11/21/96 HyperLaw, Inc.®


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November 18, 1996 (revised November 21, 1996)

Alan D. Sugarman, President, HyperLaw, Inc.

As the database protection treaty proposals careens forward 
for adoption in Geneva in December, 1996, it increasingly is 
apparent that many of the potential consequences have 
received little if any discussion or thought.  One can 
predict that even if adopted in Geneva, the treaty will 
never be approved by the Senate in anything close to its 
present form and without major, extensive revision of United 
States antitrust laws and reform of the attitude of the 
Department of Justice concerning competition and 
intellectual property.

The purpose of this monograph is to suggest a few areas that 
require thoughtful analysis before United States copyright 
law is turned on its end and fundamental balances relating 
to the role of the government in the dissemination of 
information are upset.  Each of these areas could and should 
receive complete analysis.

The database protection proposal is described as a *sui 
generis* proposal.  The proposals are an entirely new type 
of intellectual property protection outside of the existing 
United States copyright laws.  Because these proposal are so 
radical, discussion has proceeded in a factual vacuum based 
on theoretical concepts, without even identification of the 
kinds of databases deserving protection or the type of 
protection that is appropriate for each type.

One impact of the database protection proposals will be to 
limit the availability of governmental and other previously 
public domain information, and increase the costs to 
consumers.  Also, these database proposals are inimical to 
the free flow of information on the Internet.

It is customary for legislators to require various 
regulatory agencies to conduct impact studies prior to the 
adoption of a governmental regulations.  The database 
protection proposals have surfaced for passage without any 
analysis whatsoever of the impact on the dissemination of 
government information and information markets in general.  
Moreover, there has been no discussion of the competitive 
impact of these database proposals.

Additionally, the premise that the United States should make 
its copyright law consistent with European database 
protections ignores the safety valve of compulsory licensing 
available in European antitrust law, which safety valve is 
not extant, except in theory, in United States 

The database protection proponents (drawn from one segment 
of the information industry) focused on the resolution of 
their own problems without *any* regard whatsoever for the 
consequences on others in the information industry, on 
government, or on the public.


One of the most serious and troubling consequences of the 
extension of database protection is the creation of 
incentives for the transfer of control of many types of 
government information and information developed at public 
expense and required for the conduct of democracy.

Effectively, database protection, as presently envisaged, 
would create inexorable market incentives for the transfer 
of public information into the hands of private companies.

At present, copyrightability of government information is 
circumscribed by express provisions of the Copyright Act.  
As a result, there are reduced incentives, especially after 
*Feist,* for private companies to assume the government role 
of distributing and archiving government information in 
accessible manner.

In other words, if private companies cannot obtain copyright 
protection for government information, then there are 
reduced incentives for private companies to discourage 
government agencies from disseminating government 
information in equitable fashion and creating and 
maintaining their own archives of government information.  

If private companies can receive protection of databases of 
information originated by the government, then market 
conditions are created that make it predictable that 
individual government agencies will divest themselves of the 
responsibility to disseminate, maintain and archive 
information.  This is what most United States courts have 

The market dynamic that will cause database protection 
provisions to encourage the privatization of government 
information can be illustrated as follows:

Government Agency has been collecting and archiving 
information for both internal use as well as for public 

Collection and compilation of this information has 
budgetary demands.

Government Agency realizes that it can reduce budgetary 
requirements by letting private vendor collect and 
compile information, as long as Government Agency 
obtains right to use the vendor's information.

Private vendor similarly sees opportunity to assert 
database protection over this compilation.  It 
conceives of a Faustian bargain and pressures 
legislature and Agency to reduce spending by having the 
government stop compiling and archiving information.

Private vendor offers Agency the Faustian deal: it will 
provide free or reduced access to the databases for the 
Agency staff, if vendor can tie up the data.

The a Agency and database vendor have a win-win 
situation.  Agency reduces budget by off-loading 
function of collecting, distributing and archiving data 
and gets free access to data -- in return, database 
vendor obtains a protected database of government 

Public has a lose-lose situation.  Data that previously 
could not be copyrighted is now owned by database 
provider.  Competitors no longer have access to data 
and prices rise.  Other government agencies at the same 
and other government that use this data pay increased 
costs for information, since they do not receive the 
benefit of the deal.  Thus, although taxes to fund that 
one Agency's budget goes down, net taxes increase.  In 
addition, public users are now "taxed" even more for 
access to data, and some data is now priced out of the 
range of individual consumers.

The scenario above accurately describes the environment 
relating to court opinions and statutory and regulatory 
information in the United States.  In states where deals 
like this have been negotiated between court systems and 
West, the costs for access to legal information are 
substantially higher -- these deals are only possible by the 
copyright claims historically asserted by West that are 
subject to attack by post-*Feist* legal proceedings -- an 
West seeks the refuge of new and radical database protection 

It is suggested that the database protection provisions will 
only serve to create other market distortions which will 
place every government agency at all levels of government 
under lobbying and financial pressures to "privatize" 
government information.  Few government originators of 
information can refuse the Faustian bargains offered by 
information vendors, which focuses on direct costs and 
benefits to an individual agency, without regard to overall 

Similarly, we have learned that similar analysis of the 
market power forces were reached in soon to be release a 
report of The National Research Council "Bits of Power," 
which apparently will state that “market forces are not 
capable of protecting the public good associated with open 
access for scientists and educators.”


European copyright law provides more protection for factual 
databases than does United States law and the EEC has 
adopted a Database Directive -- however, European 
jurisprudence (in practice) recognizes the concept of abuse 
of a dominant market position based upon a copyright, and 
Europeans courts are willing to impose compulsory licensing, 
something which United States courts and antitrust 
enforcement agencies are *extremely* reluctant to do.  
Indeed, policy statement of the Antitrust Division of the 
Department of Justice seemed to suggest that monopolies are 
okay if based upon government granted copyrights.  See 

An illustration is the April 6, 1995 EEC case of *Magill TV 
Guide Ltd.* relating to television listings in Ireland and 
Northern Ireland.  
  • Magill EEC Case. There, television stations had asserted copyright ownership in television listings and were able to prohibit Magill from publishing a TV Guide of Irish television. The European Court of Justice concluded that the defendant television stations had abused their dominant position pursuant to Article 86 of the EEC treaty and required compulsory licensing at reasonable rates. The Court found that that "copyright was no longer being exercised in a manner which correspond to its essential function, within the meaning of Article 36 of the Treaty, which was to protect the moral rights in the work, and to ensure a reward for the creative effort." Interestingly, one of the losing appellants in *Magill* was the Washington, D.C. based Intellectual Property Organization. It did not take long for the United States information complex to respond to this new threat from abroad. The very same day the Magill decision was released by the EEC high court, the United States Department of Justice responded with its whitepaper which must have been drafted waiting for the release of the Magill decision. Antitrust Intellectual Property Guidelines -- April 6, 1995 which, without referring to Magill, the Department rejected its premise:
    “If a patent or other form of intellectual property does confer market power, that market power does not by itself offend the antitrust laws. As with any other tangible or intangible asset that enables its owner to obtain significant supracompetitive profits, market power (or even a monopoly) that is solely "a consequence of a superior product, business acumen, or historic accident" does not violate the antitrust laws. Nor does such market power impose on the intellectual property owner an obligation to license the use of that property to others.”
    Then, the information complex proceeded to have legislation introduced a few months later on November 25, 1995. Representative Hyde with the co-sponsorship of database protection sponsor Representative Moorhead, introduced the "H.R. 2674. Intellectual Property Antitrust Protection Act of 1995 which would have undercut any compulsory licensing of copyrighted information in the United States. In his comments, Hyde neglected to mention Magill and lauded the Department of Justice position. "Comments of Rep. Hyde (on behalf of Rep. Moorhead and others) on Introduction of H.R. 2674. Intellectual Property Antitrust Protection Act of 1995. The evidence is clear: the information industry complex and former Representative Moorhead wish to pick and choose from those provisions in EEC law that would be most helpful to their narrow interests. The proponents of database protection wish to implement these overbroad provisions in the United States without amendment to the antitrust laws to provide the concomitant compulsory licensing. Indeed, these proponents seek to amend United States law to take away the power of compulsory licensing from any possibly wayward courts. The Department of Justice has shown by its inaction in respect to the abuse by West Publishing Company of exercising its dominant position in caselaw publishing that in its view no abuse is sufficient to justify compulsory licensing under current law. In practice, the compulsory licensing of copyrights that constitute an essential facility in the United States is more an intellectual fiction than a reality. Indeed, the Department of Justice in recent amicus briefs opposing the copyright in West star- pagination citations, included a footnote that says, in essence, that although the copyright law will not protect the West citations, the database protection treaty if adopted *will* provide protection to West. See note below. Moreover, in a pending Tunney Act proceeding, the Department of Justice is supporting a West promoted license of West citations without a license of the associated text of opinions, without even studying commercial feasibility of the license rates, and argues that it would be unable to obtain such a license in litigation. It is apparent that in the United States, there should be no adoption of a database protection provision without *explicit and broad* legislative provisions for compulsory licensing, provisions that have not been weakened in midnight sessions by the same information companies intent upon the present database property protections. THE UNFOUNDED ASSUMPTION THAT ALL DATA IS ENTITLED TO EQUAL TREATMENT The database protection provisions assume implicitly that all types of information are entitled to equal and similar protection, and assume that once the threshold for protection is met, there is no proportionality for the extent of protection provided. There is of course no rationale for these assumptions. To the extent not grounded in the constitutional copyright clause, there is no legal reason at all for either equality of protection or the absence of proportionality between the effort expended in compiling a database and the protection afforded. For example, as a policy matter one could easily conclude that information that is obtained through government contracts, franchises or concessions or produced by regulated monopolies such as television stations and telephone companies may not be entitled to the same type of protection as other types of information compiled by private funds from numerous private sources. Indeed, the Supreme Court in the *Feist* decision seemed to be cognizant of the monopoly status of the telephone companies claiming rights to telephone subscriber telephone numbers. Similarly, there is a concept in copyright law known as a "thin copyright" which limits the exercise of a compilation copyrights based upon the nature of the compilation. These concepts should be legislative directed in any database protection legislation. It is appropriate that any database protection provisions in the United States take into account these issues and that protection for certain kinds of data be limited in duration and scope, to the extent that protection is determined to be appropriate. CONCLUSION The foregoing are merely some of issues that need to be thoroughly analyzed before these radical provisions are made a part of United States law. The database protection treaty should be tabled until adequate policy and legal studies and legislative hearings are completed and appropriate antitrust revision provisions drafted. Alan D. Sugarman Notes: 1. HyperLaw’s WEB Site www.hyperlaw.com contains information that supplements this monograph. 2. The Department of Justice in it Amicus Brief filed October 3, 1996 in Matthew Bender and HyperLaw v. West, after arguing that West star-pagination of court opinions was not protected by United States copyright law, then suggests at footnote 4 that that the issue of copyrightability is academic and that any decision of the court will be rendered meaningless by database protection proposals:
    "Copyright is not the only conceivable legal regime for protecting the fruits of industrious collection. The Delegation of the United States of American recently proposed to the World Intellectual Property Organization an international treaty that would provide to the "maker" of certain databases the exclusive right to extract all or a substantial part of the contents, without regard to copyrightability. World Intellectual Property Organization, Preparatory Committee of the Proposed Diplomatic Conference (December 1966) on Certain Sui Generis Protection of Databases, CRNR/PM/7 (May 20, 1996). Legislation providing for such protection has been introduced in Congress. See H.R. 3531, 104th Cont., 2d Sess. (1996).” The Department of Justice Amicus Brief October 3, 1996.