IP: EFF on new database protection bill in the Senate

[Dave Farber <farber () cis upenn edu>]

Date: Wed, 15 Jul 1998 17:55:20 -0400
From: Alexander Fowler <afowler () eff org>
To: declan () well com
Subject: New Database Protection Bill in the Senate


Hi Declan,


I thought you might be interested to learn that last Friday, July 10, 1998,
Senator Grams (R-MN) introduced S. 2291, "The Collections of Information
Antipiracy Act."  Sounds familiar, right?  Well, it should since this is
the proposed companion legislation to a controversial bill under the same
name that already passed the House this year (H.R. 2652).


Both bills are intended to add to existing copyright and misappropriation
law new protections on access to and use of compilations of information
(read "databases").  Such protections are very similar to those once
available under the so-called "sweat of the brow" doctrine of copyright
law.  It is interesting to note that "sweat of the brow" arose early in
this century, was the object of persistent scholarly criticism, fell from
favor by the 1980s, and in 1991 was held to be unconstitutional by the
Supreme Court.


As has characterized many of the develops with regard to H.R. 2652, this
new Senate bill slipped into the Congressional record without much fanfare
or discussion.  Proponents of these bills, which include a few, very
powerful database companies like Reed-Elsevier and West Publishing, will
tell you this is because they successfully resolve a noncontroversial set
of issues.  However, this is far from the truth, as a wide array of
commercial and noncommercial groups oppose both bills, including AT&T, MCI,
AAAS, IEEE, ACM, EFF, to name only a few.


Given Congress' sporadic schedule this year, my concern is that unless more
pressure is put on the Senate to convene hearings on this issue, it is
likely that something could pass the Congress and go to the President much
like the "No Electronic Theft Act" (H.R. 2265) did late last year.


I'm forwarding you a copy of a very well written review of the myths and
facts about The Collections of Information Antipiracy Act that was produced
by the Information Technology Association of America.


Sincerely,


Alex Fowler
EFF




MYTHS AND FACTS ABOUT H.R. 2652 --
THE COLLECTIONS OF INFORMATION ANTIPIRACY ACT


[Produced by the Information Technology Association of America,
http://www.itaa.org/database.htm, last updated on June 15, 1998.]




Myth: The database industry has suffered since the Supreme Court
found "sweat of the brow" protection for compilations
unconstitutional in 1991.


Fact: The database industry has grown at a phenomenal rate since
1991:


   Between 1991 and 1997, the number of database increased
   from 7637 to 10338, an increase of 35%;


   Between 1991 and 1997, the number of files contained
   within databases increased from 4 billion to 11.2 billion, an
   increase of 180%;


   Between 1991 and 1996, the number of online searches
   increased from 44.4 million to 79.9 million, an increase of
   80%.


Just as significant as the growth of the industry is its changing
structure. In 1977 government, academic, and non-profit entities
produced 78% of all databases, while the private sector produced
only 22%. By 1991, the government, academic, and non-profit
share dropped to 30%, while the private sector share increased to
70%. Since 1991, this privatization has continued; by 1997, the
government, academic and non-profit share had fallen to only 22%,
while the private sector share soared to 78%. The shift in market
structure, combined with the increase in the absolute numbers of
databases, indicates that private investment in database creation has
increased since Feist.


Myth: H.R. 2652 will not lead to an increase in the price of
databases.


Fact: Between 1986 and 1996 the consumer price index increased
44%, and the price of health care increased 84%. The price of
subscriptions to scholarly journals, which consist of "collections of
information" and often are published by commercial firms,
increased by 148%. If the price increased this much when there
was no special database protection and competition was possible,
imagine how much it will increase after H.R. 2652 grants database
compilers a legal monopoly.


Myth: H.R. 2652 is necessary to ensure database publishers with
an adequate return on their investment.


Fact: The Dutch-British conglomerate Reed Elsevier, one of the
major supporters of H.R. 2652, publishes many scientific
"collections of information." The profit margin of Reed Elsevier's
science section in 1996 was almost 42% -- even higher the
Microsoft's profit margin of 35.5%!


Myth: Existing law does not provide databases with sufficient
protection.


Fact: The proponents of H.R. 2652 base their entire argument on
one case: the Eleventh Circuit's decision in Warren Publishing. We
believe that the Eleventh Circuit misapplied the copyright law in that
case, and reached the wrong conclusion. But the courts have reached
the right conclusion in the vast majority of the copyright decisions
relating to databases -- cases never mentioned by H.R. 2652's
proponents. For example, the Ninth Circuit recently found that
copyright did reach the CPT database of the American Medical
Association -- another of H.R. 2652's supporters. The Ninth Circuit
withheld protection from the database, however, because the AMA
misused its copyright. As it seeks to regain protection through
H.R. 2652, the AMA neglects to mention that it disqualified itself
from existing protections by virtue of its misconduct.


Furthermore, database publishers can rely on numerous other forms
of protection, including trademark, trade secret, contract, state
common law misappropriation, and technological protection. It
should be noted that the Senate recently adopted S. 2037, which
bolsters technological protections by prohibiting their circumvention.


Nonetheless, unfair commercial predation of databases should not be
tolerated, and a statute directed specifically at this problem merits
serious consideration.


Myth: H.R. 2652 simply tries to restore the status quo prior to the
Supreme Court's 1991 Feist decision finding "sweat of the brow"
protection unconstitutional.


Fact: The "sweat of the brow" doctrine -- granting copyright
protection to the facts in a compilation as a reward for the effort
invested in gathering the facts -- was never the prevailing approach
for the protection of compilations; it existed in tandem with the more
mainstream approach of protecting only the expression in the
compilation. Sweat of the brow began to decline with Congress'
adoption of the Copyright Act in 1976, and it was in full retreat by
the 1980's. The Feist decision in 1991 was just the final blow. In
short, H.R. 2652 tries to turn the clock back more than twenty years;
since the 1976 Act, database publishers have known they could not
rely upon the sweat of the brow doctrine.


Moreover, H.R. 2652 is far broader than the "sweat of the brow"
doctrine. Courts created sweat of the brow as a stop gap measure to
protect a narrow class of directories in which there was no
protectable expression. H.R. 2652, by contrast, applies to
collections of information even if they qualify for copyright. For this
very large class of databases, H.R. 2652 allows publishers to charge
more with no off-setting societal benefit. Further, H.R. 2652
prohibits transformative uses of the information -- re-use of the
information in different kinds of products. Sweat of the brow was
not applied in such a far reaching manner. H.R. 2652 thus
represents a radical departure from the way information traditionally
has been treated in the country.


Myth: H.R. 2652 is required to assure protection for U.S.
databases in Europe.


Fact: While the European Database Directive will deny sui generis
protection for U.S. databases if similar protection does not exist
here, the Directive will still afford copyright protection to those U.S.
databases. And since several European countries currently do not
offer adequate copyright protection for databases, the Directive will
actually improve matters for U.S. databases relative to the status
quo. In other words, U.S. companies will be no worse off that
they are now, and indeed might be better off. Also, U.S. companies
can receive sui generis protection if they simply establish
subsidiaries in Europe -- something many of the proponents of H.R.
2652 already have. Finally, as its proponents have admitted, H.R.
2652 probably would not satisfy the Database Directive's
reciprocity requirement, because it is based on a tort rather than a
property approach.


In any event, we should not let the European Community dictate
what our laws should be. To the contrary, we should challenge the
Database Directive's reciprocity provision before the World Trade
Organization.


Myth: H.R. 2652 will protect small businesses.


Fact: While H.R. 2652 may benefit a few small database
publishers, it will harm far more. Most small database publishers are
value added publishers; they extract information from existing
databases and add value by inserting new information or arranging
the information in a new way. H.R. 2652 will allow the large
upstream database publishers to drive the small value-added
publishers out of business. Thus, it should come as no surprise that
the driving forces behind this legislation are Reed Elsevier and
Thomson (the Canadian company which bought West Publishing) --
two of the world's largest publishing houses.


Myth: H.R. 2652 will not harm research activities.


Fact: H.R. 2652 is opposed by the American Association for the
Advancement of Science, the Institute of Electrical and Electronics
Engineers, and many universities because of the negative impact it
will have on the collaborative methodology of research. Currently,
observation made by different scientists in different institutions are
pooled together in databases which form the basis for analysis by
still other scientists. H.R. 2652 will create disincentives for the
sharing of data, which in turn will retard the advancement of
knowledge. H.R. 2652 will also erect barriers to the writing of
survey articles and textbooks; when the author of a textbook extracts
data from a scientific article, he is harming the "potential market" for
a product including that data -- a textbook written by the scientist
who wrote the article.


To be sure, H.R. 2652 does include an exception for non-profit
research, but that exception is circular. It applies only if the
extraction or use does not harm the actual or potential market for the
information -- the basic test for all extractions and uses under the
bill, and a test which as noted above many research uses cannot
meet.


Myth: H.R. 2652 will not harm businesses outside the database
industry.


Fact: H.R. 2652 will increase the costs of information for all
businesses. Additionally, H.R. 2652 will allow database publishers
to control the use of information by its business customers.
Currently, businesses buy information such as customer lists and
reconfigure them for internal use. Under H.R. 2652, a database
publisher can claim that this recompilation harms a "potential market"
for its database. Further, companies which rely on scientific will
suffer from H.R. 2652's adverse impact on science.


Myth: H.R. 2652 does not protect information -- just collections of
information .


Fact: H.R. 2652 prohibits the extraction or use of a quantitatively or
qualitatively ubstantial part of a collection of information. A
relatively small amount of information could be considered
"qualitatively substantial." Moreover, the second comer would have
no way of knowing in advance what information he could extract
before crossing the line; thus, as a practical matter, H.R. 2652
affords protection to a relatively small amount of information within
a collection.


Myth: H.R. 2652 contains sufficient safeguards against monopoly
pricing by sole source databases.


Fact: The only safeguard provided by H.R. 2652 is a savings
clause that the antitrust laws apply to sole source databases. This
provides little comfort, given the expense and duration of antitrust
litigation and the prevalence of sole source databases. Most database
markets are so small that they are served by one supplier.


Myth: Potential adverse impacts of H.R. 2652 have been grossly
exagerrated because it does not prevent people from gathering the
information themselves.


Fact: In many cases, the publisher of the database controls the
underlying information, making independent compilation
impossible. For example, one of the databases the AMA seeks to
protect is its membership list. The AMA maintains such a list as part
of its function as the organization that represents and regulates the
medical profession in the U.S.; it would be a practical impossibility
for another entity to create a list of all the doctors in the U.S. from
scratch. Similarly, the New York Stock Exchange maintains
information on all the stock quotations as part of its function of
administering the stock market. There is no practical way for an
entity other than the stock exchange to assemble a complete set of
stock quotes. Additionally, historic data often is available only from
publishers who have been in business for a long time; old court
decisions are available only from West and Lexis-Nexis, which
copied West's databases. Ironically, Lexis-Nexis, part of Reed
Elsevier, now seeks to prevent the very sort of copying that allowed
it to create its database in the first place.


Beyond the impossibility of recreating a database in some cases,
there is the fundamental information policy question of whether we
want to require people to invest time and energy in recollecting
information that has already been collected -- reinventing the wheel.
For over two hundred years, the answer has been no. The Senate
must decide if now is the time to change this bedrock principle.








~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
  Alexander Fowler
  Director of Public Affairs
  Electronic Frontier Foundation


  E-mail: afowler () eff org


  Tel/Fax: 202 462 5826 (East Coast)
  Tel: 415 436 9333; Fax 415 436 9993 (West Coast)


  You can find EFF on the Web at <http://www.eff.org>


  EFF supports the Global Internet Liberty Campaign
  <http://www.gilc.org>


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~