[House Report 108-421]
[From the U.S. Government Publishing Office]
108th Congress Rept. 108-421
HOUSE OF REPRESENTATIVES
2d Session Part 2
======================================================================
DATABASE AND COLLECTIONS OF INFORMATION MISAPPROPRIATION ACT
_______
March 11, 2004.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Barton of Texas, from the Committee on Energy and Commerce,
submitted the following
ADVERSE REPORT
[To accompany H.R. 3261]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 3261) to prohibit the misappropriation of
certain databases, having considered the same, report
unfavorably thereon with an amendment and recommend that the
bill do not pass.
CONTENTS
Page
Amendment........................................................ 1
Purpose and Summary.............................................. 7
Background and Need for Legislation.............................. 7
Hearings......................................................... 10
Committee Consideration.......................................... 10
Committee Votes.................................................. 10
Committee Oversight Findings..................................... 10
Statement of General Performance Goals and Objectives............ 10
New Budget Authority, Entitlement Authority, and Tax Expenditures 10
Committee Cost Estimate.......................................... 10
Congressional Budget Office Estimate............................. 11
Federal Mandates Statement....................................... 12
Advisory Committee Statement..................................... 12
Constitutional Authority Statement............................... 12
Applicability to Legislative Branch.............................. 12
Section-by-Section Analysis of the Legislation................... 12
Changes in Existing Law Made by the Bill, as Reported............ 15
AMENDMENT
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Database and Collections of
Information Misappropriation Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Collective work.--The term ``collective work'' means a
work, such as a periodical issue, anthology, or encyclopedia,
in which a number of contributions, constituting separate and
independent works in themselves, are assembled into a
collective whole.
(2) Commerce.--The term ``commerce'' means all commerce which
may be lawfully regulated by the Congress.
(3) Compilation.--The term ``compilation'' means a work
formed by the collection and assembling of preexisting
materials or of data that are selected, coordinated, or
arranged in such a way that the resulting work as a whole
constitutes an original work of authorship. The term
``compilation'' includes collective works.
(4) Database.--
(A) In general.--Subject to subparagraph (B), the
term ``database'' means a collection of a large number
of discrete items of information produced for the
purpose of bringing such discrete items of information
together in one place or through one source so that
persons may access them.
(B) Exclusions.--The term database does not include
any of the following:
(i) A work of authorship, other than a
compilation or a collective work.
(ii) A collection of information that
principally performs the function of
addressing, routing, forwarding, transmitting,
or storing digital online communications or
receiving access to connections for digital
communications, except that the fact that a
collection of information includes or consists
of online location designations shall not by
itself be the basis for applying this clause.
(iii) A collection of information gathered,
organized, or maintained to perform the
function of providing schedule and program
information for multichannel audio or video
programming.
(iv) A collection of information gathered,
organized, or maintained to register domain
name registrant contact data maintained by a
domain name registration authority, unless such
registration authority takes appropriate steps
to ensure the integrity and accuracy of such
information and provides real-time,
unrestricted, and fully searchable public
access to the information contained in such
collection of information.
(C) Discrete sections.--The fact that a database is a
subset of a database shall not preclude such subset
from treatment as a database under this Act.
(5) Domain name.--The term ``domain name'' means any
alphanumeric designation which is registered with or assigned
by any domain name registrar, domain name registry, or other
domain name registration authority as part of an electronic
address on the Internet.
(6) In concert.--A person acts ``in concert'' with another
person who makes a database available in commerce if the act of
making available in commerce is planned, arranged, coordinated,
adjusted, agreed upon, or settled between the two persons
acting together, in pursuance of some design or in accordance
with some scheme.
(7) Information.--The term ``information'' means facts, data,
works of authorship, or any other intangible material capable
of being generated or gathered.
(8) Internet.--The term ``Internet'' means the combination of
computer facilities and electromagnetic transmission media, and
related equipment and software, comprising the interconnected
worldwide network of computer networks that employ the
Transmission Control Protocol/Internet Protocol or any
successor protocol to transmit information.
(9) Legal entity.--The term ``legal entity'' means a person,
other than an individual, including a firm, corporation, union,
or other organization, which is organized under the laws of the
United States, a State, the District of Columbia, or any
commonwealth, territory, or possession of the United States, or
the laws of a foreign country.
(10) Maintain.--To ``maintain'' a database means to update,
validate, or supplement the information contained in the
database.
(11) Making available in commerce to others.--The term
``making available in commerce to others'' means making
available in commerce to--
(A) a substantial number of members of the public; or
(B) a number of persons that extends beyond--
(i) a family and its social acquaintances; or
(ii) those who could reasonably anticipate to
have a database made available in commerce to
them without a customary commercial
relationship.
A court may take into account repeated acts directed to
different persons by the same or concerted parties in
determining whether the limits imposed by subparagraph (B)(ii)
have been exceeded.
SEC. 3. PROHIBITION AGAINST MISAPPROPRIATION OF DATABASES.
(a) Liability.--Any person who makes available in commerce to others
a quantitatively substantial part of the information in a database
generated, gathered, or maintained by another person, knowing that such
making available in commerce is without the authorization of that other
person (including a successor in interest) or that other person's
licensee, when acting within the scope of its license, shall be liable
for the remedies set forth in section 7 if--
(1) the database was generated, gathered, or maintained
through a substantial expenditure of financial resources or
time;
(2) the unauthorized making available in commerce occurs in a
time sensitive manner and inflicts injury on the database or a
product or service offering access to multiple databases; and
(3) the ability of other parties to free ride on the efforts
of the plaintiff would so reduce the incentive to produce or
make available the database or the product or service that its
existence or quality would be substantially threatened.
(b) Injury.--For purposes of subsection (a), the term ``inflicts an
injury'' means serving as a functional equivalent in the same market as
the database in a manner that causes the displacement, or the
disruption of the sources, of sales, licenses, advertising, or other
revenue.
(c) Time sensitive.--In determining whether an unauthorized making
available in commerce occurs in a time sensitive manner, the court
shall consider the temporal value of the information in the database,
within the context of the industry sector involved.
SEC. 4. PERMITTED ACTS.
(a) Independently Generated or Gathered Information.--This Act shall
not restrict any person from--
(1) independently generating or gathering information
obtained by means other than extracting it from a database
generated, gathered, or maintained by another person; and
(2) making that information available in commerce.
(b) Acts of Making Available in Commerce by Nonprofit Scientific or
Research Institutions.--Subject to section 9, the making available in
commerce of a substantial part of a database by a nonprofit scientific
or research institution, including an employee or agent of such
institution acting within the scope of such employment or agency, for
nonprofit scientific or research purposes shall not be prohibited by
section 3 if the court determines that the making available in commerce
of the information in the database is reasonable under the
circumstances, taking into consideration the customary practices
associated with such uses of such database by nonprofit scientific or
research institutions and other factors that the court determines
relevant.
(c) Hyperlinking.--Nothing in this Act shall restrict the act of
hyperlinking of one online location to another or the providing of a
reference or pointer (including such reference or pointer in a
directory or index) to a database.
(d) News Reporting.--Nothing in this Act shall restrict any person
from making available in commerce information for the primary purpose
of news reporting, including news and sports gathering, dissemination,
and comment, unless the information is time sensitive and has been
gathered by a news reporting entity, and making available in commerce
the information is part of a consistent pattern engaged in for the
purpose of direct competition.
SEC. 5. EXCLUSIONS.
(a) Government Information.--
(1) In general.--Except as provided in paragraph (2),
protection under this Act shall not extend to--
(A) a database generated, gathered, organized, or
maintained by a Federal, State, or local governmental
entity, or by an employee or agent of such an entity,
acting within the scope of such employment or agency;
or
(B) a database generated, gathered, or maintained by
an entity pursuant to and to the extent required by a
Federal statute or regulation requiring such a
database.
(2) Exception.--Nothing in this subsection shall preclude
protection under this Act for a database gathered, organized,
or maintained by an employee or agent of an entity described in
paragraph (1) that is acting outside the scope of such
employment or agency, or by a Federal, State, or local
educational institution, or its employees or agents, in the
course of engaging in education, research, or scholarship.
(b) Computer Programs.--
(1) Protection not extended.--Subject to paragraph (2),
protection under section 3 shall not extend to computer
programs, including any computer program used in the
manufacture, production, operation, or maintenance of a
database, or to any element of a computer program necessary to
its operation.
(2) Incorporated databases.--A database that is otherwise
subject to protection under section 3 is not disqualified from
such protection solely because it resides in a computer
program, so long as the collection of information functions as
a database within the meaning of this Act.
SEC. 6. RELATION TO OTHER LAWS.
(a) Other Rights Not Affected.--
(1) In general.--Subject to subsection (b), nothing in this
Act shall affect rights, limitations, or remedies concerning
copyright, patent, trademark, design rights, antitrust, trade
secrets, privacy, access to public documents, and misuse.
(2) Right of contract.--Notwithstanding subsection (b),
nothing in this Act shall affect rights, limitations, or
remedies concerning the common law right of contract.
(b) Preemption of State Law.--
(1) Laws regulating conduct that is subject of the act.--On
and after the effective date of this Act, no State statute,
rule, regulation, or common law doctrine that prohibits or
otherwise regulates conduct that is prohibited or regulated
under this Act shall be effective.
(2) Clarification of inapplicability to cases not involving
commercial competition.--Paragraph (1) shall not apply to
preempt actions under State law against a person for taking
actions that--
(A)(i) disrupt the sources of data supply to a
database; or
(ii) substantially impair the perceived accuracy,
currency, or completeness of data in a database by
inaccurate, untimely, or incomplete replication and
distribution of such data; and
(B) do not involve the person making available in
commerce the data from such database in competition
with such database.
(c) Communications Act of 1934.--Nothing in this Act shall affect the
operation of section 222(e) or any other provision of the
Communications Act of 1934 (47 U.S.C. 151 et seq.), or shall restrict
any person from making available in commerce or extracting subscriber
list information, as such term is defined in section 222(h)(3) of the
Communications Act of 1934 (47 U.S.C. 222(h)(3)).
(d) Securities.--Nothing in this Act shall--
(1) affect the operation of the Securities Act of 1933 (15
U.S.C. 78a et seq.), the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.), the Public Utility Holding Company Act of
1935 (15 U.S.C. 79a et seq.), the Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.), the Investment Company Act of 1940
(15 U.S.C. 80a-1 et seq.), the Investment Advisers Act of 1940
(15 U.S.C. 80b et seq.), or the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.), or the rules or
regulations thereunder;
(2) affect the authority of the Securities and Exchange
Commission; or
(3) apply to information with respect to quotations for, or
indications, orders, or transactions in, securities.
(e) Misuse.--Judicial doctrines of misuse shall apply under this Act.
SEC. 7. CIVIL REMEDIES.
(a) Civil Actions.--
(1) Commencement of actions.--Any person who is injured by a
violation of section 3 may bring a civil action for such a
violation in an appropriate United States district court. Any
action against a State governmental entity may be brought in
any court that has jurisdiction over claims against such
entity.
(2) Notice of commencement of actions and appeals.--Any
person who brings an action for such a violation, or who files
an appeal from any final decision on such an action, shall
transmit notice of such action or appeal to the Federal Trade
Commission, the United States Patent and Trademark Office, and
the Register of Copyrights, in accordance with subsection
(i)(1).
(b) Temporary and Permanent Injunctions.--Any court having
jurisdiction of a civil action under this section shall have the power
to grant temporary and permanent injunctions, according to the
principles of equity and upon such terms as the court may deem
reasonable, to prevent or restrain a violation or attempted violation
of section 3. Any such injunction may be served anywhere in the United
States on the person enjoined, and may be enforced by proceedings in
contempt or otherwise by any United States district court having
jurisdiction over that person.
(c) Monetary Relief.--
(1) Actual damages and attributable profits.--When a
violation of section 3 has been established in any civil action
arising under this section, the plaintiff shall be entitled to
recover the actual damages sustained by the plaintiff as a
result of the violation and any profits of the defendant that
are attributable to the violation and are not taken into
account in computing the actual damages sustained by the
plaintiff. The court shall assess such profits or damages or
cause the same to be assessed under its direction. In assessing
profits the plaintiff shall be required to prove defendant's
gross revenue only and the defendant shall be required to prove
all elements of cost or deduction claims.
(2) Additional damages.--In addition to actual damages, the
court may enter judgment for an additional amount not exceeding
2 times such actual damages after considering the following
factors:
(A) Whether the plaintiff notified the defendant of
the alleged violation and the defendant continued to
violate section 3.
(B) The willfulness of the defendant's conduct.
(C) Whether the defendant has a history of database
misappropriation.
(D) The defendant's ability to pay.
(E) Whether the alleged violation had a serious
negative financial impact on the plaintiff.
(F) Any good faith effort by the defendant to rectify
the misappropriation.
(G) Whether the assessment of additional damages is
necessary in order to deter future violations.
(d) Impoundment.--At any time while an action under this section is
pending, including an action seeking to enjoin a violation, the court
may order the impounding, on such terms as it deems reasonable, of all
copies of contents of a database made available in commerce or
attempted to be made available in commerce potentially in violation of
section 3, and of all masters, tapes, disks, diskettes, or other
articles by means of which such copies may be reproduced. The court
may, as part of a final judgment or decree finding a violation or
attempted violation of section 3, order the remedial modification or
destruction of all copies of contents of a database made available in
commerce or attempted to be made available in commerce in violation of
section 3, and of all masters, tapes, disks, diskettes, or other
articles by means of which such copies may be reproduced.
(e) Costs and Attorney's Fees.--The court in its discretion may award
reasonable costs and attorney's fees to the prevailing party. The court
shall award costs and fees if it determines that an action was brought
or a defense was raised under this Act in bad faith.
(f) Actions Against United States Government.--Subsections (b) and
(d) shall not apply to any action against the United States Government.
(g) Relief Against State Entities.--The relief provided under this
section shall be available against a State governmental entity to the
extent permitted by applicable law.
(h) Limitation on Liability of Certain Entities.--
(1) Limitation on liability.--No provider of an interactive
computer service shall be liable under section 3 for making
available information that is provided by another information
content provider.
(2) Definitions.--In this subsection, the terms ``interactive
computer service'' and ``information content provider'' have
the meanings given those terms in section 230(f) of the
Communications Act of 1934 (47 U.S.C. 230(f)).
(3) Construction.--For purposes of section 230 of the
Communications Act of 1934 and any other provision of law, the
provisions of this Act shall not be construed to be a law
pertaining to intellectual property.
(i) Oversight of Civil Remedies by FTC and PTO.--
(1) Notice.--The Federal Trade Commission, the Director of
the United States Patent and Trademark Office, and the Register
of Copyrights shall, by regulation, prescribe the form and
procedures by which persons shall transmit the notices required
by subsection (a)(2).
(2) Oversight.--The Federal Trade Commission, the Director of
the United States Patent and Trademark Office, and the Register
of Copyrights shall review the actions conducted under this
section for the purposes of identifying instances in which
judicial interpretation of this Act adversely or otherwise
materially affects the administration of laws and policies
within their respective jurisdictions.
(3) Amicus curiae briefs.--The Federal Trade Commission, the
Director of the United States Patent and Trademark Office, and
the Register of Copyrights may, in appropriate instances, file
briefs as friends of the court in appeals from final decisions
of actions under this section.
(4) Reports.--The Federal Trade Commission, the Director of
the United States Patent and Trademark Office, and the Register
of Copyrights shall, within 18 months after the date of the
enactment of this Act, each transmit a report to the Committee
on the Judiciary and the Committee on Energy and Commerce of
the House of Representatives and the Committee on the Judiciary
and the Committee on Commerce, Science, and Transportation of
the Senate on their operations under this subsection. Such
reports shall include--
(A) a summary of any briefs filed under paragraph
(3);
(B) an explanation of the impact, if any, of the
judicial decisions reviewed on existing laws and
policies within the jurisdiction of the Commission, the
Director of the Patent and Trademark Office, or the
Register of Copyrights, as the case may be; and
(C) any recommendations for legislative or other
changes that the Commission, the Director of the Patent
and Trademark Office, or the Register of Copyrights, as
the case may be, considers appropriate.
SEC. 8. LIMITATION ON ACTIONS.
No civil action shall be maintained under this Act unless it is
commenced within 2 years after the cause of action arises or claim
accrues.
SEC. 9. EXCLUSION FROM LIABILITY FOR EDUCATIONAL INSTITUTIONS AND
RESEARCH LABORATORIES.
(a) Exclusion.--Except as provided in subsection (d), no liability
shall be imposed under this Act on--
(1) any accredited nonprofit postsecondary educational
institution or any nonprofit research laboratory,
(2) any employee of such educational institution or
laboratory acting within the scope of his or her employment, or
(3) any student enrolled in such educational institution
acting in furtherance of the supervised activities or programs
of the institution,
by reason of activities undertaken for nonprofit education, scientific,
or research purposes.
(b) Accreditation.--For purposes of this section, accreditation shall
be as determined by a regional or national accrediting agency
recognized by the Council on Higher Accreditation or the United States
Department of Education.
(c) Nonprofit Research Laboratory.--For purposes of this section, a
nonprofit research laboratory is a nonprofit research organization that
is primarily engaged in basic or applied scientific research, or both,
and that is a qualified organization as defined in section 41(b)(6)(B)
of the Internal Revenue Code of 1986 for purposes of the research
credit determined under section 41 of such Code.
(d) Exception.--Subsection (a) does not apply to an institution,
laboratory, employee of such institution or laboratory, or student of
such institution to the extent that the institution, laboratory,
employee, or student makes available substantially all of a database in
direct commercial competition with a person who made the substantial
expenditure described in section 3(a)(1).
SEC. 10. EFFECTIVE DATE.
(a) In General.--This Act shall take effect on the date of the
enactment of this Act, and shall apply to acts of making available in
commerce on or after that date with respect to databases existing
before, on, or after that date.
(b) Prior Acts Not Affected.--No person shall be liable under section
3 for making available in commerce on or after the date of the
enactment of this Act a quantitatively substantial part of the
information in a database in violation of that section, when the
information was lawfully extracted from the database before the date of
the enactment of this Act, by that person or by that person's
predecessor in interest.
SEC. 11. NONSEVERABILITY.
(a) In General.--If the Supreme Court of the United States holds that
the provisions of section 3, relating to prohibition against
misappropriation of databases, are invalid under Article I of, or the
First Amendment to, the Constitution of the United States, then this
Act is repealed, effective as of the date of the Supreme Court
decision.
(b) Termination.--Subsection (a) shall cease to be effective at the
end of the 10-year period beginning on the date of the enactment of
this Act.
PURPOSE AND SUMMARY
H.R. 3261, the ``Database and Collections of Information
Misappropriation Act'' creates comprehensive and perpetual
protection for databases. The Committee ordered H.R. 3261
reported unfavorably, with an amendment.
BACKGROUND AND NEED FOR LEGISLATION
The importance of databases to commerce
One of the basic tenets of intellectual property law holds
that facts are not copyrightable, recognizing the great need to
widely disseminate factual information. To qualify for
copyright protection a work must be original to the author and
possess a minimal degree of creativity. It is a well-
established principle that no one may claim originality as to
facts. Facts, by their very nature, are discovered, not
created, and therefore, are part of the public domain.
This policy has served commerce well. The culture of
business and science involves using existing data in different
ways, or combining existing data with newly generated data.
Information is the foundation to advances in medical and other
scientific research. It is also a fundamental element of
innovation in products and services. Allowing scientists and
businesses to access and use factual information propels
society forward rather than relegating important resources to
``reproducing'' the same information.
The ``sweat of the brow'' doctrine and Feist
While the majority of courts through U.S. history had
upheld the policy that facts are not copyrightable, a minority
of courts granted copyright protection to factual compilations
under the ``sweat of the brow'' doctrine. The courts reasoned
that even in cases in which a database lacked creativity or
originality, a publisher was entitled to protection because of
the time and resources expended in collecting and organizing
the information.
In 1991, the Supreme Court in Feist Publications, Inc. v.
Rural Tel. Ser. Co, 499 U.S. 340 (1991), rejected the ``sweat
of the brow'' doctrine. The Court reaffirmed that originality
is the central component of copyright. While explaining that
the vast majority of factual compilations will pass the
originality test, the Court emphasized that compilations of
factual information would receive only limited protection. The
Court explained that the copyright in a factual compilation
extends only to the author's original contributions, not the
facts or information conveyed.
History of congressional action
The Feist decision started a debate as to whether database
producers would continue to invest resources in the creation
and maintenance of databases. This debate has been ongoing
since the 104th Congress, with various versions of property
rights and misappropriation bills moving between the Committee
on Energy and Commerce and the Committee on the Judiciary.
During those years, the proponents of the legislation have
produced no compelling evidence that there is any danger to the
continued prosperity of the database industry. In fact, a 2003
report by Dr. Martha E. Williams entitled, The State of
Databases Today, showed an increase in the total number of
databases as well as an increase in the private sector's share
of the database market. Since the Feist decision, the database
market has grown 147%. The amount of information contained in
the databases increased at an even greater rate, 363%. In
addition, there has been a steady shift in database production,
away from government and academic production and toward private
sector production. In 1990, government databases made up 17% of
the database market, academic databases made up 12%, and
private sector databases made up 68%. By 2002, the private
sector had grown to constitute 90% of the total database
market.
Further, there exist a number of state and Federal remedies
to protect investments in databases. Those remedies include
copyright, the Computer Fraud and Abuse Act, contract, and
trespass to chattels. Database producers have been successful
in protecting their products using these available remedies.
H.R 3261
H.R. 3261 raises Constitutional questions. It defies the
parameters articulated by the Supreme Court in the Feist
decision. It attempts to relyon the Commerce Clause of the
United States Constitution to do what the Intellectual Property Clause
prohibits. In doing so, H.R. 3261 would create a host of problems
involving the free use of factual information. This has significant
repercussions for scientific research, academic development, and
innovation in products and services in a wide range of industries.
The Supreme Court has held that the Intellectual Property
Clause of the Constitution precludes the copyright of facts.
The Supreme Court has also stated that Congress cannot avoid
the particular requirements of one specific Constitutional
provision by relying on the general authority of the Commerce
Clause. The Court went on to explain that permitting that type
of Congressional action would eradicate the limitation on
Congress' power contained in a limiting Clause.\1\ The Office
of Legal Counsel of the Justice Department (DoJ) reached this
very conclusion with regard to database legislation when
considering an earlier version of the legislation.\2\
---------------------------------------------------------------------------
\1\ See Railway Labor Executives' Ass'n v. Gibbons, 455 U.S. 457
(1982) (explaining that if Congress had the power to enact nonuniform
bankruptcy laws pursuant to the Commerce Clause, the Court would
eradicate from the Constitution a limitation on the power of Congress
to enact bankruptcy laws required under the bankruptcy Clause)
\2\ See Memorandum from William Michael Treanor, Deputy Assistant
Attorney, United States Department of Justice, to William P. Marshall,
Associate White House Counsel (July 28, 1998).
---------------------------------------------------------------------------
Proponents of the legislation have long pointed to the law
of trademark as evidence that Congress has the power to enact
legislation under the Commerce Clause when the Supreme Court
has rejected the protection under the Intellectual Property
Clause. However, the Supreme Court struck down the first
trademark law, enacted under the Intellectual Property Clause,
because the Intellectual Property Clause applied to writings
and discoveries.\3\ The Court explained trademarks were
neither. In contrast, databases are clearly writings and in
fact generally receive limited copyright protection. They
unquestionably fall within the scope of the Intellectual
Property Clause, and Congress is therefore barred from enacting
copyright-type protection for databases under the Commerce
Clause.
---------------------------------------------------------------------------
\3\ See U.S. v. Steffens, 100 U.S. 82 (1879).
---------------------------------------------------------------------------
The bill has other fundamental flaws. H.R 3261 provides a
database producer perpetual protection for information in a
database. It protects investment not just in the creation of
the database, but also in the mere maintenance of a database.
Routine updates would extend this protection indefinitely. H.R.
3261 also has a very liberal time sensitivity provision. So
much so that it barely resembles time sensitivity provisions
developed in misappropriation law. The time sensitivity
provision in H.R 3261 would protect information as long as it
retains commercial value. In contrast, true misappropriation
protection, like that articulated by the Supreme Court in INS
v. AP, 248 U.S. 215 (1918) and by the Second Circuit in NBA v.
Motorola Inc., 105 F.3d 841 (2nd Cir. 1997), provides limited
protection for time sensitive information. In the INS case,
protection extended for several hours; in the NBA case,
protection extended for minutes. In contrast, the perpetual
protection provided by H.R. 3261 even goes beyond the duration
limits to protection under copyright law.
Further, many of the terms in H.R. 3261 are ambiguous and
are certain to lead to litigation. This will put a chill on the
use of factual information and in turn, the creation of
innovative information products and services based on this
information. The availability of double damages will only
exacerbate this. There is also a real concern that database
producers could use the right of action provided in the Act as
an anticompetitive tool.
Committee action
The Committee opposes creating a new and untested
protection for factual information when harm has not been
demonstrated and there exist a number of Federal and state
remedies to protect databases. As explained above, the
Committee also questions the Constitutionality of H.R. 3261.
Because of the limited nature of the referral, the
Committee on Energy and Commerce was unable to address the many
problems raised by the bill as reported by the Committee on the
Judiciary. Instead, the Committee introduced and passed H.R.
3872, the Consumer Access to Information Act of 2004. H.R 3872
offers more limited protection to databases while preserving
consumer access to factual information.
H.R. 3872 is based on the 2nd Circuit Court of Appeals
decision in NBA v. Motorola. It sets forth the following five
factor test to establish a claim for misappropriation: (1) a
person generates or collects the information in the database at
some cost or expense; (2) the value of the information is
highly time sensitive; (3) another person's use of the
information constitutes free-riding on the first person's
costly efforts to generate or collect it; (4) the other
person's use of the information is in direct competition with a
product or service offered by the first person; and, (5) the
ability of other parties to free-ride on the efforts of the
first person would so reduce the incentive to produce the
product or service that its existence or quality would be
substantially threatened. The bill provides that a violation of
the act will be treated as an unfair or deceptive act or
practice, enforced by the Federal Trade Commission under the
Federal Trade Commission Act, 15 U.S.C. 57a(a)(1)(B).
H.R 3872 will offer protection for database producers while
preserving important access to factual information. H.R 3872
should also pass Constitutional scrutiny because it tracks the
strict misappropriation standards set forth by both the Supreme
Court and the 2nd Circuit Court of Appeals.
HEARINGS
The Subcommittee on Commerce, Trade, and Consumer
protection held a joint hearing with the Committee on the
Judiciary's Subcommittee on Courts, the Internet, and
Intellectual Property on a discussion draft of what would
become H.R. 3261 on September 23, 2003. The Subcommittee
received testimony from: David Carson, General Counsel,United
States Copyright Office; Thomas J. Donohue, President and CEO, Chamber
of Commerce; Keith Kupferschmid, Vice President, Intellectual Property
Policy & Enforcement, Software & Information Industry Association; and
William Wulf, President, National Academy of Engineering and Vice
Chairman, National Research Council.
COMMITTEE CONSIDERATION
On March 3, 2004, the Committee met in open markup session
and ordered H.R. 3261 unfavorably reported to the House, with
an amendment, by voice vote, a quorum being present.
COMMITTEE VOTES
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
There were no record votes taken in connection with ordering
H.R. 3261 unfavorably reported. A motion by Ranking Member
Dingell to order H.R. 3261 unfavorably reported to the House,
with an amendment, was agreed to by a voice vote.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee held a legislative
hearing and made findings that are reflected in this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
H.R. 3261 creates comprehensive and perpetual protection
for databases.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
3261, the Database and Collections of Information
Misappropriation Act, would result in no new or increased
budget authority, entitlement authority, or tax expenditures or
revenues.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 8, 2004.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3261, the Database
and Collections of Information Misappropriation Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Melissa E.
Zimmerman (for federal costs), Sarah Puro (for the state and
local impact), and Paige Piper/Bach (for the private-sector
impact).
Sincerely,
Elizabeth M. Robinson
(For Douglas Holtz-Eakin, Director).
Enclosure.
H.R. 3261--Database and Collections of Information Misappropriation Act
H.R. 3261 would allow parties who create or maintain
information databases to file civil suits in a United States
district court against parties who misuse those databases. The
bill would require the United States Patent and Trademark
Office, the Federal Trade Commission, and the Register of
Copyrights to accept and review notices submitted by
individuals filing such suits. Under the bill, each agency also
would be required to write a report regarding the impact of the
law with recommendations for change. CBO estimates that
implementing H.R. 3261 would have no significant effect on
spending subject to appropriation and would not affect direct
spending or revenues.
H.R. 3261 contains an intergovernmental mandate as defined
in the Unfunded Mandates Reform Act (UMRA) because it would
preempt state laws that protect the collection of information;
however, CBO estimates that the resulting costs, if any, would
not be significant and would not exceed the threshold
established in UMRA ($60 million in 2004, adjusted annually for
inflation).
H.R. 3261 would create a new private-sector mandate as
defined in UMRA by prohibiting any person from making a
substantial part of information in certain databases available
to the public in commerce without proper authorization.
Currently, certain types of information that may be contained
in a database are not protected by copyright law, and such
information may not be protected under individual state laws.
H.R. 3261 would impose a mandate by creating a federal law of
misappropriation that would subject to civil penalties any
person who, without authority, makes a substantial portion of
the information in a database publicly available. To avoid such
penalties, a person must obtain the consent of the database
owner through a licensing or similar agreement. The person's
ability to obtain a license from the proper authority would
depend in part on the potential effects of such a license on
competition with the licensor's database products or services.
The cost of complying with the mandate could be either the cost
of the license or the revenue forgone by not making the
information publicly available.
CBO cannot estimate the total cost of the mandate because
we do not have enough information to determine the scope and
impact of the prohibition against misappropriation of certain
databases. While court decisions have identified collections of
information that failed to meet the creative expression
standard under existing copyright law, those decisions are of
limited use in identifying all of the types of collections to
which H.R. 3261 could extend protection. Database providers may
have been unaware of unauthorized use or, even if aware of such
activity, may not have chosen to test their rights in court.
On February 10, 2004, CBO transmitted a cost estimate for
H.R. 3261 as ordered reported by the House Committee on the
Judiciary on January 21, 2004. The two versions of the
legislation are identical, as are the cost estimates.
The CBO staff contacts for this estimate are Melissa E.
Zimmerman (for federal costs), Sarah Puro (for the state and
local impact), and Paige Piper/Bach (for the private-sector
impact). The estimate was approved by Robert A. Sunshine,
Assistant Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, and subject to the discussion above,
the Committee finds that the Constitutional authority for this
legislation may be provided in Article I, section 8, clause 3,
which grants Congress the power to regulate commerce with
foreign nations, among the several States, and with the Indian
tribes.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION
Section 1. Short title
Section 1 establishes the short title of the Act as the
``Database and Collections of Information Misappropriation
Act.''
Section 2. Definitions
Section 2 sets forth definitions of terms used in the
legislation, including ``collective work,'' ``database,'' and
``making available in commerce to others.''
Section 3. Prohibition against misappropriation of databases
Section 3 prohibits the making available to others of a
quantitatively substantial part of the information in a
database generated, gathered, or maintained by another person,
with knowledge that the making available is without the
database producer's authorization, if (a) the database was
generated, gathered, or maintained through a substantial
expenditure of financial resources or time; (b) the making
available occurs in a time-sensitive manner, considering the
temporal value of the information in the database within the
context of the industry sector involved; (c) the making
available inflicts injury on the database by serving as a
functional equivalent in the same market as the database in a
manner that causes displacement of sources of revenue; and, (d)
the ability of parties to ``free-ride'' on the efforts of the
plaintiff so reduces the incentive to produce or make available
the database that its existence or quality is substantially
threatened.
Section 4. Permitted acts
Section 4 provides the act shall not restrict acts of
making available of the information in a database by: (a) any
person who independently generates or gathers information; (b)
a nonprofit scientific, or research institution, for nonprofit
scientific or research purposes, if a court determines that the
making available in commerce of the information is reasonable
under the circumstances; (c) by the act of hyper-linking of one
online location to another or providing of a reference or a
pointer in a directory or index; or (d) for the primary purpose
of news reporting, including news and sports gathering,
dissemination, and comment, unless the information is time-
sensitive and has been gathered by a news-reporting entity, and
the making available is part of a consistent pattern engaged in
for the purpose of direct competition.
Section 5. Exclusions
Section 5(a) provides that protection under the legislation
does not extend to a database generated, gathered, organized,
or maintained by a governmental entity or pursuant to, and to
the extent required by, a Federal statute or regulation
requiring such a database. The section does not preclude
protection for an employee or agent acting outside of the scope
of employment or agency. Neither does it preclude protection
for a governmental educational institution, or its employees or
agents, in the course of engaging in education, research, or
scholarship.
Section 5(b) excludes computer programs from protection.
However, databases incorporated in a computer program are not
precluded from protection.
Section 6. Relation to other laws
Subject to the preemption provision of section 6(b),
section 6(a) preserves the rights, limitations and remedies of
copyright, patent, trademark, design rights, antitrust, trade
secrets, privacy, access to public documents, misuse, and
contract. Section 6(b) preempts state law that prohibits or
otherwise regulates conduct that is prohibited or regulated
under the Act. However, it does not preempt for cases not
involving commercial competition. Specifically, these are
actions under State law involving the disruption of the sources
of data supply to a database or impairment of the perceived
accuracy, currency or completeness of a database by inaccurate,
untimely, or incomplete replication or distribution of the
database.
Sections 6(c) and (d) include savings clauses for the
Communications Act of 1934 as well as securities laws,
regulations, and market data.
Section 6(f) applies judicial doctrines of misuse to the
Act.
Section 7. Civil remedies
Section 7 provides for enforcement of the legislation.
Section 7(a) creates a private right of action. Any person who
brings an action under this section, must submit notice of the
commencement of the action, or any derivative appeal, to the
Federal Trade Commission (FTC), the United States Patent and
Trademark Office (PTO), and the Registry of Copyrights (RoC).
The agencies shall, by regulation, prescribe rules by which
notice must be transmitted. Sections 7(b) and (c) provide that
relief for a violation of section 3, may be in the form of
temporary of permanent injunctions or actual damages and
attributable profits. The court may double the damages after it
considers whether: the violation continued after notice by the
plaintiff; the conduct was willful; the defendant has a history
of database misappropriation; the defendant is able to pay; the
violation has had a negative financial impact on the plaintiff;
there were any good faith efforts by the defendant to rectify
the misappropriation; or double damages are necessary to deter
future violations.
Section 7(d) provides for impoundment of all copies of
contents of the database made in violation of section 3, at the
court's discretion. Neither injunctive relief nor impoundment
is a remedy available against the Federal government. All
relief under section 7 is available against state entities to
the extent permitted by applicable law.
Section 7(e) provides for costs and attorney's fees to the
prevailing party, at the court's discretion.
Section 7(h) provides a limitation on liability for a
provider of interactive computer service for making available
information that is provided by another information content
provider. Interactive computer service and information content
provider have the same meanings given to the terms under
section 230(f) of the Communications Act of 1934.
Section 7(i) provides oversight authority to the FTC, PTO
and RoC for purposes of identifying instances in which judicial
interpretations of this Act materially affects the
administration of laws or policies in their respective
jurisdictions. It also permits each agency to submit amicus
curiae briefs and requires them to report to Congress on any
briefs filed and the impact of any decisions on their areas of
jurisdiction.
Section 8. Limitation on actions
Section 8 provides that no civil action shall be maintained
under the act unless it is commenced within 2 years after the
cause of action arises or claim accrues.
Section 9. Exclusion from liability for educational institutions
Section 9 excludes from liability under the act accredited
nonprofit post-secondary educational institutions, nonprofit
research laboratories, and employees or students associated
with each. The exclusion does not apply if any shielded entity
makes available substantially all of a database in direct
commercial competition with a database owner as described in
section 3.
Section 10. Effective date
Section 10 provides that the Act shall take effect on the
date of the enactment of the Act, and shall apply to violations
on or after that date with respect to databases existing
before, on, or after that date.
Section 11. Nonseverability
Section 11 provides that if, within 10 years from the date
of enactment, the U.S. Supreme Court holds that the provisions
of section 3 are invalid under article I of, or the First
Amendment to, the Constitution, the Act is repealed effective
as of the date of the Supreme Court decision. The provision
sunsets ten years from the day of enactment of the act.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
This legislation does not amend any existing Federal
statute.