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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases Summary Legislative efforts are currently under way in the United States, the European Union, and the World Intellectual Property Organization (WIPO) to greatly enhance the legal protection of proprietary databases. One of these efforts, the European Union's 1996 Directive on the Legal Protection of Databases,1 already has been finalized and is now being implemented by the European Union's member states, while other legislative initiatives in the U.S. Congress and WIPO are still pending action. As discussed in detail in the 1997 report Bits of Power: Issues in Global Access to Scientific Data2 and in subsequent publications,3 these new legal approaches threaten to compromise traditional and customary access to and use of scientific and technical (S&T) data for public-interest endeavors, including not-for-profit research, education, and general library uses. At the same time, there are legitimate concerns by the rights holders in databases regarding unauthorized and uncompensated uses of their data products, including at times the wholesale commercial misappropriation of proprietary databases. 1 The E.U. Database Directive—Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the Legal Protection of Databases, 1996 O.J. (L77) 20. The E.U. Database Directive is reprinted as Appendix D of this report. 2 National Research Council (1997), Bits of Power: Issues in Global Access to Scientific Data, National Academy Press, Washington, D.C. 3 See, e.g., J.H. Reichman and Paul F. Uhlir (1999), ''Database Protection at the Crossroads: Recent Developments and Their Impact on Science and Technology," Berkeley Technology Law Journal, Vol. 14, No. 2, p. 793, and Stephen M. Maurer and Suzanne Scotchmer, "Database Protection: Is It Broken and Should We Fix It?" Science, Vol. 284, p. 1129.
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases Factual data are both an essential resource for and a valuable output from scientific research. It is through the formation, communication, and use of facts and ideas that scientists conduct research and educate students. Our nation has a vibrant and demonstrably productive sector of S&T database producers, disseminators, and users that has led the world. Advances in computing and communications technologies make S&T databases and the facts they contain increasingly valuable for producing new discoveries and for accelerating the growth of knowledge and the pace of innovation. The same technologies that facilitate the effective production, dissemination, and use of digital databases, however, can also expedite their unauthorized dissemination and use, undermining incentives to create new databases, enabling unfair competition and wholesale misappropriation, and in the most extreme cases, exposing the original database rights holder to market failure. The institutions, organizations, and individuals involved form a highly complex web of interrelationships—some competing and some complementary, some creating or using original data collections or derivative productions, and spanning activities in both public and private, national and international, and scientific and non-scientific contexts (see Table S.1 for some representative examples of different types of S&T database activities). Although these diverse actors all have their own goals and motivations, they nonetheless may be broadly characterized in three fairly distinct groups. The first is the government sector, which produces S&T databases as a public good and has a mandate under OMB Circular A-1304 to disseminate the fruits of those activities as broadly and openly as possible, and to provide efficient access. The second is the commercial-Sector, which produces databases as a private good and typically maintains those data on a proprietary and restricted basis, either for internal purposes or for commercial vending, with the goal of full cost recovery plus profit. The third is the not-for-profit sector, which includes universities, research institutes, and various public-interest organizations that produce databases in support of their institutional mission and typically disseminate data on a cost-recovery basis, which can cause them to take a middle ground in terms of treating their databases as a public or a private good. As users of databases, all three sectors support the public good approach of the federal government to data distribution, and all seek to minimize the costs they may need to pay for access to and use of data from private-sector sources. A principal concern of the committee is that the development of any new database protection measures directed toward protecting private-sector investments take into account the need to promote access to and subsequent use of S&T data and databases not only by the not-for-profit sector, but by for-profit creators of derivative databases as well. 4 Office of Management and Budget (1993), Circular A-130, "Management of Federal Information Resources," U.S. Government Printing Office, Washington, D.C.
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases Numerous legal, technical, and market-based approaches already exist to protect proprietary rights in databases. Existing legal measures include (1) copyright law, recently updated and strengthened for the online digital environment; (2) licensing, a subset of contract law, which is increasingly the method of choice for online vendors of proprietary databases and other information products; (3) trade secret law, used in conjunction with contract law and various new technological protections; and (4) unfair competition law in state common law, which is of limited value for database protection at this time but is viewed as a potential model for a new federal database protection statute. These legal measures are being supported with increasing efficiency online by technological protections such as digital encryption, watermarks, download limitations, access controls, and both hardware- and software-based trusted systems. Finally, there are important market-based approaches to protecting databases, such as frequent updating or customizing of database content, that can help prevent stolen databases from undermining the rights holder's market for very long or very broadly. For public-sector databases, including S&T databases, there are well-established laws and policies in place5 that generally prohibit proprietary protections of databases by the government and that treat those data as public goods and promote their full and open availability to the public. While many not-for-profit S&T database producers and vendors—especially those that receive government funding for their activities—adhere to the policy of full and open data availability for public-sector databases, other not-for-profits seek the full protection of the law for their proprietary databases. This division of interests has been further exacerbated by the enactment of the 1996 E.U. Database Directive, which provides strong and unprecedented property rights in public- and private-sector databases and the substantial components of such databases. The current efforts to enact statutory federal database protection in the United States appear to be stimulated by three principal factors: (1) the possibility for rapid and complete database copying with the potential for instantaneous broad dissemination; (2) a gap in U.S. law created by the Feist6 decision, which served as the final blow to invalidating copyright protection on the basis of "sweat-of-the-brow" investments alone; and (3) the E.U. Database Directive, which requires non-E.U. nations to pass a similar law in order for their citizens to enjoy the directive's protections in Europe, thereby providing a potentially unfair advantage to European competitors of the U.S. private-sector. The committee believes, however, that the need for additional statutory pro 5 See, e.g., 44 U.S.C., section 3506(d)(1)(A) (Supp. 1995), and Office of Management and Budget (1993), Circular A-130, note 4. 6 Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991). It is important to note, however, that Feist did not "overturn" the "sweat-of-the-brow" doctrine under copyright, which Congress had actually done already under the Copyright Act of 1976. Moreover, the sweat-of-the-brow doctrine under state law was never a prevailing legal approach.
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases TABLE S.1 Examples of Different Types of S&T Database Activities Discussed in the January 1999 Workshop Organization (Sector) Information and Tools Provided Data Sources Geographic and Environmental U.S. Geological Survey (USGS) (Government) Geographic data: maps and map products Data from other programs: biologic, geologic, hydrologic USGS, other federal agencies, state and local governments, not-for-profit researchers, partnerships with private-sector Long-Term Ecological Research (LTER) Network Office (Not-for-Profit) Site description database, integrated climate database, remotely sensed ecological data Ecological researchers at distributed sites belonging to the LTER network GeoSystems Global Corp. (Commercial) Digital maps, MapQuest Web site, mapping services From the public domain: government-produced maps (federal, state, local), digital geographic data, remotely sensed imagery Other sources: commercial and other countries' maps, digital data, remotely sensed imagery, other published sources Genomic National Center for Biotechnology Information (Government) GenBank: DNA and protein sequence data; Other genomic mapping databases; 3D protein structure database; bibliographic databases; software tools Direct contributions from scientists; access to other databases from government, not-for-profit, other country sources Center for Bioinformatics University of Pennsylvania (Not-for-Profit) Specialized biological databases; software tools for integration of distributed heterogeneous databases Proprietary and public-domain experimental data from academic researchers; manual processing and encoding of data from published literature; online molecular and cellular biology and genomic databases Molecular Applications Group (Commercial) Software for storing, mining, and visualizing genomic data; databases derived from public and private data and proprietary software >150 online database sites, public and proprietary
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases Users Dissemination Modes USGS, other government agencies, commercial database providers and value adders, researchers, and the general public Maps: hard copy (paper, plastic, film) and digital form; distributed by agency directly and through partnerships with private-sector, not-for-profit sector Researchers Internet, some tape and CD-ROM for portability Commercial clients: large companies and consumers Maps: hard copy and digital form Software products distributed via retail channels (CD-ROM) and directly to corporate customers Mapping services distributed via Internet Research scientists in academic, government, commercial organizations Internet access via Web servers and File Transfer Protocol (FTP) Research scientists in academic, government, commercial organizations (U.S. and abroad) Internet access Source code distributed directly Research scientists in academic, government, commercial organizations (U.S. and abroad) Some software products downloaded from the Web; others require on-site expert installation
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases Organization (Sector) Information and Tools Provided Data Sources Chemical and Chemical Engineering National Institute of Standards and Technology (NIST) Physical and Chemical Properties Division (Government) Specialized chemistry and chemical engineering databases (extensively evaluated and documented) Experimental results from published literature; experiments done specifically for data acquisition; published data evaluations; supplementary data deposits Chemical Abstracts Service American Chemical Society (Not-for-Profit) Chemical Abstracts: bibliographic database Registry: registry of chemical substances Software access tools Journals, patents, books, proceedings, dissertations Institute for Scientific Information (Commercial) Bibliographic databases: citation indexes, tables of contents Information services Linkages to publishers' full text databases Journals, books, proceedings (print and electronic format) Meteorological National Climatic Data Center (Government) Climatological summaries from National Weather Service stations; historical long-term climatic databases National Weather Service, World Meteorological Organization, NASA, bilateral agreements with other countries Unidata Program, University Corporation for Atmospheric Research (Not-for-Profit) Quasi-real-time atmospheric and related data Case study data sets Software tools Public: National Weather Service, National Environmental Data Service Private: network of lightning sensors, sensors in commercial aircraft TASC (Commercial) Real-time weather information Public: National Weather Service—downlink directly from U.S. and international weather satellites, other observational sources NOTE: Although the subject matter of this study included all S&T databases, the committee was able to choose only representative examples for discussion and analysis in the report. For instance, specific examples from the social sciences or the space sciences, among other disciplines, were not included.
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases Users Dissemination Modes Researchers in academic, government, commercial organizations (some databases used primarily by industrial users) Variety of forms: hard copy publication, CD-ROM or floppy disk, Internet access; NIST distributes directly or via agreements with secondary distributors Researchers in academic, government, commercial organizations; patent examiners; students Electronic access, hard copy, CD-ROM Academic, government lab, and corporate libraries; researchers in academic, government, commercial organizations Diskette, CD-ROM, FTP files, Internet access, hard copy Individuals, commercial clients, government agencies, engineering uses Hard-copy, microfiche, magnetic tape, disks, CD-ROM, FTP, Internet Academic departments Internet News media (broadcast and cable TV), aviation, energy and power, agribusiness Public and private data communication networks: satellite broadcasting services and Internet
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases tection has not been sufficiently substantiated. The high level of activity in the production and use of digital S&T (and other) databases in the United States serves as prima facie evidence that the threats of misappropriation do not constitute a crisis. Nor do the existing legal, technical, and market-based measures provide a chronic state of underprotection for proprietary databases. The almost universal use of licensing, rather than sale, of online databases and other digital information, coupled with technological enforcement measures, on balance potentially provides much stronger protections to the vendors vis-à-vis their customers than they enjoyed prior to Feist and under the print media copyright regime. While some of the current law providing protection to database rights holders remains uncertain in terms of scope of applicability, the trend in recent years has been to broaden, rather than narrow, applicable intellectual property protections. Moreover, for the many reasons discussed in this report, strong statutory protection of databases would have significant negative impacts on access to and use of S&T databases for not-for-profit research and other public-interest uses (see Table S.2). Nevertheless, although the committee opposes the creation of any strong new rights in compilations of factual information, it recognizes that limited new federal legal protection against wholesale misappropriation of databases may be appropriate. In particular, a balanced alternative to the E.U. Database Directive might be achieved in a properly scoped and focused new U.S. law, one that could then serve as a model for an international treaty in this area. Recommendations Because of the complex, interdependent relationships among public-sector and private-sector database producers, disseminators, and users, any action to increase the rights of persons in one category likely will compromise the rights of the persons in the other categories, with far-reaching and potentially negative consequences.7 Of course, it is in the common interest of both database rights holders and users—and of society generally—to achieve a workable balance among the respective interests so that all legitimate rights remain reasonably 7 The potential for unintended consequences from new sui generis intellectual property legislation and the need for caution were emphasized by the former chairman of the House Committee on the Judiciary, Robert W. Kastenmeier, in Kastenmeier and Remington (1985), "The Semiconductor Chip Protection Act of 1984: A Swamp or Firm Ground?" Minn. L. Rev ., Vol. 70, pp. 417,440-442, where the authors suggested that any proposal for such legislation should meet a four-point test: (1) that the protection would fit harmoniously with other intellectual property regimes; (2) that the new protection can be defined in a reasonably clear and satisfactory manner; (3) that the new proposal is based on an honest analysis of all the costs and benefits; and (4) that the legislation should show clearly that it would enrich and enhance the "aggregate public domain."
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases TABLE S.2 Summary Comparison of Not-for-Profit Research User Rights Under Traditional Copyright and Under Online Licensing When Combined with Sui Generis Database Protection Legislation Traditional Copyright Law Licensing Plus Sui Generis Protection Such as Provided by the E.U. Database Directive 1. User can immediately use all disparate factual data and information disclosed in a database; copyright law does not protect ideas or facts. Fair use exception available for certain additional research or educational uses, even of protected expression. 1. Even after paying for access to factual data and information, which are not copyrightable by definition, user faces limitations on use in any ways prohibited by the license and as reinforced by the legislation; user cannot distribute another database, using the same factual data or information, without either seeking permission and perhaps paying another fee or regenerating those protected data independently. 2. User can independently create another version of a database and sell it; copyright law allows independent creation, and all factual data are in the public domain. 2. User can independently create another version of the database. If this is not possible, user needs a license or permission to combine legitimately accessed factual data or information into a derivative data product; the licensor can claim that the user is violating redistribution and other rights, and the user must guess what courts will consider to be a quantitatively or qualitatively insubstantial part of the database; the licensor is under no duty to grant such a license; and if a sole-source, the licensor may not want any competition from follow-on products. 3. User can combine noncopyrightable factual data with other data and information into a multiple-source or interdisciplinary database for research or educational purposes without permission or additional payment to the originators.a 3. User cannot lend, give, or sell data to others even after paying for access (unless permitted by the license) because there is no first sale, only a license; user would have to obtain express permission and perhaps pay additional fees to avoid the risk of harming the market (e.g., possibly causing one lost sale). 4. User can make limited or "fair use" of even protected expression for not-for-profit research or classroom purposes; such uses often deemed fair or privileged uses under statutory law or precedents. 4. Because there are no limits on licensing, user is subject to database vendor overriding even those exceptions contained in the legislation, including exceptions for research, education, or other public-interest uses. 5. Following the first purchase of a copyrightable database in hard copy, user can lend, give, or resell it to anyone else under the first sale doctrine, borrow it from a library, use it at any time for virtually any [lawful] purpose, and make a copy of it for personal or scholarly purposes. 5. During the period of protection, user rights depend on the terms of the license supported by the new property right; database would not enter the public domain for at least 15 years (and in Europe possibly never if the rights holder continues to invest in maintenance or updates of a dynamic database). NOTE: This summary table was compiled from a more detailed comparative discussion presented in an article by J.H. Reichman and Paul F. Uhlir (1999), "Database Protection at the Crossroads: Recent Developments and Their Impact on Science and Technology," Berkeley Technology Law Journal, Vol. 14, No. 2, pp. 799-821. a Acknowledgment of sources is an appropriate academic norm, but their express permission is not required.
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases protected. Therefore, as a general guiding principle, the committee recommends that any new federal protection of databases should balance the costs and benefits of the proposed changes for both database rights holders and users. In addition to this general principle, the committee makes a number of recommendations—based on its assessment of legislative options8 and related policy options—to the government, and it makes one recommendation to the not-for-profit S&T community. Recommended Legislative Principles The committee recommends that any new federal statutory protection of databases incorporate the following principles: Limit any additional protection to prohibition of acts of unauthorized taking that cause substantial competitive injury to the database rights holder in the rights holder's actual market. The standard of harm should be sufficiently clear to permit good-faith users to know when they are infringing on a database rights holder's rights and should not undermine the nation's capabilities for innovation or competition in the marketplace. Constrain the subject matter scope to databases comprising a collection of discrete facts and items of information, and expressly exclude collections of copyrightable material, which is already protected . Protection under any new statute should extend only to a database that is the product of a substantial investment and not to any idea, fact, procedure, system, method of operation, concept, principle, or discovery disclosed by the database. Limit the term of protection to a period of time sufficient to provide incentives found necessary for the creation of new databases . If legislation with a fixed term of protection is adopted, an appropriate term of protection most likely should be substantially shorter than the proposed 15-year term. It also should be based on an analysis of the economics of the database industry, rather than set arbitrarily. 8 In response to its charge, the committee selected the three major legislative models that were introduced into the Congressional Record by Senator Orrin Hatch shortly after the committee's January 1999 workshop. See Cong. Rec., Vol. 106, S. 316 (Jan. 19, 1999). The committee evaluated and compared the major provisions of these three models in arriving at the consensus principles and recommendations presented here. The rationale for each recommended principle or action is contained in Chapter 4. In evaluating the three legislative proposals, the committee was well aware of the fact that they would change further and therefore presented "moving targets" for the study. It is for this reason that the committee's recommendations regarding any potential legislation in this area are offered as guiding principles, rather than as specific language for a specific bill.
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases In any new legislation with a fixed term of protection, require database rights holders to provide notice of expiration of the term of protection. Specifically, any such legislation should:. Require database rights holders to identify the date on which a database was created so that the user will know when it no longer enjoys statutory protection (of course, those databases that remain commercially valuable longer than the statutory period of protection can continue to be protected by other means, such as copyright, trade secret, contract, and technical and other measures); and Require rights holders of databases that are updated continuously, or at periodic intervals, to identify with reasonable precision those substantial portions of the database that are and are not subject to protection. Failure to identify the date of creation for each new substantial portion of a database should serve as a basis for a defense against infringement after the expiration of the term of protection for the original portion of the database. Apply protection only to databases created after the effective date of any new legislation, in recognition that a major purpose of enacting enhanced protection is to provide additional incentives for the development of new databases. Expressly continue to provide legal rights of access to and uses of proprietary databases equivalent to those that not-for-profit researchers, educators, and other public-interest users enjoyed under traditional or customary practice prior to enactment of any new legislation . Courts should be allowed to invalidate any non-bargained9 licensing terms that are shown to interfere unduly with otherwise legislatively permitted customary uses by not-for-profit entities. Provide either for a sunset provision with the possibility to renew, or for periodic assessments of the effects of new statutory database protection on competition in the database market and on consumers of databases, as well as on access to and use of data—including S&T data—by not-for-profit, public-interest users, in order to enable timely and appropriate revision of legislation as needed. Although private-sector databases derived from government data should be eligible for protection, protection should not be extended to databases collected or maintained by the government. Any new legislation should 9 By ''non-bargained term" the committee means any term, usually contained in a standard form contract, over which, as a practical matter, no actual bargaining by the parties to the contract takes place.
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases expressly affirm the need for continuation of existing legal norms for wide distribution of government data and of data created pursuant to a government mandate or funding. Recommended Policy Actions for Government Although the committee believes that its recommended actions in these areas ought to be undertaken whether or not any new statutory database protection is enacted by Congress, all of these actions will take on an increased urgency and importance if relatively strong proprietary rights are established by federal statute. Scientific and technical data owned or controlled by the government should be made available for use by not-for-profit and commercial entities alike on a nonexclusive basis and should be disseminated to all users at no more than the marginal cost of reproduction and distribution, whenever possible. While the private-sector's creation of derivative databases from government data should be encouraged, the source of the original government data must ensure that those data remain openly available. Any information product derived from a government database also should be required to carry an identifier stating the government source(s) used. Federal funding agencies should require university and other not-for-profit researchers or their employing institutions that use federal funds, wholly or in substantial part, in creating databases not to grant exclusive rights to such databases when submitting them for publication or for incorporation into other databases. The Copyright Office should sponsor discussions between the representatives of private-sector producers of databases and user stakeholder representatives from government agencies and not-for-profit groups to help develop a common understanding and optimal terms for the licensing of S&T databases and data products. Federal government agencies, including federal science agencies as appropriate, should undertake and fund external research that investigates the changing and complex economic aspects of S&T database activities, particularly in the context of any new legislative database protection measures that may be enacted and in support of legislative principle number 7 recommended above. All departments and agencies of the federal government should continue to adopt international S&T agreements that include provisions to facilitate access to S&T data across national boundaries and should conduct
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A Question of Balance: Private Rights and the Public Interest in Scientific and Technical Databases periodic reviews of international policies and agreements to promote conformity to the above principles. The U.S. government should negotiate with the Commission of the European Communities to revise its highly protectionist E.U. Database Directive. Recommended Approach for the Not-for-Profit S&T Community The not-for-profit S&T community should continue to promote and adhere to the policy of full and open exchange of data at both the national and international levels.
Representative terms from entire chapter: