SPEAKERS CONTENTS INSERTS
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89–463 PDF
2003
DATABASE AND COLLECTIONS OF INFORMATION MISAPPROPRIATIONS
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
AND THE
SUBCOMMITTEE ON COMMERCE, TRADE,
AND CONSUMER PROTECTION
OF THE
COMMITTEE ON ENERGY
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AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
SEPTEMBER 23, 2003
Serial No. 51
(Committee on the Judiciary)
Serial No. 108–46
(Committee on Energy and Commerce)
Printed for the use of the Committee on the Judiciary and the Committee on Energy and Commerce
Available via the World Wide Web: http://www.house.gov/judiciary
and http://energycommerce.house.gov
COMMITTEE ON THE JUDICIARY
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F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois
HOWARD COBLE, North Carolina
LAMAR SMITH, Texas
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
STEVE CHABOT, Ohio
WILLIAM L. JENKINS, Tennessee
CHRIS CANNON, Utah
SPENCER BACHUS, Alabama
JOHN N. HOSTETTLER, Indiana
MARK GREEN, Wisconsin
RIC KELLER, Florida
MELISSA A. HART, Pennsylvania
JEFF FLAKE, Arizona
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
STEVE KING, Iowa
JOHN R. CARTER, Texas
TOM FEENEY, Florida
MARSHA BLACKBURN, Tennessee
JOHN CONYERS, Jr., Michigan
HOWARD L. BERMAN, California
RICK BOUCHER, Virginia
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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
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SÁNCHEZ, California
PHILIP G. KIKO, Chief of Staff-General Counsel
PERRY H. APELBAUM, Minority Chief Counsel
Subcommittee on Courts, the Internet, and Intellectual Property
LAMAR SMITH, Texas, Chairman
HENRY J. HYDE, Illinois
ELTON GALLEGLY, California
BOB GOODLATTE, Virginia
WILLIAM L. JENKINS, Tennessee
SPENCER BACHUS, Alabama
MARK GREEN, Wisconsin
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RIC KELLER, Florida
MELISSA A. HART, Pennsylvania
MIKE PENCE, Indiana
J. RANDY FORBES, Virginia
JOHN R. CARTER, Texas
HOWARD L. BERMAN, California
JOHN CONYERS, Jr., Michigan
RICK BOUCHER, Virginia
ZOE LOFGREN, California
MAXINE WATERS, California
MARTIN T. MEEHAN, Massachusetts
WILLIAM D. DELAHUNT, Massachusetts
ROBERT WEXLER, Florida
TAMMY BALDWIN, Wisconsin
ANTHONY D. WEINER, New York
BLAINE MERRITT, Chief Counsel
DEBRA ROSE, Counsel
DAVID WHITNEY, Counsel
MELISSA L. MCDONALD, Full Committee Counsel
ALEC FRENCH, Minority Counsel
COMMITTEE ON ENERGY AND COMMERCE
W.J. ''BILLY'' TAUZIN, Louisiana, Chairman
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MICHAEL BILIRAKIS, Florida
JOE BARTON, Texas
FRED UPTON, Michigan
CLIFF STEARNS, Florida
PAUL E. GILLMOR, Ohio
JAMES C. GREENWOOD, Pennsylvania
CHRISTOPHER COX, California
NATHAN DEAL, Georgia
RICHARD BURR, North Carolina
Vice Chairman
ED WHITFIELD, Kentucky
CHARLIE NORWOOD, Georgia
BARBARA CUBIN, Wyoming
JOHN SHIMKUS, Illinois
HEATHER WILSON, New Mexico
JOHN B. SHADEGG, Arizona
CHARLES W. ''CHIP'' PICKERING, Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
STEVE BUYER, Indiana
GEORGE RADANOVICH, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
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LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ''BUTCH'' OTTER, Idaho
JOHN D. DINGELL, Michigan
Ranking Member
HENRY A. WAXMAN, California
EDWARD J. MARKEY, Massachusetts
RALPH M. HALL, Texas
RICK BOUCHER, Virginia
EDOLPHUS TOWNS, New York
FRANK PALLONE, Jr., New Jersey
SHERROD BROWN, Ohio
BART GORDON, Tennessee
PETER DEUTSCH, Florida
BOBBY L. RUSH, Illinois
ANNA G. ESHOO, California
BART STUPAK, Michigan
ELIOT L. ENGEL, New York
ALBERT R. WYNN, Maryland
GENE GREEN, Texas
KAREN McCARTHY, Missouri
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TED STRICKLAND, Ohio
DIANA DeGETTE, Colorado
LOIS CAPPS, California
MICHAEL F. DOYLE, Pennsylvania
CHRISTOPHER JOHN, Louisiana
TOM ALLEN, Maine
JIM DAVIS, Florida
JAN SCHAKOWSKY, Illinois
HILDA L. SOLIS, California
DAN R. BROUILLETTE, Staff Director
JAMES D. BARNETTE, General Counsel
REID P.F. STUNTZ, Minority Staff Director and Chief Counsel
Subcommittee on Commerce, Trade, and Consumer Protection
CLIFF STEARNS, Florida, Chairman
FRED UPTON, Michigan
BARBARA CUBIN, Wyoming
JOHN SHIMKUS, Illinois
JOHN B. SHADEGG, Arizona
Vice Chairman
GEORGE RADANOVICH, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
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LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
DARRELL E. ISSA, California
C.L. ''BUTCH'' OTTER, Idaho
W.J. ''BILLY'' TAUZIN, Louisiana
(Ex Officio)
JAN SCHAKOWSKY, Illinois
Ranking Member
HILDA L. SOLIS, California
EDWARD J. MARKEY, Massachusetts
EDOLPHUS TOWNS, New York
SHERROD BROWN, Ohio
JIM DAVIS, Florida
PETER DEUTSCH, Florida
BART STUPAK, Michigan
GENE GREEN, Texas
KAREN McCARTHY, Missouri
TED STRICKLAND, Ohio
DIANA DeGETTE, Colorado
JOHN D. DINGELL, Michigan,
(Ex Officio)
C O N T E N T S
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SEPTEMBER 23, 2003
OPENING STATEMENT
The Honorable Lamar Smith, a Representative in Congress From the State of Texas, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property, Committee on the Judiciary
The Honorable Cliff Stearns, a Representative in Congress From the State of Florida, and Chairman, Subcommittee on Commerce, Trade, and Consumer Protection, Committee on Energy and Commerce
The Honorable Howard L. Berman, a Representative in Congress From the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property, Committee on the Judiciary
The Honorable Jan Schakowsky, a Representative in Congress From the State of Illinois and Ranking Member, Subcommittee on Commerce, Trade, and Consumer Protection, Committee on Energy and Commerce
WITNESSES
Mr. David Carson, General Counsel, Copyright Office of the United States, Library of Congress
Oral Testimony
Prepared Statement
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Mr. Thomas J. Donohue, President and Chief Executive Officer, Chamber of Commerce
Oral Testimony
Prepared Statement
Mr. Keith Kupferschmid, Vice President, Intellectual Property Policy and Enforcement Software and Information Industry Association, on behalf of the Coalition Against Database Piracy
Oral Testimony
Prepared Statement
Mr. William Wulf, President, National Academy of Engineering and Vice Chairman, National Research Council
Oral Testimony
Prepared Statement
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Letter to the Honorable F. James Sensenbrenner, Jr., Committee on the Judiciary and the Honorable W. J. ''Billy'' Tauzin, Committee on Energy and Commerce from Nils Hasselmo, President, Association of American Universities
Letter from Thomas J. Donohue, President and Chief Executive Officer, Chamber of Commerce of the United States of America to the Honorable Lamar S. Smith, Chairman, Committee on the Judiciary, Subcommittee on Courts, the Internet and Intellectual Property and the Honorable Cliff Stearns, Chairman, Subcommittee on Commerce, Trade and Consumer Protection of the House Committee on Energy and Commerce
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APPENDIX
Material Submitted for the Hearing Record
Statement of the Honorable W. J. ''Billy'' Tauzin
Statement of the Honorable Bart Stupak
Statement of the Honorable Barbara Cubin
Statement of the Honorable Gene Green
Statement of the Honorable Ted Strickland
Letter from Justin Hughes, Assistant Professor of Law, Benjamin N. Cardozo School of Law, Yeshiva University
Letter from Keith Kupferschmid, Counsel for CADP to the Honorable Lamar Smith, Chairman, Subcommittee on Courts, the Internet and Intellectual Property, Committee on the Judiciary and the Honorable Cliff Stearns, Chairman, Subcomittee on Commerce, Trade and Consumer Protection of the House Energy and Commerce Committee
Statement of Congressman John D. Dingell, Ranking Member, Committee on Energy and Commerce
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Statement of Congressman John Shimkus
DATABASE AND COLLECTIONS OF INFORMATION MISAPPROPRIATIONS
TUESDAY, SEPTEMBER 23, 2003
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
and
Subcommittee on Commerce, Trade, and Consumer Protection,
Committee on Energy and Commerce,
Washington, DC.
The Subcommittees met, pursuant to call, at 4:08 p.m., in Room 2141, Rayburn House Office Building, Hon. Lamar Smith [Chairman of the Subcommittee on Courts, the Internet, and Intellectual Property] presiding.
Mr. SMITH. The Subcommittee on Courts, the Internet, and Intellectual Property will come to order along with the written permission of the Chairman of the Subcommittee on Commerce, Trade, and Consumer Protection.
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Before I recognize individuals for opening statements, let me just make a couple of comments. To my knowledge, this is the first time we have had such a joint hearing, and it is a privilege to do so with the Commerce Committee, one, because they are so important; but, two, because Cliff Stearns, the Chairman of their Subcommittee, is a personal friend and for a number of years, actually was a neighbor across the hall. And I miss seeing him on that hall.
In any case, I want to recognize Congressman Stearns, because we will be cochairs of this hearing today. My part will be opening statements and the testimony of the witnesses, an Congressman Stearns will preside during the question-and-answer period after that.
Let me recognize myself for an opening statement.
Today the Subcommittee on Courts, the Internet, and Intellectual Property and the Subcommittee on Commerce, Trade, and Consumer Protection will consider the discussion draft of the ''Database and Collections of Information Misappropriation Act.
I am sure many of you are wondering what can be said about database protection that hasn't already been said? However, after 8 years of debate, we are here to review draft legislation that embodies a compromise between the House Committees on the Judiciary and Energy and Commerce.
Electronic compilations and other collections of factual material are absolutely indispensable to the American economy. These information products place a wealth of data at the fingertips of business, professionals, scientists, scholars and consumers. Databases are essential tools for improving productivity, advancing education and training and creating a more informed citizenry.
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Developing, compiling, distributing and maintaining databases requires substantial investments of time, personnel and money.
Information companies must dedicate resources to gathering and verifying factual material, presenting it in a user friendly way and keeping it current.
U.S. firms have been the world leaders in this field, but several recent legal and technological developments threaten to erode incentives for investments needed to maintain and expand databases.
While the 1991 Supreme Court decision in Feist Publications reaffirmed that most commercially significant databases satisfy the originality requirement for protection under copyright, the court emphasized that this protection is necessarily thin.
Several subsequent lower court decisions have pointed out that current copyright laws cannot stop a competitor from lifting massive amounts of factual material from a copyrighted publication to use as a basis for its own competing product.
In cyberspace, technological developments represent a threat as well as an opportunity for collections of information. Copying factual material from a third party's collection and rearranging it to form a competing information product is cheaper and easier than ever.
The draft legislation before us today provides protection to databases and gives incentives to their creators to continue producing these invaluable tools. This legislation is a compromise. In fact, a key element is the misappropriation approach that is narrowly tailored to target bad actors while preserving the ability of consumers to access and use information.
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Mr. SMITH. Now, that concludes my opening statement, and the gentleman from Florida, Mr. Stearns, is recognized for his.
Mr. STEARNS. Thank you, Chairman Smith, for hosting this unprecedented joint hearing, and on behalf of my fellow Energy and Commerce Subcommittee Members, I want to thank you for the warm hospitality. We are delighted to be here.
The copyright clause of the United States Constitution states that ''Congress shall have the power to promote the progress of science and useful arts by securing, for limited times to authors, the exclusive right to their respective writings.'' .
This power is limited by subject matter, only writings and discoveries of authors may be protected, purposed material may only be protected to the end of promoting science and useful arts; and duration, writings may be protected for a limited time period.
While all three limitations are important, it is the subject matter limitation that is the central consideration underlying copyright protection.
For 7 years, there was a split in the courts about whether copyright protection would be afforded to only creative works or whether noncreative compilations of information could receive protection.
A minority of courts held that noncreative compilations of information could receive copyright protection under the judicial ''sweat of the brow'' doctrine.
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In 1991 the Supreme Court struck down the ''sweat of the brow'' doctrine. The court wrestled with the ostensible paradox that while facts are not copyrightable, compilation of facts generally are.
The Supreme Court explained that the key to understanding the seeming paradox was in understanding why facts are not copyrightable.
The court held that originality is the sine qua non of copyright law, without regard to the resources spent in collecting and assembling factual compilations.
A compilation is no more worthy of copyright protection than the underlying facts themselves, unless there is a modicum of creativity in the compilation. In other words, creative compilations of information would be protected by copyright. Noncreative compilations of information like the White Pages would not.
And that is why we are here today. Proponents of legislation argue that this decision left a gaping hole in the protection of their products. They believe the distribution capabilities of the Internet have exacerbated the need to fill this gap in protection. Opponents of the legislation see no shortcomings in the current law and believe that proponents of legislation have failed to demonstrate a concrete problem that requires a legislative solution. They believe contract, trespass, misappropriation, unfair competition, and the Computer Fraud and Abuse Act provide sufficient protection for noncreative databases.
It seems that while the opponents of the legislation would support a narrow misappropriation statute, they raise constitutional concerns about broader proprietary interest in factual information, and I share those constitutional concerns.
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I believe that Congress should not create property rights in facts. Specifically, I am concerned that the prohibition against making database information available has ambiguous terms that will chill the development of new databases and lead to further litigation. I am concerned that a database that is merely maintained and not necessarily collected would receive protection. How does this standard couple with the time sensitivity standard? Could the maintenance provision cause a court to have a liberal reading of time sensitivity?
I am most concerned about the way this legislation will impact scientific educational and research activities. I worry that the determination of what is customary is so vague, that it will only be resolved through costly litigation. This could put a real chill on important research activity.
As a result, I suspect none of us would like to see this.
And in conclusion, I look forward to a rigorous discussion of the constitutional issues such as the constitutional boundaries of noncreative database misappropriation legislation and the other issues I have raised earlier. I am pleased that we have the opportunity today to have these questions answered. I withhold comment on the draft of the bill until I can be certain that this draft strikes the appropriate balance between access to information, innovation, and protection against misappropriation.
It is plausible that such a balance may be unattainable. I am certain the discussion here today will assist us, and I look forward to hearing from our distinguished panel. And I thank again Chairman Smith for his hosting this joint Committee and his hospitality.
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Mr. SMITH. Thank you, Chairman Stearns.
Mr. SMITH. The gentleman from California, Mr. Berman, is recognized for his opening statement.
Mr. BERMAN. Thank you very much, Mr. Chairman, and without, at this point specifically, reacting to some of the comments of my colleague from Florida, I do note the former Chairman of this Subcommittee sitting in the back row there, Howard Coble, and there is something about database protection in Howard Coble that automatically come to mind for anyone who sat through the many hours of hearings and markups of this legislation in earlier Congresses. And we are still with the issue, and it is good to have Howard with us at this time.
I am open-minded on this issue, one of those rare issues that I am open minded on. And I look forward to the witnesses and understanding exactly what the draft does, how it differs from the earlier legislation offered by each Committee and studying the issue further. So I am glad you called this hearing, and I think this is an important issue for us to be dealing with and look forward to the testimony of the witnesses.
Mr. SMITH. Thank you, Mr. Berman.
Mr. SMITH. And I also thank you for pointing out that Mr. Coble is with us, and I would like to ask him, if Mr. Coble is still here, he is welcome to join us up at the table here. And we appreciate all that he has done on this issue to date.
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Mr. COBLE. I want to thank the gentleman from California for his kind words. Howard, thank you, but pardon my gravelly voice. I am just getting over a cold. And, Mr. Chairman, thank you for calling—this is—I don't think the gentleman from Florida and I are in synch on this, but this is a very important issue, Mr. Chairman. I thank you for having the hearing.
Mr. SMITH. Thank you, Mr. Coble.
The gentlewoman from Illinois, Ms. Schakowsky is recognized for her opening statement.
Ms. SCHAKOWSKY. Thank you, Chairman Smith, and I want to thank my Chairman, Chairman Stearns, for holding today's hearing on the database and collection of Information Misappropriation Act of 2003.
I really look forward to hearing the expert testimony from today's witnesses, their thoughts on the draft bill and the problems that the bill aims to address.
As we all know, this is a highly controversial issue that has been debated for several years by Members of both Committees. In my view, our copyright laws need to strike a very delicate balance between the interests of proprietors and consumers. Our laws must ensure that proprietors are rewarded for their work, while at the same time protecting the consumer's access to information. It is extremely important that we do not pass laws that prevent people from obtaining factual information. Database owners can already copyright their original selection, coordination and arrangement of facts.
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We need to explore the issue further to determine if the current protections are adequate. If they are not, legislative remedies must be narrowly tailored to solve identified problems. Sweeping legislation could hamper research and harm consumers.
I heard just in the last few days from Northwestern University, a University of my district, and they were supporting a letter from the president of the Association of American Universities that was written to Chairman Tauzin and Sensenbrenner that I would—if it hasn't already—like to ask unanimous consent to place the letter in the record.
Mr. SMITH. And without objection, that letter will be made a part of the record.
[The information referred to follows:]
A.eps
B.eps
C.eps
Ms. SCHAKOWSKY. Let me just quote a couple sentences. Quote, colleges and universities believe that any database protection legislation should provide narrowly focused protection that supports data integrity and response to demonstrable threats to the incentive to create databases without impeding access to the data and information upon which research and education programs depend.
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We have also heard from librarians who have been very careful in representing the consumer interests and researchers' interest, and I look forward to learning more about this important topic from today's witnesses. Thank you.
Mr. SMITH. Thank you, Ms. Schakowsky.
Mr. SMITH. Without objection, other Members' opening statements will be made a part of the record, and now I will introduce our witnesses today. Our first witness is David Carson, general counsel of the U.S. Copyright Office. Mr. Carson oversees the Office's regulatory activities, litigation and administration of the copyright law. He also serves as a liaison on legal and policy matters between the Copyright Office and Congress and other Government agencies. He is a graduate of Stanford University where he earned a master's degree in history, and Harvard Law School.
The next witness is Thomas J. Donohue, president and chief executive officer of the United States Chamber of Commerce. Prior to his current post, Mr. Donohue served for 13 years as the president and chief executive officer of the American Trucking Association. Mr. Donohue earned a bachelor's degree from St. John's University and his MBA from Adelphi University.
Our next witness is Keith Kupferschmid, vice president for Intellectual Property Policy and Enforcement for the Software and Information Industry Association. Mr. Kupferschmid is responsible for working directly with SIIA's intellectual property committee. He graduated from the University of Rochester in 1987 with a BS in mechanical engineering and from American University's Law School in 1993.
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Our last witness is William Wulf, who was elected president of the National Academy of Engineering in 1997. The NAE and National Academy of Sciences operate under Congressional charter to provide advice to the Government on issues of science and engineering.
Mr. Wulf is the author of over 100 papers and technical reports, has written three books and holds two U.S. patents. And I welcome you all. We have written statements from every one of our witnesses, and without objection, the complete statements will be made a part of the record.
Mr. SMITH. As you know, we expect you to limit your testimony to 5 minutes, and Mr. Carson, we will begin with you.
STATEMENT OF DAVID CARSON, GENERAL COUNSEL, COPYRIGHT OFFICE OF THE UNITED STATES, LIBRARY OF CONGRESS
Mr. CARSON. Good afternoon, Chairman Smith, Chairman Stearns, Ranking Members Berman and Schakowsky. Members of both Subcommittees. Thank you for giving the Copyright Office the opportunity to testify at this hearing on the discussion draft of the Database and Collections of Information Misappropriation Act.
Our written testimony provides some historical perspective on database protection in the United States, briefly reviews the approach taken in the discussion draft and addresses some of the concerns that critics of database legislation have voiced thus far.
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In the few minutes that I have with you today, I would like to focus on the message that the Register of Copyrights has delivered in past testimony on database legislation, a message that is equally relevant today. Since the Supreme Court in the Feist case withdrew much of the protection that copyright law had previously offered to databases, the Copyright Office has perceived a need to provide adequate incentives for the production and dissemination of databases.
We believe the databases are important to our economy and culture, both as a component in the development of electronic commerce and as a tool for facilitating scientific, educational and technological advancement. We have long recommended an approach to database protection based on a misappropriation or unfair competition model rather than an exclusive property rights model.
At the same time, we have been concerned about the risks of overprotection. The free flow of information is essential to the advancement of knowledge, technology and culture, and we support legislation that, while ensuring adequate incentives for investment, would not inhibit access and use for socially beneficial purposes in appropriate circumstances.
The discussion draft represents a continuing evolution toward such an approach. We commend the leadership of those who have worked so hard to produce a draft that adopts this approach and takes into account the needs of producers of databases as well as users and members of the educational, scientific and research communities.
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While we have not had sufficient opportunity to study the discussion draft to permit us to offer any defensive views on this particular draft, we believe in general that it represents a major step in the direction of enactment of the type of balanced legislation that the Office has long recommended.
I should point out that our testimony on this issue in the past, as well as today, draws heavily on our 1997 Report on Legal Protection of Databases which contains a wealth of information on the subject, to which I commend you.
Since the Supreme Court's 1991 decision in Feist, only a thin layer of copyright protection remains for qualifying databases. In order to qualify, they must exhibit some modicum of creativity in the selection, arrangement or coordination of the data in them.
The protection is thin in that only the creative elements—the selection, coordination and arrangement of data—are protected by copyright. In no case is the data itself copyrightable.
One of the most significant cases in this area since Feist is the 2nd Circuit's 1997 decision in NBA v. Motorola. It is our understanding that the approach taken in the discussion draft is designed to codify the standards set forth in the NBA case. Our written testimony sets forth our analysis of the extent to which the discussion draft succeeds in this effort, and we believe that, by and large, it does succeed.
We do believe that further clarification may be necessary in some instances. For example, to determine whether the approach taken in the discussion draft is intended to codify nothing more than the hot news misappropriation doctrine discussed in the NBA case and the landmark 1918 Supreme Court decision in International News Services v. Associated Press.
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While the discussion draft requires that the unauthorized making available occur in a time-sensitive manner, courts would be instructed to consider the temporal value of the information in the database within the context of the industry sector involved in determining whether the time-sensitive requirement has been met.
This suggests that perhaps something beyond hot news would be protected, but further thought should be given to clarifying the circumstances under which such protection should be given.
We do believe that serious consideration should be given to protecting more than hot news, but on the other hand, to the extent that the legislation would go beyond protection of hot news, we are inclined to favor imposing some time limit on the duration of protection for a database.
As always, the Copyright Office stands ready to assist you in your further consideration of this proposal, and I will be pleased to answer any questions you may have.
Mr. SMITH. Thank you, Mr. Carson.
[The prepared statement of Mr. Carson follows:]
PREPARED STATEMENT OF DAVID O. CARSON
Good afternoon. Chairman Smith, Chairman Stearns, Congressman Berman, Congressman Schakowsky, Members of both Subcommittees, it is a pleasure to appear before you today. Thank you for giving the Copyright Office the opportunity to testify at this hearing on the discussion draft of the Database and Collections of Information Misappropriation Act.
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The Copyright Office has testified twice in recent years before the Subcommittee on Courts and Intellectual Property on legislation to protect databases. In the 105th and 106th Congresses, the Register of Copyrights testified in connection with the proposed Collections of Information Antipiracy Act. That bill was passed by the House in the 105th Congress but no action was taken in the Senate. In her testimony on that legislation and on a later version, the Register testified that there was a 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. She stated that 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, the Register cautioned that the risks of over-protection were equally serious, because (as already noted) the free flow of information is essential to the advancement of knowledge, technology and culture. She testified in support of legislation that would ensure adequate incentives for investment, without inhibiting access for appropriate purposes and in appropriate circumstances.
Accordingly, the Register 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 could optimize the availability of reliable information to the public.
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In the intervening years, nothing has occurred to change the views of the Copyright Office. We continue to believe that balanced legislation should be enacted that would provide appropriate levels of protection for producers of databases, without unnecessarily impeding the free flow of knowledge and information.
The discussion draft represents a continuing evolution of the legislation addressing the protection of databases toward a pure misappropriation approach. In our previous testimony we expressed the view that misappropriation is the best approach to this issue and we commend the leadership of all of those who have worked so hard on this issue for their commitment to craft legislation that takes into account the needs of producers of databases as well as users and members of the educational, scientific and research communities. While we have not had sufficient opportunity to study the discussion draft to permit us to offer any definitive views on this particular draft, we believe in general that it represents a major step in the direction of enactment of the type of balanced legislation the Office has long recommended.
Much of what I say today will be based on the research and findings of the Register in her August 1997 Report on Legal Protection for Databases, which was prepared at the request of Senator Hatch, Chairman of the Senate Committee on the Judiciary. We are aware of no major developments since the time of that Report that have significantly altered the landscape with respect to legal protection for databases.
My testimony today will provide a historical perspective concerning the protection of databases in the United States, briefly review the approach taken in the discussion draft and address some of the concerns that critics of database legislation have voiced.
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I. THE HISTORY OF DATABASE PROTECTION IN THE UNITED STATES
In the terminology of the copyright law, a database is a ''compilation.'' The Copyright Act defines a compilation as ''a work formed by the collection and assembling of preexisting materials or of data . . .''(see footnote 1) Compilations were protected as ''books'' as early as the Copyright Act of 1790.
Over the course of the nineteenth century, two rationales developed for protecting compilations under copyright. The earliest cases identified the compiler's effort—''his own expense, or skill, or labor, or money''(see footnote 2)—as the critical contribution justifying protection. This type of analysis came to be known as the ''sweat of the brow'' doctrine. Analyses under sweat of the brow emphasized both the compilers' efforts and the copiers' ''unfair use of the copyrighted work, in order to save themselves the time and labor of original investigation.''(see footnote 3)
During the late nineteenth century, courts began to articulate another basis for copyright protection that generally differed from the labor/investment approach taken in cases involving compilations. In a series of decisions from 1879 to 1903, the Supreme Court held that the ''writings'' that could be protected under the Copyright Clause of the Constitution included ''only such as are original,''(see footnote 4) and indicated that creativity is a component of originality.(see footnote 5)
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The evolving doctrine of originality was applied by some courts in compilation cases, particularly cases involving compilations of textual materials such as law books. These cases identified the author's critical contribution justifying protection as his judgment in selecting and arranging materials.(see footnote 6)
This approach coexisted with, rather than supplanted, sweat of the brow cases. Sweat of the brow was applied to cases involving purely factual compilations, such as catalogs and directories.
On the question of the scope of protection afforded to compilations, there was somewhat greater uniformity in the case law. In compilation cases, regardless of the theoretical framework adopted to justify copyright protection, once the plaintiff's work was determined to be copyrightable, courts generally held a defendant to have infringed whenever material was copied from the plaintiff's work. Typically, there was no inquiry as to whether the particular material copied was protected by the plaintiff's copyright. To avoid infringement, a second-comer was required to go to the original sources and compile the material independently, without reference to the earlier work.(see footnote 7) A common thread running through many of these decisions was the court's desire to prevent the copier from competing unfairly with the compiler by appropriating the fruits of the compiler's efforts or creativity. In this sense, courts treated copyright protection for compilations much like a branch of unfair competition law.
In the Copyright Act of 1976, Congress included in the definition of ''compilation'' the first express statutory link between compilations and original works of authorship ''. . .that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes a work of authorship.''(see footnote 8) Cases under the 1976 Act were divided about the continuing viability of the sweat of the brow doctrine. Some circuits continued to apply it,(see footnote 9) while other circuits rejected it, requiring a showing of sufficient creativity in order to entitle a compilation to copyright protection.(see footnote 10) The Supreme Court resolved the split in the circuits in Feist Publications, Inc. v. Rural Tel. Serv. Co.(see footnote 11) In that case, the Supreme Court held that the white pages of a telephone directory (containing an alphabetical listing of all residents with telephone service in a defined geographic area) was insufficiently creative to merit copyright protection. The Court held that the requirement of creativity was not merely statutory, but rooted in the Copyright Clause itself.(see footnote 12) Thus, the sweat of the brow doctrine was laid to rest.
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What remains is a thin layer of copyright protection for qualifying databases. In order to qualify, they must exhibit some modicum of creativity in the selection, arrangement, or coordination of the data. The protection is thin in that only the creative elements (selection, arrangement, or coordination of data) are protected by copyright. Explanatory materials such as introductions or footnotes to databases may also be copyrightable. But in no case is the data itself (as distinguished from its selection, coordination or arrangement) copyrightable. The absence of uniform protection for noncreative databases is what has given rise to the calls for this legislation.
II. DISCUSSION DRAFT OF THE DATABASE AND COLLECTIONS OF INFORMATION MISAPPROPRIATION ACT
It is our understanding that the scope and applicability of the prohibitions in the discussion draft are designed to codify the standards set forth in the Second Circuit's decision in National Basketball Ass'n v. Motorola, Inc. (''NBA'').(see footnote 13) That case involved a state law misappropriation claim by the NBA against the maker of a hand-held pager which provided subscribers with scores and statistics of professional basketball games in progress.(see footnote 14) In analyzing the case, the court concluded that a ''hot news'' misappropriation claim under the theory of International News Service v. Associated Press(see footnote 15) (''INS'') would survive preemption by federal copyright law.(see footnote 16) The court enumerated five elements ''central to an INS claim.'' Those conditions are:
(i) the plaintiff generates or collects information at some cost or expense;
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(ii) the value of the information is highly time-sensitive;
(iii) the defendant's use of the information constitutes free-riding on the plaintiff's costly efforts to generate or collect it;
(iv) the defendant's use of the information is in direct competition with a product or service offered by the plaintiff; and
(v) the ability of other parties to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.(see footnote 17)
A. The plaintiff generates or collects information at some cost or expense.
The first condition is codified in subsection 3(a)(1) of the discussion draft, which applies the prohibition against misappropriation only to databases that were ''generated, gathered, or maintained through a substantial expenditure of financial resources or time.'' The term ''maintained'' does not appear in the court's articulation of the first condition. However, the reference to ''quality'' in the fifth factor could suggest a recognition that misappropriation applies not only to the initial creation but to the periodic update and verification of the product or service. One other variation from the exact language of the court is the requirement of a ''substantial'' expense. The court used the arguably less demanding term, ''some.'' The discussion draft also equates ''time'' with ''cost or expense,'' which we believe is probably a defensible interpretation of the elements set forth in NBA.
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B. The value of the information is highly time-sensitive.
The second condition is codified in subsection 3(a)(1) of the discussion draft, which requires that the making available occur ''in a time sensitive manner.'' Section 3(c) of the discussion draft states that courts shall consider ''the temporal value of the information in the database, within the context of the industry sector involved'' in determining whether this condition is met. The discussion draft omits the term ''highly,'' although it is not clear how much difference that makes. The discussion draft appears to take a flexible approach to this condition, requiring consideration of the business context, but also allowing a court to consider whatever other factors it might deem relevant. This approach may well be the subject of initial uncertainty, until courts have provided guidance in applying the standard. In this respect, the discussion draft may go beyond the ''hot news'' doctrine addressed in NBA and INS.
In its previous testimony, the Copyright Office noted with approval the application of a definite term of protection, beginning at the time the relevant portion of the collection is first used in commerce. The Office continues to have concerns about protection without a clear end point. However, the time sensitivity provisions of the discussion draft may address that concern, depending upon how they are interpreted. It may be that consideration should be given to clarifying the scope and application of the ''time sensitive'' component of this discussion draft. To the extent that it goes beyond ''hot news''—and in the past the Office has supported protecting more than ''hot news''—there may still be reason to consider some specific limitation on the duration of protection.
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C. The defendant's use of the information constitutes free-riding on the plaintiff's costly efforts to generate or collect it.
The third condition is codified in subsection 3(a) of the discussion draft, which prohibits the ''mak[ing] available in commerce to others a quantitatively substantial part of the information in a database generated, gathered, or maintained by another person . . .'' While the term ''free- riding'' does not appear in the relevant portion of the text, the conditions described appear to be the practical equivalent. Moreover, the ''free-riding'' problem is addressed in subsection 3(a)(3).
D. The defendant's use of the information is in direct competition with a product or service offered by the plaintiff.
The fourth condition is codified in subsection 3(a)(2) of the discussion draft, which requires that the making available ''inflict[] an injury.'' That term is defined in subsection 3(b) as ''serving as a functional equivalent in the same market as the database in a manner that causes the displacement, or the disruption of the sources, of sales, licenses, advertising, or other revenue.'' Here the discussion draft expressly provides for direct competition and also requires the showing of at least some disruption in revenue to the compiler.
E. The ability of other parties to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.
The fifth condition is codified verbatim in subsection 3(a)(3) of the discussion draft. Thus, this legislation appears to codify the standards set forth by the Second Circuit.
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III. CRITICISMS OF THE DISCUSSION DRAFT
I understand that the discussion draft has been the subject of criticism. I would like to take this opportunity to address some of those arguments.
A. Constitutionality
It has been suggested that this legislation exceeds Congress' authority under Article I, section 8 of the Constitution. As you know, the Constitution provides explicit authority for the protection of copyright.(see footnote 18) As discussed earlier, the Supreme Court held in Feist that the Copyright Clause cannot serve as a basis of authority for the protection of noncreative databases. But Feist does not address whether some other basis for protection of such materials may exist. The most likely other basis is the Commerce Clause.(see footnote 19) At least one critic suggests that the Commerce Clause cannot serve this function. The Copyright Office disagrees.
It has long been accepted that Congress has the power to enact trademark legislation under the Commerce Clause, despite the fact that trademarks may be seen as a form of intellectual property; that trademark law protects material that does not meet standards for copyright and patent protection; and that the protection may last indefinitely. The Supreme Court's opinion in The Trademark Cases(see footnote 20) held unconstitutional an early attempt by Congress to enact a trademark law, based on a lack of Congressional power under either the Copyright Clause or the Commerce Clause. According to the Court, the Copyright Clause did not provide authority for the legislation because trademarks have different ''essential characteristics'' from inventions or writings, since they are the result of use (often of already-existing material) rather than invention or creation, and do not depend on novelty or originality.(see footnote 21) The Commerce Clause did not provide authority because the particular trademark law in question governed all commerce and was not limited to interstate or foreign commerce.(see footnote 22) The opinion suggested that similar legislation limited as to the type of commerce involved would pass constitutional muster under the Commerce Clause. Indeed, legislation consistent with the Court's interpretation of the Commerce Clause was subsequently enacted and has gone unchallenged since 1905.
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The Register's 1997 Report on the Legal Protection of Databases stated that ''To the extent that database protection promotes different policies from copyright protection, and does so in a different manner, it is similar to trademark law, and therefore seems likely to survive a constitutional challenge.'' The prohibition set forth in this discussion draft appears to meet that prescription. It is crafted to protect that which the NBA case held to be outside of copyright. Its focus is on unfair competition through the misappropriation of a commercial product that is the result of substantial expenditure of another's financial resources or time, in a way that inflicts commercial injury on that person, elements that are far removed from the core of copyright.
B. Subpoena to Identify Violators
The discussion draft includes a procedure similar to that in 17 U.S.C. §512(h) to allow potential plaintiffs to learn the identity of those they believe have violated the provisions in this discussion draft. The Copyright Office believes that the section 512(h) subpoenas are a necessary and appropriate tool in copyright owners' struggle against infringement, particularly in the digital and online environments. However the discussion draft does differ in one significant respect: Section 512(h) requires the person seeking a subpoena to file with the clerk of the court a certain information about the claim of infringement that has given rise to the controversy that requires identification of the alleged infringer. This provision provides assurances that the subpoena is sought in good faith and that there is an objective basis for seeking it. The current discussion draft does not have any analogous safeguards. The Copyright Office recommends the inclusion of such a provision in this discussion draft.
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C. Fair Use Exception
We understand that some have suggested that this discussion draft is somehow flawed without the inclusion of a ''fair use'' exception, similar to the one that appears in the Copyright Act.(see footnote 23) In the past, the Copyright Office has supported inclusion of provisions similar to fair use in database protection legislation. However, the past legislative proposals provided for broader protection than is provided in this discussion draft. In providing for a narrower prohibition, the discussion draft may well obviate the need for a fair use-type of provision. It may well be that this discussion draft already incorporates most of the principles embodied in copyright fair use. The ''purpose and character of the use''(see footnote 24) is addressed by subsection 3(a) of the discussion draft, which prohibits the ''making available in commerce,'' and in subsection 3(b), which makes clear that the prohibition extends only to inflictions of injury that serve as a functional equivalent in the same market as the database. The ''amount and substantiality of the portion used''(see footnote 25) is also addressed in subsection 3(a), which requires ''a quantitatively substantial part of the information.'' Indeed, this provision is more permissive than fair use, which may not excuse the use of a quantitatively insubstantial portion that is qualitatively vital to the work. The ''effect of the use upon the potential market for or value of the copyrighted work''(see footnote 26) is addressed by subsection 3(a)(3), requiring that the ability of others to free-ride threaten the ''existence or quality'' of the database, as well as subsection 3(b), with its strong requirement of market harm. Of course, the second fair use factor, ''the nature of the copyrighted work,''(see footnote 27) is inapplicable to a legal regime specifically designed to protect that which is denied copyright protection for lack of creativity. While we are strong proponents of fair use and understand the desire for such a provision in database protection legislation, we are not persuaded that such a provision is necessarily required when the prohibition itself serves the policies underlying fair use.
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D. Internet Service Provider Liability
There has been complaint that the discussion draft would subject internet service providers (''ISPs'') to liability unfairly. However, subsection 7(i) of the discussion draft explicitly insulates ISPs from liability unless their employees violate the prohibition while acting within the scope of their duties, actively direct or induce a violation of the prohibition, or receive a financial gain directly attributable to the violative conduct. It is not readily obvious to the Copyright Office how the ordinary use of ISPs' systems by their users could be within the scope of these few exceptions to the general rule that ISPs do not bear liability under this discussion draft. Moreover, it is notable that the discussion draft provides this benefit to ISPs without requiring them to abide by many of the conditions that appear in section 512 of the Copyright Act,(see footnote 28) such as taking down violative material in response to a notice or terminating the account of a repeat offender. Compared to section 512, this provision appears to be generous.
E. Alleged Expansion of Intellectual Property Protection
There is also apparently a somewhat amorphous criticism that this discussion draft would serve in furtherance of an alleged trend of expanding intellectual property protection without counterbalancing other interests. The Copyright Office sees no such trend. Indeed, the last few years have seen expansions of exceptions and limitations. For example, legislation has provided exceptions and limitations for digital distance education,(see footnote 29) use of works by the blind,(see footnote 30) and the aforementioned provisions for ISPs.(see footnote 31)
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A complete analysis of intellectual property protection includes a consideration not only of the provisions of the law, but also of the other factors which affect the incentive to create and the availability for use of protected materials. Most significantly, the dramatic growth of the use of digital technology and the Internet have made more materials available to more people than ever before. However, this technology has also created an avenue for the improper use of materials on a previously unimagined scale. Changes in the law to try to prevent or remedy these improper uses do not necessarily reflect a change in philosophy about the appropriate scope of protection and have not altered the fact that both authorized and unauthorized users of protected materials generally have greater opportunities to use the material of others than they did before these technological developments.
IV. CONCLUSION
The discussion draft represents the latest in a series of legislative attempts to provide consistent, federal standards of protection for databases. As I noted at the outset, the Copyright Office is sympathetic to these efforts but does not, at this time, take a position on this legislation. As always, the Copyright Office stands ready to assist both Subcommittees and I will be pleased to answer any questions you may have.
Mr. SMITH. Mr. Donohue.
STATEMENT OF THOMAS J. DONOHUE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, CHAMBER OF COMMERCE
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Mr. DONOHUE. Thank you, Mr. Chairman. And Mr. Chairmans, all and Members, it is fun to appear before a joint Committee. You are never quite sure where the balance is. So we will keep an eye from this end as well.
On behalf of the Chamber's 3 million business members of every size and every sector, I am pleased to come here today and to discuss this draft legislation. Let me briefly explain the two very important reasons why the Chamber is clearly opposed to this piece of legislation, and then we will gladly answer your questions.
First, the Nation already has on the books, as many have already mentioned, the vast web of laws that protect database information, laws that even database producers themselves appear to be completely satisfied with. We have the benefit of contract intellectual property, copyrights, state of law misappropriation, trespass and Federal computer antihijacking statutes and numerous other protections that are on the books and in place.
The Chamber's members, you will not be surprised, include many of the country's biggest producers and users of databases, and I would clearly tell you if they didn't think the law was protecting them because they would have clearly told me; but in fact, our Members have told us that this legislation is misdirected, in many ways, harmful and unnecessary.
Proponents of the database legislation have yet to provide a real-world example of a database that isn't protected under current law. I agree under the discussion that the law has been strong and weak in various ends of the bookends, but clearly there is protection; and if we were to pass this draft legislation, there would be many new problems for all of us to face.
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It is remarkable that when you think about the enormous number of databases that our children use and we use and that all your staffs use every day, and the equally enormous number of opportunities for some kind of serious infringement is that no one here is telling you about one that has happened. Six years ago the Copyright Office told the Congress that they could pass legislation to add additional protection. The Congress has not, during that period of time, with the introduction of new technology, with people carrying Blackberries around on their belt so they can access all kinds of information, we haven't had these problems.
This is a solution in search of a problem, and we ought to be very careful about that.
Now, your mission in the Congress—the Congress has many missions, but in this instance it is to specifically identify and define the problem and then craft some legislation to fix it. I think you will have to spend the majority of your time looking for the problem.
Let me go to the second concern I have, which is even more critical, and that is this legislation with its vague terms and allowance for excessive penalties—and I will say something about that at the end—would significantly add to the country's frivolous litigation nightmare.
For example, if this legislation were enacted, an individual or an organization such as the Chamber could be sued for taking the text of existing laws and reformatting them to make them easier for people to understand. It could also stop a replacements part manufacturer from being able to compare and hence advertise their products as alternatives to other more expensive originals; and with the legislation's vague and expansive definition of the term time-sensitive, information—time-sensitive information, an individual or an organization could be the target of a lawsuit for using information in a database that is decades old.
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Ladies and gentlemen, I think for a minute of where our society would be without sharing database information. We owe an incredible advances in medicine, science, technology and the arts to the availability of that information to researchers all over the place.
That is not to say, however, that access to database information should necessarily be available free. When people reformat and lay it out in a usable and a helpful way, they can and should charge for it, and the user should pay for it.
Passing this legislation—let me conclude—would put a chill on business investment, deprive consumers of new information products and threaten a litigation bonanza that we can't afford, and it would then put penalties that will quadruple the fines when the things we do in RICO statutes only triple them. This would be a very unfortunate piece of legislation.
Thank you very much, Mr. Chairman.
Mr. SMITH. Thank you, Mr. Donohue.
[The prepared statement of Mr. Donohue follows:]
PREPARED STATEMENT OF MR. THOMAS J. DONOHUE
INTRODUCTION
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Chairman Stearns, Chairman Smith, Ranking Member Schakowsky, Ranking Member Berman and Members of the Committees. Thank you for the opportunity to be here today to testify on ''the Database and Collections of Information Misappropriation Act''.
I'm Tom Donohue, President and Chief Executive Officer of the U.S. Chamber of Commerce, the world's largest business federation, representing more than 3 million businesses of every size, sector and region of the country.
I have previously written to both Committees to express my serious concerns about the draft legislation. I ask that copies of my correspondence be made a part of the record.
I recognize that the staffs of your two Committees have worked hard to address the concerns that the Chamber and others have expressed regarding this issue. Unfortunately, I believe that the draft Database and Collections of Information Misappropriation Act does not adequately address those concerns. Instead, this legislation continues to pose a serious threat to the business community, as well as to the academic and science community. I strongly urge you not to move forward with this legislation.
Although the discussion draft has been shared with the public for barely three weeks, it has already attracted a firestorm of thoughtful criticism. Along with the Chamber's objections, additional detailed and persuasive criticisms have been lodged by an extraordinarily diverse array of public and private entities. When the U.S. Chamber of Commerce, Consumers Union, the American Conservative Union, Association of Research Libraries NetCoalition and the Eagle Forum, all join hands in opposition to a legislative initiative, it's fair to ask what could unite groups which so often see the world in very different ways.
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The reason why so many organizations are so concerned about the discussion draft is simple. There has been no threshold showing that there is a problem that needs to be addressed by legislation. However, there is enormous concern that were this draft enacted, it may well create enormous problems for information users and producers, stifling innovation and adding to the excessive litigation burdens already facing American businesses.
We live in the ''Information Age'' - an age in which advances in information technology have helped fuel economic growth and enhanced productivity. Fundamental changes in basic information policy will affect virtually every American, as well as virtually every business, not just those commonly thought of as information companies.
Our country's basic information policy provides that facts - the building blocks of information - cannot be owned. That historic policy was underscored in a unanimous 1991 Supreme Court decision Feist v. Rural Telephone. In that landmark case, the Supreme Court reaffirmed that the U.S. Constitution prohibits copyright protections for facts contained in a database. The Court concluded that the Constitution's objective of promoting ''the Progress of Science and useful arts'' is accomplished by ''encouraging others to build freely upon the ideas and information conveyed by a work.''
The basic goal of copyright, indeed of all intellectual property law, is to encourage creative activity. That is why the Feist court underscored that intellectual property protection can only be provided to those portions of a database that reflect a minimal level of creativity. Notwithstanding this unanimous Supreme Court decision, however, proponents of broad database legislation continue to seek protection for information that they haven't created.
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That is not to say that access to these databases should necessarily be available for free. Indeed, the Chamber strongly believes that current protections, such as appropriate intellectual property protections, along with contract and licensing agreements and state trespass and misappropriation protections, as well as other protections, should be utilized and enforced. Companies need and deserve protection for the time, effort and expense that they undertake to create databases, but new intellectual property protections like those envisioned by the discussion draft are too broad and unnecessary.
WHAT'S THE PROBLEM? WHERE IS THE ''GAP'' IN CURRENT LAW?
The Chamber has always believed that the best way to legislate is to specifically identify and define problems, and then carefully craft legislation to deal with those particular real-world harms. Whenever Congress legislates - especially in an area with the broad ramifications such as those inherent in changing basic and long-standing copyright and information policy - that legislation should be narrowly targeted to resolving a demonstrated real-world harm, with as little collateral damage as possible.
In this arena, throughout the seven-year consideration of this issue, proponents of changing how our nation regulates information have yet to provide a real-world example of a database that can't be protected under current law. There are an astronomical number of opportunities daily for some kind of infringement. Yet the inability to cite gaps in the law is profoundly telling. Indeed, this inability to cite real gaps in existing laws underscores our concern that some proponents of broad database legislation seek to leverage dominance in existing markets into dominance in other markets - without having to gain these advantages via competition in the marketplace.
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Most persuasive to me is the reaction of the Chamber's members to the discussion draft. Our broad membership includes many of America's most significant database producers. These companies invest enormous sums of money producing creative, new information products. These companies currently enjoy myriad legal protections for their databases, including contract, copyright, state- law misappropriation, trespass, federal computer anti-hacking statutes and numerous other protections.
If our Chamber members believed for a second that they couldn't protect their substantial investments in database production, they would be urging me to affirmatively fight for new law. Instead, I'm hearing that there is little or no upside for the business community in database legislation, and potentially a significant, anti-competitive downside.
THREAT OF EXCESSIVE LITIGATION
As you know, the Chamber has long been concerned about the threat excessive litigation poses to the economy and American business. This legislation, if enacted, would combine vague terms and excessive penalties to create a frivolous litigation nightmare for businesses of all industries.
The reason for this begins with the core prohibition of the draft bill. Since the Supreme Court's 1918 decision in International News v. Associated Press, courts have awarded relief in what became known as ''hot news'' misappropriation cases. That line of cases established the tort of misappropriation, and found that even factual data could be protected if the data met a series of tests, including that the data is ''highly time sensitive''. The Court found in that case that wire stories were ''hot'' and protected for a few hours. Subsequent cases have found, for example, that sports scores are ''hot'' and potentially protected for a matter of minutes.
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The discussion draft, however, creates a new definition of ''time sensitivity'' in the context of this bill, significantly different than the ''time sensitivity'' that courts have been familiar with for more than eighty years under the International News line of cases. Specifically, this draft would potentially require courts to add the concept of ''value'' to the determination of time sensitivity.
For example, this draft legislation works retroactively, ensnaring facts in databases that are conceivably decades old. The draft protects facts in encyclopedias, even though the lead-time in publishing means that data is generally months old before it reaches the bookstores. In short, it is impossible to state definitively what this core prohibition means - though it can be definitely stated that this prohibition bears only a superficial resemblance to the time-sensitivity standard created by the Supreme Court in the International News case and expressly preserved in Feist.
The courts would be forced to determine whether the proposed prohibition can be tightened to look like constitutionally sanctioned ''hot news'' misappropriation and not like the copyright of facts forbidden by Feist. While the courts sort this out, the combination of vague terms, a private right of action, quadruple damages and incredibly expansive subpoena power would create a litigation bonanza that will chill investment and threaten business, depriving consumers of new information products.
CONCLUSION
On behalf of the Chamber, I want to thank you for the opportunity to share some of our more serious concerns regarding the discussion draft. The Chamber has always believed that the best way to legislate is to identify and define specific problems, and then carefully craft legislation to deal with them. While some urge ''moving beyond'' discussing the problem in order to legislate, we are convinced that, if there is to be legislation it should be narrowly targeted to resolving a demonstrated real-world harm, with as little collateral damage as possible.
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Appropriate information policy is critical to American business. While we may be willing to support compromise legislation carefully targeted to deal with specific, demonstrated ''gaps'' in existing law, there has been no demonstrated need for such legislation at this time.
On behalf of American businesses and our three million members, I want to thank you again for inviting me to testify and share our concerns.
Mr. SMITH. Mr. Kupferschmid.
STATEMENT OF KEITH KUPFERSCHMID, VICE PRESIDENT, INTELLECTUAL PROPERTY POLICY AND ENFORCEMENT SOFTWARE AND INFORMATION INDUSTRY ASSOCIATION, ON BEHALF OF THE COALITION AGAINST DATABASE PIRACY
Mr. KUPFERSCHMID. Chairman Smith and Stearns and Members of both Subcommittees, I appreciate the opportunity to testify before you today to discuss the need for legislation that protects America's databases from piracy. I also would like to especially thank Chairman Sensenbrenner and Chairman Tauzin for their strong leadership on this important issue and appreciate the commitment of the two Committees to work together to produce and enact meaningful database legislation.
I am Keith Kupferschmid, vice president of intellectual property for the Software and Information Industry Association, and I am here today on behalf of the coalition against database piracy. CADP is a broad-based coalition that was formed for the sole purpose of pursuing enactment of a Federal law to prevent misappropriation of databases. Its members include large and small database producers who devote substantial resources to creating and distributing database products and services.
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The value of reliable and comprehensive databases that these companies make available to researchers, to businesses, to Government officials, to citizens is immeasurable. Farmers use databases to get weather and soil information; lawyers to rely on legal precedent; doctors to determine safe and effective medical procedures; workers to search for new jobs; pharmacists to understand drug interactions; home buyers to find the right house, and the list goes on.
Database piracy is a major concern to America's database publishers. With the Internet and advances in technologies, databases can be easily stolen and made available to others in ways that cause great harm to the original database producer.
Unfortunately, U.S. copyright law and other existing laws do not adequately protect against such piracy. A recent case, Schoolhouse versus Anderson, decided in 2002, demonstrates the glaring inadequacies of current law. In that case the defendant copied and posted on the Internet a minimum of 74 percent of a small magazine publisher's database of school information. Although the defendant admitted to copying the database, the court held that the defendant was not liable for copyright infringement.
Shortly after that case, the plaintiffs in the case got out of the database business. This is just one example. There are many other cases, including Skinder-Strauss v. MCLE, EPM Communications v. Notara Warren Publishing v. Microdos, Ticketmaster v. Tickets.com and many others.
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In addition to the database piracy cases that have resulted in litigation, there are numerous other instances of piracy that never make it to the courtroom. Many database producers are simply unwilling to spend the significant amounts of money litigating questionable causes of action and in the process draw attention to the vulnerabilities of their company's databases.
Clearly there is a definite and significant need for database protection legislation. In addition, the risk of potential future instances of database piracy and the adverse effects that piracy would have on investment in databases and consumer protection is certainly sufficient justification for Congress to enact database protection legislation.
I would like to focus the remainder of my remarks on the draft legislation. The discussion draft reflects years of discussions and negotiations between the two Committee staffs and stakeholders. The draft legislation they have developed takes a very targeted and very narrow approach to addressing the problem of database piracy.
It is based on a misappropriation approach that only covers the act of making a database available that causes significant commercial harm to the database producer. It protects the database itself, not the information or the facts in the database.
The draft legislation creates a narrowly focused prohibition that applies only if ten criteria are met. These ten criteria, all of which must be satisfied, set a very high standard for qualifying for protection under this draft bill. This standard is even higher when one also considers the exceptions to liability that are contained in the draft.
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We believe that some of the substantive provisions of the draft will provide protection against database piracy while also accounting for the legitimate concerns of database users.
However, we believe that some of the language contained in the draft requires clarification, notably the preemption and time sensitivity provisions, among others. We are also concerned that the discussion draft does not recognize database thefts that cause noncompetitive harms. We look forward to working with the two Committees to ensure that these concerns are addressed.
We note that a few groups, many of whom were part of the process initiated by the two Committees to come up with a compromised text, have voiced their opposition to the discussion draft. The approach of the discussion draft, relying on a standard of misappropriation, is precisely the standard that was recommended by many of those who are now writing to express their concern. Their continued opposition amply demonstrates that they simply do not accept the conclusions that the chairmen have both reached: that Congress should legislate to improve legal protection available for databases.
Our goal throughout this whole process has been to get narrowly targeted legislation that will address the problem of database piracy while also addressing the legitimate concerns of the database user community. To the extent that the opponents believe that the draft falls short of this goal, we continue to stand ready to address those concerns in exchange for their support for this important piece of legislation and their recognition that the bill must address the needs of the database publishing community.
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We look forward to working with the Congress and the other stakeholders to achieve a legislative solution that eliminates the unfairness we discuss today. Thank you again for all your work on this important legislation. I will be happy to answer any questions.
Mr. SMITH. Thank you, Mr. Kupferschmid.
[The prepared statement of Mr. Kupferschmid follows:]
Mr. SMITH. Mr. Wulf.
STATEMENT OF WILLIAM WULF, PRESIDENT, NATIONAL ACADEMY OF ENGINEERING AND VICE CHAIRMAN, NATIONAL RESEARCH COUNCIL
Mr. WULF. Thank you, Mr. Chairman. Like my predecessors here, I am very grateful to have the opportunity to testify on this important legislation today. I should clarify that I am testifying on behalf of the U.S. National Academies. That is The Academy of Sciences, The Academy of Engineering, and institute of Medicine, but also on Behalf of the Association of American Universities, the American Library Association and the Association of Research Libraries.
The proposed legislation concerns a topic about which the scientific research, education and library communities have had an abiding and continuing concern. For all of those communities, the free and open sharing of information is essential for progress, and that progress is in large measure responsible for our quality—you are improving quality of life. It is estimated that one half of our GDP growth is due to advances in science and technology. It is estimated that two-thirds of our productivity growth, the real source of wealth creation, is due to advances in science and technology.
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A hundred years ago this year, the Wright brothers flew the first heavier-than-air aircraft. A hundred years ago this year, Henry Ford opened his mass production plant making affordable automobiles available to all of us. A hundred years ago this year, the average life expectancy of an American was 46. It is now 77 an increase of 31 years.
On the light side, I suppose it is interesting to speculate how many of us in this room would be here if it weren't for those advances in science and technology.
On the serious side, my point is that this is a system that one tampers with very carefully. An unintended consequence of well-intended legislation on the free and open sharing of information could have enormous implications on our prosperity, our health and indeed on our national security.
I would just like to make a few points about the draft legislation. First of all, I want to acknowledge that, in fact, the draft has a number of significant improvements, and we are very grateful for that. I must admit that my own analysis is incomplete, but I believe that there are also still problems and ambiguities, some of which are in my written testimony. As a consequence, the Academy has remained committed to being helpful in producing a balanced and fair bill, assuming that one is deemed necessary.
The key I think is that there are several principles that ought to inform the process of crafting any new legislation in this area, and I would like to focus the rest of my testimony on those principles.
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The first is that the public domain status of factual noncopyrightable information must be preserved. Any new protection regime should leave a wide buffer zone to ensure that factual information will not be subjected to proprietary claims.
Two, only significant problems of unfair competition in market failure that have been proven should be addressed. And negative unintended consequences must be avoided.
Three, a reasonable balance of interest among the stakeholders in an information economy should be maintained. Congress should proceed cautiously in creating new protection regimes, because once created, a new protection regime is virtually impossible to dismantle.
Four, healthy competition in the information industry needs to be promoted, while the further strengthening of unwarranted monopolies should be avoided.
Five, exclusive control by private parties over information in databases produced by the Government must be prevented.
Six, new protection regimes should not create any doubt or controversy about the lawfulness of traditional and customary access to and use of factual information for not-for-profit science, research and education, effective exceptions must be adopted.
And finely, the important role and function of our Nation's libraries must not be undermined.
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Before concluding, let me note that there is little evidence, as far as I can tell, since the last time we testified on this issue that databases or other collections of information are routinely stolen or that there is a significant market failure in the information industry for such products.
Indeed, database producers have already enjoy a broad range of legal technological and self-help methods, many of which have been further strengthened in recent years, that protect the fruits of their investment.
Nevertheless, the academies and the other organizations represented in this testimony remain committed to playing a constructive role in helping Congress to consider the issues of database protection in a way that is consistent with the principles I have identified above. Thank you.
Mr. SMITH. Thank you, Mr. Wulf. And thank you all for your very strong testimony today.
[The prepared statement of Mr. Wulf follows:]
PREPARED STATEMENT OF WM. A. WULF
INTRODUCTION
My name is Bill Wulf. I have been asked to testify on behalf of the U.S. National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine (the ''Academies''). As you know, the three Academies were chartered by Congress to provide advice to the federal government and to the nation on scientific, technical, and medical issues. My testimony is also being given on behalf of the Association of American Universities, the American Library Association, and the Association of Research Libraries.
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I am grateful to have the opportunity to testify to you today about the draft legislation called the ''Database and Collections of Information Misappropriation Act of 2003.'' This proposed legislation concerns a topic about which the scientific, research, education, and library communities have had an abiding interest and continuing concerns. Indeed, this is the third time that the Academies have testified on congressional legislation in this area since 1997, and both the Academies and their operating arm, the National Research Council (NRC), have published extensively on these issues over the past seven years. A list of recent relevant NRC reports and my biographical summary are provided at the end of this statement. Copies of the referenced NRC reports, as well as the Academies' previous testimony, letters to Congress, and background analyses that we have written on previous versions of this legislation, are available on request.
Although I am authorized to speak only on behalf of the organizations that I represent here today, the issues I wish to raise with you pertain broadly to our nation's scientific, research, education, and library concerns. And although I do not address directly the important issues raised by this legislation for the commercial sector, which are the focus of other testimony before you, my remarks are cognizant of the broader implications to our nation's economic and social progress.
My testimony makes the following points, which build on our previous analyses:
> As a matter of public policy, there are several key principles that must inform the process of crafting any new legislation in this area, including the following:
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1) The public-domain status of factual, non-copyrightable information must be preserved, and any new protection regime should leave a wide buffer zone to ensure that factual information will not be subjected to proprietary claims.
2) Only significant problems of unfair competition and market failure that have been proven should be addressed, and negative unintended consequences must be avoided.
3) A reasonable balance of interests among all stakeholders in the information economy should be maintained. Congress should proceed cautiously in creating new protection regimes, because once created, a new protection regime is virtually impossible to dismantle.
4) Healthy competition in the information industry needs to be promoted, while the further strengthening of unwarranted monopolies should be avoided.
5) Exclusive control, either de jure or de facto, by private parties over information and databases produced by the government must be prevented.
6) New protection regimes should not create any doubt or controversy about the lawfulness of traditional and customary access to and use of factual information for not-for-profit science, research, and education. Effective exceptions must be adopted.
7) The important role and functions of our nation's libraries must not be undermined.
> The draft legislation includes a number of improvements over previous versions of this legislation that have been introduced by the House Committee on the Judiciary since 1996.
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> There are still major problems and ambiguities in the current draft bill that can and should be addressed, assuming that the creation of a new statutory remedy is still deemed necessary.
> The Academies and the other organizations represented in this testimony remain committed to playing a constructive role in helping Congress to consider the issues of database protection in a way that is consistent with the principles identified in this testimony and that avoids negative unintended consequences.
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A. KEY PRINCIPLES
1) The public-domain status of factual, non-copyrightable information must be preserved, and any new protection regime should leave a wide buffer zone to ensure that factual information will not be subjected to proprietary claims.
As we have noted in previous testimony on this issue, access to and use of factual data in the public domain is essential to furthering our understanding of nature, to the validation of scientific claims, and to the progress of science and our nation's system of innovation. The advent of digital technologies for collecting, processing, storing, and transmitting data has led to an exponential increase in the size and number of databases created and used. A hallmark trait of modern research is to obtain and use dozens or even hundreds of databases, extracting and merging portions of each to create new databases and new sources for knowledge and innovation.
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Not only researchers and educators, but all citizens with access to computers and networks, constantly create new databases and information products for both commercial and noncommercial applications by extracting and recombining public-domain data and information from multiple sources. The rapid and continuous synthesis of disparate data by all segments of our society is one of the defining characteristics of the information age. Moreover, the serendipitous nature of research and the need of scientists and others to make transformative uses of non-copyrightable facts are such that one cannot predict when or how a database will be used. The ability of individuals and organizations to use information in a wide variety of innovative ways is also a measure of success of the original data-collection efforts.
Society uses the fruits of such research and innovation to expand the world's base of knowledge and applies that knowledge in myriad downstream applications to create new wealth and to enhance the public welfare. Indeed, the policy of the United States has been to support a vibrant research enterprise and to assure that its productivity is exploited for national gain. Thus, freedom of inquiry, the availability of scientific and other factual data in the public domain, and the open publication of results are cornerstones of our research system that U.S. law and tradition have long upheld.
The results of these wise policies have been spectacular. For many decades, the United States has been the leader in the collection and dissemination of scientific and technical data and in the discovery and creation of new knowledge. Our nation has used that knowledge more effectively than any other nation to support new industries and applications, such as the biotechnology industry and the discovery of new diagnostics and cures for hereditary and other diseases.
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In addition to the critical importance to our progress in science and innovation for factual information to remain in the public domain, it also is essential for many other compelling American values and needs, including 1st Amendment rights of freedom of expression, the promotion of the information economy, democracy and good governance, and other public- interest uses by consumers and society generally.
Because of the overriding importance of non-copyrightable factual information remaining in the public domain, any new legislation in this area must be limited to remedying unfair conduct in commerce rather than extending any exclusive property rights in the factual information itself.
Where there is uncertainty or doubt about the effect of potential new legislation, Congress should be careful to err on the side of caution. When the subject matter consists of the fundamental building blocks of knowledge, science and expression, the cost of over-protection far exceeds the cost of under-protection.
2) Only significant problems of unfair competition and market failure that have been proven should be addressed, and negative unintended consequences must be avoided.
Proponents of new database protection legislation have long argued that the misappropriation of databases is a major problem in the U.S. information industry and that existing methods of protection and remedies are inadequate. We find both assertions to be of increasingly dubious validity.
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There is little evidence since the last time we testified on this issue before Congress that databases or other collections of information are routinely stolen or that there is massive market failure in the information industry. Indeed, database producers already enjoy a broad range of legal, technological, and self-help methods-many of which have been further strengthened in recent years-that protect the fruits of their investments. Available legal remedies at the federal level include traditional copyright law, new rights to prevent the circumvention of technological protection measures granted under the Digital Millennium Copyright Act, and the new Computer Fraud and Abuse Act. Under state law, many jurisdictions have a common law prohibition against misappropriation of ''hot news,'' and a claim for trespass to chattels to protect databases.
Contracts and licenses are now used universally by database owners to make their products available under a range of custom-tailored, restrictive conditions. Technologies that protect digital databases and help enforce the existing statutory and contractual rights of owners are constantly being refined and strengthened, including such methods as encryption, online database access controls, software and hardware based trusted systems, and digital object identifiers and electronic watermarks. Indeed, these contracts and technologies are increasingly employed to limit uses of data and information that would otherwise be permitted by law. Congress should carefully monitor their use and consider whether limits on their use are needed to preserve the balance between access to and use of factual information and the incentives to invest in the collection of such information, both of which are essential to the vigorous growth of science and knowledge.
Finally, market based protections of databases through self-help business practices such as frequent updating and customizing can help make misappropriation less effective. Taken together, these database protection methods have helped make the commercial database market expand successfully in the United States.
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The Academies, the Association of American Universities, the American Library Association, and the Association of Research Libraries nonetheless are committed to playing a constructive role in helping Congress to consider the issues of database protection in a way that is consistent with the principles identified in this testimony and avoids unintended negative consequences. The National Research Council reports referenced at the end of this testimony analyze the far- reaching negative implications to research and innovation that could result from legislation that is overly protective of data and non-copyrightable factual information.
3) A reasonable balance of interests among all stakeholders in the information economy should be maintained. Congress should proceed cautiously in creating new protection regimes, because once created, a new protection regime is virtually impossible to dismantle.
It is essential to consider fully and to promote a healthy balance of the interests of all the stakeholders in the information economy and society, including the general public. The trend in recent years has been to increase the breadth, depth, and length of all types of intellectual property protection. The creation of any new statutory rights, particularly for subject matter as sensitive as non-copyrightable factual information, must be done in full cognizance of the interaction of these rights with other parallel rights conferred by other statutes to avoid negative synergistic effects. In this regard, a major concern for the research community, as discussed further below, are the potential negative effects on access to and use of databases from unbridled, highly restrictive licensing practices, especially through increasingly legitimized adhesion contracts (e.g., shrink-wrap and click-on licenses), in concert with any additional new statutory rights in databases.
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Further, history has demonstrated that once granted, intellectual property rights are rarely, if ever, reduced or limited. Thus, if there is uncertainty about the effect of any proposed new protection, it is important err on the side of caution and the preservation of the status quo.
4) Healthy competition in the information industry needs to be promoted, while the further strengthening of unwarranted monopolies should be avoided.
The promotion of competition is primarily an economic issue of direct interest to our colleagues in industry, but the benefits of competitive prices and increased quality accrue to the public. It is important, nonetheless, to emphasize that a preponderance of scientific databases are produced by sole sources, whether in the public or the private sector. For example, the vast majority of observational data sets of phenomena in the natural world, as well as all unique historical factual compilations, can never be recreated independently and are therefore frequently available only from a single, original source. In other cases, scientific databases are de facto unique natural monopolies because the cost of producing the data and the potential market are such that the economics will not support multiple sources. Even when data that are similar, but not identical, to original research results or observations are available for use in non-technical applications, researchers and educators are unlikely to consider an inexact replica of a database to be a suitable substitute if it does not meet fully the original specifications. For this reason, scientific databases are particularly prone to monopoly control. Any new legislation therefore must not enhance the market power of sole-source providers in any segment of the information industry without adequate public-interest safeguards.
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5) Exclusive control, either de jure or de facto, by private parties over information and databases produced by the government must be prevented.
Consistent with principle #1 above, the public domain status of governmental databases and other information products is a key factor for the success of our nation's research enterprise, as well as for other compelling national values and interests. Legislation that confers new rights on the private sector must fully exempt government databases from the scope of protection and avoid the possibility of exclusive capture by private-sector entities.
6) New protection regimes should not create any doubt or controversy about the lawfulness of traditional and customary access to and use of factual information for not-for-profit science, research, and education. Effective exceptions must be adopted.
Also in keeping with principle #1 above, it is important to provide clear immunity for customary non-commercial scientific, research, and educational uses from the scope of a database protection statute. Non-profit institutions should not be required to have expert intellectual property counsel looking over the shoulder of every scientist and scholar. Customary activities should not be chilled. Because in the case of databases, facts themselves are at issue, the legislation should include an express presumption that such customary uses are exempt from liability and the burden of proof on the plaintiff of demonstrating a violation should be heightened.
7) The important role and functions of our nation's libraries must not be undermined.
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Libraries traditionally have served the important public-interest function of providing access to information to our nation's citizens, and performed essential preservation and archiving activities. Any new rights conferred by new legislation on database owners must not undermine the libraries' ability to continue its role as public-interest intermediary for the access to and preservation of factual information resources.
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B. PRELIMINARY COMMENTS ON THE DRAFT LEGISLATION
We have not had sufficient opportunity to analyze comprehensively the draft ''Database and Collections of Information Misappropriation Act of 2003.'' The issues and competing interests in this legislation are complex and difficult to reconcile. Although the process has been long and difficult, we believe that it has led to a deeper understanding of the issues, which was so palpably lacking when the first legislative proposal, based on the European Union's database directive, was introduced in 1996. It also has demonstrated the inherent problems with introducing any new rights in this Constitutionally sensitive area and the importance of addressing adequately the competing legitimate interests of the many stakeholders in the information economy, not only the economic interests of the originators of commercial databases.
Our preliminary analysis of this new version of the legislation is consistent with the views expressed by the major university organizations in the September 9, 2003 letter from Nils Hasselmo, President of the Association of American Universities, to the two cognizant Committee Chairmen. We conclude that although improvements have been made over the previous legislative proposals introduced by the Committee on the Judiciary, very significant problems still remain to be resolved. Moreover, the current draft contains a number of new provisions whose intent and impact are ambiguous and which could have serious unintended consequences for the research and education enterprise.
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We appreciate, in particular, several improvements that have been made in response to the concerns expressed earlier by the Academies and other parties to this process. The move toward a standard of liability grounded more in unfair competition law and the elimination of some of the most unacceptable aspects of previous versions of the Committee on the Judiciary's proposed statutes, are certainly welcome. Among the specific improvements that we see are the elimination of qualitative substantiality, the effort to tie liability to direct competition in the same market as the existing database, the adoption of a knowledge requirement as a condition of liability, and a limitation to databases that require substantial effort to develop. The elimination of criminal penalties and the explicit recognition of the doctrine of misuse as a limiting factor on lawsuits are also positive developments.
Although the discussion draft addresses some of the concerns we identified previously, many serious problems remain nonetheless, while new ambiguities have been introduced by the recent changes. We note here only the issues of greatest concern to the scientific, research, education, and library communities, consistent with the principles articulated above, and also incorporate by reference the additional concerns expressed in the September 9 letter from Nils Hasselmo. In particular:
> With regard to the liability standard, the discussion draft could confer perpetual ownership rights in a wide variety of data by virtue of protecting investment based on open-ended maintenance of a database. In addition, the concept of ''making available to others'' appears to be overly broad, posing a threat to customary collaborative work within or among universities and research institutions. Moreover, a minimal amount of harm-even one lost sale or a single lost source of data-could lead to a finding of liability and to a chilling of the use of public-domain factual information, contrary to the values articulated under principle #1 above.
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> The exception for educational, scientific, and research institutions applies only if the institutions are nonprofit and their ''making available'' is for nonprofit purposes. This would discourage joint research and development activities between nonprofit institutions and corporations. Especially troubling is that the exception can be overridden by a shrink- wrap or click-on license and render the exception meaningless—a major concern noted under principles #3 and 6. Any new legislation must preclude such a possibility. Finally, we continue to urge that the burden of proof of demonstrating that customary not-for- profit scientific, research, and educational uses of factual information are unreasonable should be a heavy one and should be borne by the plaintiff.
> The scope of the exclusion for government information in the discussion draft is uncertain as well. It appears that a publisher that incorporates government information in its database could prevent others from making available that government information - even if it is not available from any other source, contrary to principle #5.
> By failing to address the problem of sole-source databases, the discussion draft increases monopolists' control over competitive uses of information. This is of particular concern in the market for databases used in scientific research and education, as noted under principle #4. The provision on misuse, which could help mitigate harmful conduct of database monopolists, lacks any guidance for courts to determine whether misuse occurred. The misuse provision should specifically address the issue of sole-source databases. H.R. 1858 contained appropriate language in this regard.
While we believe that the Committees have made progress on this legislation, it is clear that the current discussion draft is still not ready to be adopted and would introduce serious problems in its present form for many stakeholders in the information economy, including the scientific, research, educational, and library sectors.
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In closing, I would like to reiterate that the Academies, and all of the organizations I represent in my testimony today, have sought to play a constructive role in the congressional efforts to craft appropriate legislation in this complex and sensitive area. We look forward to working with Congress on this issue to develop a consensus on how best to move forward from here.
Thank you again for providing us with the opportunity to testify at this hearing.
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Recent relevant National Research Council reports, published by the National Academies Press and all freely available at: www.nap.edu :
The Role of Scientific and Technical Data and Information in the Public Domain (2003)
The Digital Dilemma: Intellectual Property in the Information Age (2000)
A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases (1999)
Bits of Power: Issues in Global Access to Scientific Data (1997)
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Mr. SMITH. At this point, I am going to turn the Chair over to Congressman Stearns, and we will continue with the hearing.
Mr. STEARNS. I thank my colleague, and I certainly would defer to him to start with his questions.
Mr. SMITH. Thank you, Mr. Chairman. Mr. Carson, let me direct my first question to you, and this goes to page 8 of Mr. Wulf's prepared testimony, and he mentions several examples of serious problems with the proposed legislation, and let me read you the first two and ask you to tell us why they are or are not serious problems.
Now, he says, first with regard to the liability standard the discussion draft could confer perpetual ownership rights in a wide variety of data by virtue of protecting investment based on open-ended maintenance of a database. And second, the exception for educational, scientific and research institutions arise only if the institutions are nonprofit and their making available is for nonprofit purposes.
Do you consider those to be serious problems, and if not, why not?
Mr. CARSON. We understand the concern, Mr. Chairman. However, we are not certain how serious they are in the context of this bill. Let's take the first one. Would this discussion draft confer perpetual ownership rights? We don't think so, and we don't think so primarily because of one of the requirements that the unauthorized making available in commerce has to occur in a time-sensitive manner.
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As we stated in our testimony, there is, we think, some ambiguity in the current draft that suggests what is meant by that. If, as we understand, this is simply a codification of the ''hot news'' doctrine, then we don't see how there can be any conceivable problem with perpetual ownership rights. If it goes beyond ''hot news,'' then we really have to give it further thought and have a clear understanding of what is meant by this time-sensitive component and the elaboration that a court should consider the temporal value of the information in the database within the context of the industry sector involved. That, we think, does need some amplification and clarification, and depending on where that leaves us, we may or may not have some kind of problem.
On the second aspect, whether the restriction of the exception for educational, scientific and research institutions to nonprofit institutions is a problem, I guess my first reaction to that would be that while we think it is a good thing that this legislation—this proposed legislation—would have an exclusion for nonprofit educational scientific and research institutions, when you look at the scope of the prohibitions set forth in section 3, which is clearly addressed to competitive activity which is serving as a functional equivalent in the same market as the data base—the proprietor's database—it is really hard to imagine too many situations, if any, when a nonprofit, scientific or educational research facility would be engaging in an act which would even implicate that primary prohibition.
So that would be the first part of my answer, and the second part would be—we think there is a distinction between nonprofit institutions and for-profit institutions. If you are in this business for a profit, then maybe you should be on the same playing field as any other for-profit actors.
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Mr. SMITH. Thank you, Mr. Carson.
Mr. Kupferschmid, in the appendix to your prepared testimony, you give several examples of databases that are not currently protected by copyright law. Two of the examples you gave are the directory of information on U.S. cable television systems, and the second was a Massachusetts lawyer diary and manual.
My question for you is why should they be protected? And my question for Mr. Donohue and Mr. Wulf is why not?
Mr. KUPFERSCHMID. One of the cases you are talking about, Warren Publishing v. Microdos, was a case involving a cable directory, and in that case Microdos came along and copied and sold the database in competition with Warren, a typical case of free riding, the exact type of situation we are trying to address here.
Since that case has come down Warren Publishing has taken steps to try to protect themselves. What they have done is they have now put a shrink wrap license around the cable directory, because they feel that is pretty much the only way that they can protect themselves.
I think it is quite interesting that because there is no law to protect themselves and they have taken this step, they have gotten this directory sent back to them from libraries and from others who do not want to adhere to the shrink wrap agreement. They won't open it up. So what that means is because there is no law and because Warren Publishing has had to take these steps to protect themselves, in essence, there is information that is not getting out there. And that is because there is no law and they have had to use other means to protect themselves. If there were a law, then presumably they would not have to do that and——
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Mr. SMITH. Thank you. Mr. Donohue and Mr. Wulf, very briefly, why shouldn't we protect that directory and that—directory of information U.S. cable television systems and the Massachusetts lawyer diary and manual? Why shouldn't we protect those databases?
Mr. Donohue.
Mr. DONOHUE. I believe that there is enough law on the books to give most companies the protection that they would need. What we are doing here, when you think about the Internet, when you think about the databases that are available—and there are millions of them—what we are doing here is talking not about the facts, as my colleague said here, but about the format, how they are put together. And certain of those things ought to be paid for. If they are not paid for appropriately, then the law which we now have should be used to protect those that are injured.
To put together a new piece of legislation, to run around and look within those millions of databases for somebody that has been harmed is—in some ways this is getting ridiculous, because we are looking around for a problem for this solution.
Mr. SMITH. Mr. Donohue, if current law was not sufficient, would you support legislation that would close that loophole?
Mr. DONOHUE. If I saw it and it made sense and if there was a serious enough problem to be resolved, of course.
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Mr. SMITH. Okay. Thank you, Mr. Donohue, and thank you, Mr. Chairman.
Mr. STEARNS. I thank my colleague.
Mr. Carson, let me just follow up here a little bit with what my colleague talked about. Now, you expressed the view that misappropriation is the best approach to this issue. Right?
Mr. CARSON. That's correct.
Mr. STEARNS. And so when you say misappropriation, you are talking about products versus rights of facts. Is that a good interpretation of what misappropriation is? In other words, you are saying misappropriation as a rule could be used to say that the facts themselves as developed could be used as property, products. No? Why don't you define misappropriations for me.
Mr. CARSON. No. Misappropriations—in fact on the opposite end of the spectrum from the property right—is an aspect of unfair competition, Mr. Chairman, and therefore the—basically the focus of a misappropriation claim would be the act of competition, the taking of someone else's database and using it in competition with them.
Mr. STEARNS. Okay. Now, in the Supreme Court International News Service v. Associated Press, do you believe that it is necessary for that approach to closely track the language that is in that decision?
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Mr. CARSON. I don't think it is necessary, Mr. Chairman. I think it is probably the minimum. It is my understanding that this discussion draft, in fact, is an attempt and not a bad attempt to track the language in the INS decision and subsequently the NBA decision which also follows that, but it doesn't necessarily have to be that narrow.
Mr. STEARNS. And yet in the Supreme Court decision with Feist, it says no copyright protection for noncreative databases no property right. Now, does that go against what you just said?
Mr. CARSON. Not at all. It is talking about copyright. We are not talking about copyright here. We are talking about an entirely different species of protection.
Mr. STEARNS. So you would agree that what the bill in tracking the INS decision is the appropriate way to go?
Mr. CARSON. We would think that that is an appropriate way to go, I think, is how I would put it.
Mr. STEARNS. An appropriate way.
Okay. Mr. Donohue, how do you respond to the specific example cited by Mr. Kupferschmid of court cases that have not offered protection to databases? And we hear all the time, you know, that there is no protection for these databases. What would be your response that the courts are not helping out?
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Mr. DONOHUE. Well, we have a couple of examples here of legal situations that narrowed the scope of what is protected, and therefore, it is seen to be not helping out. The issue here, you know, we have gone through a phenomena over the last 10 years in this country in the expansion of databases that are no longer held in our hand. We look at them on the screen or we pull them off from an electronic system. We have gone through the whole question of taxing and how do you pay for these issues and the protection and privacy.
This issue is so small compared to everything else, I would not argue with you, Mr. Chairman, that you somewhere can find someone that was injured; but the preponderance of evidence is that the benefits far outweigh the loss in terms of what is happening with this valuable information without intentionally injuring anybody's economic well-being. What is the benefit for our society versus—and you have to ask a question, why do we really want this legislation? Do we want it because every day people have economic loss or intellectual property loss? Or do we want it because certain people are looking for a way to perhaps capture information for their own economic gain? And I am not suggesting that that is the only interest here.
What I am suggesting is that our members, AT&T and Yahoo and Bloomberg and Schwab and people that maintain extraordinary databases are saying, Tom, we are not being injured. We don't really think this legislation is going to help. And what it is going to be is a retirement opportunity for certain class action or mass action or straight-action lawyers. We don't need this type of new legislation, because we don't have a problem to fix.
I wouldn't argue, though, Mr. Chairman, that a very smart guy from a good organization that it itself is divided on this issue can't find an exception or a circumstance where somebody was injured.
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Mr. STEARNS. My time has expired. You probably could have touched on the fact that the bill allows for quadruple damages.
Mr. DONOHUE. I said that in my testimony.
Mr. STEARNS. Okay.
Mr. Berman.
Mr. BERMAN. Thank you, Mr. Chairman. Just to clarify, Mr. Donohue, you are not saying that there is something inherently wrong when people try to capture information for their economic gain, are you?
Mr. DONOHUE. No. As a matter of fact, that is what I represent on a fair and equitable way without disadvantaging others through the use of the Government.
Mr. BERMAN. Mr. Carson, the ACLU writes in opposition to the draft legislation they raise first amendment concerns, which I think the Committees should appropriately—should consider and give way to, but they also state that the copyright clause of the Constitution stands as an affirmative bar to protection of unoriginal compilations of facts and that therefore the draft bill violates the copyright clause. While Chairman Stearns didn't quite say that in his opening statement, he came pretty close to saying that. What does the Copyright Office think of this assertion that the copyright clause of the Constitution prevents Congress from protecting facts and that the bill attempts to evade an important Congressional limitation on—constitutional limitation on Congressional power?
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Mr. CARSON. Mr. Berman, clearly the copyright clause prevents Congress from protecting facts through the vehicle of the copyright laws, and there is a pretty good argument that the copyright clause might as well prevent Congress from protecting databases through conferring a property right that is essentially the same as a copyright on database producers; but the copyright clause does not speak to Congress's power under the commerce clause to regulate competition in this industry if what the legislation is in fact regulating is that competition and is not conferring exclusive rights, which is the copyright package and which is what the copyright clause, in fact, addresses.
Mr. BERMAN. Thank you.
Dr. Wulf, you argue that new database legislation is unnecessary because the DMCA copyright laws, trespass actions and contracts provide database producers with adequate protection, yet many of the organizations that you represent today advocate in other contexts rolling back the DMCA, weakening copyright law and placing Government limitations on the freedom to contract in the form of compulsory licenses and things like that.
Isn't there an inconsistency between these positions? The organizations you represent appear to be proposing that we take away the very protections that they assert through you, provide adequate protection to database creators. Will they support strong database legislation if they succeed in rolling back protection in these other areas?
Mr. WULF. I think inflating the two issues is probably a mistake. You are absolutely right, there are organizations which have differing views from my own on some of these issues. I happen to have been an entrepreneur who spun out from a university and started a software company and intellectual property rights in software which is very much a gut issue for me.
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Mr. BERMAN. I don't think I inflated the two issues. I think the organization you represent has.
Mr. WULF. I am representing those organizations with respect to this particular bill and not with respect to everything that they have ever said or done.
Look, I think the essential point here is—and by the way, you probably know that in earlier testimony we said—we, the academies, not everybody I represent here, said that we thought there was potentially a gap that needs to be filled. Things have happened since then. We need to now, I think, stand back very carefully and ask whether the things that have happened, like the Digital Millennium Copyright Act, have closed that gap to the point where this legislation is no longer needed. I was not advocating not doing it. I am advocating taking a very careful look.
Mr. BERMAN. At whether or not the DMC——
Mr. WULF. Whether that gap still exists.
Mr. BERMAN. And if it doesn't, it is because the Digital Millennium Copyright Act may have closed that gap.
Mr. WULF. And the Computer Fraud and Abuse Act and new technology in cryptography and, you know, a lot of things. It is not the one thing.
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Mr. BERMAN. Thank you very much, Mr. Chairman. I yield back.
Mr. STEARNS. I thank the gentleman.
Mr. Keller, my colleague from Florida.
Mr. KELLER. Thank you, Mr. Chairman. Let me begin with Mr. Kupferschmid. I was taking some notes when Mr. Donohue was speaking. He said there is no real world example of a database not protected under current law. I got the gist of his testimony was there is not really a problem, because you have the adequate existing laws to cover it. If you were speaking to a sixth grade class, what would you say is a real word example they could relate to that is not protected by existing law?
Mr. KUPFERSCHMID. Well, the example I would give them would probably be Ticketmaster v. Tickets.com, because that involved concert information. So why not go with that since we are dealing with a teenage crowd here. In that case, Tickets.com originally deep-linked to the information in Ticketmaster's Web site. Ticketmaster didn't want them to do that, so they were able to use technology to prevent them from deep-linking. The technology didn't work because Tickets.com then came and sent out a Spider, Robot, Web Crawler, whatever you want to call it, and copied the information and put it into their database. So Ticketmaster then sues Tickets.Com since the technology didn't work.
Well, Ticketmaster then sues for four claims. They sue for copyright infringement, misappropriation law, breach of contract and also trespass law. Guess what? They lost on all four claims. They lost on copyright because there was no copyrightable expression in the concert data that was taken. They lost on misappropriation, because there is a ''hot news'' misappropriation requirement, and the information was not considered to be time-sensitive or highly time-sensitive under that criteria.
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Under breach of contract theory, there was held to be no contract. This was just a Web page with terms and conditions at the end. Browse wrap licenses like that are usually not enforceable.
And lastly in trespass, this was the same court that heard the trespass claim in the eBay Bidder's Edge case; but yet, they turned around and said there was no damage to a server or any type of damage to hardware that Ticketmaster had and therefore there was no trespass. So they tried technology, it didn't work. They tried contract, it didn't work. They tried misappropriation. They tried trespassing. They tried copyright. All out of luck. They lost. That is a typical case.
Mr. KELLER. That is a sophisticated sixth grade class. All right. In fairness to the other side, Mr. Donohue let me ask you a tough question here. You argue that there is essentially not a problem, because existing laws offer protection in a database. At least that is how I inferred your testimony. However, I understand that some opponents, including I guess some of your members such as Bloomberg, are making arguments in court now such as the day star versus 20th century case, the one they signed on to, that the current protections provided by contracts, State laws on trespass and the Computer Fraud and Abuse Act should be precluded from protecting databases.
How do those two positions coexist?
Mr. DONOHUE. A sixth grade answer?
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Mr. KELLER. I hope so. That is all I can understand up here.
Mr. DONOHUE. My first argument is there is not a repetitive compelling problem of any size or shape that would compel the Congress of the United States to act and pass new legislation. My second issue is that we heard what the court didn't do and regularly doesn't do with the occasional case that it gets. I think that deserves some consideration in terms of maybe what is happening is people are using, for the most part, information that should be available. I make no argument for even a sixth grader that there aren't occasional problems that we would all feel badly about, but we don't need a massive new set of legislation that is going to give the trial lawyers a whole new retirement program just to deal with those occasional issues. Thank you very much to the sixth grade.
Mr. KELLER. Well, if this legislation had the misappropriations standard, which I think you previously wanted and didn't have, the quadruple penalties and had a couple of other things that were changed, would this be something that you think would merit support or do you think it is just a fatally flawed idea from the get-go?
Mr. DONOHUE. Well, for the reasons I expressed, I rather think it is flawed. Of course, any time the Congress and the Committee with smart people like this change a piece of legislation around and narrow its scope, we would always look at it and we would look at it thoughtfully.
What I am commenting on is the draft that was put before us, and that would be a mistake for this Committee to advance.
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Mr. KELLER. Thank you, Mr. Chairman. I have nothing further.
Mr. STEARNS. I thank my colleague.
The Ranking Member on the Commerce Consumer Protection and Trade, we welcome her, Ms. Schakowsky.
Ms. SCHAKOWSKY. Mr. Kupferschmid, Mr. Donohue said that he has members of his association which has taken a very strong position against this legislation who themselves have databases, and I am trying to understand then what the difference is between the interest that you represent and the interest—and I would welcome Mr. Donohue's comment as well. If one segment doesn't have a problem, are you just finding—you know, as Mr. Donohue has suggested—a couple of examples but that industry wide it is not a major problem that needs our addressing?
Mr. KUPFERSCHMID. I think the difference between the number and the types of database producers that we represent compared to the chamber of commerce, I think it is significantly different. We have in our coalition here 70 companies that are pure database producers that are supportive and they know that there is a need for legislation. I won't speak for the Chamber. I will let Mr. Donohue speak for himself, but I highly doubt that there is that number of companies in his association interested in this issue. I know he referenced the fact that we are divided on this issue. Nothing could be further from the truth. I mean, SIIA and CADP are very supportive of database legislation protection, and recognize the need for it. The coalition against database piracy, which involves members like Dow Jones, eBay, the Newspaper Association of America, McGraw-Hill, the National Association of Realtors, and smaller companies like Carfax and Berkshire Publishing, they are all supportive and there is they believe that there is a definite need. These are companies that their business is producing databases.
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Ms. SCHAKOWSKY. Mr. Donohue.
Mr. DONOHUE. Thank you very much for the opportunity to comment. First, we have more than 3 million members. We have a majority of the major database holders as our members. The list that you have been submitted on the other side has 14 subsidiaries of one company, has a number of people, who I think if they had an opportunity to review this legislation might have another view, but let me say, Congresswoman, that the interesting thing about my job is not dealing with the Congress, because that is easy.
It is dealing with my members. But the great majority of our members have made it very clear that an added legislation that opened up this litigation problem and that made it more difficult for people to use their product and access their information would be a difficulty for them. And if the Committee would like, I would be very happy to give you an extensive list. I think it would be a little longer than the one over here.
Ms. SCHAKOWSKY. Thank you. I am looking at the letter from the American Civil Liberties Union, and one of the issues that they raise is the issue of subpoena powers. They say subpoena powers pose serious privacy concerns. Section 7 of the bill gives database owners broad subpoena powers with no judicial discretion. A clerk must grant a subpoena as long as the proposed subpoena ''is in proper form,'' and that ''the accompanying declaration is properly executed.'' there is no prescription for due process protections or even a requirement that an applicant may prime fascia demonstrate that a proposed defendant has, indeed, violated the law before violating her privacy.
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This lack of privacy related safeguards seem ripe for abuse. I don't know if it is Mr. Carson, Mr. Wulf who would want to comment on that.
Mr. CARSON. Yes. This is an issue that goes certainly beyond this particular bill. And let me make clear that we have no particular position whether such a provision is appropriate in database legislation. I think we would need to hear the case to be made for that. But to the extent that you are referring to a controversy that is very much in the air with respect to section 512 of title 17, which does have the process that you described, we are quite familiar with that and we think most of the complaints that you have just described frankly have very little to them when you peek beneath the hood.
The fact of the matter is that the types of problems that people have claimed exist in that respect first of all are to some extent obviated by the protections that are built into section 512 of title 17, some of which are not in this discussion draft, and we think that if you continue to consider such a provision in this discussion draft you need to consider including such provisions—in particular provisions that require that before you get the subpoena you file something with the court that lays out the basis for your need, including identifying what work is being infringed and where you can find the infringing material.
Beyond that, though, what you have described, if you think about it, isn't so very different from what happens every day in civil litigation. Subpoenas are issued by attorneys in civil litigation without any judge reviewing them. They can seek information about third parties. The third party has no right even to be aware that it is being sought from the person to whom the subpoena is directed until after the fact. So what you are describing is simply a matter of fact, every day in civil litigation in this country.
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Mr. KUPFERSCHMID. If I could just supplement what David said, and I agree with everything that he said. To give some context to this, the subpoena provision that is in this bill was drafted at the very outset when the negotiations over this draft legislation had first started. As we all know, a lot has changed over that period of time. But at the time when this provision was drafted the ISPs were supportive of this exact provision that is in the bill. Like I said, I know a lot has changed in the legal regime certainly within those 3 years, but this remains to be an important provision to database producers. We will be, willing to discuss changes to it or to address their concerns, as I mentioned before, if that is necessary.
Ms. SCHAKOWSKY. Did you want to say anything?
Mr. WULF. I am not a lawyer and so I would be happy to respond in writing if that would be all right. I must admit that what I just heard, however, as a layman scares me.
Ms. SCHAKOWSKY. It is disturbing, isn't it?
Mr. WULF. Yes.
Ms. SCHAKOWSKY. Thank you, Mr. Chairman.
Mr. STEARNS. Gentleman from New Jersey, Mr. Ferguson.
Mr. FERGUSON. Thank you, Mr. Chairman. I am not a lawyer either, thankfully. We are beating up on lawyers a good bit today and I usually will jump right in there. I have the AT&Ts of the world in my district. I also have Reed Elsevier, Martindale Hubbell in my district. They obviously are coming at this issue from different sides. I think some very good points have been made quite articulately by our panel today, and I appreciate all of your testimony. My concern is with this chilling effect that we have heard talked about and actually if I am not mistaken it has been cited on both sides of this debate and this conversation. And to Mr. Donohue I wanted to kind of engage you a little bit on this.
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As I have said, I wholeheartedly agree with you and the Chamber on the need for tort reform, for less litigation, for all of the above and you know I have been a loyal foot soldier in that battle and will continue to be.
Mr. DONOHUE. Thank you, sir.
Mr. FERGUSON. And I certainly can appreciate the desire to stay away from increased litigation, increased frivolous lawsuits, et cetera, in the future. And I agree that frivolous lawsuits, litigation trial lawyers, et cetera, have had a chilling effect on business job creation, et cetera, in a whole host of areas. My concern is that—and the way I am seeing this kind of break down a little bit and also with what I have heard in our own office, from folks in my district on various sides of this, is that the folks who are somewhat in the database business, like the AT&Ts of the world, but who have many other business interests are not as interested in this legislation or certainly not supportive of it because they see it as more of a litigation magnet rather than a protection for their business. And the folks at, say, Martindale Hubbell, for instance, and Reed Elsevier, this is their entire business. So they are much more interested in these protections that they would be afforded and their products would be afforded under this legislation. And my question, I guess, is what about the chilling effect on the database collection and management companies? What about the—I guess we are talking about—we have discussed a little bit about a problem that may or may not exist. But some of what we do in the Congress, as you know, is trying to preempt problems that may exist in the future. Maybe we see examples of now, but may become much worse. And there are companies who would probably be doing a lot more investment, a lot more work, a lot more with regard to database collection and providing products to their customers, but maybe aren't doing so today because they know they don't have the protections.
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What are your thoughts on kind of the opposite kind of chilling effect?
Mr. DONOHUE. Well, first one sentence to say thank you for your appreciation of the legal questions here and the possibility that this draft would create far more legal difference of opinion and therefore far more cost and, by the way, in those circumstances much less likely for people to invest in database expansion. Second, I think you have to look at the record, and the record is that the database business and the products they are producing become more sophisticated, more expansive and more helpful every day. And the question is, and you could ask that sixth grade class about it because they even use it, the question is what benefit would we get in size and scope to encourage investment, to expand databases or to make us more comfortable with this legislation? And I think there have been some good arguments made here. But I think that the potential, talking about potential difficulty is far more expansive than the potential benefit.
If somebody came back and brought a lot of these extraordinary people that run this business in here and they laid out a whole series of economic and intellectual property and business difficulties, I would listen because you know what, those people would be my members. But that is not what is going on right now. And I understand that you have a split in your district. But it is pretty clear that we ought not fix it if it is not broken.
Mr. FERGUSON. But what we are hearing from a number of folks, 70 some folks or however many, even it was five, that say that there is a problem.
Mr. DONOHUE. Right. Then I would want to dissect the problem a little more carefully and I would recommend that before you passed a piece of legislation that will affect the information base of an information based economy that is absolutely dependent on it for economic expansion and the creation of future jobs in this country.
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Mr. FERGUSON. Very quickly, Mr. Chairman. I know my time is up. You talked about the vague terms of the draft bill and the excessive penalties. I think there probably is going to continue to be a very healthy debate on that. I think probably a lot of us who maybe agree with some points on one side would agree with other points on the other side. If some of those issues were resolved, if this were narrowed and sharpened a little bit, could you see an instance where you could be supportive of this bill?
Mr. DONOHUE. You know I testify a lot here and I like to be very clear, not, you know, take some of the points that others do. But allow me the protection of saying I would have to see it and talk to my members. But from everything I see now, I am opposed to and it would have to be significantly changed.
Mr. FERGUSON. I know my time is up.
Mr. DONOHUE. Thank you very much.
Mr. STEARNS. I thank the gentleman. Mr. Boucher, the gentleman from Virginia.
Mr. BOUCHER. Well, thank you very much, Mr. Chairman. I want to thank these witnesses for being with us today and sharing your views on the subject. You have presented to us well prepared and thoughtful testimony.
We find ourselves, I think, at a fairly curious juncture here. The bill that is before us in draft form is said to be a compromise between the Commerce and Judiciary Committees. I have the privilege of serving on both of those Committees. I may be the only Member here who has that opportunity, and I have had some conversations with many Members of the Commerce Committee in particular about this measure, and I don't believe there is a single Member of the Commerce Committee who is prepared to support this bill. And so I find it very curious that it is being presented today as a compromise measure with the two Committees participating and putting forward this consensus draft. I really find it to be very much to the contrary.
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I oppose this measure also, and I want to commend Mr. Donohue in particular for his statement today. I think it was compelling. I think it was incisive. I think he hit all the right points. The remedies that are available under copyright, under trespass, under misappropriation, under contract law itself have proven successful in the cases that have been litigated in protecting databases where there were genuine harms that would arise from the taking of facts within that database. To legislate at this point, I really think, in the absence of a clearly delineated problem that requires a solution, is simply mischievous and would create an anti-competitive effect, potentially locking away facts that are available to the public today and, at a minimum, requiring that people pay for facts that are free and available for public use presently.
And then, as many Members and some of the witnesses have indicated, there are very substantial constitutional concerns about this measure. So put me down among the opponents. I think the best course we could take is to put this aside and go on to our more urgent legislative business.
Having said that, I just want to ask a couple of questions and, Mr. Carson, I am going to direct these to you. First of all, I am a little bit perplexed by your answer about the subpoenas. What the bill authorizes is subpoenas being issued before any lawsuit has been filed. Now, you talked about the normal discovery process in which lawyers issue subpoenas in civil litigation. But you know there is a fundamental difference between that kind of circumstance and the circumstance presented by this bill. In the circumstance you cite a lawsuit is pending. And in that pending litigation, if the person to whom a subpoena is directed believes that there is some impropriety in that discovery, he has the opportunity to go to the judge before whom that case is pending and seek an order that protects him from this abusive and improper discovery. That happens all the time in our litigation. Under the provisions of this bill that could not happen.
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Mr. CARSON. Not at all true, Mr. Boucher. Not at all true. And again I am focusing primarily on what we find in section 512.
Mr. BOUCHER. What is not at all true?
Mr. CARSON. It is not at all true that someone under this bill would be at a disadvantage with respect to someone who is the subject of a subpoena in pending litigation.
Mr. BOUCHER. How does a person under this bill go to a judge and say, Judge, protect me from the issuance of this subpoena or from having to comply with the requirements of this subpoena? How do you do that? You would agree, would you not, that you can do that this regular civil litigation?
Mr. CARSON. You can do it under 17 USC section 512 and although I haven't studied the provision in this discussion draft and I am certainly not here to suggest that it needs to be in here—we have no view on it—assuming that this does track what is in section 512, the subpoenas issued pursuant to section 512 are subject to the Federal Rules of Civil Procedure. In fact, under section 512 people have gone to the District Court here in Washington to seek protection.
Mr. BOUCHER. But you would have to go ab initio. You would have to initiate your own proceeding before the court while there is no judge sitting overseeing that case.
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Mr. CARSON. That is not how it works, Mr. Boucher.
Mr. BOUCHER. Well, you and I have a difference of opinion about that and it is obviously something that would need to be examined. I would continue this discussion with you except that I have one other question of you and my time is almost up.
I find another series of provisions in this bill to be curious and I wonder how they can coexist. Perhaps you can help me with this. One of those is the requirement of time sensitivity before the protections this bill would extend to database creators would apply. The other is the fact that this bill is made retroactive. Can you give me an example of a database that contains facts where the protection of those facts is required because of their time sensitivity, where that database is already in existence?
Mr. CARSON. Mr. Boucher, I actually hadn't studied the bill to the point where you saw the retroactivity provision. We have already expressed our concern about the vagueness of the time sensitivity provision.
Mr. BOUCHER. I appreciate that you are not prepared to answer the question.
Mr. CARSON. No, Mr. Boucher. That is not exactly what I said, sir.
Mr. BOUCHER. Well, go ahead if you have an answer.
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Mr. CARSON. I have said already we have problems with the time sensitivity provision because we think it is ambiguous and we have already expressed that if the time sensitivity thing carries over for a long period of time there may be problems.
Mr. BOUCHER. Thank you, Mr. Carson. Thank you, Mr. Chairman.
Mr. STEARNS. Ms. Baldwin. Yes.
Ms. BALDWIN. Thank you, Mr. Chairman. Thank you all for being here today. I appreciate your testimony. As the people have been asking questions before, there has been disclosure, so I am a lawyer, but much more importantly, I am the granddaughter and niece of scientists and both belong to one the organizations that Mr. Wulf is representing today. I also represent a major research university, the University of Wisconsin, Madison campus, and so have very strong concerns about the impact of this on the conduct of science.
But before—just as a—given the draft in front of us, there is a question of course of the need for this legislation. If there is need for additional protection for digital databases, I would think that those could ultimately benefit universities and university research efforts both by providing greater incentives to create databases and providing additional protection for university created databases. But obviously I have heard a lot of very generalized concerns from the scientific community about the potential harmful effects of overprotection of databases.
Mr. Wulf, if you can, somewhere between the sixth grade level and the post-doctoral level, elaborate on some of your concerns about the overprotection of databases and its impact on the conduct of science, and especially I want to tease out some details from you, if you can identify some real or hypothetical examples of what might be in store if this legislation were to pass as is.
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Mr. WULF. I think something—let me address an issue that you mentioned and that is the value potentially to universities and to researchers of having protection in databases. I have spent about two-thirds of my career in academia and something that is kind hard for people to understand sometimes is that the real motivation, the real inducement for academics to do research is not financial. It is rather peer recognition, and that tends to argue in favor of as much free flow of information to your peers as possible. So I am not at all sure that in fact additional restrictive legislation here would be beneficial.
The term ''chilling'' has been used a couple of times here, and I think that is another point that needs to be made. Academics tend to be risk averse. And we will of course never know what they decide not to do because there might be a potential litigation. But academics will, by and large, stay as far away as possible from the potential of litigation. So again we are talking about lost opportunities. We are talking about opportunity costs. Those are very hard to measure. But one should never make the mistake of thinking that because they are hard to measure they are not real. They are very real.
I think some of the kinds of issues that we worry about include access to Government generated information. We worry about access to information generated by sole sources. Much of the scientific data that is collected is observational and it happens at a moment in time with an instrument being available. It is not reproducible. And if that kind of information became inaccessible because of excessive protection, it could have a tremendously chilling effect on the conduct of research. We typically—I shouldn't say typically. Often, often enough to be scary—cannot predict what the use of a database will be. The existence of the ozone hole over Antarctica was verified using databases which had been collected for an entirely different purpose at an entirely different time with no anticipation of this kind of use.
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So if access to information that you could not predict would be needed, were restricted, we might not still know about the existence of this enormously environmentally dangerous ozone hole.
Does that help?
Ms. BALDWIN. Yep. Thank you.
Mr. STEARNS. Mr. Delahunt.
Mr. DELAHUNT. Mr. Wulf, I appreciate the concerns that you articulated. You used the term ''risk averse and chilling effect.'' I will tell you what my concern is, that database providers are for profit corporations, and capital oftentimes is risk averse. And I thought Mr. Donohue's observations were correct. You know, his judgment there is not a problem. We hear that there was a case, I think it was the Schoolhouse case and other cases that Mr. Kupferschmid referred to or alluded to during the course of his testimony. It is my belief that there is a problem. But clearly there is a perception among the database community that there is a problem. I know if I were to invest or I know if I were, you know, corporate management and I had capital to invest, I would be looking for new opportunities to diversify. And the concern that I have is all of these great achievements that really have come about because of database and access to information we will not maintain that here in the United States, we will not maintain the level of current data to give us a competitive advantage. And the kind of research that the academies have been interested in will be provided by our, you know, European data providers, data companies. That is the concern that I have.
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Now, I think that is a potential problem that impacts exactly what you are talking about because I sense that—and we are only starting to see in the aftermath much of what was accomplished in terms of the advances that I and others have alluded to was based on work that was protected prior to the Fist case. Now we find ourselves in uncharted waters here, and what I am concerned about is the potential for, again, these data—the database industry diversifying and not investing the kind of resources that are necessary to maintain that absolute current state of data and access to information that provides our scientific community and our economy the kind of advantages that we have enjoyed. I don't know. Would you care to comment or anyone for that matter?
Mr. WULF. Well, I could only repeat myself. We clearly have an innovation system in this country that works. It is an innovation system which is fed by the basic research done in our academic research universities. We just need to be very careful that we don't destroy that in the process. The point I tried to make in my oral testimony was——
Mr. DELAHUNT. Right, and just let me interrupt because we don't have a lot of time. But I agree with that. And I think you testified and it was my understanding that this particular draft that is before us was generated as a result of the various groups whom you testify in behalf of and others sitting down and trying to develop a consensus so that the concerns you express are addressed. Now, presumably, fine-tuning is required. But I guess the bottom line question is who is right? Is it Mr. Kupferschmid or is it Mr. Donohue? You know, is there a problem? If there is a perception of a problem, you know what, there is not a lot of folk that are going to be running out looking to invest in database.
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Mr. KUPFERSCHMID. If I could interject here, I mean there are actually numbers that bear that out. In 1996, the EU data base directive was passed. Since that time the percentage of U.S.-produced databases has shrunk from 69 percent to 60 percent .
Mr. DELAHUNT. Well, this is the kind of information I think that this Committee needs. And Mr. Donohue?
Mr. DONOHUE. Well, if you take the primary—the company that has really been behind a lot of this discussion, Reed Elsevier, they have made 20 some acquisitions since 1991, spent in excess of $7 billion and a lot more than that. Those are the numbers that I have here, and their operating margins are still annually over 20 percent. So one might understand why they want to protect their product. But they certainly think it is a good business because they keep expanding it every year and they are getting a hell of a return. I might buy some stock now that I am looking at this.
Mr. DELAHUNT. Well, I will take a look myself. But I guess my question is these new acquisitions, are they an effort to diversify to protect themselves from the kind of liability that I presume they fear that they have, so that, you know, if their stuff continues to get pirated or if any of it gets pirated they are out of—you know, they continue to survive. I don't know. Now, I know that you read that Wall Street Journal, you know, religiously. And maybe you can tell us whether those 19 acquisitions were an effort to diversify or are they just simply building on the so-called core business?
Mr. DONOHUE. Well, Congressman, if we were on their board we would have encouraged the acquisitions because they did diversify their fact base to attract a broader group of fact users. But that is not the question here and, as my colleague said, this isn't an argument about fact. This is an argument about structure and access to that fact. And what I am having difficulty with is the question of where is the problem? Now——
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Mr. DELAHUNT. Well, there was a problem in that Schoolhouse case. 74 percent, that web of laws that you were referring to in your testimony certainly didn't protect that individual.
Mr. DONOHUE. Well, then maybe we ought to go back and look at the case and maybe find out, maybe it didn't deserve to be pro-investigated. Look, I think this joint Committee has done a very useful thing here, because you are having what amounts to a colloquy on the subject, which—and I want to congratulate you on that and tell you I think that is essential and I think you have learned a couple of things, that we are worried about the litigation side of this, that we are very concerned about finding the problem before we get the solution, and that there is legitimate concern on the part of some people about going forward that they protect their assets. Well, what role should the Committee and the Congress have in that and what is in place to do it now, and I think it has been a good discussion and I appreciate the opportunity to participate.
Mr. KUPFERSCHMID. If I could respond. I think Mr. Donohue has done a marvelous job sort of redirecting the questions and staying on script. But this isn't about you know, one company. This isn't just about, Reed Elsevier. There are lots of other companies, a lot of mom and pop companies like Schoolhouse, like Berkshire Publishing, like Carfax, other smaller database producers that are having problems with database piracy. These are companies that really put all their money, all their investment into this one database and if this database is pirated they are out of luck and they are out of business. And so this is not just a one company issue. Like I said earlier, there are lots of members of CADP and they are all supportive.
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What I have heard today is that I honestly don't think we can come up with enough examples to ever satisfy Mr. Donohue. He refers to the occasional case. We have got lots and lots of cases and there are a lot of other cases that never make it into the courtroom because the database producers are worried about precisely what you are talking about, that people aren't going to invest in the company or invest in the database if they know how vulnerable the database is. And, you know, there are thousands of realtors out there worried about their databases being on pornography sites. It is a totally different type of concern here. But there is definitely a problem here that needs to be addressed.
Now, if Mr. Donohue doesn't want to recognize that, no matter how many examples we give, I just feel that we will never be able to satisfy him.
Mr. STEARNS. The gentleman's time has expired. We certainly are at a consensus we are not going to have a second round, and we are going to let Chairman Smith close. Oh, okay. Yes, okay. Someone has just come in. Ms. Lofgren, we welcome your questions.
Ms. LOFGREN. Thank you and apologies for my lateness. It is United Airlines' fault. Let me just ask, I guess Mr. Carson or whoever wants to answer it. This is not the first time that we have visited this issue. And when last we passed something through Judiciary, I filed a lone dissenting view that in my judgment the measure we passed was—didn't meet the constitutional standard. And actually I was sort of a fan of the sweat of the brow doctrine. I thought it was a very nifty little doctrine that served us well for many years. But we no longer have that available. And I just—I am still not getting how we can create a property right out of something that cannot be copyrighted. And how we are—how this solves this problem. Can anyone answer that for me?
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Mr. CARSON. The answer is that no one is proposing that you do that, Congresswoman Lofgren. This is not a property right. This is based on an unfair competition, misappropriation scheme which deals with wrongful use of someone else's database in competition with them. It is not an exclusive rights model such as you find in copyright.
Ms. LOFGREN. Well, I understand that. But ultimately I think it dodges the question, which is in order to protect something you have to have a property right that cannot be created, that I can see. I mean how do you get past that?
Mr. CARSON. You get past it by not giving anyone a property right. This bill doesn't create any property rights whatsoever. It is a right against unfair competition by people who use your material in the same realm that you are using it in direct competition with you in a way that threatens to destroy your ability to continue in business.
Ms. LOFGREN. Well, I think that is a great creative answer, but I don't think it really answers the question. I don't know if anyone else wants to address it but I think that is the meat of what we face here.
Mr. KUPFERSCHMID. Well, I will jump in here. I mean the bill itself in the prohibition itself, forgetting about the exceptions or exclusions in the bill, the bill itself has 10 requirements that any database producer must meet before their database even gets protected here. I mean that pales in comparison to previous legislation that has been out there, where legislation would prevent use or extraction. It covered the potential market here. It has got to be the functional equivalent in the same market. I mean that is a long ways from potential market or related market that were in previous bills. It doesn't cover use of data or information or accessing a database. All it does is cover making available a database in a way that causes commercial harm, and then commercial harm is even defined by a very high standard such that it has got to substantially threaten the incentive to produce the database to begin with. Along with lots of
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other—you know, there are nine other requirements here that I haven't even mentioned, so there is a very high standard in the bill. Then when you do include the exceptions and the exclusions here, it would be pretty difficult to prove that there has actually been a violation here.
Mr. DONOHUE. So what we have here then is a limited experience of a problem and a piece of legislation seeking to solve that limited problem which has 10 standards and therefore is probably not going to help very many people, and we have clearly a divided industry, database industry, looking at the legislation. I still think we have a solution looking for a problem, and I hope we can be very careful in what we do.
Mr. KUPFERSCHMID. With, these 10 criteria here we intended to try to attempt to address the Chamber and other people's concerns. In fact, when this whole process started back in 2001 the Chamber and the Libraries and the University Committee and others provided a document to both Committees, and I will quote exactly from that document in which they said they would support a true misappropriation bill. For example, one which closely follows the historic standards laid out in NBA v. Motorola which would be constitutional and would not stifle innovation, would not impede scientific progress and would not ultimately hurt the growth of exciting new database products.
Well, we heard the message 3 years ago, or 2 years ago. Here we are. We have got a misappropriation-based approach. One based on NBA v. Motorola, and we are still hearing the same message. It is a little frustrating because I am not sure what else we can do.
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Ms. LOFGREN. I am not sure there is anything you can do. Mr. Wulf, you looked like you wanted to say something.
Mr. WULF. Well, I just—since you weren't here earlier, let me repeat a little bit of what was in my oral testimony. It is estimated that half of the growth in the GDP is due to the innovation system, the advances in science and technology, two-thirds of the growth in productivity due to the advances in science and technology. I am just a little bit concerned here that a small amount of damage to that innovation system in order to protect some pretty isolated cases where this might be useful or appropriate is not the right trade-off.
Ms. LOFGREN. Thank you very much. And given the lateness of the hour, I will yield back the remainder of my time.
Mr. STEARNS. I thank the gentlelady. Mr. Smith will conclude. I will make just a general comment. Mr. Kupferschmid, I think you have made a very strong argument and passionate. Mr. Wulf is saying, you know, between the Digital Millennium Copyright Act, the Computer and Fraud Act, as well as I guess contract law dealing with trespasses, we should move very slow. So maybe just a comment to you is to more narrowly define, tailor your misappropriation statute and maybe come back again at it is a possibility.
But at that I would look to my distinguished Chairman, thank him again for his hospitality here having this joint hearing and allow him to have the last word.
Mr. SMITH. Thank you again, Mr. Chairman. Mr. Chairman, I may have detected a very narrow thread of agreement here. Admittedly it is probably only a nanometer wide, but it is there. And it is this, that no one denies that there are at least some databases that should be protected that are not protected. Mr. Donohue and Mr. Wulf feel that those are isolated cases and that we don't need legislation to address them because they are not as widespread as Mr. Kupferschmid and Mr. Carson believe.
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What I wanted to do, Mr. Carson and Mr. Kupferschmid, is to read part of your testimony or at least refer to part of your testimony and ask Mr. Donohue and Mr. Wulf to reply and then you can respond to their comments. The point here is that the proposed legislation does erect very high hurdles, very high standards that have to be met before anybody is liable for piracy of databases.
Mr. Carson mentioned in his written testimony that basically the legislation codifies the five elements of the Motorola case. Mr. Kupferschmid mentioned in his testimony that the draft legislation creates a narrowly focused prohibition that applies only if 10 criteria are met. So my question really for Mr. Donohue and Mr. Wulf is that, can you think of any example of someone who would meet all these requirements, all these criteria and still be liable for piracy of databases? In other words, aren't these pretty narrowly drawn and maybe your concerns are unwarranted?
Mr. Donohue first, then Mr. Wulf.
Mr. DONOHUE. Thank you, Mr. Chairman. I have observed during my recent tenure at the Chamber over 6 years the work of plaintiffs lawyers up close, and they can find the history of the world written on the head of a pin, and we are creating a piece of legislation with extraordinary penalties in it that will open up a new retirement program.
Mr. SMITH. If we set aside the penalties and just focus on the criteria though, are there any of those criteria that you feel are too broad?
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Mr. DONOHUE. I don't have the 10 criteria here sir but I would just say very specifically, if there is overwhelming evidence of economic and intellectual property loss because of behavior against databases I have not seen it. If it is there we want to see it and we would be helpful.
Mr. SMITH. Okay, good. Mr. Carson, can you respond very quickly or perhaps Mr. Kupferschmid?
Mr. CARSON. Mr. Chairman, I don't have fact patterns at my fingertips, maybe Mr. Kupferschmid does, where I can tell you I know of real world cases that would fall into this. Again there was the INS case, there was the NBA case. That is what these are taken from. So certainly there have historically been such cases.
Mr. SMITH. Exactly. Thank you.
Mr. Kupferschmid.
Mr. KUPFERSCHMID. Certainly the goal of this bill was to provide a very narrowly tailored misappropriation free riding type approach to database piracy, something that would address the concerns of the database user community while also providing fairly narrow protection. I think the bill comes pretty close to that mark and the cases that we have described, I think, in most cases although, I don't know all the facts in those cases—would be covered by the draft bill under those instances. I also don't think that any existing uses or the manner in which the database user community, make available databases would be altered all under this bill.
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Mr. SMITH. Okay. Thank you, Mr. Kupferschmid. Mr. Donohue, if I could ask a final favor of you. Could you get back to us, take a look at those criteria, because if we move ahead we might well want to narrow the bill some more. I don't know. I don't want to speak for the Chairman, but we would be interested in your views as to which of those criteria you feel are too broad.
Mr. DONOHUE. I would be glad to.
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Mr. SMITH. Okay. Thank you again, Mr. Chairman.
Mr. WULF. Let's see. Could I just jump in with a 10-second one here because I would second what Tom Donohue said. I would just like to add to that that we need to look at this in the light of the developments that have happened since the last time we went around this race track. Things have changed. The environment has changed, and so we need to be very careful that we take into account those changes.
Mr. SMITH. Okay. Thank you, Mr. Chairman.
Mr. STEARNS. I thank my distinguished colleague. And with that, we thank the witnesses very much for your enthusiastic, energetic testimony, and we look forward to continuing discussion.
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With that, the Committees are adjourned.
[The prepared statement of Mr. Dingell follows in the Appendix]
[The prepared statement of Mr. Shimkus follows in the Appendix]
[Whereupon, at 5:50 p.m., the Subcommittees were adjourned.]
A P P E N D I X
Material Submitted for the Hearing Record
PREPARED STATEMENT OF THE HONORABLE W. J. BILLY TAUZIN, CHAIRMAN, COMMITTEE ON ENERGY AND COMMERCE
Thank you Mr. Chairman for holding this hearing today. It is always a pleasure to work with my colleagues at the Judiciary Committee. I value the insights the members of your Committee bring to the issues over which we share jurisdiction.
The database issue has been around for some time now. I remember the first bill being introduced in the 104th Congress and reaching a peak of contention in the 106th Congress. At that time there was a stalemate between these two Committees. Each Committee passed its own bill - staking out its own position on the issue. Neither Committee was willing to move toward the other. When I took the gavel at Energy and Commerce and Chairman Sensenbrenner took over at the Judiciary Committee, we decided we would work through this issue in a different way. The two Committees have worked amicably towards a draft bill - and I believe this is a credit to the fine members on both Committees.
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So here we are today . . . We devoted 2 1/2 years of resources to get a draft piece of legislation and to get that legislation before the two Committees for a full and fair vetting of the issues. And that is what I expect today - a fair hearing on the issues involved. I do not expect the issue to be less contentious than it has been in the past but I do expect it will take on a new civility due to the cooperative nature in which the two Committees have been working.
We have a distinguished panel of witnesses with significant expertise on these issues. The witnesses on the panel have been active in the database debate over the last several Congresses and are no strangers to those of us who have followed the debate. I look forward to hearing your perspectives on the draft legislation and drawing on your expertise as we talk through the issues before us. I thank you all for being here this afternoon and yield back the balance of my time.
PREPARED STATEMENT OF REPRESENTATIVE BART STUPAK, SUBCOMMITTEE ON COMMERCE, TRADE AND CONSUMER PROTECTION
I appreciate this joint committee forum to discuss this bill- and want to express my concerns with moving forward with such legislation.
In today's information age, databases are the tools that make vast amounts of facts and information understandable and manageable.
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The facts the databases rely upon are public domain. Facts cannot be owned.
But this bill seeks to do just that- to grant the compiler of a database unprecedented ownership rights to facts.
Current law is sufficient to deal with the misappropriation of information or infringement upon creative works.
The broad opposition to this bill, ranging from consumer groups to database producers themselves, is very telling.
If a need existed for such legislation, surely multiple database producers would be clamoring for such a bill, rather than expressing major concerns.
To move this bill forward would be to move the flow of facts and information backwards, and would disadvantage consumers.
I certainly believe that this hearing is informative, but do not believe that any further steps should be taken on this bill to advance it.
Thank you.
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PREPARED STATEMENT OF REPRESENTATIVE BARBARA CUBIN
Thank you to both Chairmen for their commitment to working together on this issue and holding this hearing today. It is important that the discussion continue, as we seek to determine what, if any, remedy would be most appropriate.
I would also like to thank the distinguished panelists that have joined us today. Your testimony is valuable and essential in furthering the debate on database management and protections.
A well balanced policy in this and every realm is an important goal for Congress. While this debate has historically dead ended in its search for that balance, it does not mean we should forego our efforts altogether.
One's creation, original or compilation, should certainly be afforded rights and protections. It is equally important, particularly in today's world of ever changing and exponentially growing technological advances, that these protections not inhibit further development and available options.
Again, I thank the panelists and am certain that today's testimony will further illuminate the path that this legislation must take in a timely manner.
I thank the Chairman again and yield back the remainder of my time.
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PREPARED STATEMENT OF REPRESENTATIVE GENE GREEN
Thank you to our Chairmen and Ranking Members for holding this hearing on the need for expanded legal protection for databases. I appreciate our witnesses coming before us today to give us their views on this draft legislation.
This country has a long-honored tradition of considering factual information part of the public domain. In fact, the ability of scientists and researchers to have unrestricted access to this public information has contributed to the tremendous innovation on which this country's economic strength rests.
For several years now, the database industry has come to Congress with their concerns about database piracy and the effect that it will have on the industry's willingness to invest sufficiently in new products.
While I understand their concerns, my initial thought is that these concerns seem a little premature considering that the digital age has only contributed to the proliferation of databases. And, to date, I have not seen any real evidence of investment in databases being stymied.
Even if we assume that this threat to the database industry is real, I have questions about the necessity of enacting such a broad piece of legislation to protect them. In the past, the Energy and Commerce Committee has approved legislation to narrowly address this very issue, and I question why we are not taking a similar approach today.
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Again, I thank our witnesses for appearing before us today. I look forward to your testimony and the light that it will shed on this important issue.
PREPARED STATEMENT OF THE HONORABLE TED STRICKLAND, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO
Thank you Mr. Chairman. Briefly, I would like to express my reservations regarding the Database and Collections of Information Misappropriation Act. I have heard from a number of interested parties about their concerns with this legislation and I hope this hearing encourages Congress to continue thinking about legislation that would create broad new protections for databases.
In the 106th Congress, I supported H.R. 1858, the ''Consumer and Investor Access to Information Act of 1999.'' This bill was more narrowly written to create new protections against the selling or distributing of duplicated databases in interstate and foreign commerce. While H.R. 1858 would have offered new legal protections for database owners, these protections would not have limited the American public's access to information. It may be that additional protections for database owners are worthy of pursuit. However, facts that are part of the public domain should remain so and I hope we are careful to ensure we preserve the public's access to data and information and avoid unintended consequences as this debate continues.
I think the Database and Collections of Information Misappropriation Act of 2003 is too broad. I fear it would change our current information policy to a point where we could stifle innovation, hamper scientific progress and get in the way of development in the electronic commerce marketplace.
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Again, thank you Mr. Chairman.
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PREPARED STATEMENT OF CONGRESSMAN JOHN D. DINGELL
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Chairman Stearns and Chairman Smith, the debate over whether adequate legal protections exist to protect current databases and provide incentives to the creation of new and more valuable databases is an extremely contentious issue that has been debated in our respective Committees for several years. Databases are essential to ensuring the rapid search and retrieval of the enormous amounts of facts and other forms of information that are available, especially through the Internet. In fact, the Internet not only provides access to already created databases, but it has helped spur a remarkable growth in the number of databases, such as movie directories and loan comparison charts. Between 1990 and 2002, the number of database entries in the comprehensive Gale Directory of Databases has increased 147 percent. Moreover, the amount of information contained in such databases has increased 363 percent.
I note that this explosive growth in the number of databases has occurred despite the claims of the proponents of the draft legislation that ''no meaningful legal protection of databases currently exists.'' I find it dubious that companies would invest vast amounts of financial resources in developing new databases if legal protections were nonexistent.
In fact, significant legal protections already exist for databases. For example, the original selection, coordination, and arrangement of facts in a database are protected by copyright law. Additionally, databases already receive protection under the Computer Fraud and Abuse Act, the Digital Millennium Copyright Act, and various state laws such as trespass to chattels, breach of contract, and misappropriation.
Notwithstanding the legal protections available, limited gaps in current law may exist. If such gaps are found, it is incumbent upon Congress to take a focused legislative approach as we attempted to do in the 106th Congress with H.R. 1858, the ''Consumer and Investor Access to Information Act of 1999.'' This bill was narrowly crafted to provide limited protection to database producers against wholesale misappropriation of their work. Importantly, it would also have allowed the public to continue to have unfettered access to facts that are in the public domain.
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Unfortunately, the draft Database and Collections of Information Misappropriation Act of 2003 takes the opposite approach. It would create broad new rights for database owners and dramatically alter our current information policy. Much like its predecessors, the draft bill has serious flaws and would stifle the development of a robust electronic commerce marketplace. It would create a quasi-property right in facts themselves, granting the compiler of information an unprecedented right to control value-added, downstream uses of the resulting collection. It would also establish an unprecedented subpoena process that would undoubtedly lead to abuse.
I must caution those who support broad new protections for databases. Electronic commerce has prospered in the United States in part because of our basic information policy - that facts, the building blocks of all information products, cannot be owned. Facts are part of the public domain. They do not owe their origin to an act of authorship. It is important that facts remain available for everyone to use and that Congress does not legislate in a way that would restrict the public's access to facts.
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(Footnote 1 return)
17 U.S.C. §101.
(Footnote 2 return)
Emerson v. Davies, 8 F. Cas. 615, 619 (C.C.D. Mass. 1845).
(Footnote 3 return)
West Pub. Co. v. Lawyers' Co-operative Pub. Co., 79 F. 756, 772 (2d Cir. 1897).
(Footnote 4 return)
In re The Trademark Cases, 100 U.S. 82, 94 (1879).
(Footnote 5 return)
Bleistein v. Donaldson Lithographing Co., 188 U.S. 239 (1903).
(Footnote 6 return)
See e.g., Edward Thompson Co. v. American Lawbook Co., 122 F. 922, 924 (2d Cir. 1903)(focusing on ''skill and taste of the [plaintiff] in selecting or arranging'' materials); Lawrence v. Dana, 15 F. Cas. 26, 28, 4 Cliff. 1 (C.C.D. Mass. 1869)(''copyright may justly be claimed by an author of a book who has taken existing materials from sources common to all writers, and arranged and combined them in a new form, and given them an application unknown before, for the reason that, in so doing, he has exercised skill and discretion in making the selections, arrangement, and combination . . .'').
(Footnote 7 return)
See, e.g., Williams v. Smythe, 110 F. 961 (C.C.M.D. Pa. 1901); List Publishing Co. v. Keller, 30 F. 772 (C.C.S.D.N.Y. 1887).
(Footnote 8 return)
17 U.S.C. §101.
(Footnote 9 return)
See, e.g., Illinois Bell Tel. Co. v. Haines & Co., 683 F. Supp. 1204 (N.D. Ill. 1988), aff'd, 905 F.2d 1081 (7th Cir. 1990), vacated and remanded, 499 U.S. 944 (1991); Rural Tel. Serv. Co. v. Feist Publications, Inc., 916 F.2d 718 (10th Cir. 1990), reversed, 499 U.S. 340 (1991).
(Footnote 10 return)
See, e.g., Financial Info., Inc. v. Moody's Investors Serv., Inc., 808 F.2d 204 (2d Cir. 1986), cert denied, 484 U.S. 820 (1987); Eckes v. Card Prices Update, 736 F.2d 859 (2d Cir. 1984); Worth v. Selchow & Richter Co., 827 F.2d 569, 572–73 (9th Cir. 1987).
(Footnote 11 return)
499 U.S. 340 (1991).
(Footnote 12 return)
Id. at 346.
(Footnote 13 return)
105 F.3d 841 (2d Cir. 1997).
(Footnote 14 return)
The case also involved a claim of infringement of the copyrights in the broadcasts of the games. That claim was rejected by the court because alleged infringement involved reproduction only of the uncopyrightable facts from the broadcasts, and not of the expression or descriptions of the games that constituted the broadcasts. 105 F.3d at 847.
(Footnote 15 return)
248 U.S. 215 (1918).
(Footnote 16 return)
See 17 U.S.C. §301.
(Footnote 17 return)
105 F.3d at 852.
(Footnote 18 return)
''To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.'' U.S. Const., Art. I, sec. 8, cl. 8.
(Footnote 19 return)
''To regulate Commerce with foreign Nations, and among the several States . . .'' U.S. Const., Art. I, sec 8, cl. 3.
(Footnote 20 return)
100 U.S. 82 (1879).
(Footnote 21 return)
Id. at 93–94.
(Footnote 22 return)
Id. at 97.
(Footnote 23 return)
See 17 U.S.C. §107.
(Footnote 24 return)
§107(1).
(Footnote 25 return)
§107(3).
(Footnote 26 return)
§107(4).
(Footnote 27 return)
§107(2).
(Footnote 28 return)
See 17 U.S.C. §512 (limiting the liability of qualifying ISPs for copyright infringement).
(Footnote 29 return)
See 17 U.S.C. §110(2).
(Footnote 30 return)
See 17 U.S.C. §121.
(Footnote 31 return)
See 17 U.S.C. §512.