UNITED STATES OF AMERICA September 28, 1998 The Honorable Tom Bliley Dear Chairman Bliley: The Federal Trade Commission is pleased to have this opportunity to offer this comment concerning Title V of H.R. 2281, the Collections of Information Antipiracy Act.(1) The Commission is responding to your September 25, 1998 letter also signed by Ranking Member John D. Dingell, requesting agency views on Title V of H.R. 2281 as an official request of a Congressional Committee, see Commission Rule 4.11(b), 16 C.F.R. § 4.11(b). Collections of information, such as databases, play an important role in promoting innovation and advancing knowledge in the information age. Further, the emergence of new digital technologies has greatly increased the accessability and usefulness of many databases. However, these same technologies have also facilitated opportunities for piracy and misuse. Thus, the question whether the law continues to provide adequate incentives for database owners both to produce databases and to maintain sufficient access to those databases presents an important public policy challenge. This challenge is further complicated by the ongoing nature of innovation, which requires both protecting the incentives of those who are first to compile a particular type of database and preserving the incentives of those who seek to transform existing databases into new, useful compilations or other products. The Commission has considerable experience formulating policy and remedies involving similar kinds of challenges. During the Commission's 1995 Hearings on Global and Innovation-Based Competition, industry, academia, and legal practitioners provided extensive testimony concerning the intersection of competition, intellectual property, and innovation policy. And, in recent cases such as In re Softsearch Holdings, Inc.(2) and In re Automatic Data Processing, Inc.(3) the Commission has considered the potentially anticompetitive effects of consolidation that would increase market power within database markets. Drawing from these and other experiences, this comment is intended to provide an additional perspective on the competition issues raised by the proposed legislation and its implications for sustained innovation in the database industry. Additional legal protections for databases may well be warranted, especially in light of the ease of piracy of some databases. H.R. 2281 provides an important step toward appropriate protections for databases. This comment identifies a few areas of concern that may warrant further study prior to any enactment of the proposed bill, however. This comment contains a brief overview of H.R. 2281, a discussion of contemporary intellectual property and competition policy in light of the specific issues raised by the bill, specific provisions of H.R. 2281 that could raise competition concerns, and the House Judiciary Committee's suggestion that the appropriate response to anticompetitive behavior by sole-source providers can be found in the antitrust laws and, in particular, the essential facilities doctrine. This comment cautions that policies that further entrench the market power of single-source data providers could have an unintended, undesirable impact on competition and innovation because of the significant potential for anticompetitive conduct in single-source database markets.
H.R. 2281 is designed to provide additional legal protections to collections of information that are not entitled to protection under copyright law following the Supreme Court's decision in Feist Publications v. Rural Telephone Services, which abolished "sweat of the brow" copyright protection for non-creative, factual compilations.(4) Although H.R. 2281 is based on a misappropriation model,(5) the bill addresses core issues similar to those that arise in the context of intellectual property policy, as well as antitrust policy. These issues involve how best to protect both the ability of initial innovators to realize returns on their investments in developing a database and the ability of next-generation innovators to access databases to serve as building blocks for ongoing innovation competition. The bill defines a collection of information as "information that has been collected and has been organized for the purpose of bringing discrete items of information together in one place or through one source so that users may access them."(6) Information includes any "facts, data, works of authorship, or any other intangible material capable of being collected and organized in a systematic way."(7) H.R. 2281 provides civil and criminal remedies for any substantial use of or extraction from a collection of information that harms the actual or potential market of the owner of the collection, if the collection required an investment of substantial resources to compile or maintain.(8) However, the bill does not restrict an individual from using or extracting any single item of information or insubstantial part of a collection.(9) Nor does it prohibit an individual from independently gathering information(10) or using a database to verify the accuracy of an independently gathered collection of information.(11) The bill excludes from protection computer software and collections of information that are gathered, organized, or maintained by a government entity.(12) The bill also excludes from protection extraction or use of a substantial amount of data that occurs more than 15 years after the investment of resources that qualified the portion of data for protection.(13) And, the bill contains express guarantees that it does not limit the operation of copyright law or Federal and State antitrust laws.(14)
As noted above, H.R. 2281 raises core issues of how to protect both investments in databases and access to databases similar to those at the interface between intellectual property and antitrust policy. It is well recognized that despite the apparent tension between the antitrust and intellectual property laws, the two bodies of law share the common purpose of promoting innovation and enhancing consumer welfare.(15) Intellectual property protection provides incentives for innovation and encourages dissemination and commercialization of new technologies by establishing enforceable property rights for the creators of new products, processes, and works of expression. Without intellectual property rights, imitators could exploit more rapidly the investments of innovators without compensation, reducing the commercial value of innovations and thus eroding the incentives to invent and invest. Similarly, antitrust law recognizes that this kind of free riding on the efforts of others is undesirable, because it is likely to reduce the incentives for innovators to introduce new and better products. However, the antitrust laws also recognize that certain misuses of intellectual property rights may harm competition and deter innovation by, for example, permitting a monopolist to leverage its market power, attributable to a patent or copyright, from an existing market into a new market or to foreclose anticompetitively a competitor's access to an important input.(16) For policymakers, the goal must be to maintain a proper balance between the protection of property that ensures initial innovation and the access to property that ensures ongoing innovation competition. During its 1995 hearings on Global and Innovation Based Competition, the Federal Trade Commission heard testimony from industry, researchers, and legal practitioners confirming that both competition and property rights play important roles in facilitating innovation. In particular industries, intellectual property protection appears to spur innovation. However, in some circumstances, strong intellectual property protection may inhibit follow-on innovation. Participants explained that in high-tech and other industries, next-generation innovations are often built on the basis of access to information regarding the first-generation product.(17) Similar testimony by individuals who testified before the House Subcommittee on Courts and Intellectual Property of the House of Representatives Committee on the Judiciary emphasized that collections of information are of critical importance to continuing innovation.(18) It is important for policymakers to strike a balance between preserving incentives to innovate by granting protection against misappropriation of intellectual property while allowing access to that property so that others may use and build upon pre-existing sources of information. The Collections of Information Antipiracy Act presents issues about how to strike this delicate balance. Database owners have expressed legitimate concerns about free-riding by those who merely copy and resell existing databases. In crafting legislation to protect the incentives of first-generation database producers, however, it is important to keep in mind the need to preserve the ability and incentive of follow-on innovators, who need access to the initial innovation for use as a stepping stone for further progress. Antitrust and intellectual property law seek to maintain incentives for both first-generation and next-generation competition and innovation. These laws attempt to achieve this goal by calibrating incentives in order to induce first-generation innovation while not impeding the development of second-generation products. Antitrust doctrine analyzes most provisions in intellectual property licensing agreements under a rule of reason inquiry that examines, among other things, how a particular restraint may promote incentives for both initial and next-generation innovation.(19) Copyright law grants an author the exclusive right to exploit his work in the manner he sees fit, but copyright law also recognizes, in appropriate cases, the right of others to use a copyrighted work if such use transforms or adds value to the original copyrighted work. The Supreme Court has explained: "the primary objective of copyright is not to reward the labor of authors, but 'to promote the Progress of Science and useful Arts.' To this end, copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work."(20) Similarly, patent law encourages successive innovation by making patent applications public documents, thus revealing how a new invention works and how to reproduce it.(21) Analogously, policymakers should seek a legislative approach that will achieve a proper balance between maintaining the incentive to produce first-generation databases and encouraging reasonable uses of those databases to produce new, second-generation or complementary products or services of value to consumers.
A change in the law to protect database developers from commercial piracy of collections of information appears desirable. Databases play an integral role in many facets of our economy, and collecting and organizing factual data is often an expensive and complex process. Free-riding by those who merely copy and resell or give away existing databases may reduce incentives for database providers to create new databases or to introduce existing databases in new mediums that can more effectively deliver more information to consumers. As recent cases such as ProCD v. Zeidenberg(22) and Warren Publishing v. Microdos Data Inc.(23) show, the proliferation of digital technologies have rapidly reduced the costs and difficulty associated with copying and distributing vast amounts of data. These cases raise the specter that new technologies may outpace and erode the potency of currently available legal protections. In both the ProCD and Warren Publishing cases, the plaintiffs appeared to be the victims of outright piracy of their work, yet, while the database owner in ProCD was able to obtain relief on contractual theories, the database owner in Warren Publishing could not obtain copyright protection. Although it may be too early to tell, these decisions may signal that current protections and remedies for database misappropriation, such as those available under contract and copyright law, are inadequate. Thus, a legislative remedy that effectively and accurately targets "free-riders" on databases appears desirable. H.R. 2281 represents an important and positive step in this direction. Nevertheless, as discussed below, concerns remain about a few provisions of the bill.
Although significant improvements have been made to the Collections of Information Antipiracy Act since its introduction, certain provisions still may raise competition concerns. In each of the instances set forth below, innovation competition might be chilled or impeded because of ambiguous language that could be read to preclude certain reasonable uses of existing databases to produce new products or services of value to consumers. After identifying the ambiguous language of concern, this comment provides an example of how language from H.R. 2281 could deter the production of certain next-generation databases.
H.R. 2281 provides: "no criminal or civil action shall be maintained under this chapter for the extraction or use of all or a substantial part of a collection of information that occurs more than 15 years after the investment of resources that qualified the portion of the collection of information for protection under this chapter that is extracted or used."(24) This language raises the following potential concerns: First, it is unclear that a 15-year term is necessary in order to protect incentives to produce all types of databases. For example, the Commission's 1995 hearings elicited testimony that in some high-tech markets, product cycles are as short as six to eighteen months. In analogous high-tech database markets, fifteen years would provide much longer protection than needed to maintain incentives for database owners. A fifteen-year term of protection would also be much longer than that provided by misappropriation law, which traditionally has been applied only to protect time-sensitive, "hot" information.(25) Second, to the extent that a database contains a dynamic subject matter,
protection for database contents could be perpetual because the owner is likely to update
its database frequently with new information, thereby renewing the period of protection
granted under the statute from the time the owner makes a substantial investment of new
resources. It may be difficult for a potential user to judge whether a new monetary
investment in a portion of the database is "substantial" enough to confer
protection. Moreover, it is not clear whether subsequent investments to maintain, rather
than to gather, data are sufficient to renew continuously the term of protection on the
bill.(26) For example, might an investment of resources
incurred by maintaining historical data in a mainframe computer or sophisticated website
trigger continuous protection? Although the House Report indicates that the bill is
intended to avoid providing ongoing protection to an entire collection every time there is
an additional substantial investment made in a database's scope or maintenance,(27) the bill's operative language might nevertheless be read
to allow an opposite result. This might be cured by adding language to H.R. 2281 similar
to that contained in the House Report.(28)
H.R. 2281 prohibits the extraction of "all or a substantial part, measured either quantitatively or qualitatively, of a collection of information . . . so as to cause harm to the actual or potential market for that other person . . . ."(29) Conversely, the bill permits the use of an individual item of information and "other insubstantial parts" of a database.(30) This language raises the following potential concerns: First, this definition may not give a user sufficient guidance to reasonably determine whether a particular use of a collection of information would be quantitatively substantial enough to trigger civil and potentially criminal liability. Gauging "substantiality" is an inherently uncertain process.(31) Moreover, the well-developed body of copyright law that addresses the question of substantiality in the context of fair use is an unsuitable guide. For example, some decisions hold that relatively small amounts of information constitute "substantial" amounts of a copyrighted work.(32) Yet, these decisions involve creative expression which, at least under traditional doctrine,(33) ought to be entitled to greater protection than entirely factual works. Moreover, in assessing what is "quantitatively" substantial, some courts look to whether the amount of a use "exceeds that necessary to disseminate the facts."(34) This criterion, of course, would be inappropriate in the context of databases, where any use of a collection of information necessarily will be comprised solely of facts. Second, users might not be able to judge whether a particular use of information is qualitatively substantial. The traditional test for determining whether or not a use is qualitatively substantial is to ask whether the use replicates "the heart" of the work.(35) Yet, such stylistic judgments are inapt for assessing the significance of an extraction of facts. Perhaps "qualitative" judgments could be made on the basis of the pecuniary value of portions of the database. This, in turn, would raise questions of whether the qualitative substantiality should be measured by the market value of the information or the investment of resources by the database owner. In either case, it may be difficult for a secondary user to judge the qualitative value of the information.(36)
The Collections of Information Antipiracy Act defines a "potential market" as "any market that a person claiming protection under section 1302 has current and demonstrable plans to exploit or that is commonly exploited by persons offering similar products or services incorporating collections of information."(37) This language raises the following potential concerns: First, this standard may not be defined sufficiently for a secondary user to make a reasonable evaluation whether he will be exposed to claims that he has harmed the potential markets of the owner. For example, without asking, how could a secondary user learn whether the database owner has a "current and demonstrable plan" to enter a market that the secondary user is planning to enter? Does the statute create a disincentive for follow-on innovators, by leaving them with a Hobson's choice of either acting without knowledge of an owner's intent or revealing the nature of their new use to the database owner, who could then choose to "free ride" on the work of the follow-on innovator? Second, it is unclear whether a decision by the database owner to enter a "potential market" after entry by the secondary user would create liability under the act. Although the language of the bill defines a potential market as one that the database owner has "current and demonstrable plans to exploit," it is unclear whether a secondary user might incur liability if the plan came into being after the follow-on innovator created the new database. Third, the potential market concept embodied in H.R. 2281 appears to create protections that are broader than copyright and misappropriation law, yet the need for broader protection for non-creative databases is unclear. Under misappropriation law, an owner has traditionally been able to obtain redress for damage only to his actual market. As is explained in the Restatement (Third) of Unfair Competition: In most of the small number of cases in which the misappropriation doctrine has been determinative, the defendant's appropriation . . . resulted in direct competition in the plaintiff's primary market . . . Appeals to the misappropriation doctrine are almost always rejected when the appropriation does not intrude upon the plaintiff's primary market.(38) And, as explained by the courts:
Thus, although termed a "misappropriation" statute, H.R. 2281 appears to go beyond traditional misappropriation doctrine in this respect.(40) Likewise, H.R. 2281 appears to provide greater protection than is available under copyright law. Unlike misappropriation, copyright may impose liability not only if a copyright holder suffers harm in his actual market, but also if he suffers harm in collateral and derivative markets that he has not yet exploited. However, the fair use doctrine provides that the market harm must be balanced against the purpose and character of the potentially infringing use. Thus, if a secondary use alters the first with "new expression, meaning or message," thereby adding greater value to a copyrighted work, there is a stronger likelihood that the use will be found to be not infringing, even if the copyright holder has been harmed in a potential market.(41) However, if a use merely duplicates the original, and serves only as a market replacement for it, there is a stronger likelihood that the use will be found to be infringing.(42) The Supreme Court explains:
H.R. 2281 provides no similar balancing mechanism. Unlike the copyright statute, which contains explicit language directing courts to balance the nature of the use against harm to the copyright holder's exploitation of potential markets,(44) H.R. 2281 does not provide any device by which courts can weigh similar transformative uses by innovators.
Consider how the potential problems identified above could play out: Suppose that a small publisher of entertainment directory websites, FunWeb Inc., decides to compile an online directory of Italian restaurants in the United States. Users will be able to search the website for the names, addresses, phone numbers, hours of operation, and accepted forms of payment for each Italian restaurant in any city in the United States. The directory will also allow users to post their own reviews of the restaurants to the website. FunWeb compiles the database in part from restaurant listings in several preexisting, printed regional and local travel guides that are commercially available. Although some of the sources contain reviews or ratings of the restaurants, FunWeb does not include that information in its directory; it merely copies factual information about each restaurant and then checks for current accuracy of the information. In virtually all cases, FunWeb copies 20% or less of the factual information in the travel guides. However, when certain sources learn that FunWeb is planning to create the website, they threaten to sue under the Collections of Information Antipiracy Act. FunWeb must consider whether to go forward with its plans for the online directory. Consider some of the issues that FunWeb would confront. First, was its extraction substantial? It is not clear whether a 20% taking would be considered quantitatively substantial. Moreover, how could FunWeb know if the Italian restaurant listings were "qualitatively" substantial to any particular source? Second, even if some of the listings originally were created more than 15 years earlier, FunWeb likely should assume that ongoing investments of resources were necessary to maintain the accuracy of the listings. But how could FunWeb know whether these investments in maintenance were sufficiently "substantial" to qualify listings for ongoing protection, or which listings had required such investments? Third, even though FunWeb would serve a different market niche than any of the regional travel guides, the sources might assert that FunWeb's online directory would harm their "potential market." But to know whether any of its sources had "current and demonstrable plans" to enter the market for a national, online Italian restaurant directory, FunWeb would have to disclose its idea to each source, thus subjecting itself to the possibility that one of the sources would claim FunWeb's idea as its own. Additionally, even if no source had any plan to establish such an online directory, FunWeb would have to consider whether the sources might assert that such a market is "commonly exploited by persons offering similar products or services incorporating collections of information." If such a claim were successful, FunWeb could face liability. In the face of these questions and uncertainties, FunWeb might choose to forego publishing the online directory altogether. H.R. 2281 implicitly assumes that the remedy for such situations would be for a second-comer such as FunWeb to gather the necessary information on its own. Yet, in this example, recompilation of nationwide restaurant information from scratch could be costly enough to render publication of the online directory unlikely, thus depriving consumers of a beneficial product. If that result were necessary in order to protect incentives for the creation of the original sources, it might be justified. In this example, however, such a result seems unnecessary. Creation of the FunWeb online directory would not be likely to undermine the incentive to continue to produce and maintain regional and local travel guides, because those guides serve an audience interested in a broad range of information in addition to restaurant listings. In sum, ambiguous provisions in H.R. 2281 might have the unintended effect of chilling the creation of value-adding, next-generation databases that pose no threat to the incentives of the creators of first-generation databases.
The database industry has some markets that are served by only a single provider of information, either because historical or other unique information is no longer available from original sources or because it may not be economically feasible to recompile a competing database. There is an increased potential for anticompetitive conduct where there exists only a monopoly source for a particular type of information. Like other monopolists, sole-source database providers typically have significantly greater opportunities to raise price and impose tight usage restrictions than providers in competitive or even highly concentrated markets. Anticompetitive conduct can also take the form of monopolist providers seeking to leverage their market power from existing information markets into new markets or denying essential inputs of information to competitors.(45) Congress has considered these types of concerns in other contexts. In hearings during this Congress, the Subcommittee on Antitrust, Business Rights, and Competition of the Senate Judiciary Committee has devoted considerable attention to the effects of concentration and potentially monopolistic practices on innovation and competition in various high-tech and information markets. In addition to identifying competitive concerns similar to those discussed above, participants in those hearings articulated some of the challenges associated with crafting "after-the-fact" remedies to competitive problems in such markets. The House Report on the Collections of Information Antipiracy Act indicates the provisions of § 1305(d) are relevant to potential competitive problems associated with sole source databases. Section 1305(d) provides that the bill does not "limit in any way the constraints on the manner in which products and services may be provided to the public that are imposed by Federal and State antitrust laws, including those regarding single suppliers of products and services." The House Report explains that the purpose of this exception is to establish that the "appropriate response to potential abuse . . . can be found in the antitrust laws, which are specifically designed to deal with such monopoly concerns."(46) The House Report notes that "[t]he essential facilities doctrine in particular may be particularly relevant to this issue."(47) Although antitrust enforcement provides a significant restraint on monopolistic conduct, antitrust law cannot alleviate all of the potential competitive problems associated with sole-source databases. For example, certain monopolistic behavior, such as supracompetitive pricing by a lawful monopoly, in some cases is not a cognizable antitrust violation, even though it might impede innovation and cause other consumer harm. The essential facilities doctrine provides that certain refusals to deal by a monopolist may be unlawful "because a monopolist's control of an essential facility (sometimes called a 'bottleneck') can extend monopoly power from one stage of production to another, and from one market into another."(48) Such abuse is traditionally remedied by requiring a firm controlling an essential facility to make the facility available on nondiscriminatory terms. Although the essential facilities doctrine remains a potent tool of antitrust enforcement,(49) it has been sparingly used, and the courts have not fully expounded its application in a large variety of circumstances. Thus, policymakers should be cautious about their reliance upon it as an easy solution to difficult problems.(50) On the other hand, antitrust enforcers sometimes can act prospectively to prevent competitive problems. Last year, the Federal Trade Commission acted to prevent the creation of a sole-source database through a merger of two of the largest suppliers of U.S. gas and oil production and well history data, Dwight's EnergyData and Petroleum Information Corporation (PI).(51) Dwight's Energy and PI had been competitors in compiling and selling petroleum data that are used by geologists to locate oil and gas reserves. The merger would have created a monopoly in the market for this information because both firms' databases contained historical data that could not have been recompiled by new entrants. The Commission was concerned that the resulting monopoly would have charged higher prices and provided reduced services to customers of well history and production data, and would have resulted in a decline in technological innovation as competition to enhance databases would have been lost. To settle the charges, the FTC required Dwight's to license a complete set of its data to a Commission-approved buyer that would become an independent competitor, insuring a continuation of price, innovation, and other competition.(52) In another recent case, In re Ciba-Geigy,(53) the Commission imposed a mandatory licensing remedy, among other remedies, to ensure access to specialized intellectual property necessary for ongoing innovation. In that case, the two merging parties, Ciba-Geigy and Sandoz, controlled the critical proprietary rights, including patent rights, patent applications, and know-how, necessary to develop commercial gene therapy products, which have the potential to target many life-threatening diseases for which there are currently no cures. Post-merger, the competitive development of these potentially life-saving therapies could have been hindered by the merged firm's control of all of the proprietary rights necessary to commercialize gene therapy products, according to the complaint. As a condition for the merger's consummation, the Commission required that the merged entity license critical patents so that access for developers of gene therapy products could be maintained. Cases such as Dwight's and Ciba-Geigy illustrate circumstances in which antitrust enforcers can act prospectively to prevent competitive problems, such as the potential for monopoly pricing and harm to ongoing innovation competition. Because the competitive concerns in Dwight's and Ciba-Geigy were created by mergers, the Commission was able to address the concerns through the issuance of orders that required licensing. However, as explained above, the ability of antitrust enforcers to remedy competitive problems associated with pre-existing, lawfully obtained monopolies is sometimes more circumscribed.
H.R. 2281 represents an important and positive step toward ensuring appropriate protection for collections of information, including databases. Nevertheless, prior to final action on H.R. 2281, the Conference Committee may wish to consider changes to certain provisions of H.R. 2281, identified above, that could inadvertently chill value-adding uses of first-generation databases. If the Conference Committee concludes that enactment of H.R. 2281 is generally desirable, the Conference Committee may wish to consider language to effect the following changes: adopt a term of protection shorter than 15 years and preclude potentially perpetual protection; define more clearly quantitatively and qualitatively "substantial" uses of information; and limit protection to uses in direct competition(54) with a collection of information or, if the potential market concept is retained, require a balance along the lines available in the context of "fair use" under copyright. By direction of the Commission, Robert Pitofsky 1. This comment represents the views of the Federal Trade Commission. Although this comment makes general reference to "H.R. 2281," the Commission's comments are directed solely to Title V of the bill. 2. 5 Trade Reg. Rep. (CCH) ¶ 24,171 (F.T.C. July 28, 1997)(consent decree)(as condition to merger of only two databases with certain oil production data, merged firm required to license data at reasonable rates to establish a competitor as a second source). 3. 5 Trade Reg. Rep. (CCH) ¶ 24,006 (F.T.C. March 27, 1996)(consent decree)(as condition to settling charges that the defendant's acquisition of a rival provider of information services to salvage yards was intended to monopolize various markets within the salvage yard information management industry, defendant required to divest the computer systems and salvage yard parts trading network it acquired in order to establish a competitor as a second source). 4. 499 U.S. 340 (1991). 5. The Supreme Court has described the tort of misappropriation as taking material that has been acquired as the result of organization and the expenditure of labor, skill, and money, and then appropriating that material and selling it as one's own. International News Service v. Associated Press, 248 U.S. 215, 239 (1918). Although state law varies, a plaintiff asserting a misappropriation claim has generally been required to prove five elements:
National Basketball Assoc. v. Motorola, Inc., 105 F.3d 841, 845 (2d Cir. 1997). 6. § 1301(1). 7. § 1301(2). 8. § 1302. 9. § 1303(a). 10. § 1303(b). 11. § 1303(c). 12. § 1304. 13. § 1308. 14. § 1305(c) & (d). 15. Atari Games Corp. v. Nintendo of America, Inc., 897 F.2d 1572, 1576 (Fed. Cir. 1990); United States Department of Justice & Federal Trade Commission, Antitrust Guidelines for the Licensing of Intellectual Property §1.0 (1995). 16. See generally Antitrust Law Developments (Fourth) at 282-85, 953-81 (1997). 17. Federal Trade Commission Staff, Competition Policy in the New High-Tech, Global Marketplace, Vol. I, Ch. 6 (1996). 18. E.g., Statement of Dr. Debra Stewart on behalf of The Association of American Universities, The American Council on Education, and The National Association of State Universities and Land-Grant Colleges before the Subcommittee on Courts and Intellectual Property of the United States House of Representatives Committee on the Judiciary (February 12, 1998); Statement of William A. Wulf, on behalf of the Academy of Engineering & Vice Chairman of the National Research Council before the Subcommittee on Courts and Intellectual Property of the United States House of Representatives Committee on the Judiciary (Oct. 23, 1997). 19. E.g., Intellectual Property Guidelines §§ 3.4, 5.6 (grantbacks, which allow a licensor to use the licensee's improvements to the licensed technology, can be procompetitive by, for example, promoting innovation in the first place, but also may adversely affect competition if they substantially reduce the licensee's incentives to engage in research and development). 20. Feist Publication Inc. v. Rural Tele. Service Co., 499 U.S. 340, 350 (1991)(citations omitted). 21. 35 U.S.C.A. § 111. 22. 86 F.3d 1447 (7th Cir. 1996)(holding that the defendant's copying of the contents of a CD-ROM database of 3,000 telephone directories and resale of it in an online format violated the licensing agreement accompanying the CD-ROM). 23. 115 F.3d 1509 (11th Cir. 1997)(en banc), cert. denied, 118 S. Ct. 197 (1997)(holding that the defendant's copying of a cable system directory and reselling of it in a software format did not constitute a copyright violation because of the uncreative nature of the directory). 24. § 1308(c)(emphasis added). 25. E.g., International News Service v. Associated Press, 248 U.S. 215 (1918)(holding that facts from a news wire were sufficiently time sensitive or "hot" to warrant protection under misappropriation doctrine). 26. Section 1302 provides that collections of information that are "gathered, organized or maintained by another person through an investment of substantial monetary or other resources" are protected under the Act. (Emphasis added.) 27. H.R. Rep. No. 105-525, 105 Cong., 2d Sess., 21 (1998). 28. The House Report states:
H.R. Rep. No. 105-525, 105 Cong., 2d Sess., 21 (1998). 29. § 1302 (emphasis added). 30. § 1303(a). 31. For example, the size of the entire universe of data contained in a database may be unknown to a user (particularly users of electronic databases) thereby rendering them unable to judge the size of their extraction in relation to the whole work. 32. See, e.g., Iowa State Univ. Research Found. Inc. v. American Broadcasting Co., 621 F.2d 57, 61-62 (2d Cir. 1980)(use involving 8% of a videotape held to be substantial). 33. See, e.g., Harper & Row, Publishers Inc. v. Nation Enter., 471 U.S. 539, 563 (1985)("The law generally recognizes a greater need to disseminate factual works than works of fiction or fantasy"). 34. Harper & Row, 471 U.S. at 564; Salinger v. Random House, 811 F.2d 90, 98 (2d Cir. 1987). 35. See, e.g., New Era Publications Int'l v. Carol Publishing Group, 904 F.2d 152, 158 (2d Cir. 1990). 36. For example, one would expect that information relating to an investment of resources in collecting a particular item of data would be solely in the owner's control. 37. § 1301(3) (emphasis added). 38. Restatement (Third) of Unfair Competition, § 38 cmt. c, at 412-13. 39. The National Basketball Assoc., 105 F.3d at 852-53, citing, National Football League v. Delaware, 435 F. Supp. 1372, 1378 (D. Del. 1977). 40. Unlike H.R. 2281's predecessor, H.R. 2652, H.R. 2281's exception for news reporting creates a more misappropriation-like remedy. It provides:
§ 1303(e). 41. Luther R. Campbell aka Luke Skywalker v. Acuff-Rose Music, Inc., 510 U.S. 569, 579 (1994). 42. Id. at 591. 43. Id. at 579. 44. 17 U.S.C. § 107. 45. Sole source databases have been the subject of substantial litigation concerning allegations of anticompetitive conduct by a monopolist. Many of these cases have arisen in the context of telephone directories, which are the types of factual, non-creative database that H.R. 2281 is intended to protect. See, e.g., Great Western Directories v. Southwestern Bell Tele. Co., 63 F.3d 1378 (5th Cir. 1995), modified, 74 F.3d 613 (1996); Direct Media Corp. v. Camden Tele. and Telegraph Co., 989 F. Supp. 1211 (S.D. Ga. 1997). 46. H.R. Rep. No. 105-525, 105th Cong., 2d Sess., 19 (1998). 47. Id. 48. MCI Communications Corp. v. AT&T, 708 F.2d 1081, 1132 (7th Cir. ), cert. denied, 464 U.S. 891 (1983). 49. United States v. Terminal Railroad Ass'n, 224 U.S. 383 (1912); Otter Tail Power Co. v. United States, 410 U.S. 366 (1973). 50. Issues of whether, when, and how to mandate access to competitively significant inputs are discussed at some length in Chapter 9 of the Federal Trade Commission Staff Report, Anticipating the 21st Century: Competition Policy in the New High-Tech, Global Marketplace (May 1996). 51. In re Softsearch Holdings, 5 Trade Reg. Rep. (CCH) ¶ 24,171 (F.T.C. July 28, 1997)(consent decree). 52. In re Automatic Data Processing, 5 Trade Reg. Rep. (CCH) ¶ 24,006 (F.T.C. March 27, 1996)(consent decree). 53. 5 Trade Reg. Rep. (CCH) ¶ 24,182 (F.T.C. March 24, 1997)(consent decree)(C. Azcuenaga, concurring in part and dissenting in part). 54. In this regard, H.R. 2281 improves upon its predecessor, H.R. 2652, by limiting liability for nonprofit educational, scientific, or research uses of a covered database to only those uses that harm the actual market of the database owner. § 1303(d). |