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--> The Trend Toward Strengthened Intellectual Property Rights: A Potential Threat to Public-Good Uses of Scientific Data Laws and regulations, both national and international, affect the flow of scientific information through electronic networks. Among them are rules regarding liability for false or misleading information, laws protecting individual privacy rights, and export controls. This chapter focuses on intellectual property policies and their expression in laws and regulations affecting the contents of databases, because changes are now afoot that may erode the relatively privileged position science has held within the existing legal framework.1 By restricting scientists' full and open access to the data on which future advances depend (see Box 5.1), these changes could impede the progress of science and thus limit the contributions that science can make to society, notwithstanding the constitutional mandate that intellectual property rights should be limited in time and should advance science and the useful arts.2 One such change is that governments, including our own, are finding it increasingly difficult to maintain the rate of growth that publicly funded science has enjoyed over the past half century. When scientific research is supported instead by private funding, the end results and perhaps the research itself are likely to be kept proprietary. Furthermore, there are indications that the scientific data management that governments continue to fund may well be carried out as if it were proprietary, in the sense that fees for use of the data may exceed the costs of dissemination. As their tax bases decline and governments come to regard their data collections as possible sources of revenue, they have, in some instances, adopted the same short-term, profit-maximizing strategies as private firms. Yet today, when commercially valuable data of scientific importance are made available in electronic form, they also become available for rapid, inexpen
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--> BOX 5.1 Effects of Government Support on U.S. Research and Data Activities The ability of private-sector technological development in the United States to thrive without the kind of centrally organized institutional framework and industrial policy apparatus typical of the European Community and many other nations1 has stemmed in good measure from the large public investments in basic research and development that were made after the late 1950s, in response to Cold War pressures and national security interests. In retrospect, the success of the U.S. innovation system, despite its apparent anarchical character, can be seen as linked to public funding of academic institutions and specialized laboratories, whose research product has paved the way for private industrial applications.2 In this context, the fact that federal funding also largely defrayed the costs of collecting and disseminating raw and elaborated scientific data merits particular attention. Throughout the Cold War period, and extending into the present, the U.S, government has reinforced its subsidies of fundamental research with a policy of open exchange of scientific data. This policy was promoted internationally through the government's bilateral science and technology cooperative agreements and increasingly in recent years through both bilateral and multilateral agreements concerning various large-scale research programs and projects. None of these agreements, however, has broadly encompassed all scientific research activities. Instead, they typically have been limited to scientific cooperation and related protocols for the exchange of data according to the special interests of a geographic region, scientific discipline or subdiscipline, or specific projects undertaken by the parties to the agreement. In the rise of the United States to become the world's leading producer of technological goods and scientific information, the government's role in ensuring an open supply of data to the scientific community under favorable economic conditions has been a constant stabilizing factor. 1 See, e.g., Margaret Sharp and Keith Pavitt (1993), "Technology Policy in the 1990s: Old Trends and New Realities," J. Common Mkt. Stud, 31:129, 138-39, table 1. 2 See Computer Science and Telecommunications Board, National Research Council (1995), Evolving the High Performance Computing and Communications Initiative to Support the Nation's Infrastructure, National Academy Press, Washington, D.C. sive copying and manipulation. While this facilitates value-adding uses from one perspective, from another, it undermines the data provider's ability to recover costs, much less to generate a profit. A second change is that, in many areas of research, the separation has diminished between basic research, where intellectual property rules are more concerned with attribution of ideas and findings than with the appropriation of published material, and applied research, where intellectual property and proprietary concerns predominate. This conjunction has been especially evident in computer
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--> science and biotechnology, where some basic advances are now virtually inseparable from their industrial applications. The granting of patents or other exclusive property rights in these industrial applications can affect the ability of other researchers to test and extend the theories underlying them. Third, the revolutionary convergence of digital, computing, and telecommunications technologies has profoundly altered the preexisting status quo.3 The potentially large gains and losses from the commercial exploitation of data under these changing conditions have led to a concerted drive for new and stronger forms of legal protection for publishers of electronic databases in general, including compilations of scientific data that were heretofore treated as components of the public domain. 4 The current trend toward stronger and more enduring intellectual property rights, and fewer limitations on the rights of copyright holders vis-á-vis public-good uses of information, could reduce some of the limitations that have benefited scientists, and on which they have relied. Government studies of the challenges that digital technologies pose for intellectual property law at both national and international levels have stimulated calls for strengthening intellectual property rules. In addition to legislation either adopted or still under consideration in the United States and other nations, proposals to strengthen international copyright and related laws were a major focus of multilateral negotiations sponsored by the World Intellectual Property Organization (WIPO) in December 1996, largely at the urging of the United States and the European Union. One of the draft treaties currently being considered calls for worldwide adoption of a new form of intellectual property protection for the contents of databases.5 Although this treaty was scheduled for discussion and approval at the WIPO Diplomatic Conference held in Geneva, Switzerland, on December 2-20, 1996, the conference delegates decided that it required further study. Future adoption of a treaty with similar proposals would have such profound consequences for transnational exchanges of scientific data that the committee chose it as a principal focus of this chapter. This chapter begins by briefly describing the relevant legal infrastructure during the predigital period and by identifying certain destabilizing factors, such as the introduction of electronic photocopying machines. It then outlines digital technologies' role in accelerating the rise of information as a commodity to be bought and sold and in thus upsetting the previous imperfect balance between under-protection and overprotection of the rights of data creators and holders. The discussion that follows examines the emerging legal responses to these phenomena. It describes the current legislative and treaty proposals in detail and explores the implications for science of new proprietary rights in databases. The chapter concludes by proposing actions that groups representing the research and education communities should undertake to stimulate reformulation of the legislative and treaty proposals, with a view to reconciling the need to protect the legitimate
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--> interests of database makers with the need to protect the activity of science and to ensure its ongoing contribution to the public interest. SALIENT FEATURES OF THE PREDIGITAL STATUS QUO Because the creation, collection, and dissemination of scientific data in the United States have in large part been subsidized by government funding, they have not depended on the balance between incentives to create and efforts to preserve free competition that intellectual property law normally governs. Within this framework, most academic compilers or generators of scientific data were more concerned about obtaining credit or recognition for their contributions than about securing the economic fruits of their efforts.6 Only in cases where members of the scientific community authored discursive scientific works or otherwise participated in applied technological innovation, or where commercial publishers compiled value-added databases, were they likely to be affected by legal rules governing commercial applications of data. In such cases, existing legal institutions proved relatively stable in the predigital epoch, and the scientific community has taken this stability largely for granted. In the private sector, by contrast, commercial compilers of data have long suffered from a risk of market failure owing to the intangible, ubiquitous, and, above all, indivisible nature of information goods and to the ease with which free riders may have appropriated the fruits of the compilers' investment, once the information goods were made available to the public in print media. Despite this risk, the domestic and international intellectual property systems responded laconically, if not with indifference, to the compilers' dilemma. 7 This indifference stemmed in part from the inability of the worldwide intellectual property system to match compilations of data to the basic subject matter categories covered, respectively, by the Paris Convention for the Protection of Industrial Property (1883) and the Berne Convention for the Protection of Literary and Artistic Works (1886).8 It also stemmed from a concomitant reluctance to fetter the basic building blocks of scientific and intellectual discourse with legal impediments.9 Notwithstanding these infirmities, the commercial exploitation of nonscientific data and of published compilations of information prospered in some developed countries, notably the United States and the United Kingdom (where copyright protection is sometimes available). Whether there would have been greater commercial exploitation of scientific data in the past if publishers could have invoked stronger proprietary rights is a matter of conjecture. Patents are seldom available for database contents because writings are not patentable subject matter and also because the largely incremental character of database development would typically make it hard to meet eligibility requirements. Even contract law has significant limitations when mass-market information products are sold to persons outside the scope of a contract.10
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--> Data as Know-how Applied to Industry To obtain some measure of protection, firms engaged in industrial applications of scientific discoveries have entrusted their commercially valuable data to trade secret law or to equivalent laws of confidential information. Trade secret law (or equivalent laws of confidential information) provides innovators and investors with no exclusive property rights at all. Rather, it permits third parties to reverse-engineer any unpatented industrial product by proper or honest means in order to reveal the process by which it was obtained, and to use that process to manufacture equivalent goods.11 To the extent that an innovative product is derived from commercial applications of scientific data kept under actual or legal secrecy, a competitor always remained free to generate the same data and to apply it to similar products or uses.12 Trade secret law thus provides qualifying originators with no legal immunity from direct competition. It merely confers a ''head start," that is, an uncertain period of natural lead time, during which originators seek to recoup their investment in research and development while establishing their trademarks as symbols of quality that consumers recognize. In this and other respects, trade secret law operates as a liability regime that discourages certain types of conduct rather than as an exclusive property right that may create a legal barrier to entry (see Box 5.2). When scientific data are disseminated to the public in print media, they normally forfeit the protection of trade secret law, or related laws of confidentiality, except insofar as two-party contracts may otherwise provide. Not surprisingly, commercial compilers in such cases have sometimes found it difficult to appropriate the fruits of their investment unless either copyright laws or unfair competition laws afford them a limited shelter against wholesale duplication by third parties. Copyright Law as a Cultural Bargain The advent of the printing press created for published literary and artistic works markets that had previously existed only in a rudimentary form, owing to the need to produce each copy of a work by hand from a single original. Paradoxically, to promote markets for information goods and other literary and artistic works, the state intervened by erecting new monopoly rights-intellectual property rights-even as it removed the royal privileges and guild monopolies pertaining to tangible goods that were handed down from the Middle Ages. Information goods have the properties of so-called public goods-they are nondepletable and nonexcludable. A second comer's use of a new information good does not diminish or exhaust it; once it is disclosed to the world, anyone can use it without the originator's permission and without reimbursing him or her for the costs of research and production. Unless the state limits the ability of third parties to copy a given literary production, for example, and to sell the copied
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--> BOX 5.2 Definitions Liability Rule and Exclusive Property Rights A property right precludes third parties from appropriating the object of protection, whereas a liability rule regulates the means by which they can engage in certain potentially harmful acts on certain conditions. 1 If one has "rightful possession of some thing-—such as an automobile or a home" under an exclusive property right, "another person ordinarily cannot take it without permission"; but a liability rule permits others to engage in acts that "create risks of harm and thus constitute probabilistic invasions of property interests" (such as nuisances), while obligating them to pay damages for harm under specified circumstances. 2 Sul generis Sui generis means "of its own kind or class" (Blacks Law Dictionary 1434, West, 6th ed., 1990). The literature refers to special-purpose intellectual property laws that deviate significantly from the classic patent and copyright paradigms as ''sui generis" regimes. See, for example, Pamela Samuelson (1985), "Creating a New Kind of Intellectual Property Law: Applying the Lessons of the Chip Law to Computer Programs," Minn. L. Rev., 70:471 (discussing the sui generis character of the Semiconductor Chip Protection Act). Subpatentable A subpatentable innovation is novel in the sense of being new, but it represents a step in technical progress that an engineer might be expected to make in due course. By definition, a patentable invention must be "nonobvious" in the sense that it represents a breakthrough beyond the capacity of a routine engineer to make in due course.3 In simpler terms, patents are supposed to reward extraordinary achievements, while subpatentable Innovations are those that proceed in small, incremental steps. 1 See, e.g., Guido Calabresi and A. Douglas Melamed (1972), "Property Rules, Liability Rules, and Inalienability: One View of the Cathedral," Harv. L. Rev., 85:1089. 2 Louis Kaplow and Steven Shavell (1996), "Property Rules Versus Liability Rules: An Economic Analysis," Harv. L. Rev., 109:713, 713-15. For an analysis of trade secret law as a default liability regime governing relations between originators and borrowers of subpatentable innovations, see Reichman, "Legal Hybrids," note 27. 3 See 35 United States Code, section 103 (1996). good for less than the price charged by the originator, neither the author nor the publisher may have sufficient incentives to create or invest in the dissemination of cultural and information goods. 13 The historical solution to this problem has been the mature copyright system, which charges both authors and their publishers a price for overcoming market failure. In effect, copyright law has enabled the state to impose "portable fences"
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--> that accompany intangible creations and that limit what purchasers can do with them, even though they possess the physical artifacts, such as books or printed tables of numbers, in which these intangible creations are embodied.14 In so doing, the state also has imposed legal constraints on authors and publishers—a cultural bargain—that has attempted to balance incentives to create against the public interest in both free competition and access to the copyrighted culture. 15 For example, although copyright law protects an author's personal expression for a relatively long period of time, it attaches only to "original works of authorship." In principle, this requirement excludes functionally dictated collections of data that fail to manifest a creative selection or arrangement.16 Moreover, copyright law never prevents third parties from independently creating their own versions of another author's unprotectable ideas or of the factual discoveries presented in a given scientific publication. In other words, copyright law protects only a given author's style, not his or her factual or ideological content. The Concept of Fair Use The mature copyright paradigm further curbs even this limited monopoly by relaxing the author's control over certain uses of great public interest. Thus, numerous exceptions to and limitations on the copyright owner's bundle of exclusive rights favor face-to-face teaching (e.g., by allowing limited duplication of materials for classroom use), library and archival uses, and selected public interest pursuits, 17 in addition to a general "fair use" exception "for purposes such as criticism, comment, news reporting, teaching ... scholarship, or research."18 While the availability and scope of statutory exceptions usually vary with the nature of the subject matter at issue, the fair use exception applies to all subject matter categories across the board. Even so, overriding the copyright owner's exclusive rights in the name of fair use remains an atypical result contingent on a judicial evaluation of the special "purpose and character" of the use, the "nature of the copyrighted work," the ''amount and substantiality of the portion used," and the "effect of the use upon the potential market for or value of the copyrighted work.”19 In recent years, the advent of new technologies—from photocopying machines to computer programs and optical scanners—has unsettled the doctrine of fair use20 by enabling even copies for private research uses to displace commercial markets,21 and also by making it possible to overcome most of the transaction cost problems that increasingly had been used to justify application of the fair use exception in practice.22 Protection Afforded Copyright law will not protect the product of a compiler's industrious efforts—i.e., of labor, skill, or investment—if the selection or arrangement it em-
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--> bodies does not rise to the level of an original work of authorship. Moreover, a mature copyright system usually affords protection only against wholesale copying of the original selection and arrangement underlying any eligible compilation of data. In the United States, this doctrine of weak or "thin" protection for factual works has been reinforced by First Amendment concerns, which some courts and commentators viewed as mandating broad access to the disparate facts that result from a compiler's efforts.23 When these doctrines apply, they greatly diminish the value of copyright protection even to database publishers who satisfy the eligibility criteria, because their exclusive reproduction and derivative work rights—as construed by the Supreme Court in Feist Publications, Inc. v. Rural Telephone Service Co.—will not normally prevent unauthorized extractions of disparate data for either competing or value-adding uses.24 Some federal appellate courts, however, have begun to rebel against the Feist decision and to reinstate stronger copyright protection for factual compilations and databases by subtle doctrinal manipulation. 25 Whether state or federal unfair competition laws could also provide some supplementary relief against the unauthorized copying of commercially valuable data that are not protected by trade secret or copyright laws remains an unsettled question, although such laws are sometimes invoked both here and abroad.26 In any event, this cyclical fluctuation between states of underprotection and overprotection is a characteristic trait of borderline subject matter that fits imperfectly within the classical patent and copyright paradigms, such as the contents of databases.27 DIGITAL TECHNOLOGY—DISRUPTING THE BALANCE OF PUBLIC AND PRIVATE INTERESTS Despite (or perhaps because of) the relatively weak legal infrastructure governing use of data, a thriving market for compiled information has grown up, and U.S. publishers appear to play a dominant role in it,28 although it is important to emphasize that this market has been largely concerned with nonscientific data and information. This industry seems largely characterized by niche marketers who supply and dominate specific market segments. The limited size of these segments and the relatively high startup and servicing costs seem to deter second comers from readily entering such markets.29 In other words, once the threshold level of investment has been crossed, the first comer tends to take the relevant market segment as a whole. The public sector nonetheless has remained largely immunized from the potential abuses of market power inherent in this situation, owing both to its subsidized status and to the long-standing legal tradition that denied copyright protection to works produced by U.S. government agencies.30 As a result, data provided by federally funded projects have flowed through the domestic innovation system with few legal impediments (see Box 5.1), and legal disputes about
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--> ownership or the exercise of proprietary rights in scientific data as such rarely have been ventilated before intellectual property tribunals.31 By the late 1980s, however, digital technologies and new telecommunications networks had combined to produce "the greatest changes in the way information is distributed since the invention of printing by movable type in the 15th century."32 The use of computers made it economically feasible to collect, store, manage, and deliver huge amounts of data at a time when continuously expanding databases have become ever more prominent building blocks of knowledge, especially in the observational sciences, as discussed in Chapter 3. Electronic databases further blur the line between these collection and application functions by allowing users to make their own tailor-made extractions from the mass of data available in the collection as a whole.33 These tools allow users to "add ... immense value to what would otherwise be masses of incoherent, disparate data."34 Moreover, the latest value-added data products, once disseminated worldwide via the Internet and other media, frequently lead to the rapid production of new technical innovations, which result in the generation of more data.35 Electronic publishing thus broadly advances the revolutionary process that computerization began, and it makes both data and research results potentially available at very low cost all over the world.36 As this digital and telecommunications revolution has created vast new markets for electronic information goods and tools,37 it has outpaced the legal infrastructure, which remains geared to the slower-moving print media.38 This strain manifests itself in two contradictory ways. Sometimes digital technology aggravates the basic market-failure characteristic of information goods and thus deepens a chronic state of underprotection. This can occur, for example, when second comers download the originator's data and enter the market with a competing product that free-rides on the originator's investment.39 At other times, however, digital technology so thoroughly overcomes the threat of market failure that it endows the first to invest with abnormal market power that can result in a chronic state of overprotection. This can occur, for example, when sole-source data providers charge exorbitant prices or oblige libraries and research institutions to accept terms and conditions that effectively waive both the special privileges and the fair use exceptions set out in the Copyright Act of 1976.40 The Vulnerability of Publicly Distributed Electronic Databases To the extent that government- or university-generated data remain uncommercialized, their vulnerability to technically refined means of accessing, downloading, or duplication is only of relative importance. Presumably, the originators want the broadest possible distribution of their data sets.41 Even in this situation, however, there are some concerns that are likely to grow over time. For
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--> example, government may impose cost-recovery conditions on the use of data that third parties who obtain unauthorized access could avoid. Users also might inadvertently corrupt the original database and cause potential harm. Moreover, over time, the distinction between basic, noncommercialized data and data applied to industrial pursuits or other downstream uses seems likely to break down, as has already occurred in other disciplines, such as the Earth sciences and biotechnology.42 Universities and other research institutions may view data compilations generated in the course of their research as potential revenue sources, especially in an era of declining government support, just as they have done with patentable inventions. As more scientific data are applied to commercial purposes for one reason or another, the data collectors must necessarily distinguish between sources that are made publicly available without charge and those that are not.43 Otherwise, even the providers that do not charge for data could disrupt contractually controlled applications of their own data downstream, not to mention the risk that the noncharging government or academic generator might inadvertently infringe on third parties' proprietary domains. A related trend is for some governments to commercialize their data, regardless of whether other governments follow suit. The former will become concerned about the vulnerability of their data even if the latter are not. By the same token, those providers that still choose not to charge for their services will increasingly come into contact with (and, perhaps, conflict with) the legal and technical fences that states bent on commercializing data may erect. As one observer put it, "The division between the two regimes" could become "a dam over which information will not easily flow," to the possible detriment of scientific progress and global economic growth, which seems to require that "[m]ore than perhaps any other commodity, data must be allowed to move without barriers."44 To the extent that databases are commercialized, whatever their origin, the refined digital technologies that enhance the compiler's power to collect and disseminate data will enhance as well the free-riding competitor's power to appropriate the fruits of the first comer's investment.45 The second comer who purchases the originator' s product, say, in the form of a CD-ROM, may electronically extract and recompile the data in question at a fraction of their collection and distribution costs. The second product may then be sold for less than the first, because its publisher has contributed nothing directly or indirectly to the research and production costs. Digital technology also enables second comers to extract and recombine the originator's data into value-added products that improve on the original, or that compete in different and sometimes distant market segments.46 In some cases, third parties may even extract the compiler's data in order to make them available over telecommunications networks, an act that can destroy any residual incentives to invest.47 In such cases, existing copyright laws generally afford little or no relief, as explained above.
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--> Relative Invulnerability of Many Privately Controlled Databases When the database maker is the sole source of the data in question, and substitute databases cannot readily be compiled from public domain sources, digital technology greatly strengthens a supplier's market power. By restricting access to identifiable, on-line subscribers, for example, and by "placing conditions on access and [using technology] to monitor . . . customer usage," the publisher can largely restore the power of the two-party contractual deal that the advent of the printing press had appeared to destroy.48 In effect, publishers in this position may not need copyright law at all, even if they qualified for protection. They may prefer to reject the state-imposed cultural bargain in order to override both its fair-use provisions and its specific exemptions favoring the public interest in teaching and research.49 Moreover, electronic publishers may have virtually no transaction cost problems to overcome because digital technology now enables them to track and charge for every instance of electronic access, even for browsing and scientific uses that were previously exempt. 50 The resulting market power then enables the publisher to impose monopoly prices and arbitrary terms on users-including libraries, educational institutions, and research centers-and to disregard the social consequences that ensue from the inability of such public organizations to foot the bills.51 How Will the Public Interest Be Served in the Information Age? While many types of scientific data, like other forms of information, possess economic value under the appropriate circumstances, the sponsors of new proprietary rights explicitly contemplate a level of systematic commercialization of both large and small units of data that is unprecedented. How these impending changes in the legal infrastructure will impinge on the research and educational communities has not been clearly worked out even by the European authorities responsible for the European Union's recently adopted Directive on the Legal Protection of Databases. 52 A bill to enact a U.S. model of the European law, which was recently introduced, is even more cryptic in this regard,53 while the WIPO Draft Database Treaty tried to finesse the issue.54 One can predict, nevertheless, that these legislative initiatives will greatly affect the scientific and educational communities if, as Chapters 3 and 4 of this report have emphasized, they lead to a more market-driven environment with fewer government subsidies than before. Whether contractual attempts to reduce users' access to scientific and cultural products that was promoted by copyright laws in the past will survive legal challenges on such grounds as federal preemption of state law, or doctrines of misuse of copyrights (allied to antitrust law), remains controversial.55 Another question is whether the economic and cultural bargain embodied in copyright law remains appropriate for the digital environment (see Box 5.3), given that trade-driven economic policies have otherwise weakened the consensus on which that
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--> service help-line"). But see Jane C. Ginsburg (1994), "Surveying the Borders of Copyright," J. Copyright Soc'y, 41:322:325-26 (arguing for legal restraints on such contractual conditions). 59. See, e.g., Goldstein, Celestial Jukebox, note 21, at p. 230 ("Exemptions and compulsory licenses for research and educational uses recognize the transcendent claim these uses have on a copyright system whose founding premise is that a culture can be built only if toilers in the vineyard are free to draw on the works of their predecessors"); Marci A. Hamilton (1996), "The TRIPS Agreement: Imperialistic, Outdated and Overprotective," Vand. J. Transnat'l L., 27:613, 623-33 (advocating construction of "free-use zone ... in the online era"); Samuelson, Technological Protection, note 37. For the view that developing countries should formulate their own doctrines of misuse to govern information providers' contracts, see J.H. Reichman (1997), "From Free Riders to Fair Followers: Global Competition Under the TRIPS Agreement," NYU J. Int'l L. Pol. (forthcoming). 60. See, e.g., Hamilton, note 59, at pp. 628-29. 61. See, e.g., Goldstein, Celestial Jukebox, note 21, at p. 230 (stressing need for exemptions and compulsory licenses favoring "research and educational uses" as transcendent claim rooted in cumulative progress of knowledge). 62. As mentioned above, the copyright laws of most developed countries exclude functionally determined databases and do not protect disparate data even when a given compilation as a whole happens to satisfy the eligibility requirements of those laws. This principle was incorporated into Article 10 of the TRIPS Agreement of 1994, which requires copyright protection when "the selection or arrangement of... contents constitute intellectual creations," but stipulates that such protection "shall not extend to the data or material itself." 63. See Paris Convention for the Protection of Industrial Property, March 20, 1883, as last revised at Stockholm, July 14, 1967, 21 U.S.T. 1583, T.I.A.S. No. 6923, 828 U.N.T.S. 305 (hereinafter Paris Convention); Berne Convention for the Protection of Literary and Artistic Works, Sept. 9, 1886, as last revised at Paris, July 24, 1971, S. Treaty doc. 99-27, 99 Cong. 2d Sess. (1986), 828 U.N.T.S. 221 (hereinafter Berne Convention). For the official line of demarcation between "writings" and "products" that underlies these Conventions, and its gradual disintegration under pressure from a proliferating set of hybrid (i.e., sui generis) regimes that deviate from the patent and copyright models, see, e.g., Reichman, "Collapse of the Patent-Copyright Dichotomy," note 8, at pp. 480-512; see also Reichman, "Legal Hybrids," note 27, at pp. 24482519. 64. While the Commission claims that a key motive is the need to harmonize European Union law, critics debunk this claim because Article 10 of the TRIPS Agreement partly performed this function, and also because the E.C.'s database regime, as finally adopted, actually discourages harmonization on the crucial issue of fair use. See, e.g., Charles R. McManis (1996) "Taking TRIPS on the Information Superhighway: International Intellectual Property Protection and Emerging Computer Technology," Villanova L. Rev., pp. 207-288. The predominant objective, among those stated, is to increase the share of European database producers (including governments) in the world market. See, e.g., E.C. Directive on Databases, note 52, Recital 11. 65. See, e.g., Commission of the European Communities (1991), 1991 Report on the Impact Program: Main Events and Developments in the Electronic Information Services Market, COM (93) 156 final; Commission of the European Communities (1990), Working Program of the Commission in the Field of Copyright and Neighboring Rights, COM (90) 584 final; Rosier, note 28, at pp. 105, 107, 110-13. The IMPACT program specifically addressed the goal of improving the position of the European Union's member countries in the emerging global market for information goods. Among the strategies it endorsed were proposals to strengthen intellectual property rights, to protect new technologies, and to stimulate both international trade and European economic development. 66. See, e.g., Rosier, note 28, at pp. 109-10, 133-39. The Commission stressed the vulnerability of database publishers to market failure, but devoted little or no published attention to the
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--> countervailing risk of technologically induced overprotection. It nonetheless attempted to deal with this latter problem by means of a compulsory license, but was foiled by the Council of Ministers at the last moment. 67. See E.C. Directive on Databases, note 52, articles 3-6 (copyright), 7-1 1 (sui generis right). For earlier versions, see Commission of the European Communities (1992), Proposal for a Council Directive on the Legal Protection of Databases, COM (92) 24 final-SYN 393 (First E.C. Directive on Databases); Commission of the European Communities (1993), Amended Proposal for a Council Directive on the Legal Protection of Databases, COM (93) 464 final-SYN 393 (Amended E.C. Directive on Databases); Council of the European Communities, Common Position, note 52. 68. See, e.g., Gunnar Karnell (1991), "The Nordic Catalogue Rule," Protecting Works of Fact, pp. 67-72 (E.J. Dommering and P.B. Hugenholtz, eds.), Kluwer. Laws implementing this regime "prohibit slavish reproduction, in whole or in part, of 'catalogues, tables, and similar compilations in which a large number of particulars have been summarized' including databases, for ten years after first publication ... [I]ndustrious effort and investment rather than creativity are the prerequisites." Reichman, "Legal Hybrids," note 27, at pp. 2492-93 (quoting Karnell and noting predigital ambiguities of this law). 69. Reichman, "Legal Hybrids," note 27, at p. 2493; see also Jean Hughes and Elizabeth Weightman (1992), "E.C. Database Protection: Fine Tuning the Commission's Proposal," EIPR, 14:146, 148 (Directive goes beyond the Nordic rule and protects against reuse of the data compiled). 70. See generally Common Position, note 52 at pp. 14-29. 71. See E.C. Directive on Databases, note 52. 72. See Haungs, note 23; Miller, note 23; and Rosier, note 28, and accompanying text. See also Ginsburg, "Information After Feist," note 23; Litman, "Public Domain"; Melville B. Nimmer and David Nimmer (1996), Nimmer on Copyright, §§1.10[C1. 1.10 [D], Matthew Bender. 73. See First E.C. Directive on Databases, articles 1(1), 2(5); Commission of the European Communities (1992), Explanatory Memorandum to the Proposal for a Council Directive on the Legal Protection of Databases, COM (92) 24 final-SYN 393, at pp. 21-22, 25, 35, 41) (hereinafter First Explanatory Memorandum); Amended E.C. Directive on Databases, articles 2.2, 6 (all stressing the goal of protecting the compiler's industrious effort and investment against parasitic appropriation by competitors). A true liability regime does not bestow winner-take-all rewards in exchange for certain technical achievements. Rather, a liability regime (such as the model trade secret law used in the United States) aims primarily to restore and preserve the bases for healthy competition by discouraging certain market-distorting forms of conduct that prevent innovators from appropriating the fruits of their investment. As long as innovators obtain adequate lead time and second comers contribute directly or indirectly to the innovators' costs of research and development, a liability regime declines to endow these same innovators with an absolute right to control the uses of their innovative products or with any legal barriers to entry by others. See, e.g., Reichman, "Legal Hybrids," note 27, at pp. 2434-42, 2496, 25042558. 74. See, e.g., Samuelson, "Missing Foundations," note 34; Rosier; note 28. 75. Now Preambular Recitals 6-7; First Explanatory Memorandum, note 73. 76. Cf. Uniform Trade Secrets Act §1(4), 14 U.L.A. 438 (1985) (UTSA) (adopted by a majority of states); Restatement (Third) of Unfair Competition Law §§39-45 (1993); David D. Friedman, William Landes, and Richard Posner (1991), "Some Economics of Trade Secret Law," J. Econ. Persp. (Winter), at 61 et seq.; Wendy J. Gordon (1992), "On Owning Information: Intellectual Property and the Restitutionary Impulse," Virginia L. Rev., 78:149. See also International News Service V. Associated Press, 248 U.S. 215 (1918). 77. See First E.C. Directive on Databases, note 67, articles 1(1), 2(5), 9(3); Technically, the right arises with the creation of the database and lapses 10 (now 15) years from the date it was first lawfully made available to the public. The provision forbidding unauthorized reuse of the
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--> compiler's factual contents closed a gap in the Nordic catalogue rules, which case law had not yet resolved. See notes 68 and 69 and accompanying text. Already at this first draft stage, however, the language chosen to implement the Commission's "unfair competition" approach was contradicted by other language describing the database maker's "exclusive right to prevent unauthorized extraction and reutilization" of contents. See, e.g., First Explanatory Memorandum, note 73, at p. 53. 78. See First E.C. Directive on Databases, note 67, articles 8(1), (2); see also Amended E.C. Directive on Databases, note 67, article 11(1), (2). Of course, if multiple data providers serviced a given market segment, the draft Directive's procompetitive thrust was satisfied without recourse to a compulsory license. However, the opportunity to choose among providers seems to be rare in practice because the bulk of all electronic compilations of data reportedly emanates from sole-source providers, and this "niche" marketing appears characteristic of both the private and the public sector. In all such cases, the compulsory license would lie, and originators, including public bodies benefiting from a natural monopoly, would be obliged to grant licenses for commercial reexploitation of their data on fair and nondiscriminatory terms. 79. In this respect, the early draft version seems to have anticipated some of the findings concerning the procompetitive characteristics of liability-based intellectual property regimes that legal theory was investigating at about the same period of time. See, e.g., Samuelson et al., "Manifesto," note 38, at p. 2308; Reichman, "Legal Hybrids," note 27, at p. 2432. 80. See Commission of the European Communities, Amended Proposal for a Council Directive on the Legal Protection of Databases, COM (93) 464 final-SYN 393, at p. 4 (1993) (hereinafter Second Explanatory Memorandum) (declining to accept E.U. Parliament's request for special exemptions in favor of education and research). 81. See, e.g., the discussion in Chapter 4. 82. See Amended E.C. Directive on Databases, note 67; Reichman, "Legal Hybrids," note 27, at pp. 2494-98 (analyzing and criticizing these proposals). 83. See E.C. Common Position, note 52; Hunsuker, note 33 (approving this version); von Simson, note 44 (criticizing this version); Reichman and Samuelson, note 1 (criticizing this version). 84. See E.C. Directive on Databases, note 52, articles 7(1) ("Member States shall provide for a right for the maker of a database which. . ."), 16(1) (requiring Member States "to comply with this Directive before 1 January 1998"). 85. E.C. Directive on Databases, note 52, article 1(2) (broadly defining a database as "a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means"). 86. See text accompanying notes 76 and 77. 87. E.C. Directive on Databases, note 52, article 7(1). 88. See, id., article 1(1) at 24 ("This Directive concerns the legal protection of databases in any form"). Both the First Proposed Directive, note 67, article 1(1), and the Amended E.C. Directive on Databases of 1993, note 67, article 1(1), covered only electronic databases. The E.C. Common Position found this distinction unworkable and could not justify differing levels of protection on this basis. See, e.g., Hunsuker, note 33, at p. 6 n. 14 (citing authorities and adding that "today's high speed scanners and optical character recognition software make electronic conversion of nonelectronic databases almost as easy as electronic conversion of electronic databases"). 89. See E.C. Directive on Databases, note 52, articles 7(1) (providing initial 15-year term from date of completion), 7(2) (extending protection for an additional 15 years if the database "is made available to the public in whatever manner" before expiration of the initial term), 7(3) (allowing 15-year renewals for "[a]ny substantial change, evaluated qualitatively or quantitatively, to the contents of a database . . . from the accumulation of successive additions, deletions or alterations, which ... result in ... a substantial new investment"). 90. See id., article 7.
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--> 91. See E.C. Directive on Databases, note 52, articles 3 and 5. 92. See E.C. Common Position, note 52, articles 8-9, 16(3). 93. Compare E.C. Directive on Databases, note 52, article 7(2)(a) (defining "extraction" to mean "the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form") with id., article 5(a). 94. Compare id., articles 7(2)(b) (defining "reutilization" to mean "any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission") with id., article 5(b), (d), (e). A database embodied in a hard copy and sold as such remains subject to the first-sale doctrine even under the sui generis right, which means that the database maker cannot "control resale of that copy [by the vendee] within the Community." Id., article 7(2) (b). Moreover, public lending of such a copy, say, by a library, "is not an act of extraction or re-utilization." Id., article 2. 95. See note 5 and accompanying text (citing 1996 WIPO documents favoring an international database regime as proposed by the United States and international copyright reforms concerning on-line transmissions as proposed by the European Union). 96. E.C. Directive on Databases, note 52, article 9(b). 97. See id., articles 9, 9(b). 98. See id., articles 8(2), 9(b). 99. See, e.g., McManis, "Emerging Computer Technology," note 64, at 256 (stating that "[a]ny other substantial extraction from an electronic database [besides illustration for teaching or scientific research] will be infringing, irrespective of whether the extraction is for a commercial purpose, such as market research or private investment decisions, or for a wholly non-commercial purpose, such as religious canvassing, political polling, genealogical research, or pursuit of any ... hobby or avocation"). McManis contrasts this provision unfavorably with "the exceptions and limitations that safeguard the public interest in copyright law." Id., at p. 54, n. 204, pp. 56-57. 100. See, e.g., Hunsuker, note 33 (stressing fact that article 9(b) speaks of extraction for the purposes of illustration for teaching or scientific research, whereas article 6, concerning copyrightable databases, speaks of "the sole purpose of illustration for teaching or scientific research"). 101. See note 3 (findings of OTA Report). 102. See generally Reichman, Collapse of the Patent-Copyright Dichotomy, note 8, at pp. 488-489 (discussing economic implications and contradictions of such paradoxes). 103. See E.C. Common Position, note 52, article 16(3); E.C. Directive on Databases, note 52, article 16(3). 104. Rosler, note 28, at pp. 138, 140 (stressing tendencies of "[m]onopolists typically [to] charge large premiums for their goods"). 105. See, e.g., Rosler, note 28, at pp. 141-43; Reichman, "Legal Hybrids," note 27, at pp. 2496-98. 106. See Feist Publications, Inc. v. Rural Telephone Service Co., 111 S. Ct. 1282 (1991); Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989). 107. See, e.g., Reichman, "Electronic Information Tools," note 15, at pp. 466-67, 472-75. 108. See Robert W. Kastenmeier and Michael J. Remington (1985), '"The Semiconductor Chip Protection Act of 1984: A Swamp or Firm Ground?," Minn. L. Rev., 70:417, 438-42 (stating that proponents of new intellectual property laws have the burden to "show ... that a meritorious public purpose is served by ... proposed congressional action," and setting out a fourpronged test of public interest that should be met in each case). 109. Simon Chalton (1994), "The Amended Database Directive Proposal: A Commentary and Synopsis," EIPR, 16:94, 99 (stressing that national treatment would apply to copyrightable databases, but not to the extraction right). The reciprocity approach, in a more nuanced form, was retained in the final directive. See E.C. Directive on Databases, note 52, article 11. 110. See 17 U.S.C. §§902(a)(l)(A)-(C), 913, 914 (1994); Jay A. Erstling (1989), '"The Semiconductor Chip Protection Act and Its Impact on the International Protection of Chip Designs," Rutgers
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--> Computer Tech. L. J., 15:303; Charles R. McManis (1988), "International Protection for Semiconductor Chip Designs and the Standard of Judicial Review of Presidential Proclamations Issued Pursuant to the Semiconductor Chip Protection Act of 1984," Geo. Wash. J. Int'l L. Econ., 22:331. 111. Final Act Embodying the Result of the Uruguay Round of Multilateral Negotiations, Marrakesh Agreement Establishing the World Trade Organization, signed at Marrakesh, Morocco, April 5, 1994, Annex IC, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), articles 1(2), (3), 2(1), 3(1), 4, 9(1), 39; McManis, "Emerging Computer Technology," note 64, at pp. 253-62; Paul E. Geller (1995), "Intellectual Property in the Global Marketplace: Impact of TRIPS Dispute Settlement," Int'l L., 29:99, 110. 112. See E.C. Directive on Databases, note 52, article 11 and Preamble, Recital 56. 113. See, e.g., J.H. Reichman (1995), "Universal Minimum Standards of Intellectual Property Protection Under the TRIPS Component of the WTO Agreement,", Int'l L., 29:347-51; Adrian Otten and Hannu Wager (1996), "Compliance with TRIPS: The Emerging World View," Vand. J. Transnat'l L., 29:391. 114. See, e.g., Intellectual Property Committee (USA), Keidanren (Japan), and UNICE (Western Europe) (1988), Basic Framework of GATT Provisions on Intellectual Property: Statement of the Views of the European, Japanese and United States Business Communities; see also R. Michael Gadbaw (1989), "Intellectual Property and International Trade: Merger or Marriage of Convenience?," Vand. J. Transnat'l L., 22:223. 115. See, e.g., Hanns Ullrich (1995), "TRIPS: Adequate Protection, Inadequate Trade, Adequate Competition Policy," in Antitrust: A New International Trade Remedy?, Pacific Rim Law & Policy Assoc. at pp. 153, 184-207 (John O. Haley and Hiroshi Iyori, eds.); Ralph Oman (1994), "Intellectual Property After the Uruguay Round," J. Copyright Soc'y, 42:18 (approving this trend); see generally Reichman, "From Free Riders to Fair Followers," note 59. 116. See, e.g., Morton David Goldberg (1996), "The Digital Agenda in the U.S. and WIPO," paper presented to the Fourth Annual Conference on International Intellectual Property Law and Policy, Fordham University School of Law, April 11-12 (hereinafter Fourth Fordham Conference); Paul Waterschoot (Director, DG XV/E, European Commission) (1996), "Intellectual Property and the Global Information Infrastructure-The E.U. Perspective," paper presented to the Fourth Fordham Conference; see also Shira Perlmutter (Associate Register for Policy and International Affairs, U.S. Copyright Office) (1996), "Developments in WIPO: A Status Report on the New Instrument and Protocol," paper presented to the Fourth Fordham Conference. However, the delegations to the Geneva Diplomatic Conference in December 1996 rejected or modified many of these proposals, and a more socially balanced treaty was actually adopted. See WIPO Copyright Treaty, WIPO doc. No. CRNR/DC/89, December 20, 1996, adopted by the Geneva Diplomatic Conference on the same date. 117. See Committee of Experts on a Possible Protocol to the Berne Convention, Proposals of the European Community and Its Member States, Geneva, May 22-24, 1996, WIPO doc. BCP/CE/ VIVI—INR/CE/VI/I, May 20, 1996; and U.S. White Paper, note 38. 118. See, e.g., U.S. White Paper, note 38, at pp. 114-24; P. Samuelson, "Copyright Grab," Wired 4.01:136, 190-91; McManis, note 64, at pp. 68-70 (criticizing this view). 119. See, e.g., U.S. White Paper, note 38, at pp. 230-34; McManis, note 64, at pp. 271-79. There are also privacy reasons behind these measures. Cf. Branscomb, note 3 (who approves of the encryption and information management proposals). 120. See, e.g., Reichman and Samuelson, note 1; McManis, note 64, at p. 73. See also, J.H. Reichman (1995), "The Know-How Gap in the TRIPS Agreement: Why Software Fared Badly, and What Are the Solutions," Hastings Commun. Ent. L. J. (Commun./Ent.), 17:763, 779-84 (citing authorities). 121. See, e.g., McManis, note 64, at pp. 274-76 (stressing proposal to limit removal of electronic "shrink-wrap licenses" as component of U.S. White Paper's overall efforts "to reduce . . . application and scope of fair use doctrine"). For judicial and scholarly opposition to such
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--> licenses, see note 55; see also Charles R. McManis (1993), "Intellectual Property Protection and Reverse Engineering of Computer Programs in the United States and European Community," High Tech. L. J., 8:25, 88-96 (concluding that contracts, or at least shrink-wrap licenses, that prohibit reverse engineering are preempted by federal intellectual property law); Julie E. Cohen (1995), "Reverse Engineering and the Rise of Electronic Vigilantism: Intellectual Property Implications of 'Lock-out' Programs," So. Cal. L. Rev., 68:1091. But see Raymond T. Nimmer (Reporter for the Drafting Committee on Uniform Commercial Code, Article 2B (licenses)), U.C.C. Revision: Information A.S.E. in Contracts (April 15, 1996) (arguing that proposed Art. 2B of U.C.C. should make such licenses presumptively valid); Pro-CD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (upholding shrink-wrap license concerning electronic database). 122. McManis, "Emerging Computer Technology," note 64, at p. 67 (citing authorities); Hamilton, note 59, at pp. 628-29. 123. See note 5. 124. See Committee of Experts on a Possible Protocol to the Berne Convention, Proposal of the United States of America on Sui Generis Protection of Databases, Geneva, May 22-24, 1996, WIPO doc. BCP/CE/VNI/2-INR/CE/VI/2, May 20, 1996 (hereinafter U.S. Proposal on Databases); see also Mark Powell (1996), "The European Union's Database Directive: An International Antidote to the Side-Effects of Feist," paper presented to the Fourth Fordham Conference. Powell notes that the E.C. Directive will be incorporated into the laws of Norway, Iceland, and Liechtenstein under existing trade agreements with the E.U.; that "the Commission will encourage Central and Eastern European countries to adopt similar legislation" in their Association Agreements; that the E.U.-Turkey Customs Union Decision explicitly obliged Turkey to align its legislation on databases with the Directive; and that its reciprocity clause "will be used by the Commission as a bargaining chip" in dealing with third countries. 125. Powell, id. 126. See, e.g., Powell, note 124, at pp. 2-3 (objecting that "it is questionable whether an international instrument should be founded on a legal measure with no proven track record and which contains such novel legal concepts ... especially since ... [n]either database makers nor users were satisfied with the compromise reached in the Directive"); see also Pamela Samuelson (1994), "The N.I.I. Intellectual Property Report," Communications of the ACM, 37:17. (finding it "peculiar that the WIPO experts should even consider recommending a treaty on database protection when the idea for such a law is so new and untested"). 127. See, e.g., Powell, note 124, at p. 16 (stating that the "economic case for the creation of a right to prevent extraction and/or re-utilization of non-original contents by users has never been satisfactorily explained"); see also id., at p. 55 (stressing that an "international treaty, . . . is trickier to modify" than domestic models and suggesting that the Diplomatic Conference should confine itself to a "set of general principles" for legal protection of databases that would be reviewed within a fixed period of time). 128. See, e.g., Jens L. Gaster (Principal Administrator, DG XV-E-4, European Commission) (1996), "The New E.U. Directive Concerning the Legal Protection of Data Bases," paper presented to the Fourth Fordham Conference (conceding that "the sui generis right was considerably strengthened during the legislative process" and that attacks on the right to extract even insubstantial parts of a protected database were barely repelled). 129. TRIPS Agreement, note I 111, article 71; see also id., articles 68-69. While parties to the Berne Convention remain free to adopt higher copyright standards among themselves (see Berne Convention, note 63, article 20), these arrangements would not become binding on other Berne members in the absence of a unanimous decision. See id., article 27(3). Unless such standards were incorporated into the TRIPS Agreement, parties to a special arrangement under Berne (or related to Berne) would run some risk of having to extend the higher standards to nonsignatory members of the WTO, under the most-favored-nation clause of the TRIPS Agreement. See TRIPS Agreement, note 111, article 4. While applications of Article 4 remain inherently
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--> uncertain, and this outcome would depend on the interpretation of various provisions in both the TRIPS Agreement and prior international agreements (see notes 63 and 111 and accompanying text), the goal is clearly to develop "a model in the search for a global solution regarding the protection of databases which is presently discussed at WIPO." Gaster, note 128. 130. See TRIPS Agreement, note 111, articles 1(3), 2(2), 3(1), 35-38; J.H. Reichman, "Universal Minimum Standards of Intellectual Property Protection Under the TRIPS Agreement," Int'l. L., 29:374-375. 131. See U.S. Congress, House of Representatives, H.R. 3531, 104th Congress, 2d Session, May 23, 1996, sec. I (short-titled "Database Investment and Intellectual Property Antipiracy Act of 1996") (hereinafter H.R. 3531). This bill was introduced by Carlos Moorhead, chairman of the House Subcommittee on Courts and Intellectual Property, and referred to the Committee on the Judiciary. 132. See id., sections 2, 3(a). 133. See id., sections 2, 3(a), (b), 6. 134. U.S. Constitution, Article I, Section 8, clause 8. 135. See, e.g., Reichman and Samuelson, note 1 at pp. 102-09, 132-36. Because the European Community has codified a doctrine of "thin" copyright protection of computer programs, it expressly subordinated the protection of databases to that policy (see E.C. Directive on Databases, note 52, article 2(a)); in contrast, because the U.S. federal courts have resisted a policy of "thick" or strong copyright protection for computer programs, there is reason to fear that the sui generis database law may be used to overturn these precedents. 136. H.R. 3531, note 131, section 4(a)(1). 137. This provision is thus consonant with several other key provisions that greatly strengthen the scope of protection in general. See infra text accompanying notes 138-155. 138. See H.R. 3531, note 131, article 6(b); notes 89-90 and accompanying text. 139. See E.C. Directive on Databases, note 52, article 8(1) at p. 26. Gaster, note 128, at pp. 9, 11 (indicating that protection of the right to extract-but not to reuse-an insubstantial component was an integral part of the compromise that led to otherwise strengthened protection). 140. See H.R. 3531, note 131, section 4(a)(2). 141. Id.; E.C. Directive on Databases, note 52, article 7(g). 142. See H.R. 3531, note 131, sections 4(a)(l), (2), 5(a). 143. See id., section 4(a)(2), 4(b). This restriction covers markets in which the database owner has a demonstrable interest or expectation in licensing or otherwise reusing the database, as well as markets in which customers might reasonably be expected to become customers for the database. 144. Id., section 4(b) (4). 145. See E.C. Directive on Databases, note 52, article 15 (expressly voiding contractual provisions to this effect). 146. See Powell, note 124, at pp. 40-43. See also U.S. Proposal on Databases, note 124, article 7(2) ("No Contracting Party shall impair the ability to vary by contract the rights and exceptions to rights set forth herein"). 147. See H.R. 3531, note 131, sections 4(a) (2), 4(b) (4). 148. See text accompanying notes 91-92 and Box 5.4; Reichman and Samuelson, supra note 1, pp. 103-109. 149. See, e.g., H.R. 3531, note 131, section 5(B), which states: "Nothing in this Act shall in any way restrict any person from independently collecting, assembling or compiling works, data or materials from sources other than a database subject to this Act." 150. See H.R. 3531, note 131, sections 4, 5, 6. 151. See E.C. Directive on Databases, note 52, article 9(b); see also id., articles 9(a) (allowing extraction for private purposes from nonelectronic databases), and 9(c) (allowing extraction and reuse for purposes of "public security or an administrative or judicial procedure").
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--> 152. See H.R. 3531, note 131, section 5; U.S. Proposal on Databases, note 124, article 5. The U.S. Proposal to WIPO appears less watertight, because it does permit contracting parties, "in their domestic legislation, [to] provide for exceptions to or limitations on the rights," so long as such exceptions or limitations "do not unreasonably conflict with a normal exploitation ... and do not unreasonably prejudice the legitimate interests of the right holder." Id., article 5.3. Because the U.S. Proposal links this exception to the notion of a "substantial" taking for purposes of infringement and also to the express notion that use of preexisting protected matter is not independent creation (see id., articles 3.1, 3.2), the drafters clearly aim to forbid any exceptions that permit extraction or use of a substantial part of the database for any purpose. At the same time, the U.S. Proposal to WIPO is more amenable to local variants that expand upon uses of insubstantial components than is H.R. 3531, and to this extent it moves further towards the E.C. Directive. 153. See H.R. 3531, note 131, section 3(c), which provides: "Except for a database made by a governmental entity, any database otherwise subject to this Act, is not excluded here from because its contents have been obtained from a governmental entity." 154. See H.R. 3531, note 131. 155. See Executive Office of the President, Office of Management and Budget, "Implementing the Information Dissemination Provisions of the Paperwork Reduction Act of 1995," Memorandum by Alice M. Rivlin, September 22, 1995 (cautioning agencies that use the services of private contractors not to impose, or permit the intermediary to impose, restrictions that interfere with the agencies' own dissemination responsibilities; and reiterating "the basic standard that agencies shall not charge use fees for government information which exceed the cost of dissemination"). 156. See H.R. 3531, note 131, sections 4, 5(a)(b); text accompanying notes 140-147 (stressing built-in restrictions on claiming use of an insubstantial part in practice). 157. Cf. E.C. Directive on Databases, note 52, article 16(3) (requiring E.C. Commission to report, at three-year intervals, concerning these issues and the need to establish "non-voluntary licensing arrangements"). 158. See, e.g., H.R. 3531, note 131, section 10 ("Circumvention of Database Protection Systems"); U.S. Proposal on Databases, note 124, article 8 (Prohibition of Protection-Defeating Devices). 159. See, e.g., H.R. 3531, note 131, section 11 ("Integrity of Database Management Information"). 160. See, e.g., Branscomb, note 3, at pp. 175-77. 161. See text accompanying note 15. 162. See H.R. 3531, note 131, sections 10, 11. 163. See further infra text accompanying notes 137-138. 164. See H.R. 3531, note 131, sections 8, 13. 165. See David and Foray, note 35. 166. See Perlmutter, note 116; Morton David Goldberg (1996), "The Digital Agenda in the U.S. and WIPO," paper presented to the Fourth Fordham Conference. 167. See note 124. 168. Cf., e.g., Dirk J.G. Visser (1996), "Copyright in Cyberspace-National Dutch Report," paper presented to the International Association for Literary and Artistic Property (ALAI) Study Days, Amsterdam, June 4-8, at p. 12, quoting the Dutch Federation of Organizations in the Library, Information and Documentation Fields' (FOBID) recent complaint to the Minister of Justice: To its unpleasant surprise FOBID has found that in the [E.C.] Green Paper [see note 4] little or no attention is paid to the statutory limitations on copyright, such as library privileges and rules on educational, scientific and private use. Many existing limitations are technology dependent. It has to be examined whether and to what extent these limitations should be maintained or adapted in the digital environment.
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--> To this and similar complaints, Visser's report makes the following reply: [M]any limitations are the result of successful "lobbying." Intermediaries and users applying for specific limitations must realize that right owners, who will oppose any limitation as a matter of principle, are generally very well represented at the (national and international) legislative level. Thus, the extent to which copyright limitations will be preserved or extended in the digital environment will eventually be determined by the ability of intermediaries and users to have their voice heard on the political level. Visser, at p. 13 (quoting P.B. Hugenholtz and D.J.G. Visser (1995), Copyright Problems of Electronic Document Delivery: A Comparative Analysis, Report to the Commission of the European Communities (DG XIII), Brussels/Luxembourg, p. 62.) See also Robert J. Hart, "Intellectual Property and the Global Information Infrastructure-The Perspective in Japan, Australia, and Canada," paper presented to Fordham's Fourth Conference (stressing that only Australia's proposals concerning regulation of national information infrastructures have so far reflected concerns for "fair use" and related exceptions). 169. See Berne Convention, note 63, article 20 (authorizing member states "to enter into special agreements among themselves . .. [that] grant to authors more extensive rights than those granted by the Convention"). 170. The next step would be to use the Council for TRIPS and relevant provisions of the TRIPS Agreement as a springboard for binding non-Berne countries, and especially developing countries, to the same standards. See, e.g., J.H. Reichman (1995), "Universal Minimum Standards," note 130, at pp. 345, 383-85; J.H. Reichman, "From Free Riders to Fair Followers," note 59 (urging developing countries to resist these pressures). 171. See, e.g., E.C. Commission, Green Paper on Copyright and Related Rights in the Information Society (July 19, 1995); Paul Waterschoot, "An Overview of Recent Developments in Intellectual Property in the European Union," paper presented to Fourth Fordham Conference, note 116. 172. See, e.g., McManis, note 64, at p. 211. 173. John Perry Barlow (1994), "The Economy of Ideas: A Framework for Rethinking Patents and Copyrights in the Digital Age (Everything You Know About Intellectual Property is Wrong)," Wired 2.03, at p. 84 (March). 174. See, e.g., Paul Edward Geller (1996), "Conflicts of Law in Cyberspace: Rethinking International Copyright in a Digitally Networked World," Colum.-VLA J. L., 20:571; I. Trotter Hardy (1994), "The Proper Legal Regime for 'Cyberspace,"' U. Pitt. L. Rev., 55:993; Jane C. Ginsburg (1995) "Global Use/Territorial Rights: Private International Law Questions of the Global Information Infrastructure," J. Copyright Soc. USA, 42:318. 175. See, e.g., Reichman, "Universal Minimum Standards," note 130, at pp. 347-51, 365-73. 176. For the possibility that some developing countries might postpone the obligation to implement these standards beyond the I -year transitional period specified by the TRIPS Agreement, on grounds of hardship, see Reichman, "Universal Minimum Standards," at p. 353, note 130. 177. See, e.g., Reichman, "From Free Riders to Fair Followers," note 59 (arguing that if developing countries interpret "grey areas" of TRIPS Agreement in a procompetitive manner, it could benefit consumers, users, and second comers everywhere). 178. See, e.g., Reichman, "Know-How Gap in TRIPS," note 120, at pp. 779-84 (uncertain scope of copyright protection for computer programs); Reichman, "Legal Hybrids," note 27, at pp. 2459-64, 2488-90 (uncertain status of industrial designs under diverse regimes, including copyright law). 179. McManis, "Emerging Computer Technology," note 64, at p. 284; see also Kurtz, note 32, at pp. 120, 121, 124 (stressing risk that a chronic state of overprotection could "choke off opportunities for academic research and educational uses of intellectual property"). 180. Rosier, note 28, at pp. 141-42.
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--> 181. The OMB circular supra, note 155, suggests that pressures to privatize the distribution of government-funded data had already become a problem before the advent of the proposed database law in the United States. 182. See also Kurtz, note 32, at p. 121 (stating that overprotective legal monopolies ''can ... be as stifling to creation as underprotection ... [and they] can choke off opportunities for academic research and educational uses of intellectual property"). Even though the sole-source provider may not wish to price itself out of the market, this will be cold comfort to "those who cannot afford to pay, and [could thus] lead to a society of information haves and have nots." 183. See David and Foray, note 35. 184. See Reichman and Samuelson, note I, at pp. 113-30, 137-63. 185. See text accompanying notes 73-74. 186. See, e.g., Ginsburg, "Information After Feist," note 23, at pp. 384-387. 187. The ambivalence of the final E.C. Directive in this regard is explained in part by the fact that no serious fair-use provisions had previously been developed in the presence of the compulsory license that the Council of Ministers deleted at the last moment, and in part by the growing disinclination of both the European Union's and the United States' intellectual property authorities to recognize fair use in the digital environment. 188. Goldstein, Celestial Jukebox, note 21, at pp. 220-22. Gordon, "Fair Use as Market Failure," note 22. 189. Samuelson et al., "Manifesto," note 38, at pp. 2385-86 (discussing limits of legal protection for single features of computer programs). 190. See, e.g., OMB Circular A-130, U.S. Government Printing Office. For the problem of leakage as a limit on price discrimination, see Chapter 4. 191. See E.C. Directive on Databases, note 52, article 6(2). 192. For example, "NASA and Orbital Sciences ... reached an agreement regarding the Sea WiFS mission for ocean color data," a private endeavor "for which NASA provided upfront money for a data purchase ... [so that] the companies ... [could] get financial backing." Under this agreement, "the company had exclusive rights to exploit the data for a number of days, after which the data went to NASA for scientific purposes." Letter from Joanne Gabrynowicz, July 25, 1996. Reportedly, this agreement was possible owing to the perishability of ocean color data for commercial purposes. However, for some scientific disciplines, which depend on realtime observations, delay as a form of product differentiation is not feasible. This, in turn, suggests the importance of legal measures that permit providers and users to adjust the concept of fair use (or fair and reasonable terms) to the needs of different categories of users. 193. See, e.g., Reichman and Samuelson, note 1, at pp. 158-61. For the general importance of such a clause in the post-TRIPS environment, especially with regard to transfer of technology agreements, see Reichman, "From Free Riders to Fair Followers," note 59. 194. For example, licenses "issued pursuant to federal law for private remote sensing systems require that system operators make their commercially obsolete data available to the National Data Archive on 'reasonable terms and conditions.' The government does not require that they [be] give[n]. .. the data, nor does it set the criteria by which the decision is made. But if, and when, a company decides to purge data, it triggers the requirement, [which] ... amounts to the government having the right of first refusal." Letter from Joanne Gabrynowicz, July 25, 1996. 195. See, e.g., E.C. Directive on Databases, note 52, articles 7(5), 8(2) (forbidding lawful user of database to perform acts that "conflict with normal exploitation" or that "unreasonably prejudice [the maker's] legitimate interests"; see also H.R. 3531, note 131, sections 4(a), (b), 5. 196. See Reichman and Samuelson, note 1, at pp. 145-51. 197. Goldstein, Celestial Jukebox, quoted note 21; see also Ginsburg, "Information After Feist," note 23, at pp. 386-87 (deeming compulsory licenses indispensable under a noncopyright protection scheme).
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--> 198. Cf. TRIPS Agreement, note I 111, article 31(b) (allowing right of states to impose compulsory licenses on foreign patentees only if, prior to the grant, "the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions"). 199. See, e.g., Hunsuker, note 33.
Representative terms from entire chapter: