Volume 17, Number 6 • June 2000

Considerable effort and substantial resources are spent collecting, compiling, arranging, verifying, and updating the raw data from which these databases are created. Consumers and other users of these databases enjoy tremendous benefits from having reams of information available at the click of a mouse, since they often lack the time and money to perform the tasks associated with database development.

New legislation being considered in Congress will have a significant impact on the ability to copyright informational databases. If enacted, the new law, entitled Collections of Information Antipiracy Act, will protect database creators by essentially making their databases copyrightable. However, recent developments cast doubt over Congress’ ability to bring the Act to the House floor for a vote during the 106th Congress. According to congressional sources, as this article goes to print, the Act is currently logjammed in Congress as part of a “turf war” between the House Judiciary Subcommittee on Intellectual Property and the House Commerce Committee. If the House doesn’t vote on the Act during the current term, it will likely be reintroduced during the 107th Congress.
 

Current Law
Under current copyright law, most databases aren’t subject to copyright protection simply because, as a mere collection of facts or data, they don’t possess the requisite amount of creativity. In the past, some federal courts of appeal recognized the “sweat-of-the-brow” doctrine, where copyright protection might be gained by a compiler’s work and investment of resources. Those courts gave compilers a means to protect their databases from “free-riders,” but that’s no longer the case.

Nowadays, a company that painstakingly creates and uses a compilation of information in its business risks commercial free-riding: the wrongful taking, use, and dissemination of the creation that harms the company’s business. In Feist v. Rural Telephone Co., Inc., 499 U.S. 340 (1991), the U.S. Supreme Court rejected the sweat-of-the-brow doctrine and held that a compilation will be afforded copyright protection only if it’s an original work of authorship and exhibits some degree of creativity. After Feist, the amount of time, painstaking efforts, and investment of resources and capital made by a database compiler are irrelevant in determining whether a database is copyrightable.

Two recent appellate cases interpreting Feist have likewise sounded alarm bells in the database community. In BellSouth Adver. & Publ’g. Corp. v. Donnelley Info. Publ’g., Inc., 999F.2d 1436 (11th Cir. 1993) (en banc) and Warren Publ’g., Inc. v. Microdos Data Corp., 115 F.3d 1509 (11th Cir. 1997), cert. denied, 118 S.Ct. 397 (1997), the court held there was insufficient originality and creativity to extend copyright protection to a yellow page directory and a television and cable directory. Even the Copyright Office noted, in its 1997 Report on the Legal Protection of Databases, “most of the post-Feist appellate cases have found wholesale takings from copyrightable compilations to be non-infringing. The trend is carrying through to District Courts as well.”

Sometimes (though rarely) a database creator is able to protect its databases in spite of Feist and subsequent related cases. Internet auction site pioneer eBay recently had its customer database copied by upstart rival auction site ReverseAuction.com. ReverseAuction.com used the copied database to initiate a spam campaign directed at eBay customers in an attempt to lure eBay customers to ReverseAuction.com. The Federal Trade Commission took action to protect eBay’s customer databases, not for database piracy, but for violations of eBay’s user agreement. Although ReverseAuction.com denied any wrongdoing, it entered into a consent agreement with the FTC, which was filed in federal court in Washington, DC, on January 6, 2000. (Stipulated Consent Agreement and Final Order, visited May 2, 2000; http://www.ftc.gov/os/2000/01/reverseconsent.htm.)
 

Proposed Law
On January 1, 1999, H.R. 354, entitled “Collections of Information Antipiracy Act,” was introduced in the House of Representatives. Rep. Howard Coble (R-N.C.), who chairs the House Judiciary Subcommittee on Courts and Intellectual Property, sponsors the Act, along with 76 co-sponsors such as the unlikely duo of Judiciary Chairman Henry Hyde (R-Ill.) and Barney Frank (D-Mass.).

Proponents include the 17-company-member Coalition Against Database Piracy organized by Michael Klipper of the Washington, DC, lobbying firm Meyer & Klipper. Other proponents include juggernauts such as eBay, the 725,000 member National Association of Realtors, and Reed Elsevier, builder of the omnipresent LEXIS-NEXIS. The Software and Information Industry Association (SIIA), whose members include both producers and users of informational databases, also supports H.R. 354’s passage. SIIA’s intellectual property counsel believes the Act “strikes a proper balance between the conflicting interests of database users and producers.”

A number of opponents are represented by the Digital Future Coalition, which includes members such as AT&T, Bell Atlantic, AOL, Amazon.com, and Dun & Bradstreet. Other opponents include behemoths such as Yahoo!, Bloomberg Financial Markets, MCI WorldCom, and the American Library Association (ALA). Legislative counsel for the ALA indicated that although the Act’s opponents discourage database piracy, they don’t support passage of H.R. 354 because “prohibited uses are overly broad and permitted uses are vague and ambiguous.” Opponents argue that uncertainty about the Act’s permitted and prohibited uses will result in substantial litigation and stifle business development.

The Act’s purpose is to encourage continued investment in the production and distribution of valuable new databases that aren’t afforded adequate protection under the Copyright Act and other Federal laws. This new law will protect database creators that place their databases in the stream of commerce against misappropriation.

The Act amends Federal Copyright law by making a person who extracts or uses in commerce a substantial part of a database created by another, and harms the actual or potential market for that database, liable to the database’s creator for misappropriation. Duration of the protection offered to database creators is 15 years from the date the database is offered for sale.

Database creators will now be able to initiate a civil action against the offending party and seek not only monetary damages, but also injunctive relief to prevent future violations, as well as impoundment of all copies of the information extracted or used in the violation. Additionally, criminal penalties may be imposed upon willful violators. The Act includes a 3-year statute of limitations for both civil and criminal actions.

The Act tries to strike a balance between database creator’s demands for protection and the “fair use”-type exceptions that now exist in copyright law. Addressing concerns of the public, nonprofit organizations and the scientific community, the Act exempts certain activities from liability. Persons are allowed to extract or use information for 1) nonprofit, educational, scientific, or research purposes in a manner that does not directly harm the database creator; and 2) other reasonable uses such as the purpose of illustration, explanation, example, comment, teaching, criticism, research or analysis, in an amount appropriate and customary for such purposes if it is determined, by specified factors, that such an act is reasonable under the circumstances. The factors considered for determining whether other uses are reasonable include the commercial or nonprofit nature of the extraction or use, the user’s good faith, the extent to which the user added his or her own investment or creativity, and whether the original database was intended primarily for persons in the same business as the user. Finally, an outside limit is set on the reasonableness of the subsequent use: The portion taken from the original database must not be offered or intended to be offered in commerce and is not likely to serve as a market substitute for the original database.
 

Conclusion
If enacted, H.R. 354 will protect database creators from misappropriation of their products, filling the gap left in copyright law resulting from Feist. Future investment in the creation of informational databases will be encouraged, and reasonable nonprofit, educational, and scientific users will be shielded from liability. H.R. 354 is a positive step in the evolution of laws designed to address the problems associated with the worldwide technological revolution.
 
 

Daniel R. Valente is an attorney in the Washington, DC, office of Pepper Hamilton LLP. His practice is devoted primarily to providing services to high-technology and Internet companies. His e-mail address is valented@pepperlaw.com.

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