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Database bill raises constitutional flags

Congress once again is faced with the question of whether database owners should get historic new protections for the public facts they compile and resell.

6 min read
Congress will tackle one of the most important issues of the Information Age this session--whether database owners should get historic new protections for the public facts they compile and resell.

From Web crawlers to medical journal articles, nationwide court rulings, phone directories, and stock quotes, electronic database operators don't own copyrights on the facts they catalog. Rather, profits stem from aggregating and updating data that comes from original sources and then making it instantly available to paying customers.

But with the proliferation of the Internet and CD-ROMs, which make copying data a cinch, those with heavy investments in the information market want new safeguards for their current businesses and future ventures. And they just might get them.

As promised, Rep. Howard Coble (R-North Carolina) and Sen. Orrin Hatch (R-Utah) are once again spearheading legislation to protect the "brow sweat" and deep pockets of database creators and publishers, such as WestLaw or Reed Elsevier, which owns major periodicals, and Lexis-Nexis.

"Developing, compiling, distributing, and maintaining commercially significant collections requires substantial investments of time, personnel, and money," Coble said on the House floor last month when he reintroduced the Collections of Information Antipiracy Act. "The bottom line is clear: it is time to consider new federal legislation to protect developers who place their materials in interstate commerce against piracy and unfair competition."

The bill would prevent extracting all or a substantial part of a collection of information if the action would "cause harm to the actual or potential market" for the owner of the database. Violators could face a fine of up to $250,000 for each offense and five years in prison.

This is Coble's third attempt to get his bill passed. It was scrapped last session during last-minute negotiations that ushered the Digital Millennium Copyright Act into law. After fierce opposition by academic and industry groups, a similar proposal, known as the sui generis database treaty, also was rejected by delegates at the World Intellectual Property Organization's (WIPO) Diplomatic Conference in December 1996.

Passage of the Collections of Information Antipiracy Act would be a boon to powerful database owners who were first to the market. But like past efforts, the new legislation faces opposition. Researchers, a variety of industries, and Net search directories say the act would give a select group of companies an unprecedented grip--on everything from usage rights to price setting--on the information they gather. Engineers, scientists, and product developers often have used free, published material to foster new creations.

Some foes worry the new law could even apply to the Internet white pages directory for ".com," ".net," and ".org" sites--meaning domain name registrar Network Solutions could essentially copyright the entire Net. However, the act does attempt to prevent this scenario by exempting from the protections "information gathered, organized, or maintained to address, route, forward, transmit, or store digital online communications or provide or receive access to connections for digital online communications."

Still, if Netizens don't pay attention to this critical debate, they could face an electronic toll gate each time they try to access information assembled and indexed by a third party, opponents of the bill contend.

"We're pretty scared. The way we believe it will affect end users is that commercial database access fees, which already are high, will go higher," said Dan Burk, an associate law professor at Seton Hall University, who focuses on cyberspace issues. "Any collection of information that has value, that someone has put effort into creating, could be covered by this."

U.S. courts have consistently held that database compilation isn't protected by copyright, according to Burk.

In Feist Publications Inc. vs. Rural Tel. Service Company, the Supreme Court held that a phone company's white pages directory could not be copyrighted, and therefore other entities could duplicate and repackage the names, addresses, and telephone numbers found in public phone books. But Coble's bill would create a brand-new form of intellectual property protections for collections of information that have never existed in the United States before, Burk said, and could help database creators get past the Feist ruling.

The Collections of Information Antipiracy Act does include exceptions for nonprofit use, scientific research, education, and other "reasonable uses," but again only if the extraction doesn't "harm" the database owner's current or future business and is not used commercially.

Although the act doesn't apply to information gathered and offered by the government, commercial database operators can guard this data if it's in their collection.

Legal experts say, however, that any use of a database without payment could be seen as a "threat" to an information harvester's bottom line. Even the Clinton administration has expressed concerns about the constitutionality of Coble's past proposal. White House officials were concerned that the bill lacked a "balancing mechanism" to protect the rights of the public to access information.

"We believe that there should be effective legal remedies against 'free riders' who take databases gathered by others at considerable expenses and reintroduce them into commerce as their own," Andrew Pincus, general counsel for the Commerce Department, wrote in a letter to Senate leaders last summer. "At the same time, the administration has a number of concerns with [the bill], including the concern that the Constitution imposes significant constraints upon Congress's power to enact legislation of this sort.

"The administration is concerned that aspects of [the legislation] may increase transaction costs in data use," he continued. "Congress should carefully consider how encompassing 'potential markets' may affect entrepreneurs who develop new products and services that add significant value and do not compete directly with the original."

Other critics of Coble's bill say the carve-outs don't go far enough. For example, Reed Elsevier not only owns databases, but also dominates the scientific publishing market. Under Coble's bill, such a company could control the distribution of the facts in the articles it owns.

"This bill will allow database publishers to exercise greater control over downstream uses. They would be able to control a copyright on a scientist's article, for example, and prevent him from reusing his own data," said Jonathan Band, an attorney with Morrison & Foerster, who worked on the Feist case and now represents the Online Banking Association, which opposes the Coble bill.

"In many cases there is no other source of information other than the original producer, such as the New York Stock Exchange--where else can you get that information originally except from the New York Stock Exchange?" he added. "This bill will allow companies in niche after niche to have monopoly control over what should be public information."

But an attorney with the exchange said this scenario is not true regarding the NYSE. "There are other markets that trade our stocks and all produce prices that they index," said the lawyer, who asked not to be named. He added also that NYSE could never hoard its data, saying, "We're are pervasively regulated--this could never happen."

Despite the frenzy surrounding the Senate impeachment trial, other members of Congress are jumping into this intellectual property debate. Sen. John McCain (R-Arizona) has introduced the Trading Information Act to ensure that stock information is "freely and readily available to the public through all media of mass communication."

Hatch also hasn't decided which course he will take. On the Senate floor last month he proposed several possibilities, including the Database Fair Competition and Research Promotion Act, which makes it a crime to duplicate a database "collected and organized by another person in a database that competes in commerce with that other database." Unlike Coble's bill, this legislation doesn't protect database owners' "future" businesses and makes broad exceptions for research, news gathering, and science.

"Indeed, it is the information [American database providers] collect that allows us to predict the weather, to treat disease, to preserve our national security, to use computers to communicate over global networks, like the Internet, to travel, to buy a home, and even to watch the evening news," Hatch said on the floor of the Senate. "I intend this to be a high priority in the Judiciary Committee this year and intend to move forward with hearings and timely consideration of appropriate legislation."

Database companies, for one, are happy to see that their interests are a priority in both houses. Without new protections, they say there is no motivation for them to collate and update facts so that computer users can easily plow through information.

"Under Coble's bill, anybody can do the exact same thing we do--all we ask is that they not steal the information from us whether it be online, on a CD-ROM, or in print," said Judi Schultz, public relations manager for Lexis-Nexis. "The incentive to keep publishing these materials is diminished if you just know it's going to be stolen over and over again."

But adversaries say this time around, commercial interests could win out over public access.

"That is what is at stake," said Seton Hall's Burk, "access to information in the future including books, articles, and Web sites."