HYPERLAW REPORT OCTOBER 20, 1997 RE: I. ALERT HEARINGS ON NEW DATABASE PROTECTION BILL HR 2652 (LONG) [Note -- This Report Will be Revised and Updated. This is Version I.]
This report, or rather essay, is provided as food for thought, as Congress readies to ram through a database protection bill, one introduced last week.
West is back again attempting to push through Congress a database protection bill so as to protect its publications of non-copyrightable public domain information, now joined by its new ally, Reed Elsevier. The bill was introduced on October 9, 1996 and hearings are scheduled for October 23, just three days away, by the Subcommittee on Courts and Intellectual Property of the House Committee on the Judiciary. The report of the Copryight Office on this subject was silently released in August during the summer heat and Martha's Vineyard vacations of law professors.
Thomson/West and Reed Elsevier/Lexis are rushing to push through this legislation because they fear that the United States Court of Appeals for the Second Circuit will soon rule that West has no valid copyright in its citations or in its so called enhanced versions of court opinions. This will place an even hotter potato into the hands of the Subcommitte on Courts and Intellectual Property.
One reason this potato would be so hot is that this Subcommittee would appear to have jurisdiction to explore why the federal judiciary is dragging its heels on a public domain citation for court opinions, and, why, significantly, federal district courts (with two or three exceptions) continue to refuse to release to the public electronic versions of their court opinions five years after the courts began producing all opinions in electronic form.
These federal district court opinions are available in citable useable and comprehensive form only by two companies, the Canadian Thomson Publishing (West) and the English-Dutch company Reed Eslevier (Lexis). The other major publisher of federal case law is CCH, owned by the Dutch Company, Wolters Kluwer. However, last week it was announced that Reed Elsevier and Wolters Kluwer are merging which means that 95% of legal publishing will be tied into the copyright cartel established in 1988 by West and Lexis. One irony here, of course, is that when Thomson, Reed Elsevier, and Wolters Kluwer argue that United States legislation must be made consistent with European database provisions, they do no state that these same companies were the principle proponents for this protection in Europe.
Thus, one would question the description of the sponsor of this bill, Representative Coble in his remarks on the introduction of the bill:
"U.S. firms have been the world leaders in this field. They have
brought to market a wide range of valuable collections of information
that meet the information needs of businesses, professionals,
researchers, and consumers worldwide. But several recent legal and
technological developments threaten to cast a pall over this progress,
by eroding the incentives for the continued investment needed to
maintain and build upon the U.S. lead in world markets for electronic
information resources."
There is no question that the muscle behind the passage of this bill comes from Thomson/West and Reed Elsevier individually and through the trade association they dominate, the Information IndustriesAssociation.
The irony of the Subcommittees co-jurisdiction over the courts (which have had a long and deplorable tradition of leaving it to West to publish the authoritative and citable forms of court opinions) underscores the warped market incentives for the privatization of public domain governmental information which a database protection bill will solidify. In summary, providing the sweeping protection to databases of public information provides enormous incentives to private publishers to undermine permanent public archives of public information.
Yes, it is easy for the supporters to say that anyone can replicate a database by going back to the original source, but what if the original source -- the government -- no longer makes the information available in any practical legal way. Government originators does not concern themselves with their own archives because, as one reason, the private publishers provide free and discounted access to the originator of the data, thereby removing all incentive for the originator of the data to establish reasonable available comprehensive archives.
Another irony is that when this same subcommittee in 1992 (then named the House Subcommittee on Intellectual Property and Judicial Administration), held hearings on a bill to exclude copyright protections for certain legal protections, both West and its trade association argued against the bill for a number of reasons. First, they argued that the bill dismantled fundamental American laws. As Vance Opperman of West stated in his testimony to the Committee describing the Thomson Company which has yet to acquire West:
"Perhaps more disturbing it the motive of the primary proponent of H.R.
4426. Lord Thomson and his foreign-based Thomson Corporation. We have
all witnessed past efforts by foreign firms, acting under the guise of
the U.S. Subsidiaries they have bought up, to alter or dismantle
fundamental American laws for their own profits and at the expense of
American jobs and prosperity." P. 159
In 1992, the IIA further argued that "On Legal Grounds Congress Should Await Further Judicial Decisions Before Acting in Response to West v. Mead.". The IIA stated that that:
"Allowing time for the development and elaboration of the law
through judicial decisions would enable Congress to legislate if
it chose to do so, far more wisely that in could possibly do
today." There are now two appeals directly on this issue pending
before the Second Circuit and involving Thomson/West, but now
Thomson/West and Reed Eslevier (which has filed an amicus brief
supporting the position of Thomson/West) -- and, these companies
are desperate that the Congress Act before a definitive statement
is obtained from the Courts." p. 221.
Of course, in 1992, West was betting that no competitors could manage to place these matters sub judice in a forum outside of Minnesota. But thanks to Mathew Bender and HyperLaw, that did occur and it is now West that is concerned about a defnitive statement from the Second Circuit.
As information was prepared for this essay, another irony was apparent, which is that the role of database providers today is far different than it was in 1980. No longer does one need to go to Lexis/Nexis to locate information about pending legislation, for the information is available on Thomas, the Congressional Internet Site. In the 70's and 80's, anyone attempting to enter the on-line database market had two capital intensive barriers: (1) the cost of the main-frame computers systems and associated data center, systems, and support staffs and (2) the cost of creating or funding national communications networks (remember Tymnet). By, 1990, the personal computer reduced by orders of magnitude the capital required for (1) and by 1996, the Internet reduced the capital required for (2) by orders of magnitude. Sure, in the 70s and 80's these private database providers provided a valuable service. The question today is why would one use Westlaw or Lexis Nexis to obtain a recent SEC filing, a new United States Supreme Court opinion, or a just filed Congressional Bill when it is available on the Internet. The database providers had their days where capital alone provided protection -- now, they are asking Congress to provide protection for an industry that had evolved in its basic economics and this seems wrong. The market should prevail.
What this bill should be titled is the "Protection Bill the for Database Industry Dinosaurs." Some may object to this latest statement, but Tyson/Sherry (see below) I think betray some of the old concepts about what it costs to provide an "on-line service" whatever that means in 1997. They say in footnote 20 "Because the cost of setting up and operating an on-line service is significant, it is to be expected that the owner of a few databases would rather distribute them through another's on-line service and hence that the number of databases would grow faster than the number of on-line services." It seems to me that Tyson/Sherry do not get the new paradigm -- an owner of a database has no need for an on-line service to reach all information users. All they need is a link to or a web page on the Internet -- for $300 dollars a year in minimum costs, a database producer can reach all Internet users in the world. This presents a business challange to Lexis because it built its business on providing single access to multiple databases, many of which databases were and are copyrightable. But, those providers are going their own way, so where goes Lexis. Simple, to the United States Congree.
The last significant database protecteion legislative attempt, in 1995, was a midnight amendment to the Paperwork Reduction Act, which resulted in its quick withdrawal and with no one willing to admit to submission of the "West Amendment." Stunned by this defeat, West went back to the drawing boards and came back with a highly sophisticated approach which included formalistic studies, a copyright office study, industry funded professional analysis, campaign contributions, misnamed coalitions, and a broader international approach involving European legislation and treaty proposal. This is truly impressive and sophisticated effort.
One thing West learned from 1995 was not to have the bill percieved as a West bill, and it has tried to hide its fingerprints. But, they are everywhere, clearly on the Tyson/Sherry paper, and, we understand, that the day to day nagging lobbyists pestering the House Subcommittee staff are West lobbyists. What remains though is that this is special interest legislation driven by panicked companies who see the end of their 40% profit margins.
The principle intellectual support for the proposals appears to be the
Copyright Office August 1997 Study and the Tyson/Sherry study
commissioned by Thomson and Reed Elsevier and the Copyright Office
"study". The Tyson/Sherry study is a compilation of subjective opinion
and anecdotal observations and it studiously avoid references to the
protection of case law databases and appeals to the emotionalism of
databases for "finding the cures for cancer and aids and maintaining the
competitiveness of U.S. agriculture" -- and just plain ignores the case
law databases which are the root of the concerns by Thomson and Reed
Elsevier.
And, no wonder. The Tyson/Sherry study wanders off into economics never -never-land in its conclusion "In most cases a potential entrant can get data from the same source as the original firm, in which case there is no public policy need to allow the new entrant to free ride on the original firm's investment." But the bill doesn't provide an exemption where a new entrant cannot get data from the same source as the original firm, and, if Tyson/Sherry bothered to come into reality and try to obtain 20 year old court opinions complete with corrections and amendments from real world dusty, unorganized, and incomplete court archives, then perhaps a different result would be obtained. Interestingly, Tyson/Sherry added footnote (32-33) where they appear to say they do not really mean what they said. (I guess someone from West read a next to the last draft and insisted upon these footnotes._
I do say that I must admire the slight of hand and the references to database pirates and freeloaders. Perhaps Tyson/Sherry would wonder whether the pre-1988 executives of Lexis should have been subjected to a fine of "$500,000 or imprisonment for not more than 10 years" for copying court opinions from West books prior to 1988 because the data in the real world was not available from court records or perhaps Tyson/Sherry might contemplate whether Lord Thomson himself might be subjected to these fines and imprisonment because his Lawyers Cooperative executives in 1995 similarly lifted Texas case law reports from West books, for the same reason of unavailability.
Economists have the easiest ride for any profession, since they never seem to be called to account for the policies made in the name of their erudite conclusions. For example, we know that industry paid economists predicted that the West-Thomson merger would have no deleterious effect on competition. Cynics such as this writer said that the merger would result in higher prices (this has happened), lower quality (this has happened), and the firing and dislocation of employees (this has happened too), but, the economists do not seem to have at hand a theory to explain this common-sense result.
As to the bill, there are a lot of carrots thrown out there but this is a devious form of Halloween gift, for there are razor blades in each carrot. For example, "nothing in this chapter shall restrict any person from extracting or using information for the sole purpose of news reporting." Let's figure that one out. How does that help if the information is then placed in a database of a news organization. Or, another carrot is that "Nothing in this chapter shall restrict any person from extracting or using information for not-for-profit educational, scientific, or research purposes in a manner that does not harm the actual or potential market for the product or service referred to in section 1201." Of course, this is not going to help those academic law librarians who are attempting to buy data from the private sector -- they will now see prices going up maybe 20% a year.
I particularly like the proviso that one can use anothers database to
"verify" ones own. Let's see, in other words, those that are big enough
and already have databases can copy from each other (just as Lexis and
West are tied into cross licensing arrangments) but, this still keeps
the information oligopoly small. It is ok for West to verify it
attorney database from Martindale Hubbell because West already has a
database, but, a new entrant would in a sense not have the privilege.
There is nothing in the bill about abuse of the data protection laws, of legal fees and damages to someone subjected to overarching claims of database monopolists, of compulsory licensing, and even of the lack of a term on the protection. Moreover, the bill and its never-never land economists ignore the costs and delay that would be imposed on new database entrants attempting to litigate a belief that a database claim is invalid, and who do not wish to risk seizure of equipment and data and 10 year prison terms and half a million dollar sanctions because they do not believe that a single company, and is oligoploistic licensees, should monopolize the law.
Let's remember a few things. Original compilations are protected under current law. Original analysis in databases are protected under current law.
Anyone out there with a CD of telephone numbers or yellow page listings better get ready to burn them, or be prepared to spend ten years in jail.
Alan
Copyright 1997 HyperLaw, Inc. A reproduction license with attribution is permitted to all except that this license is not extended to the Thomson Corporation, Reed Elsevier, Walters Kluwer, the Information Industries Association, and any consultant, employee (other than non-management employees earning less than $100,000 a year and making the copy for their own use or use by other similar employees), agents, and/or attorneys of the foregoing. These persons may apply for a reproduction license by e-mailing me at the above address.
RESOURCES:
I.
The 1985 Paperwork Reduction Act
http://www.hyperlaw.com/hill3.htm WEST: A STUDY IN SPECIAL INTEREST
LOBBYING, The Hill, February 22, 1995, BY Doug Obey and Albert Eisele.
Full length article discussing defeat of West promoted bill to obtain
database protection legislation.
II. U.S. Copyright Office Report on Legal Protection for Databases
(August 1997)
http://lcweb.loc.gov/copyright/more.html#rpt
II.
STATUTORY PROTECTION FOR DATABASES
Laura D'Andrea Tyson and Edward F. Sherry
http://www.infoindustry.org/ppgrc/doclib/grdoc015.htm
http://www.infoindustry.org/ppgrc/doclib/grdoc016.htm
This report was funded by Thomson and Reed Elsevier.
III.
INFORMATION RE THE HOUSE
SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY
http://www.house.gov/judiciary/
B351A Rayburn HOB
Tel: (202) 225-5741
MR. COBLE, CHAIRMAN
Mr. Sensenbrenner Mr. Gallegly Mr. Goodlatte Mr. Bono Mr. Pease Ms. Lofgren Mr. Cannon Mr. McCollum Mr. Canady Mr. Frank Mr. Conyers Mr. Berman Mr. Boucher
IV.
HEARING DATE:
Subcommittee on Courts and Intellectual Property
9:30 AM -- 2226 Rayburn H.O.B.
http://thomas.loc.gov/cgi-bin/bdquery/z?d105:h.r.2652:
Hearing regarding H.R. 2652, to amend title 17, United States Code, to prevent the misappropriation of collections of information; and H.R.____, the "Vessel Hull Design Protection Act."
V.
HR 2652
http://thomas.loc.gov/cgi-bin/bdquery/z?d105:h.r.2652:
Bill As Downloaded From Thomas
HR 2652 IH
105th CONGRESS
1st Session
To amend title 17, United States Code, to prevent the
misappropriation of collections of information.
IN THE HOUSE OF REPRESENTATIVES
October 9, 1997
A BILL
To amend title 17, United States Code, to prevent the
misappropriation of collections of information.
[Italic->] Be it enacted by the Senate and House of
Representatives of the United States of America in Congress
assembled, [<-Italic]
SECTION 1. SHORT TITLE.
This Act may be cited as the `Collections of Information
Antipiracy Act'.
SEC. 2. MISAPPROPRIATION OF COLLECTIONS OF INFORMATION.
Title 17, United States Code, is amended by adding at the end the
following new chapter:
`CHAPTER 12--MISAPPROPRIATION OF COLLECTIONS OF INFORMATION
`Sec. `1201. Prohibition against misappropriation. `1202. Permitted acts. `1203. Exclusions. `1204. Definitions. `1205. Relationship to other laws. `1206. Civil remedies. `1207. Criminal offenses and penalties. `1208. Limitations on actions. `Sec. 1201. Prohibition against misappropriation `Any person who extracts, or uses in commerce, all or asubstantial part of a collection of information gathered, organized, or maintained by another person through the investment of substantial monetary or other resources, so as to harm that other person's actual or potential market for a product or service that incorporates that collection of information and is offered by that other person in commerce, shall be liable to that person for the remedies set forth in section 1206. `Sec. 1202. Permitted acts
VI.
THE INTRODUCTION OF THE COLLECTIONS OF INFORMATION ANTIPIRACY ACT --
HON. HOWARD COBLE (Extension of Remarks - October 09, 1997)
http://thomas.loc.gov/cgi-bin/query/D?r105:4:./temp/~r105RSl6::
[Page: E2000]
--- HON. HOWARD COBLE in the House of Representatives THURSDAY, OCTOBER 9, 1997 •Mr. COBLE. Mr. Speaker, today I am proud to introduce the Collections of Information Antipiracy Act, a bill to encourage continued investment in the production and distribution of valuable new collections of information. •Electronic collections, and other collections of factual material, are absolutely indispensable to the American economy on the verge of the new century. These information products put a wealth of data at the fingertips of business people, professionals, scientists, scholars, and consumers, and enable them to retrieve from this haystack of information the specific factual needle that they need to solve a particular economic, research, or educational problem. Whether they focus on financial, scientific, legal, medical, bibliographic, news, or other information, collections of information are essential tools for improving productivity, advancing education and training, and creating a more informed citizenry. They are also the linchpins of a dynamic commercial information industry in the United States. •Developing, compiling, distributing, and maintaining commercially significant collections requires substantial investments of time, personnel, and money. Information companies must dedicate massive resources when gathering and verifying factual material, presenting it in a user-friendly way, and keeping it current for and useful to customers. U.S. firms have been the world leaders in this field. They have brought to market a wide range of valuable collections of information that meet the information needs of businesses, professionals, researchers, and consumers worldwide. But several recent legal and technological developments threaten to cast a pall over this progress, by eroding the incentives for the continued investment needed to maintain and build upon the U.S. lead in world markets for electronic information resources. •I recently received a report from Dr. Laura D'Andrea Tyson, former National Economic Advisor to the President and former Chair of the White House Council on Economic Advisors. Dr. Tyson's study demonstrates strong economic reasons for providing adequate statutory protection for the data base industry, and points out that failure to act may result in adverse effects on technological progress, on economic growth, and possibly on the research, education, and scientific communities. Noted authors and scholars have also endorsed the need to provide some protection to collections of information, to prevent freeloaders from appropriating the fruits of others' investments. •Here in the United States, the 1991 Supreme Court decision in Feist Publications versus Rural Telephone Service Co. marked a tougher attitude toward claims of copyright in data bases. While reaffirming that most--although not all--commercially significant collections of information satisfy the `originality' requirement for protection under copyright, the Court emphasized that this protection is `necessarily thin.' Several subsequent lower court decisions have underscored that copyright cannot stop a competitor from lifting massive amounts of factual material from a copyrighted collection to use as the basis for its own competing product. Producers are concerned that some of these cases may also cast doubt on the ability of a proprietor to use contractual provisions to protect itself against unfair competition from such free riders. •In cyberspace, technological developments represent a threat as well as an opportunity for collections of information, just as for other kinds of works. Copying factual material from another's proprietary collection, and rearranging it to form a competing information product--just the kind of behavior that copyright protection may not effectively prevent--is cheaper and easier than ever through digital technology that is now in widespread use. •When all these factors are added together, 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, and thus encourage continued investment in the production and distribution of valuable commercial collections of information. •While copyright, on the Federal level, and State contract law underlying licensing agreements remain essential for protecting the enormous investment in collections of information, there are gaps in the protection that can best be filled by a new Federal statute which will complement copyright law. The Collections of Information Antipiracy Act would prohibit the misappropriation of valuable commercial collections of information by unscrupulous competitors who grab data collected by others, repackage it, and market a product that threatens competitive injury to the original collection. This new Federal protection is modeled in part on the Lanham Act, which already makes similar kinds of unfair competition a civil wrong under Federal law. Importantly, this bill maintains existing protections for collections of information afforded by copyright and contract rights. It is intended to supplement these legal rights, not replace them. •The Collections of Information Antipiracy Act is a balanced proposal. It is aimed at actual or threatened competitive injury from misappropriation of collections of information or their contents, not at uses which do not affect marketability or competitiveness. The goal is to stimulate the creation of even more collections, and to encourage even more competition among them. The bill avoids conferring any monopoly on facts, or taking any other steps that might be inconsistent with these goals. •This bill differs dramatically from H.R. 3531, introduced in the last Congress by then-Chairman Carlos Moorhead. H.R. 3531 proposed to enact a new form of sui generous copyright protection of data bases. This bill is a minimalist approach grounded in unfair competition principles as a complement to copyright, and the damage that can be done from substantial copying of collections of information. •In drafting this bill, I was particularly mindful of the concerns of the library, scientific research, and educational communities. Concerns raised in response to the introduction of H.R. 3531 last year by these groups warned of the dramatic consequences that could result from legislation in this area. My staff and I heard these concerns, through personal meetings and through the Copyright Office report on this issue presented to the Congress earlier this year. This bill alleviates those concerns by specifically allowing access and use for those purposes, while still providing necessary protection to ensure continued investment and production of collections of information. •This legislation provides the starting point for legislative activity on an important and complex subject. I look forward to hearing the suggestions and reactions of interested parties and of my colleagues at a hearing later this month. ::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::: :: Alan D. Sugarman Federal Appeals on Disc tm CD-ROM :: :: President Opinions of US Courts of Appeals :: :: 1993 to Date - All Circuits :: :: HyperLaw, Inc. Registered Trademark :: :: P.O. Box 1176 DO NOT SHORT CIRCUIT YOUR CLIENTS :: :: New York, NY 10023 :: :: sugarman[_at_]hyperlaw.com 212-787-2812 212-496-4138(fax) :: :: :: :: http://www.hyperlaw.com :: :: :: :: /// /// /// [R] :: :: /// /// /// :: :: /// /// /// :: :: //////////////// /// :: :: //////////////// /// :: :: /// /// /// :: :: /// /// /////////// :: :: /// /// /////////// :: :: :: :::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::::Received on Mon Oct 20 1997 - 20:46:23 GMT
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