter judgment, according to the circumstances of the case, for any sum above the amount found as actual damages, not exceeding three times such amount. The court in its discretion may award reasonable costs and attorney's fees to the prevailing party and shall award such costs and fees where it determines that an action was brought under this chapter in bad faith against a nonprofit educational, scientific, or research institution, library, or archives, or an employee or agent of such an entity, acting within the scope of his or her employment.
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''(e) REDUCTION OR REMISSION OF MONETARY RELIEF FOR NONPROFIT EDUCATIONAL, SCIENTIFIC, OR RESEARCH INSTITUTIONS.—The court shall reduce or remit entirely monetary relief under subsection (d) in any case in which a defendant believed and had reasonable grounds for believing that his or her conduct was permissible under this chapter, if the defendant was an employee or agent of a nonprofit educational, scientific, or research institution, library, or archives acting within the scope of his or her employment.
''(f) ACTIONS AGAINST UNITED STATES GOVERNMENT.—Subsections (b) and (c) shall not apply to any action against the United States Government.
''(g) RELIEF AGAINST STATE ENTITIES.—The relief provided under this section shall be available against a State governmental entity to the extent permitted by applicable law.
''§1407. Criminal offenses and penalties
''(a) VIOLATION.—
''(1) IN GENERAL.—Any person who violates section 1402 willfully, and—
''(A) does so for direct or indirect commercial advantage or financial gain, or
''(B) causes loss or damage aggregating $10,000 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 an employee or agent of a nonprofit educational, scientific, or research institution, library, or archives acting within the scope of his or her employment.
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''(b) PENALTIES.—An offense under subsection (a) shall be punishable by a fine of not more than $250,000 or imprisonment for not more than 5 years, or both. A second or subsequent offense under subsection (a) shall be punishable by a fine of not more than $500,000 or imprisonment for not more than 10 years, or both.
''§1408. Limitations on actions
''(a) CRIMINAL PROCEEDINGS.—No criminal proceeding shall be maintained under this chapter unless it is commenced within three years after the cause of action arises.
''(b) CIVIL ACTIONS.—No civil action shall be maintained under this chapter unless it is commenced within three years after the cause of action arises or claim accrues.
''(c) ADDITIONAL LIMITATION.—No criminal or civil action shall be maintained under this chapter for the extraction or use of all or a substantial part of a collection of information that occurs more than 15 years after the portion of the collection that is extracted or used was first offered for sale or otherwise in commerce, following the investment of resources that qualified that portion of the collection for protection under this chapter. In no case shall any protection under this chapter resulting from a substantial investment of resources in maintaining a preexisting collection prevent any use or extraction of information from a copy of the preexisting collection after the 15 years have expired with respect to the portion of that preexisting collection that is so used or extracted, and no liability under this chapter shall thereafter attach to such acts of use or extraction.''.
SEC. 3. CONFORMING AMENDMENTS.
(a) TABLE OF CHAPTERS.—The table of chapters for title 17, United States Code, is amended by adding at the end the following:
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''14. Misappropriation of Collections of Information
(b) DISTRICT COURT JURISDICTION.—(1) Section 1338 of title 28, United States Code, is amended—
(A) in the section heading by inserting ''misappropriations of collections of information,'' after ''trade-marks,''; and
(B) by adding at the end the following:
''(d) The district courts shall have original jurisdiction of any civil action arising under chapter 14 of title 17, relating to misappropriation of collections of information. Such jurisdiction shall be exclusive of the courts of the States, except that any action against a State governmental entity may be brought in any court that has jurisdiction over claims against such entity.''.
(2) The item relating to section 1338 in the table of sections for chapter 85 of title 28, United States Code, is amended by inserting ''misappropriations of collections of information,'' after ''trade-marks,''.
(c) PLACE FOR BRINGING ACTIONS.—(1) Section 1400 of title 28, United States Code, is amended by adding at the end the following:
''(c) Civil actions arising under chapter 14 of title 17, relating to misappropriation of collections of information, may be brought in the district in which the defendant or the defendant's agent resides or may be found.''.
(2) The section heading for section 1400 of title 28, United States Code, is amended to read as follows:
''§1400. Patents and copyrights, mask works, designs, and collections of information''.
(3) The item relating to section 1400 in the table of sections at the beginning of chapter 87 of title 28, United States Code, is amended to read as follows:
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''1400. Patents and copyrights, mask works, designs, and collections of information.''.
(d) COURT OF FEDERAL CLAIMS JURISDICTION.—Section 1498(e) of title 28, United States Code, is amended by inserting ''and to protections afforded collections of information under chapter 14 of title 17'' after ''chapter 9 of title 17''.
SEC. 4. EFFECTIVE DATE.
(a) IN GENERAL.—This title and the amendments made by this title shall take effect on the date of the enactment of this Act, and shall apply to acts committed on or after that date.
(b) PRIOR ACTS NOT AFFECTED.—No person shall be liable under chapter 14 of title 17, United States Code, as added by section 2 of this Act, for the use of information lawfully extracted from a collection of information prior to the effective date of this Act, by that person or by that person's predecessor in interest.
During today's hearing we will hear from an array of different witnesses, in and out of Government, commercial and non-profit entities, for and against the legislation. We are committed, as we always have been, to listen to any constructive suggestion which leads us to the best possible law for all.
Let me note at this time that we did extend an invitation to commercial entities who have raised concerns about the legislation. Unfortunately, they were not able to produce a witness to be here this morning but it is my understanding they have submitted a statement for the record. I wanted to mention this to you so you'll understand that no one has been shut off from this debate.
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I read an article over the holidays which described this legislation as Armageddon and insinuated that we rammed this bill through last year underhandedly and heavy-handedly. Now, I've been accused of having rocks in my head before but I've never been compared to a giant rock which will carelessly wipe out society. [Laughter.]
Mr. COBLE. What the author did not inform the reader was that he represented a client with a position on the bill, that he himself had testified at one of our two hearings we held on the legislation, and that we had considered and adopted some of the amendments he had suggested to us.
I point this out not to provoke a fight but to clarify our work. The way we do business, I have said many times: you don't need a visa to see us. Democrats on the one hand, Republicans on the other; you all can get through our doors on these intellectual property issues.
Again, I want to reiterate my staff and I, along with other members of the subcommittee, have met with dozens of parties on all sides of these issues and will continue to do so in the future. We have worked arduously to this end: to meet, gather and incorporate as many suggestions in the bill as we feel appropriate. I am committed to doing everything in our power to see that we complete this legislation this year and it is always better when we can do it together.
Now, before I recognize my friend from California let me get something off of my mind. Folks, I am an easy dog to hunt with. With my man of letters over there, I am an easy dog with whom to hunt. [Laughter.]
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Mr. COBLE. Mitch Glazier, our chief counsel, met with Mrs. Phyllis Schlafly's executive director regarding Mrs. Schlafly's concern about this bill encouraging the dissemination of private medical records. It is my belief that the bill does not so encourage such dissemination but Mr. Glazier agreed with Mrs. Schlafly's executive director that we would engage in dialogue and try to work this matter out prior to fighting our fights publicly.
Yesterday when I picked up the Washington Times I needed asbestos gloves to handle that radioactive article. Mrs. Schlafly's name appeared thereon and much of that article, my friends, was laced very generously with misinformation, with deception.
I guess what I resent most vividly is the fact that she accused me or she implied that I'm in the pocket of various special interests up here. That's an insult to me and it's an insult to the special interests she mentioned and she owes me an apology. For the record, I am not holding my breath until I get that apology. [Laughter.]
Mr. COBLE. But folks, having said all that, I don't expect everybody to agree with every piece of legislation that surfaces here but we proved last session of Congress that we could work these things out and I'm willing to do this now. But I felt obliged to mention that in case you all read that article yesterday, to know from where I'm coming. And if you didn't read it you may want to forget about it. [Laughter.]
Mr. COBLE. Having said that, I'm pleased to recognize the ranking member, Representative Berman, from California.
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Mr. BERMAN: Thank you, Mr. Chairman. Given the choice of siding with you or Phyllis Schlafly——[Laughter.]
Mr. Coble. Would the gentleman yield just a minute? What makes this so ironic is I probably vote identically with the way Ms. Schlafly wants me to vote a hundred percent of the time.
Mr. DELAHUNT. You should reconsider that, Mr. Chairman. [Laughter.]
Mr. COBLE. The gentleman from California.
Mr. BERMAN. Thank you, Mr. Chairman.
This truly is a momentous day. Not only are we having a hearing on one of the most exciting pieces of legislation ever to have been introduced in Congress but we are celebrating the anniversary of the birth of our chairman. I just wanted to have everybody know.
[Applause.]
Mr. COBLE. He hadn't ought to have said that.
Mr. BERMAN. I would sing Happy Birthday except I wouldn't want to be accused of being public funding of the arts. [Laughter.]
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Mr. BERMAN. Well, enough of that.
I want to express my appreciation for your leadership in addressing the database protection issue. There is widespread agreement in Congress that this issue deserves our prompt attention. Last year we passed this legislation twice in the House. Since then discussions with those who create databases and those who use databases have led to some significant improvements in the legislation. Most notably, as you mentioned, there is a new provision clarifying what constitutes a permitted act by users of databases for purposes of illustration, explanation, example, comment, criticism, teaching, research or analysis in an amount appropriate and customary for that purpose.
Taking the copyright analogy, the analogy here would be the fair use of protected materials. I support the legislation because I don't like the idea that simply because databases can not be copyrighted creators of databases should live without assurance that as a general matter they will be compensated for their efforts.
That's not to say that I don't have some questions about all the provisions of this bill, or that I don't agree that there remain serious concerns that we need to address. I've heard some of the concerns of the scientific and research communities and believe those concerns merit further discussion. Our hearing will be a major step toward that, I trust.
I understand the administration continues to have concerns which also I think have a great deal of merit to them. However, I recognize that there may be some here today that maintain strongly held views opposing any legislation in this area. They will pick at this provision and that provision and perhaps theoretically acknowledge a need to do something but there is nothing that they are for, and I have to disagree with that position.
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I think there are just and good reasons to provide protection from misappropriation to those who make substantial investments in the development of databases. Others have no right to a ''free ride'' simply because there is a gap in the law. It's not simply that I'm against ''free rides,'' it's that if we just continue to allow ''free riding,'' then the creators of databases won't have the incentive to continue developing these really incredibly important, new and valuable tools for our own societal advancement. And disincentivizing that kind of work is not in our country's interest.
So the concerns that are most meaningful to me, in terms of people's concerns about this bill, are those expressed with an appreciation of the need for Congress to act to protect databases from the inappropriate exploitation.
I think H.R. 354 is a very solid start toward that end and I look forward to hearing the views of each of our witnesses today. I expect that we will start thinking about how to resolve, if we can resolve, any of the differences that remain between those that have an interest in this issue, and I yield back my time.
Thank you, Mr. Chairman.
Mr. COBLE. I thank the gentlemen.
Folks, we have a busy day today. Normally the chairman and the ranking member are the only ones who want to speak but if others have brief opening statements I will recognize them.
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Mr. Sensenbrenner.
Mr. SENSENBRENNER. Mr. Chairman, I won't take very long but I do want to express my best wishes for a very happy birthday for the chairman. He asked for this to happen on his birthday. [Laughter.]
Mr. SENSENBRENNER. So he has no one to blame but himself.
But I also thank you for drawing my attention to the Washington Times article, which I must have missed yesterday. So I'm going to have to take a look at it. [Laughter.]
Mr. COBLE. Thank you, Jim.
The lady from California.
Ms. LOFGREN. I also wish you a happy birthday and thank you for scheduling this hearing early. I think this is important and, as my colleagues know, I have a number of issues that I hope will be considered by this committee. I think we can sort through them. I look forward to hearing those issues addressed. I only hope we can find the time to collaborate and address these issues successfully. I agree that we shall build this year and that will give us enough time to strike a balance.
Thanks again, Mr. Chairman.
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Mr. COBLE. I thank the gentlelady. You're right, I think the timing is important. We have a good time frame here in which to work.
The gentleman from Indiana.
Mr. PEASE. Mr. Chairman, I'm more than willing to join in the singing of Happy Birthday, assuming Mr. Berman has paid his ASCAP fees. [Laughter.]
Mr. COBLE. The gentleman from Massachusetts.
Mr. DELAHUNT. Let me add to those happy birthday sentiments and let me just say one thing. Mr. Chairman, any suggestion that you are beholden to any special interest—I want to make a matter of record and a public statement here because I can sense your anger and I'm sure it was justified—is absolutely absurd.
You know, your leadership in this committee during the 105th Congress resulted in legislation that we can all be proud of and you are to be commended for that.
You know, this bill is important not for its benefits to any special interest but because it benefits the American people. And I'm sure we'll hear testimony to that effect. That the maintenance and supporting of databases has led to remarkable advances in the quality of life for the American people. That's really what we are about. This subcommittee historically has been a committee that has worked in a bipartisan fashion and we will continue to do that.
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I think it's important to make that statement, put it out there on the record to let everybody know. I know there are some issues here that have to be addressed. We will sort them out and we'll come up with the right conclusion.
Thank you, Mr. Chairman.
Mr. COBLE. Thank you for your generous comments.
I guess one reason why I was so annoyed about the article, it implied not only that I'm on the take, by implication it implied that the rest of you who support this legislation are as well. And I apologize, folks, if I appeared overly angry but I can't conceal it.
Thank you, Bill, for your good comments.
The gentleman from the Roanoke Valley of Virginia, Mr. Goodlatte.
Mr. GOODLATTE. Mr. Chairman, I just want to apologize for not being here when we all observed the 29th anniversary of your 39th birthday. [Laughter.]
Mr. COBLE. Get him out of here. [Laughter.]
Mr. GOODLATTE. I'll cheer you up in that regard.
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And also to observe that obviously the interest in this issue and the work of this committee is not reflective just of the standing room only crowd we have today but we held hearings on encryption a couple of weeks ago and we had the same circumstance. So we may need to let the powers that be know that we need larger hearing rooms for this committee. We're where it's at.
Mr. COBLE. You weren't here when I said this, Bob: we did try to get 2141 but it was already taken.
Mr. DELAHUNT. That was bankruptcy, Mr. Chairman. I happen to serve on that subcommittee too. I chose to be with you today, though. [Laughter.]
Mr. COBLE. The gentleman from East Tennessee, Mr. Jenkins.
Mr. JENKINS. Thank you, Mr. Chairman. Obviously I missed something. I'm sorry. I guess I'll have to ask for a copy of the printed record to catch up here.
I look forward to this hearing today and obviously there's a great deal of interest.
Mr. COBLE. Thank you, Mr. Jenkins.
Since the gentleman from California and the gentleman from Indiana referred to the arts and since Howard mentioned my birthday, I'd be remiss if I didn't mention this—and I'm paraphrasing now, Bill—but the lyrics of the rock and roll song some years ago went thusly: 'Time marches on, time marches on, the young gets old, the old gets old, time marches on'. [Laughter.]
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Mr. COBLE. I'm afraid I'm in that latter category.
Folks, bear with us. It's going to be a long day. We have a full calendar of activity on the floor that will commence imminently, if it hasn't already started. I will ask you all, as I have done previously and you all have been very cooperative to this end, when you see that red light illuminate in your eyes you will know that your 5 minutes have elapsed. We're not going to keel-haul anybody for going over that but I urge you when you see that 5 minutes to try to wrap it up because our second panel consists of eight witnesses and it's going be a long time. We're probably going to be interrupted with votes on the floor, so we do need to finish this today.
I assure you your written testimony will be examined thoroughly and if you can keep your oral testimony within the 5 minute time frame we will be appreciative.
Our first witness will be the Honorable Marybeth Peters who is Register of Copyrights for the United States. She has also served as acting counsel at the Copyright Office and is chief of both the Examining and Information Reference divisions. She has served as a consultant on copyright law to the World Intellectual Property Organization and authored the general guide to the Copyright Act of 1976.
Our second witness is Mr. Andrew Pincus, who as the general counsel is the chief legal advisor for the Commerce Department. Beyond his legal responsibilities Mr. Pincus also serves as a senior policy advisor for the Secretary and the Department on a broad range of domestic and international issues, including electronic commerce, international trade, telecommunications, intellectual property rights, environmental issues, export controls and technology. Mr. Pincus holds a Bachelor of Arts Degree from Yale College in 1977 where he was graduated cum laude, and a law degree from Columbia University School of Law in 1981, where he was a James Kent scholar, a Harlan Fisk Stone scholar, and Notes and Comments Editor of the Law Review.
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Mr. Pincus, we did not receive your written testimony until last night so with your permission we may submit written questions to you in addition to the questions we put to you this morning.
Mr. PINCUS. I'd be pleased to answer them.
Mr. COBLE. Thank you, sir.
The subcommittee has copies of both witnesses testimony. Without objection they will be made a part of the record.
Ms. Peters, you may kick it off.
STATEMENT OF MARYBETH PETERS, REGISTER OF COPYRIGHTS, COPYRIGHT OFFICE OF THE UNITED STATES, LIBRARY OF CONGRESS
Ms. PETERS. Thank you. I also have to start by wishing you a very happy birthday and hope that you have some fun activities planned for later in the day.
Mr. COBLE. This may end up being fun. [Laughter.]
Ms. PETERS. Mr. Chairman, members of the subcommittee, I'm pleased to testify today on the Collections of Information Antipiracy Act.
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In October 1997 I testified on a prior version of this bill. At that time I supported the enactment of new Federal protection for collections of information. While recommending further work on certain issues to better calibrate the balance that would maximize the public interest, the Copyright Office remains convinced of the need for legislation and believes that this bill represents substantial progress in achieving that balance.
The Office's support is based on the need to preserve adequate incentives for the production and dissemination of databases which are increasingly important both as a component of electronic commerce and as a tool for scientific, educational and technological development.
In our view there is a gap in legal protection which can not be satisfactorily filled through the use of technology alone. Existing bodies of law for protecting databases are all deficient in some respect. As to copyright, the Supreme Court's decision in Feist moves that some of the most investment intensive databases are no longer protected, while those that are receive only a narrow scope of protection. Other bodies of law protect only certain aspects of databases or protect them only in certain circumstances and lack uniformity or certainty.
This legal gap is compounded by the ease and speed with which a database can be copied and disseminated using today's digital and scanning capabilities. Producers are likely to react to their vulnerability by investing less in the production of databases or disseminating them less broadly.
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At the same time, because information is essential to the advancement of knowledge and culture, the risks of overprotection are equally serious. It is important not to inhibit or raise the cost of beneficial public interest uses. The ideal scope of protection should result in optimizing the availability of reliable information to the public.
Over the past year and a half considerable evolution has taken place in this bill, refining and clarifying its coverage. Many of the concerns, ours and others, have been addressed or ameliorated. My written statement discusses the changes incorporated in H.R. 354 that we see as most important. I will address only three of these here.
First, with respect to clarifying the boundaries of the prohibition there are three definitions of ''collection of information'' and ''potential market'' and there is an exclusion for information used to accomplish digital online communications. These definitions should prevent over-broad applications extending to products outside the standard conception of a database or to all markets that could someday enter. The exclusion for online communications insures that protection does not extend to functional network elements, thereby impeding the operation of the Internet.
Second, with respect to appropriate safeguards for beneficial uses, the exemptions for permitted acts have been expanded in a number of ways. Two are particularly important. The first broadens the exemption for non-profit educational, scientific or research uses to permit such uses as long as they do not directly harm the actual market. This change appropriately limits the liability situation where such uses pose a serious and immediate threat to the producer's investment, such as when a member of the market for which the database is intended downloads it without payment.
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The most far-reaching change is the new exception for ''additional reasonable uses''. The Copyright Office applauds the inclusion of this general flexible exception. Like the Fair Use doctrine of the copyright law it can serve as a safety valve, avoiding an overly strict application of the law. We continue to examine the effectiveness of the precise mix and functions of the elements set out in the exemption.
Third, a definite term of 15 years has been added. The language in this bill makes clear that a new term of protection resulting from the investment in the maintenance of a collection does not extend the term of the preexisting collection. Nevertheless, a practical problem which merits attention remains. How does the user obtain access to the old, preexisting version if the database exists only on line and it's continually updated?
As this important bill moves through the legislative process the Copyright Office would be pleased to assist the subcommittee and its staff in resolving the remaining issues.
Thank you very much.
[The complete statement of Ms. Peters follows.]
PREPARED STATEMENT OF MARYBETH PETERS, REGISTER OF COPYRIGHTS, COPYRIGHT OFFICE OF THE UNITED STATES, LIBRARY OF CONGRESS
Mr. Chairman, members of the Subcommittee, I am pleased to testify today on the ''Collections of Information Antipiracy Act.'' In October 1997, I testified on a prior version of this bill, H.R. 2652. At that time, I stated the Copyright Office's support for the enactment of new federal protection for collections of information, while identifying some issues with regard to how such protection should be formulated.
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The basis for the Office's support was the need to preserve adequate incentives for the production and dissemination of databases, which are increasingly important to the U.S. economy and culture, both as a component in the development of electronic commerce and as a tool for facilitating scientific, educational and technological advancement. In our view, there was a gap in existing legal protection, which could not be satisfactorily filled through the use of technology alone. This legal gap was compounded by the ease and speed with which a database can be copied and disseminated, using today's digital and scanning capabilities. Without legislation to fill the gap, publishers were likely to react to the lack of security by investing less in the production of databases, or disseminating them less broadly. The result would be an overall loss to the public of the benefits of access to the information that would otherwise have been made available.
At the same time, we cautioned that the risks of over-protection were equally serious, since the free flow of information is essential to the advancement of knowledge, technology and culture. We saw the key to legislation as ensuring adequate incentives for investment, without inhibiting access for appropriate purposes and in appropriate circumstances.
Accordingly, the Copyright Office recommended the restoration of the general level of protection provided in the past under copyright ''sweat of the brow'' theories, but under a suitable Constitutional power, with flexibility built in for uses in the public interest in a manner similar to the function played by fair use in copyright law. Such balanced legislation, we believed, could optimize the availability of reliable information to the public.
As introduced, H.R. 2652 represented a constructive first step toward achieving this result. We recommended further work on the bill's concepts and language, however, in order to resolve continuing concerns and better calibrate the balance needed to maximize the public interest. We identified as requiring particular attention the scope of the permitted acts and exclusions, and the issue of duration.
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During the course of consideration of H.R. 2652 in the last Congress, numerous changes were made. As passed by the House, the legislation incorporated several provisions responding to concerns we had identified, as well as many other amendments. H.R. 354 includes all of these changes, plus two other major additions: a clarification of the duration issue and a new exemption embodying certain fair use concepts. Over the course of the past year and a half, substantial progress has been made in developing and refining the coverage of the bill.
The position of the Copyright Office on H.R. 354 can be summarized as follows: We remain convinced that there is a need for new federal legislation to supplement existing law and provide adequate incentives for investments in databases. We are not aware of any changes in law or technology since my 1997 testimony that would warrant rethinking that conclusion.
As to the form that such legislation will take, we continue to prefer the misappropriation approach taken in H.R. 354 to an exclusive property rights model, for the reasons given in my prior testimony (a copy of which is attached). Moreover, in our view, the provisions of H.R. 354 represent a significant improvement over the provisions of H.R. 2652 as introduced. Many of our earlier concerns, and a number of concerns raised by others, have been addressed or ameliorated. Again, however, I stress that the sensitivity and importance of this subject matter demands great care in crafting a statutory balance. Several issues still warrant further analysis, among them the question of possible perpetual protection of regularly updated databases, and the appropriate mix of elements to be considered in establishing the new, fair use-type exemption.
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THE THRESHOLD QUESTION: THE NEED FOR LEGISLATION
In formulating our position on H.R. 2652, the Copyright Office considered carefully the threshold question of whether there is a need for new legislation to protect collections of information in the United States. We concluded then that new legislation was desirable, and that judgment still stands.
As explained in more detail in my prior testimony, and in the Office's August 1997 Report on Legal Protection for Databases, existing bodies of law for protecting databases are all deficient in some respect. As to copyright, the Supreme Court's 1991 decision in Feist means that some of the most investment-intensive databases are no longer protected, while those that do embody the requisite minimal creativity are entitled to only a narrow scope of protection. Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991). Other bodies of law protect only certain aspects of databases, or protect them only in certain circumstances, and lack uniformity or certainty. As a result, database producers are vulnerable to the taking of substantial portions of the fruits of their investment in ways that harm their markets.
Since the 1997 hearing, there has been no change in the courts' interpretation of copyright or other bodies of law that has significantly altered the legal landscape or ameliorated prior judicial applications of Feist. The cases that established a narrow scope of protection for databases under copyright law continue to have precedential effect, and to govern the public's understanding of the boundaries of permissible conduct.
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During the 105th Congress, this Subcommittee, the Committee on the Judiciary, and the full House of Representatives also recognized the need for legislation, as demonstrated by the passage of H.R. 2652 twice, once as a free-standing bill and once as Title V of H.R. 2281.
THE SUBSTANCE OF H.R. 354
The bill before you today reflects the considerable thought and consultation that went into the evolution of H.R. 2652 in the last Congress. H.R. 354 incorporates the provisions of H.R. 2652 in its ultimate form as it passed the House the second time. Many changes were made in that bill during the course of the legislative process. These changes included adding new definitions; clarifying the core prohibition; amending the ''permitted acts''; refining and expanding the exclusions; expanding the savings clauses for other bodies of law; establishing a set term of protection; and providing special protections against monetary or criminal liability for nonprofit institutions. In this Congress, two major changes have been added in H.R. 354 that address core concerns of user communities, one intended to avoid perpetual protection for dynamic databases, and the other to create a flexible defense for fair use-type uses.
I will not describe all of these changes here, but will discuss those the Copyright Office believes to be most important from a public policy perspective: clarification of the boundaries of the prohibited conduct; the coverage of the exceptions or ''permitted acts''; addition of savings clauses regarding copyright and antitrust law; duration; and the special protections for nonprofits.
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CLARIFYING THE BOUNDARIES OF THE PROHIBITION
As to the bill's general approach, H.R. 354 adopts the same misappropriation model as proposed in H.R. 2652. The Copyright Office continues to favor this approach, because it is more limited in its scope of coverage than an exclusive property rights model, and better tailored to the subject matter and the specific problem that has been identified. In addition, several changes made during the legislative process in the last Congress have clarified the boundaries of the prohibition in a beneficial way.
Most important was the addition of definitions for two of the terms used in the prohibition: ''collection of information'' and ''potential market'' (§1401). In my prior testimony, I stated that ''additional definitions may be advisable to clarify the scope of the prohibition . . ., but should not be included unless they can shed more light rather than create new ambiguity.'' These definitions meet that test; they serve to add precision and avoid potential overbreadth.
Definition of ''collection of information''
A number of concerns had been expressed about the lack of a definition of ''collection of information'' in H.R. 2652 as introduced. The concerns centered on the possibility that many items that would not fall within a standard conception of a database might be considered to qualify as a protected collection. A history book or even a novel might qualify, since each collects and brings together facts, ideas and words. Moreover, virtually any material in digital form could be considered a collection of digits. The new definition should rule out the possibility of such overbroad interpretations. It appropriately limits protection to those collections that are made up of items collected and organized ''for the purpose of bringing discrete items of information together in one place or through one source so that users may access them.'' By focusing on the purpose for which information is collected and organized, the definition excludes material brought together in order to communicate a message, tell a story, or accomplish a result. See H. Rep. No. 105–525, 105th Cong., 2d Sess. 13 (1998).
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Definition of ''potential market''
In my prior testimony, I supported the use of the term ''potential'' in delineating what type of market harm should be actionable. I stressed the need to give the term content, however, warning that ''[t]he mere possibility that a use could be licensed should not be sufficient, or the term would become circular.'' I advised that courts could look to the producer's business plans as well as customary industry practices, as they have done under copyright law.
The new definition of ''potential'' accomplishes just that result. It defines a ''potential market'' as one which a person has current and demonstrable plans to exploit or that is commonly exploited by persons offering similar products or services incorporating collections of information. The increased certainty provided by statutory language giving guidance to the courts is a positive step.
Exclusion for network functionality
Another important change made during the 105th Congress was the addition of an exclusion barring application of the prohibition to information used to accomplish digital online communications (§1404(c)). The Copyright Office supports this exclusion, which should ensure that protection for collections of information will not be extended inappropriately to functional network elements such as domain name tables and interface specifications, and thereby unintentionally impede the development and functioning of the Internet.
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APPROPRIATE SAFEGUARDS FOR BENEFICIAL USES
In my prior testimony, I noted the ''substantial dangers inherent in establishing legal rights involving the use of facts,'' and cautioned that ''[i]t is important not to inhibit or raise the cost of existing uses in the public interest . . . [and] avoid[] making access for legitimate purposes more difficult or expensive.'' This was one of the Copyright Office's principal concerns with the bill in its original form: were sufficient safeguards in place to ensure that that beneficial uses could continue unabated? Two expansions of the exceptions or ''permitted acts,'' one made toward the end of the last Congress and one appearing for the first time in H.R. 354, provide important additional safeguards.
Broadening of exception for nonprofit educational, scientific, or research uses
As initially drafted, the exception for nonprofit educational, scientific or research uses served a primarily symbolic value. While its inclusion in the bill constituted a legislative recognition of the value and importance of such uses, the exception was written in such a way as to simply restate in the affirmative that such uses were permitted as long as they did not cause market harm (which would not in any event have violated the prohibition). When H.R. 2652 was incorporated into H.R. 2281, this exception (now §1403(a)(1)) was broadened to permit such uses as long as they did not directly harm the actual market—thus ruling out liability for indirect harm, or harm to a potential market.
The Copyright Office supports this change. In our view, it appropriately limits liability for nonprofit public interest uses to the only situations where such uses pose a serious and immediate threat to the producer's investment—i.e., where the user is a member of the market for which the database is produced, and utilizes it without permission or payment. While a producer may need protection against a commercial competitor's preemption of a potential market, such a broad field of application does not seem necessary for nonprofit scientists and scholars.
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Addition of a flexible fair use-type exception
The most far-reaching change in the bill, added when H.R. 354 was introduced, is a new exception, entitled ''Additional Reasonable Uses'' (§1403(a)(2)). This section supplements the other, more specific exceptions, with a general, multi-factor balancing test turning on the concept of reasonableness. It permits an individual act of use or extraction of information for purposes of illustration, explanation, example, comment, criticism, teaching, research, or analysis, in an amount appropriate and customary for that purpose, if the act is reasonable under the circumstances. Four factors must be considered in determining reasonableness, relating to the commercial or nonprofit nature of the use or extraction, the defendant's good faith, the extent to which the defendant has added its own investment or creativity, and whether the plaintiff's collection was primarily intended for persons in the same field or business as the defendant. Finally, an outside limit of reasonableness is set: the portion taken from the collection must not be offered or intended to be offered in commerce and likely to serve as a market substitute for the original collection.
This exception has two particularly important applications in supplementing the coverage of the previous set of exceptions: as to nonprofit users, it can provide a defense, even when the activity directly harms the actual market for the database. In addition, it can provide a defense to commercial ventures for acts going beyond mere insubstantial uses, independent collection, or verification.
The Copyright Office applauds the inclusion of such an exception in the bill. In an area as important and delicate as this, involving legal restrictions on information, we believe the incorporation of a general, flexible defense is a wise policy choice. Like the fair use doctrine of copyright law, this provision can serve as a ''safety valve,'' avoiding an overly strict application of the law with potentially negative consequences. It allows courts to make judgments appropriate to the particular facts and circumstances, and recognizes that some uses should be permitted even if they do not strictly fall within explicit statutory bounds.
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In my prior testimony, I described how many of the concepts of copyright fair use are incorporated in various places throughout the bill; this new exception adds another concept from the first fair use factor that did not appear in earlier versions. The authorized purposes all involve activities that build on the contents of an existing collection, and provide the public with new thoughts or insights. In that respect, they are similar to the ''transformative'' uses favored under fair use. See Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994).
The new exception differs from the structure of copyright fair use, however, in that it is not entirely determined by a balancing of factors. Certain elements are established as prerequisites, such as the authorized purposes and the requirement that the amount be limited to that ''appropriate and customary for that purpose.'' We continue to examine the mix of elements set out in the exception, their functions, and their relation to each other, and would be pleased to work with the Subcommittee on further shaping of the statutory language.
Amendments to other exceptions
Two other ''permitted acts'' were also modified in positive respects during the 105th Congress. The exception covering individual items and other insubstantial parts was amended by adding a sentence specifying that an individual item of information shall not itself be considered a substantial part of a collection (§1403(b)). This clarification ensures that a single but important item contained in a collection cannot be interpreted to be a qualitatively substantial part of the collection, due to its individual value.
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Finally, a concern we had expressed about the news reporting exception has been addressed. The exception now contains a carve-out, barring its application to a consistent pattern of takings of time sensitive information gathered by another news entity, for purposes of direct competition (§1403(e)). This language prevents the possibility that the type of activity held unlawful in International News Service v. Associated Press, 248 U.S. 215 (1918), would be sanctioned by the breadth of the exception.
NEW SAVINGS CLAUSES FOR COPYRIGHT AND ANTITRUST LAW
In its original form, H.R. 2652 contained a general provision specifying that it did not affect any rights or obligations under other bodies of law relating to information. During the legislative process, additional provisions were added providing more detail about the relationship of this new protection to such bodies of law, including copyright and antitrust (§1405(c), (d)). The Copyright Office believes these new provisions are an appropriate and useful addition to the bill.
The provision on copyright states explicitly that protection under the new law is independent of copyright, and does not affect any aspect of copyright protection, including limitations on rights such as fair use, in any work of authorship contained in or consisting of a collection of information. The provision further specifies that no greater protection is provided to any work of authorship contained in a collection than would otherwise be available to that work, other than a work that is itself a collection (which by definition would receive the new law's protection against misappropriation). This language should serve to confirm that the scope of copyright protection for compilations or for works of authorship contained in compilations will not change.
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The provision on antitrust law makes clear that protection under the new law does not limit in any way the constraints imposed by antitrust laws on the manner in which products or services may be provided to the public, including rules regarding single suppliers of products and services. This language addresses the ''sole source'' issue that has been raised in the course of debate. See Copyright Office Report on Legal Protection for Databases at 102–107. It ensures that relevant principles of antitrust law continue to apply to producers in governing how they can market databases that are the sole source of information. This provision should assist in preventing information from becoming unavailable to the public. To the extent that antitrust law may not adequately deal with particular conduct, further discussion may be warranted.
DURATION
The second major change incorporated into H.R. 354 relates to the issue of duration. Under H.R. 2652 as introduced, the prohibition had no set term of protection. While this was theoretically consistent with the bill's grounding in misappropriation law, I stated in my prior testimony that further study was needed to determine an appropriate measure for how long the prohibition should last. During the last Congress, a term of fifteen years was added, in the form of a limitation on the period of time during which a lawsuit can be brought.
The Copyright Office supports the addition of such a definite term. Fifteen years of protection provides substantial incentives for investments in collections of information. It also has the advantage of being consistent with the term provided in the European Union, increasing the likelihood of obtaining reciprocal protection in Europe for U.S. database producers. See Copyright Office Report on Legal Protection for Databases at 49; article 10 of Directive 96/9/EC of the European Parliament and of the Council of the European Union of 11 March 1996 on the legal protection of database (attached to Report as Appendix B).
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In the amended version of H.R. 2652, the term began to run from the date of the investment that qualified the collection for protection. In H.R. 354, the starting point is instead the date that the portion of the collection extracted or used was first offered in commerce, following the qualifying investment (§1408(c)). In the view of the Copyright Office, this change is an improvement. Investments in producing databases generally take place over a period of time, and it will be difficult to determine the precise point at which the investment became substantial enough to trigger protection. Nor would members of the public have any way to ascertain the status and progress of the producer's internal business activities.
Moreover, under the earlier ''date of investment'' approach, if further substantial investments were subsequently made before the database was placed on the market, those new investments could trigger additional terms. It is therefore preferable to start the clock running on a date that is clearcut and publicly ascertainable. Again, this approach is consistent with that of the European Union, which measures protection for publicly available databases from the January after the database was first made available to the public. European Directive, art. 10(2).
Even with this new definite term, however, concerns remain about the possibility of effectively perpetual protection. This is because the investment that triggers the prohibition in the bill may consist of maintenance of a pre-existing database. Accordingly, where a database is updated on an ongoing basis, new fifteen-year terms will begin to run whenever the update entails substantial investment and is offered in commerce. In other words, protection may be extended indefinitely.
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A new sentence was added in H.R. 354 to deal with this potential problem. It distinguishes between protection for the pre-existing database and protection for the updated version, clarifying that the fact that an investment in maintenance has resulted in a new fifteen-year term does not extend or renew protection for the pre-existing database itself. The public remains free to extract or use information from the pre-existing collection despite the continued protection for the later, updated version.
In our view, this sentence helps to avoid the specter of perpetual protection. It makes clear that the version of the database that has already been protected for a full fifteen-year term does not continue to be protected because of subsequent investments. Nevertheless, it does not completely resolve the issue. A practical problem remains: how does the user obtain access to the pre-existing version that can theoretically be freely used under the bill? If the database is in hard copy form, there may be no problem; the user can, for example, go to the library and use an old casebook. But if the hard copy is no longer available, or if the database exists only on-line and is constantly updated, it may be impossible to find and use a copy of the no-longer protected version. As a result, although protection is not perpetual in theory, it may be as a matter of reality.
The Copyright Office believes this issue merits further attention. During discussions in the Senate Judiciary Committee in the fall of 1998, consideration was given to the possibility of establishing a deposit system within the Copyright Office, in order to create a public record of databases for which protection has expired. While such a deposit system could be burdensome, and may have drawbacks as well as benefits, we are ready to work with the Subcommittee to examine this and alternative solutions.
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ADDITIONAL PROTECTIONS FOR NONPROFIT INSTITUTIONS
Three provisions were added to H.R. 2652 that further insulate nonprofit educational, scientific or research institutions, and libraries or archives, from inappropriate or disproportionate liability:
1. Inapplicability of criminal provisions (§1407(a)(3)). Criminal penalties are not available against employees or agents of such institutions, when acting within the scope of their employment.
2. Remission of damages (§1406(e)). Courts must reduce or remit entirely monetary relief if the defendant is an employee or agent of such an institution, who believed and had reasonable grounds for believing that the conduct was permissible.
3. Deterrent against frivolous lawsuits (§1406(d)). If an action is brought in bad faith against such an institution, or its employee or agent, courts are required to award costs and attorneys' fees to the defendant.
These provisions should go a long way toward ameliorating any possible chilling effect on nonprofits' activities. A nonprofit institution acting in good faith, with the belief that it is engaging in permissible conduct, will run little risk of substantial penalties other than an injunction. And a database producer will have to think carefully about the grounds for a lawsuit, or be subject to potentially serious financial consequences.
CONCLUSION
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H.R. 354 would establish consistent nationwide incentives for investments in collections of information, filling the gap left in the law in the wake of Feist. The bill represents substantial progress in legislative thinking, incorporating many positive evolutions from the initial form of its predecessor bill in the last Congress. These changes have added greater clarity and balance. The Copyright Office would be pleased to work with the Subcommittee to resolve remaining issues and concerns.
Mr. COBLE. Thank you, Ms. Peters.
Mr. Pincus, I inadvertently failed to advise the audience that you are with the Commerce Department. I think we all know that. Glad to have you with us.
Mr. PINCUS. Thank you, Mr. Chairman. It's an honor to appear before you today and also to be able to wish you a happy birthday.
Mr. COBLE. Thank you, sir.
STATEMENT OF ANDREW PINCUS, GENERAL COUNSEL, UNITED STATES DEPARTMENT OF COMMERCE
Mr. PINCUS. In the last Congress you and the other members of the subcommittee were responsible for a truly momentous accomplishment, enactment of the Digital Millennium Copyright Act. Under Secretary Daley's leadership, we in the Commerce Department were privileged to work with you on that important legislation and we're looking forward in this Congress to working with you on this legislation and the other matters in which we have a common interest.
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The issue of database protection is a matter of great interest to a large number of Federal agencies for a variety of reasons. The Government collects, manages and disseminates large amounts of information, perhaps more than any entity in the world. We fund research that produces information. We are very concerned and eager to continue the tremendous economic growth that we've experienced.
In our knowledge based economy information is key. We therefore want to maximize incentives for data collection to expand the available universe of information without putting in place unjustified obstacles to competition and innovation. And of course we want to be sure that any law enacted complies with the Constitution.
We spent a great deal of time developing an administration position that takes account of these varied perspectives. I'm afraid it's somewhat lengthy and I appreciate your making my full testimony part of the record, and I'll summarize the key parts this morning.
First, after exhaustive analysis we've concluded that there is a gap in the law that must be filled by new legislation. We support the enactment of a statute to protect database creators against free riding, the wrongful taking and distribution of database material with resulting infliction of commercial harm on the database creator.
Digital technology permits the creation and distribution of a large number of perfect copies of data files at the touch of a button and therefore expands dramatically the risk that in the absence of adequate legal remedies piracy or the threat of piracy will deter investment in database creation.
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Indeed, we believe, speaking to a lot of the affected interest groups, that there is considerable, if not complete consensus that additional legal protection is necessary to prevent a diminution in database creation. Of course it's important to craft this legal protection carefully to optimize the overall benefits and minimize disruption of research activities and prevent stunting of competition and innovation. I know the subcommittee is very sensitive to these concerns and we're very appreciative of the changes reflecting the differences between the bill before you this year and the bill passed by the House last year which respond to a number of these matters.
My written testimony comments in detail on a number of provisions of the bill. Let me just mention a few key points.
With respect to section 1402, which defines the conduct that may give rise to liability, we believe it is appropriate to narrow the prohibition to target more closely the troubling acts of misappropriation identified in Warren Publishing and similar cases. We therefore urge the subcommittee to focus on distribution and extraction for distribution as the wrongful conduct rather than on simple extraction for use.
Second, we urge the subcommittee to require substantial harm rather than just harm in order to be sure that de minimis activities will be shielded against liability.
We urge the subcommittee to reexamine the concepts of ''actual'' and ''potential'' market and consider instead a market definition tied to the product's actual customer base or the market currently exploited by similar products and services to avoid an over broad definition of the market that might limit transformative uses and other innovation and might restrict competition.
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With respect to Government data, we agree with you that Government investment in generating data generally should not be protected. We suggest that the exclusion contained in section 1404 be broadened to more clearly encompass data gathering funded by the Government.
There also is some concern that Government data might be captured by private database producers and we provide some suggestions in the testimony for addressing that potential problem.
We also want to be sure that H.R. 354's fixed protection term of 15 years can not be circumvented to provide perpetual protection for a database. I know that you are as concerned as we are that you sought to avoid this possibility by including an expressed prohibition against perpetual protection in section 1408. We suggest that the subcommittee address this issue by eliminating ''maintaining'' and ''organizing'' as bases for statutory protection.
The ''sweat of the brow'' doctrine that the Supreme Court rejected in its Feist decision protected industrious collection. We think that a statutory provision that protects either gathering or collecting would more closely replicate the pre-Feist protection as well as avoid the possibility that minor acts of maintenance might restart the 15 year clock.
Finally, with respect to the permitted use provision, we suggest a number of changes to make clear that judges will have flexibility equivalent to that under the Copyright Act to insure that liability is not imposed for protected uses of data.
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Thank you again for the opportunity to testify today and I look forward to answering your questions and working with you as the legislation moves through the process.
[The complete statement of Mr. Pincus follows.]
PREPARED STATEMENT OF ANDREW PINCUS, GENERAL COUNSEL, UNITED STATES DEPARTMENT OF COMMERCE
Mr. Chairman and Members of the Committee:
Thank you for this opportunity to present the Administration's views on H.R. 354, the ''Collections of Information Antipiracy Act.''
I. INTRODUCTION
The Administration views database protection legislation from a number of perspectives: as a creator of data and a user of it; as an advocate of both economic incentives for socially useful investment and open, market-based competition free from artificial barriers; and as an entity committed both to effective law enforcement and to the First Amendment. Reconciling these perspectives is difficult in any context. The digital economy's rapid and unpredictable change makes this challenge even greater.
The Administration believes strongly in free markets, in which firms can meet demand for new products and services without having to overcome artificial barriers that keep consumers hostage to an undesirable status quo. However, we also recognize that there are circumstances in which markets need legal mechanisms in order to function efficiently. The Feist decision(see footnote 1) conclusively eliminated one form of legal protection for databases. Undeniably, Feist has altered the landscape, but the topography is still changing in ways that pull in different directions as to the nature and extent of protection that is needed.
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In particular, the emerging digital environment has significant implications for this issue. It has become commonplace to observe that information is the currency of our economic age. That puts a premium on designing a legal schema that creates sufficient incentives to maximize investment in data collection—to expand the available universe of information—without putting in place unjustified obstacles to competition and innovation. Moreover, digital technology permits the creation and distribution of a large number of perfect copies of data files at the touch of a button and therefore expands dramatically the risk that, in the absence of adequate legal remedies, piracy, or the threat of piracy, will deter investment in database creation. For all of these reasons, it is important to calibrate new private rights carefully—to optimize overall economic and social benefits, to prevent unfairly undermining investments and agreements premised on the current law, and to preclude new opportunities for thwarting competition.
The U.S. Government has a unique stake in database legislation because it collects, manages, and disseminates massive amounts of information, possibly more information than any other entity in the world. In all these processes, it interacts with the private sector in a variety of ways. In addition, federal agencies are engaged in funding research that produces tremendous amounts of information that the government does not undertake to manage itself.
These activities represent enormous investments in highly complex knowledge management processes that are vital to human health, the environment, national security, scientific progress, and technological innovation—and, in turn, to the economy as a whole. Changes in ground rules for the use and reuse of information must be designed to minimize disruption of these critical activities and to avoid imposition of new costs that could hinder research.
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The sections which follow discuss the Administration's efforts to study database protection and access issues (Part II) and summarize the six principles that we believe should guide both domestic legislative and international treaty efforts in this area (Part III). Next, we elaborate on each principle, discussing the Administration's concerns relating to that topic and the range of possible solutions on which we believe interested parties should focus (Part IV). Finally, we offer some additional points that should be included in any database protection legislation.
II. HISTORY OF ADMINISTRATION STUDY OF DATABASE ISSUES
In response to legislative proposals in Congress and developments in the World Intellectual Property Organization (WIPO), the Administration devoted substantial energy in 1998 and 1999 to studying database protection and access issues. The Administration's review of these issues has included a variety of mechanisms and fora:
The Patent and Trademark Office (PTO) held a public conference on database protection and access issues on April 28, 1998.
During the spring and summer of 1998, a variety of Executive Branch departments and agencies participated in an informal working group on database issues led by the State Department, the Office of Science and Technology Policy (OSTP), and the PTO.
In January 1999, the National Research Council held a two day conference on scientific databases at the Department of Commerce. This conference was supported by the National Science Foundation, the National Institutes for Health, and several other agencies.(see footnote 2)
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Various officials in the Executive Office of the President (including OSTP), the Department of Commerce (including PTO), and the Justice Department have held informational meetings with both proponents and opponents of database protection legislation.
In addition to these efforts, the Administration has carefully studied a wide range of reports, studies, legal opinions and legislation on database protection and access from the United States, Canada, Japan, and the European Union, as well as participating in discussions of database protection issues at WIPO conferences in 1996, 1997, and 1998.
The Administration continues to discuss these issues with concerned parties and to examine specific topics and areas where we believe further information will help both the legislative process and any future study of the effects of database protection that might be mandated by legislation.
III. GENERAL PRINCIPLES
On August 4, 1998, in response to Senate consideration of then-H.R. 2652, the Administration set out the principles that it believes should govern database protection legislation.
Now, as then, Administration supports legal protection against commercial misappropriation of collections of information. We believe that there should be effective legal remedies against ''free-riders'' who take databases gathered by others at considerable expense and reintroduce them into commerce as their own. This situation has arisen in recent case law, and we believe that digital technology increases opportunities for such abuses.
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At the same time, the Administration's concerns with the provisions of H.R. 354 are similar to those we expressed with respect to H.R. 2652, including the concern that the Constitution imposes significant constraints upon Congress's power to enact legislation of this sort. From a policy perspective, the Administration believes that legislation addressing collections of information should be crafted with the following principles in mind:
1. A change in the law is desirable to protect commercial database developers from commercial misappropriation of their database products where other legal protections and remedies are inadequate.
2. Because any database misappropriation regime will have effects on electronic commerce, any such law should be predictable, simple, minimal, transparent, and based on rough consensus in keeping with the principles expressed in the Framework for Global Electronic Commerce. Definitions and standards of behavior should be reasonably clear to data producers and users prior to the development of a substantial body of case law.
3. Consistent with Administration policies expressed in relevant Office of Management and Budget circulars and federal regulations, databases generated with Government funding generally should not be placed under exclusive control, de jure or de facto, of private parties.
4. Any database misappropriation regime must carefully define and describe the protected interests and prohibited activities, so as to avoid unintended consequences; legislation should not affect established contractual relationships and should apply only prospectively and with reasonable notice.
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5. Any database misappropriation regime should provide exceptions analogous to ''fair use'' principles of copyright law; in particular, any effects on non-commercial research should be de minimis.
6. Consistent with the goals of the World Trade Organization (WTO) and U.S. trade policy, legislation should aim to ensure that U.S. companies enjoy available protection for their database products in other countries on the same terms as enjoyed by nationals of those countries.
With these principles in mind, we turn to an analysis of H.R. 354.
IV. DISCUSSION
G. First Principle—Protect against commercial misappropriation
A change in the law is desirable to protect commercial database developers from commercial misappropriation of their database products where other legal protections and remedies are inadequate.
The Administration supports enactment of a statute to protect database creators against free-riding—the wrongful taking and distribution of database material with resulting infliction of commercial harm (loss of customers) on the database creator. Indeed, there is considerable, if not complete, consensus that this kind of free-riding can occur without additional legal protection for non-copyrightable databases and that such legal protection is necessary to prevent a diminution in database creation.(see footnote 3)
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Section 1402 is the operative core of H.R. 354, providing the ''basic prohibition'' of this proposal to protect collections of information through a misappropriation model.(see footnote 4) Section 1402 prohibits unauthorized commercial misappropriation of a substantial amount of a database; it also appears to prohibit unauthorized extraction or ''use'' of data from a database by an individual, no matter how the information is used.
The Administration believes that any treaty on database protection that emerges from on-going discussions at the World Intellectual Property Organization should permit each treaty signatory to provide any mandated database property protection through the legal mechanism most appropriate to its domestic law, whether through misappropriation, sui generis protection, or a simple extension of their domestic copyright and neighboring rights laws. The critical issue is not the legal framework used, but whether the law provides private citizens with comparable rights to protect their investments in different jurisdictions.
We do not believe that protection of that breadth is appropriate in the database context. As a policy matter, we must weigh the need to protect database creators against the potential impact on scientific research in particular, and the dissemination of information within the society generally. It therefore makes sense to focus any prohibition on the precise activities that pose the commercial threat—''use'' is simply too broad and ambiguous.(see footnote 5) Indeed, the breadth and ambiguity of the prohibition has required concerned parties to focus considerable attention on expanding the list of statutory exceptions to make clear that various activities would not be affected by the prohibition. We believe it more appropriate to narrow the prohibition so it is targeted on conduct like the troubling acts of commercial misappropriation identified in the Warren Publishing and similar cases.(see footnote 6)
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H.R. 354's basic prohibition consists of three basic elements, imposing liability on any person who ''extracts or uses in commerce'' all or a substantial part of a database so as to cause ''harm'' to the ''actual or potential market'' of the database creator. In our view, all three of these elements should be focused more precisely on the commercial free-riding situation.
To begin with, the ''extract[s] or use[s]'' language should be narrowed. One approach would be to limit the reach to a person who, without authorization ''extracts for commercial distribution or distributes in commerce'' all or a substantial part of a database. The substitution of ''distribution'' in place of ''use'' would clarify that the Act is directed at active behavior, rather than receptive activities such as viewing, reading, or analyzing. ''Extracts for commercial distribution'' would cover any replication preparatory to distribution in commerce. Distributes in commerce should be understood broadly, compatible with First Amendment concerns.
While the Administration continues to believe that misappropriation for commercial purposes should be the focus of any legislative efforts, we recognize that, when systematic, some acts that might be characterized as ''extraction'' (in other words, acts of duplication) by individuals could conceivably undermine the commercial market for a database product. We are not familiar with any reported cases or incidents of this kind, but we recognize that such harm could occur. Such damage may occur when those acts becomes customary in a particular economic sector or field of research. At present, if there is no contract with the individual or his/her organization, the investor in a database has no effective civil remedy against such acts.(see footnote 7) We believe that one of the greatest challenges in drafting database protection legislation is providing database producers with some type of protection against such patterns of repeated individual activity without prohibiting uses of data by individuals that most people believe should be treated as ''fair uses'' and without violating the First Amendment. We are not certain whether a balance can be struck. Our suggested language concerning ''extraction for distribution'' and ''distribution'' does not address this issue; we look forward to working with the Subcommittee on this matter as the legislation moves forward.
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Second, the Subcommittee should consider whether the requirement of ''harm'' in section 1402 should be elevated to ''substantial harm'' as a means of shielding de minimis activities from any possible liability. We know that some proponents of H.R. 354 have expressed concern about a ''substantial harm'' standard because they believe that judges would compare the standard unfavorably to copyright law, which requires only ''harm.'' We agree that it is important to anticipate how judges would administer any new law, but we believe that a ''substantial harm'' standard is familiar to courts from other areas of American law.(see footnote 8) Appropriate legislative history could direct judges away from unintended comparisons to copyright law or areas of the law where ''substantial harm'' has been interpreted to impose a higher standard than intended in this bill.
At the same time, some critics of H.R. 354 have suggested that the proper trigger for liability is whether the misappropriation ''so reduce[s] the incentive to produce the product or service that its existence or quality would be substantially threatened,'' a test from the National Basketball Association v. Motorola case.(see footnote 9) While we agree that a misappropriation law should be focused on acts that do, in fact, have a tendency to reduce incentives in this manner, we think this ''diminution of incentive'' test is ill-suited as a component of the basic prohibition; it does not comport with the Administration's principle (described below) that a database protection law should be predictable, simple, and transparent. Because a database user cannot be expected to know much about the incentive structures that lead to production of databases, such a user would have no way to judge in advance whether or not her acts would satisfy a ''diminution of incentive'' test for liability. We also are concerned that the ''diminution of incentive'' test requires much more complicated proofs than would be incurred with a harm test.(see footnote 10) Accordingly, we believe that Congress should instead rely upon a ''substantial harm'' test or similar measure to serve as a workable proxy for the ''diminution of incentive'' test.
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Third, we suggest reexamination of the concepts of ''actual'' and ''potential'' market. We are very concerned that, as presently drafted, these concepts are broader than market definitions used in other areas of the law, could be subject to manipulation by private entities, and could too easily expose legitimate business practices to substantial liability. We urge the Subcommittee to consider an objective definition tied to the product's current actual customer base or the market currently exploited by similar products or services. We are concerned that any broader definition might deter entrepreneurs from developing new products and services that add significant value and do not compete directly with the original database. Leaving room for transformative uses is critical in shaping the definition of the market as targeting the free-riding we wish to prohibit. We believe that the Subcommittee should consider, individually and perhaps in combination, the notions of ''principal market'' drawn from unfair competition law, and ''neighboring market'' proposed in the Senator Hatch draft.
The Department of Justice notes that this legislation raises serious constitutional concerns that current copyright law does not raise. The Constitution itself provides for protection of copyright, in order to promote progress in science and the arts. Therefore, copyright and the First Amendment are intended to protect analogous values, and are aimed, in part, at similar and compatible objectives. The Copyright Clause and the Copyright Act permit protection only of an author's original expression, and do not authorize protection of facts. This comports with First Amendment principles. By contrast, the proposed prohibition in H.R. 354 would be directed against dissemination of facts. That measure as currently drafted likely would not survive constitutional scrutiny, at least in numerous applications. The constitutional concerns are related to the scope of the basic prohibition, discussed above, as well as the issues discussed below, including the range of permitted uses, resolution of the ''perpetual protection'' problem and the possibility of ''sole source'' situations, but the constitutionality of any law in this area will depend upon the particular statutory language adopted and therefore cannot be analyzed definitively at this time. We look forward to working with the Subcommittee to avoid constitutional infirmity.
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B. Second Principle—Keep it simple, transparent, and based on consensus
Because any database misappropriation regime will have effects on electronic commerce, any such law should be predictable, simple, minimal, transparent, and based on rough consensus in keeping with the principles expressed in the Framework for Global Electronic Commerce.(see footnote 11) Definitions and standards of behavior should be reasonably clear to data producers and users prior to the development of a substantial body of case law.
This principle informs all of our analysis. We believe that database legislation should be directed squarely at behavior that is widely acknowledged to be unfair and has been documented as a problem worthy of a legislative response. This will ensure that the legal system is not used to threaten litigation in borderline cases in a manner that may inhibit the flow of factual information and the vigor of free market competition.
We also believe that in introducing this new form of protection, some of the burden of promoting transparency and predictability should be borne by those who benefit. The legislation should not create an environment in which many kinds of database users must suddenly act at their peril. In particular, the Subcommittee might consider how a notice system could effectively warn database users when a database producer is asserting protection under the law. This will also help reduce the costs of identifying multiple cascading interests that are likely to aggregate more frequently in databases than in works of authorship. In this regard, we applaud the addition of the ''good faith'' of the defendant as a factor in allowing ''permitted use'' under section 1403 although, for reasons discussed below, we believe that our additional changes to the ''permitted use'' section may be needed.
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Rather than prescribing a particular approach and trying to address the difficulties of implementing it in legislation, we would prefer (again, in keeping with the Framework for Global Electronic Commerce principles) to assign to database publishers and users the responsibility of devising appropriate standards to identify and assert interests. While in paradigmatic cases, such as the circumstances in Warren Publishing, there may be no question about deliberate free-riding, the principle remains: users must have reason to believe that their acts are damaging to others. The ''good faith'' factor in H.R. 354 combined with private sector-developed standards for notice and disclosure would help ensure that the legislation works to condition behavior based on reasonable expectations and to avoid traps for the unwary.
C. Third Principle—Preserve access to government data
Consistent with Administration policies expressed in relevant Office of Management and Budget circulars and federal regulations, databases generated with Government funding generally should not be placed under exclusive control, de jure or de facto, of private parties.
1. Exemption of government data
The U.S. Government collects and creates enormous amounts of information, possibly more than any other entity in the world. State and local governments in the United States also gather and generate tremendous amounts of data. Broadly defined, government-generated data touches every sector of the economy and civic life. Government-funded data ranges from crime statistics to data on subatomic particles; from geological maps to court opinions; from immigration statistics to digital images of distant galaxies.(see footnote 12)
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The Administration believes that a database protection law generally should not protect government investment in generating data. There are three reasons for this conclusion. First, database protection proposals are premised on the need to provide an incentive for investment in data gathering; in the case of government-funded information, no incentive is needed. If a government decides that it is in the public interest to collect information on smog levels, education scores, or solar flare activity, it will do so. Second, there is a widespread sentiment that once data generation has been paid for with government funds, taxpayers should not have to pay ''twice'' for the same data.
Finally, the U.S. Government has historically pursued policies that strongly favor public funding of the creation and collection of information. The Administration believes that these policies have contributed greatly to the success of America's high technology and information industries as well as the strength of our democratic society. The Administration has stated elsewhere:
''Government information is a valuable national resource. It provides the public with knowledge of the government, society, and economy—past, present, and future. It is a means to ensure the accountability of government, to manage the government's operations, to maintain the healthy performance of the economy, and is itself a commodity in the marketplace.''(see footnote 13)
The Administration believes that the free flow of government-generated data is an important engine of economic growth; it will be an increasingly important resource for any society intent on creating jobs, businesses, and wealth in the ''Information Age.'' Often, government-generated information is also critical to the health and safety of the population; we must ensure that any database protection law does not hamper the dissemination of such information.(see footnote 14)
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H.R. 354 addresses the issue of government-generated data with the following section 1404(a) exclusion:
''Protection under this chapter shall not extend to collections of information gathered, organized, or maintained by or for a government entity, whether Federal, State, or local, including any employee or agent of such entity, or any person exclusively licensed by such entity, within the scope of the employment, agency, or license. Nothing in this subsection shall preclude protection under this chapter for information gathered, organized, or maintained by such an agent or licensee that is not within the scope of such agency or license, or by a Federal or State educational institution in the course of engaging in education or scholarship.''
The Administration believe that this provision serves the general policy goal of making all forms of government information available to the public, but we believe the language is too narrow to satisfy this goal fully.
To begin with, we suggest that the Subcommittee examine existing definitions of ''government information'' for more inclusive descriptions of government-sponsored data collection. For example, OMB Circular A–130 states that ''the definition of 'government information' includes information created, collected, processed, disseminated, or disposed of both by and for the Federal Government.''(see footnote 15) In particular, we believe that the present language does not adequately cover situations in which the government contracts for or provides grants for information gathering. For example, for reasons of accountability, several government contracts expressly state that the private entity is not an ''agent'' or ''licensee'' of the government, removing the data gathering from the ambit of section 1404(a). One way to address this would be to include language that information