Buy the Numbers: Publishers Seek Special Database Monopoly Protections

By Robin Gross
July 2004


A new open-access online medical journal database teaches African doctors with no research budgets about new medicines and surgical techniques.  Scientists are able to study the "greenhouse effect" because weather data is made freely available to the public over the Internet.  Electronic databases have proliferated in recent years, creating new information products and services for the public.  The availability of information databases fuels innovation by lowering the costs of research and development and spreading knowledge to new sectors.

Databases exist in all shapes and sizes.  For example, proprietary databases of legal information are owned by companies such as Lexis-Nexis or Thomson (West) Publishing.  Databases containing financial information are primarily controlled by corporations such as Dow-Jones and Nasdaq.  Giant pharmaceutical companies like Pfizer and GlaxoSmithKline own databases containing human DNA gene sequences and medical research.  Major publishing houses such as MacGraw Hill, Reuters and Knight Ridder own vast collections of news and media information in their databases.

Several mechanisms currently exist for creating legal protections over the contents of these databases.  Under current U.S. copyright law, these databases may be protected as "compilations," which are defined as "a collection and assembling of preexisting materials or of data that are selected in such a way that the resulting work as a whole constitutes an original work of authorship."

But owners of large information databases contend that they need new laws to prevent "free-riders" from ripping off their work, particularly in a digital environment, where large-scale copying is easy.  Many want exclusive rights over every part of the databases they compile, including even the underlying information, which they may not have generated.

Smaller companies, libraries and consumers counter that creating new intellectual property rights over information contained in databases robs from the public domain, establishing monopoly control over information that should be freely available.  They also claim database legal protections increase the cost of research and development for all of society.  Erecting too great of a barrier to information chokeholds innovation and restrains competition.

Jonathan Band, an attorney with the law firm Morrison and Forester in Washington, D.C. explains the dual policy considerations in protecting databases.  "There needs to be sufficient protection to provide publishers with an incentive to invest in the development of databases," he says.  But "too much protection will prevent the creation of new databases that incorporate information extracted from existing databases, and this will halt the advancement of knowledge in all realms of human endeavor."

Achieving a balance between over-protection and under-protection is essential, says Band.  "Copyright law strikes this balance by providing protection against the wholesale copying of databases (by preventing the copying of a database's selection and arrangement), but allowing the extraction of individual items of data."

But database owners want more.

Sweat of The Brow

Under existing law, "there must be some degree of originality and independent creativity in the selection and arrangement of the particular facts for the database to be protected under copyright," explains Allonn E. Levy, an intellectual property attorney with the Silicon Valley law firm Hopkins and Carley.  And while the compilations themselves can be protected, the underlying facts cannot.

These restraints on database owners' power would be ended with new database protections.  Granting new rights for database owners would give them more power to control the public's use of facts, say critics.  Database owners would have power to decide who can conduct research and in what manner.  Overprotection leads to stifling innovation and chilling scientific inquiry.

In 1991, in Feist Publications, Inc. v. Rural Telephone Service Company, the U.S. Supreme Court refused to grant copyright protection for telephone "white page" listings (i.e., names and phone numbers arranged alphabetically), ruling that the U.S. Constitution forbids the copyrighting of facts.

Prior to the landmark Feist decision, several lower courts had permitted copyright protection for databases based on the "sweat of the brow" legal doctrine.  Under this theory, courts reasoned that since it required effort to collect, verify and present facts and other data in order to create a database, that the effort alone deserved a legal reward.  But in Feist, the U.S. Supreme Court expressly overturned copyright protection under this doctrine, stating that originality is a constitutionally mandated prerequisite for copyright protection.

Justice Sandra Day O'Connor delivered the court's opinion in Feist, ruling that "only the compiler's selection and arrangement may be protected; the raw facts may be copied at will.  This result is neither unfair nor unfortunate.  It is the means by which copyright advances the progress of science and art."

In 1997, the 2nd Circuit Court of Appeals created a narrow exception to the Supreme Court's requirement of originality with the "hot news" doctrine, permitting database owners to block competitors from using certain highly time-sensitive information.  The U.S. Supreme Court has yet to take up the issue of this doctrine's departure from the originality requirement, however.

Database owners have been more successful in winning monopoly protections in Europe, which is not bound by the U.S. Constitution and its First Amendment rights.  In 1996, the European Union passed a Database Directive, which was designed to harmonize national law across all EU Member States.  The directive created a 15-year term of exclusive rights for a database compiler -- but also established that any verification or updating to the database triggers a new 15-year term of protection.  Designed to protect the "sweat of the brow" of the database creator, the directive grants rights for the compilers of both electronic and non-electronic databases, preventing unauthorized extraction or reutilization of a substantial part of their contents.  It is also an infringement to extract or reutilize "insubstantial parts of the contents of the database."  And databases are additionally protected by copyright as intellectual creations.

Under the EU's database rules, mundane efforts such as soccer match listings, street directories and television schedules are fully protected as original copyrighted works.

Since its implementation in national legislatures throughout Europe in recent years, the EU Database Directive has generated substantial criticism.  "Key notions, such as the requirement of ësubstantial' investment or the notion of ërepeated and systematic' extraction, remain open to conflicting interpretation and controversy," says University of Amsterdam Law Professor P. Bernt Hugenholtz. As a result, competitors are chilled from using or upgrading existing databases.

Jonathan Band agrees that the EU Database Directive is blocking innovation.  "Over 100 database cases have been initiated, and courts are rendering inconsistent judgments. At least two cases have been referred to the European Court of Justice."  Band says that much of the database litigation has involved specialized Internet search engines.  "The flood of litigation has had a chilling effect on the development of new search products in Europe," he says.

Companies are afraid to utilize information that could be contained in a database for fear of litigation, even if the companies never accessed the database and acquired the data from an intermediate source, for example a newspaper or the Internet.

The European Court of Justice Advocate General Stix-Hacki issued an opinion in June 2004 that upheld the broad scope of rights for database owners in the EU.  The AG said that prohibited "reutilization" of the data covers "not only the making available to the public of the contents of the database," but also material derived "indirectly from the database," even if a person did not have direct access to the database.  Even if the data is in the public domain, "that does not preclude parts of the database containing data in the public domain from also enjoying protection."  Even if a person never accessed or had knowledge of a database's existence, that person can be prevented from using public domain information contained in that database.  Whether the European Court of Justice will follow this approach remains to be seen.

Database owners are strongly supportive of the EU approach.  "The EU Database Directive has served its purpose, as it has created an incentive for the greater production of databases in Europe," says Keith Kupferschmid, a representative from the Software and Information Industry Association (SIIA).  "The directive is fast becoming the international standard for database legal protection."

SIIA lobbies for expanded database rights on behalf of publishing powerhouses such as AOL Time Warner, the Wall Street Journal, Reuters, Reed Elsevier, MacGraw Hill and the New York, Tokyo and Nasdaq Stock Exchanges.

Innovation and Exclusivity

The argument behind creating database rights is an economic one.  "Like other types of intellectual property, creators of databases will not put in their time and energy to create a database if others will just take its contents," Kupferschmid explains.  Creating databases requires labor and resources, such as software and server or storage space.  Someone must invest substantial energy for a database to provide value to the public.

Excessive database protections stifle innovation by raising the barriers to information and increasing costs.  Newspapers and magazines could not publish television program schedules without licenses from the networks. Sports scores and weather information could only be available on a licensed basis as well.  Small- and medium-sized businesses claim this inhibits their ability to compete with large corporate database owners.  If companies suddenly have to pay for information they are accustomed to getting for free, costs are passed on to consumers in higher prices and less choice.

But not all databases are created by corporate labor.  Several years ago, thousands of members of the public created an online database of music CDs by voluntarily entering in their own CD's information into the database.  When the CD database became large and thus valuable, the company CDDB, which maintained the database, decided to turn the database "proprietary" and only permit the public access to the information on a licensed basis.  And anyone wishing to build CD players, software, or other equipment capable of reading the information also must pay CDDB for a license to access the publicly donated CD data.

Kupferschmid, whose lobbying group SIIA represents both Lexis Nexis and West publishing companies, answers critics by explaining, "database companies are also database users.  They couldn't get access to databases either if the legal protections were excessive."  Both proprietary legal databases continue to be popular despite the emergence of free online databases of court rulings such as Findlaw.com.

Kupferschmid testified before a U.S. Congressional committee hearing earlier this year in support of a bill to create legal protection for the contents of databases created in the United States. Introduced by Representative Howard Coble, R-North Carolina, the Database and Collections of Information Misappropriation Act, or HR 3261, is the sixth legislative attempt to copyright facts since the Feist decision.  A North Carolina Republican, Coble has initiated most of these unsuccessful database bills in Congress.

Representative Richard Boucher, D-Virginia, supplied a dissenting view on the Coble Bill at its committee hearing.  "H.R. 3261 would essentially allow database producers to lock up facts, making them available to the American public only for a fee or not at all if such restrictions would give the database owners a competitive advantage.  Competition in the information market would be restricted, leading to higher prices and less innovation."

Boucher, who is active on Internet and intellectual property matters in the House of Representatives Commerce Committee warned, "enactment of the legislation could undermine the ability of American citizens to express their First Amendment and other constitutionally based rights."

The American Library Association (ALA) also adamantly opposes the database protections proposed by HR 3261.  According to Rick Weingarten, director of the ALA's Office of Information Technology Policy, "it turns intellectual property law on its head, in that facts have never enjoyed intellectual property protection, for reasons that lie at the very heart of the purposes of intellectual property -- to stimulate creativity, education and new invention."

In 1996, the World Intellectual Property Organization (WIPO), a treaty-making body within the United Nations, considered a proposal to pass a global treaty requiring countries to enact database rights.  Due to an organized consumer campaign, the treaty was ultimately rejected. But it remains on the agenda of WIPO's Copyright and Related Rights Committee and its revival continued to be debated at the committee's last meeting in June 2004.

The future of global database rights remains uncertain. Kupferschmid says that he "doubts WIPO will do anything until the U.S. moves forward on the issue," but adds that, "SIIA will continue to push for database legislation."

Band says a new WIPO treaty on databases is unnecessary.  The WIPO Copyright Treaty and the World Trade Organization's intellectual property agreement require countries to provide copyright protections for original databases.  More is not needed, he says.  "There is no evidence of a global lack of protection for databases that is diminishing the incentive for their production."

"Traditionally," says Levy of Hopkins and Carley, "governments have extended limited monopolies over intellectual property in order to safeguard the abilities of creators and encourage continued innovation.  However, database initiatives both in the United States and abroad appear motivated by nothing more than a desire to obtain an advantage over competitors by locking up publicly available data."

Library groups, including the ALA, are among the most consistent and vocal opponents of a WIPO Database Treaty.  According to Weingarten, "there has never been a shred of demonstrated evidence of a problem that database protection would solve."

But strong resistance in the United States to new database powers does not mean that they will not be created.  Cautions Levy, "In the past, when industry groups have been unsuccessful in creating new intellectual property rights at the national level, they have simply lobbied to include those measures in international treaties and then forced the unpopular legislative change at home."



Robin Gross is an attorney and Executive Directive of IP Justice, a San Francisco-based grassroots civil liberties organization that promotes balanced intellectual property law and protects freedom of expression.

This article was first published in "The Political Economy of R & D" by the Multi-National Monitor, July/August 2004 - Volume 25 - Numbers 7 & 8.