Bits of Power Issues in Global Access to Scientific Data (1997) / Chapter Skim
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5 The Trend Toward Strengthened Intellectual Property Rights: A Potential Threat to Public-Good Uses of Scientific Data
5 The Trend Toward Strengthened Intellectual Property Rights: A Potential Threat to Public-Good Uses of Scientific Data
Pages 132-188
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From page 132... ...
Yet today, when commercially valuable data of scientific importance are made available in electronic form, they also become available for rapid, inexpen 132
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A second change is that, in many areas of research, the separation has diminished between basic research, where intellectual property rules are more concerned with attribution of ideas and findings than with the appropriation of published material, and applied research, where intellectual property and proprietary concerns predominate. This conjunction has been especially evident in computer
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Third, the revolutionary convergence of digital, computing, and telecommunications technologies has profoundly altered the preexisting status quo.3 The potentially large gains and losses from the commercial exploitation of data under these changing conditions have led to a concerted drive for new and stronger forms of legal protection for publishers of electronic databases in general, including compilations of scientific data that were heretofore treated as components of the public domain.4 The current trend toward stronger and more enduring intellectual property rights, and fewer limitations on the rights of copyright holders vis-a-vis publicgood uses of information, could reduce some of the limitations that have benefited scientists, and on which they have relied. Government studies of the challenges that digital technologies pose for intellectual property law at both national and international levels have stimulated calls for strengthening intellectual property rules.
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and the Berne Convention for the Protection of Literary and Artistic Works (1886~.8 It also stemmed from a concomitant reluctance to fetter the basic building blocks of scientific and intellectual discourse with legal impediments.9 Notwithstanding these infirmities, the commercial exploitation of nonscientific data and of published compilations of information prospered in some developed countries, notably the United States and the United Kingdom (where copyright protection is sometimes available)
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From page 136... ...
When scientific data are disseminated to the public in print media, they normally forfeit the protection of trade secret law, or related laws of confidentiality, except insofar as two-party contracts may otherwise provide. Not surprisingly, commercial compilers in such cases have sometimes found it difficult to appropriate the fruits of their investment unless either copyright laws or unfair competition laws afford them a limited shelter against wholesale duplication by third parties.
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THE TREND TOWARD STRENGTHENED INTELLECTUAL PROPERTY RIGHTS 137 good for less than the price charged by the originator, neither the author nor the publisher may have sufficient incentives to create or invest in the dissemination of cultural and information goods.~3 The historical solution to this problem has been the mature copyright system, which charges both authors and their publishers a price for overcoming market failure. In effect, copyright law has enabled the state to impose "portable fences"
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From page 138... ...
Even so, overriding the copyright owner's exclusive rights in the name of fair use remains an atypical result contingent on a judicial evaluation of the special "purpose and character" of the use, the "nature of the copyrighted work," the "amount and substantiality of the portion used," and the "effect of the use upon the potential market for or value of the copyrighted work."~9 In recent years, the advent of new technologies from photocopying machines to computer programs and optical scanners has unsettled the doctrine of fair use20 by enabling even copies for private research uses to displace commercial markets,2i and also by making it possible to overcome most of the transaction cost problems that increasingly had been used to justify application of the fair use exception in practice.22 Protection Afforded Copyright law will not protect the product of a compiler's industrious efforts i.e., of labor, skill, or investment if the selection or arrangement it em
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From page 139... ...
will not normally prevent unauthorized extractions of disparate data for either competing or value-adding uses.24 Some federal appellate courts, however, have begun to rebel against the Feist decision and to reinstate stronger copyright protection for factual compilations and databases by subtle doctrinal manipulation.25 Whether state or federal unfair competition laws could also provide some supplementary relief against the unauthorized copying of commercially valuable data that are not protected by trade secret or copyright laws remains an unsettled question, although such laws are sometimes invoked both here and abroad.26 In any event, this cyclical fluctuation between states of underprotection and overprotection is a characteristic trait of borderline subject matter that fits imperfectly within the classical patent and copyright paradigms, such as the contents of databases.27 DIGITAL TECHNOLOGY DISRUPTING THE BALANCE OF PUBLIC AND PRIVATE INTERESTS Despite (or perhaps because of) the relatively weak legal infrastructure governing use of data, a thriving market for compiled information has grown up, and U.S.
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This can occur, for example, when sole-source data providers charge exorbitant prices or oblige libraries and research institutions to accept terms and conditions that effectively waive both the special privileges and the fair use exceptions set out in the Copyright Act of 1976.4° The Vulnerability of Publicly Distributed Electronic Databases To the extent that government- or university-generated data remain uncommercialized, their vulnerability to technically refined means of accessing, downloading, or duplication is only of relative importance. Presumably, the originators want the broadest possible distribution of their data sets.4i Even in this situation, however, there are some concerns that are likely to grow over time.
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Digital technology also enables second comers to extract and recombine the originator's data into value-added products that improve on the original, or that compete in different and sometimes distant market segments.46 In some cases, third parties may even extract the compiler' s data in order to make them available over telecommunications networks, an act that can destroy any residual incentives to invest.47 In such cases, existing copyright laws generally afford little or no relief, as explained above.
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How these impending changes in the legal infrastructure will impinge on the research and educational communities has not been clearly worked out even by the European authorities responsible for the European Union's recently adopted Directive on the Legal Protection of Databases.52 A bill to enact a U.S. model of the European law, which was recently introduced, is even more cryptic in this regard,53 while the WIPO Draft Database Treaty tried to finesse the issue.54 One can predict, nevertheless, that these legislative initiatives will greatly affect the scientific and educational communities if, as Chapters 3 and 4 of this report have emphasized, they lead to a more market-driven environment with fewer government subsidies than before.
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To overcome these disadvantages, the Commission stressed the need for a single, integrated market, undistorted by differing regulatory approaches, and for higher levels of intellectual property protection, tailored to the needs of potential investors in database production, that might stimulate additional investment in this sector.66 Another likely premise in the Commission's thinking was that privatizing the government's role in the collection and distribution of data might also generate income streams that could help to offset the shrinking availability of public funds for research and development. The Commission decided both to harmonize the domestic copyright laws
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In this context, the scientific community' s own commitment to the full and unrestricted flow of data represents an important subchapter in a larger discourse that, in this country, at least, is rooted in the First Amendment.72 The Commission of the European Communities initially addressed with commendable caution the perceived need for legal incentives to spur investment in electronic database production. The Commission affirmed its preference for a regime based on modified liability principles, that is, one that would deter certain types of socially undesirable conduct without vesting exclusive property rights in data as such (see Box 5.2~.73 Unfortunately, even the Commission's earliest proposals along these lines were flawed by contradictory elements drawn from the exclusive rights model, while the final version became a much less balanced and potentially anticompetitive exclusive property right.74
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The first draft Directive accordingly provided a 10-year period of lead time in which the database maker could recoup his or her investment in a noncopyrightable electronic database while preventing copiers from engaging in for-profit extraction or reutilization of the factual contents, in whole or in substantial part.77 The Commission's "unfair extraction" criterion seemed to invite case-bycase judicial distinctions between procompetitive activities, especially independent investment in the generation of a competing electronic database (which was roughly analogous to reverse-engineering by honest means) , and market-distorting forms of electronic copying (which were roughly comparable to industrial espionage, commercial bribery, and other types of "parasitic" or free-riding behavior that unfair competition laws interdict)
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The European Union's Final Product The 1996 Directive on the Legal Protection of Databases Although the European Commission's initial project had undergone transformation by the time that the Amended Proposal was put forward in 1993,82 its wholesale conversion from a relatively weak liability regime to a strong exclusive property right occurred during the closed proceedings of the European Council of Ministers, which produced the Common Position of July 10, 1995.83 This version, with minor technical alterations, became the final Directive on Databases, adopted on March 11, 1996, which the European Union member states must now convert into domestic intellectual property laws and regulations.84 The Directive as finally adopted may be subdivided into five parts: (1) a list of 60 "recitals" or premises that underlie this legislation; (2)
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In other words, no database circulating within the European Union will escape the regulatory effects of the 1996 Directive, regardless of the medium in which it appears or the nature of its compilers. As finally enacted, the sui generis right conferred on qualifying database makers is no longer couched in terms of "unfair" or even "unauthorized" acts or uses.86 Rather, the database maker obtains an absolute exclusive "right to prevent extraction and/or reutilization of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database."87 This twopronged exclusive right, which now applies to both electronic and nonelectronic databases,88 lasts for an initial period of at least 15 years.
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, (e) .94 In this and other respects, including the omission of any requirement for a compulsory license against sole-source providers, the drafters of the 1996 Directive have integrated the sui generis regime into the broader regulatory framework for national and international information infrastructures that the European Union and U.S.
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Moreover, database publishers who acquired market power through restricted on-line transmissions reportedly have recently imposed questionable contractual conditions on libraries and academic subscribers.~°i It follows that under the 1996 Directive, the most borderline and, in the sense that they are basic building blocks of knowledge, questionable of all objects to receive intellectual property protection compilations of data and facts, scientific or otherwise paradoxically obtain the strongest scope of protection available from any intellectual property regime except, perhaps, for the classical patent paradigm itself.~02 Nor are the breadth of protection and the monopolistic power it tends to breed likely to be offset by greater competition in the market for electronic databases, especially now that the 1996 Directive as finally adopted no longer contains the compulsory license requirement that had initially been devised for this purpose. Formally, of course, third parties still remain free to compile a database exactly like one already in commerce, because independent generation of the relevant data at one' s own time and expense is always permitted.
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This lack of effective competition, with its inherent possibilities for discouraging add-on products and for engaging in abuses of market power, was downplayed by the European Council of Ministers in 1995, even though it had been uppermost in the minds of the European Commission's own drafters a short while earlier. Article 16 of the final Directive thus merely calls for 3-year reviews to determine whether existing antitrust laws prove inadequate to deal with the "abuse of a dominant position or other interference with free competition," in which case proposals for "non-voluntary licensing" may once again be considered.~03 The fear of market failure and of chronic underprotection that initially motivated the quest for a sui generis regime to protect electronic databases has thus given way to the creation of "mini-monopolies over information"~04 and to an underlying logic that is inconsistent with the public interest in the full and open flow of scientific data.
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Known as the "Digital Agenda," these proposals were considered in a December 1996 Diplomatic Conference hosted by WIPO.~6 Some of the proposals, which the European Union's own intellectual property authorities placed on the agenda for that conference, would have conformed international copyright law to the regulatory framework for a global information infrastructure that the U.S. Information Infrastructure Task Force's (IITF)
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.~24 The Diplomatic Conference was thus asked to convert the WIPO Draft Database Treaty into international law, even though the United States lacked any corresponding domestic regime as of the time of its writing.~25 In addition, there has been no empirical test of the controversial final 1996 European Directive in actual practice, and no preliminary reports or studies evaluating even the economic justification for such measures have been issued by WIPO or by any other reputable international institution.~27 The Diplomatic Conference postponed action on this proposal and charged WIPO to set a timetable for further deliberations. Against this background, the changes to the European Commission's Database Directive made in the Council of Ministers' Common Position of 1995, including deletion of the compulsory license provision and other measures that strengthened the exclusive rights apparatus, reflect the coordinated strategies that the European Commission and the U.S.
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proposal, one finds that its definition of "database" is much broader than that of the 1996 Directive. It contemplates, for example, that noncopyrightable components of computer programs could qualify for protection as databases, and it provides no apparent criterion for excluding even facts or data compiled for scientific and historical works.~35 Moreover, the database maker's exclusive rights to extract, use, or reuse all or a substantial part of the contents are reinforced by allowing database makers to control any use that "adversely affects the actual or potential market for that database" in addition to uses that otherwise "conflict with the database owner's normal exploitation."~36 This specification, which is not found in the 1996 Directive, has the potential for impeding virtually any judge-made exceptions analogous to "fair use" under copyright laws, because any such exception would almost certainly affect the "potential market" for any given database.~37 At the same time, the database owner's potentially perpetual "derivative work" right (flowing from continuing updates)
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database publishers, opposed to this constraint in the 1996 Directive, expressed an intent to exercise permissible contractual overrides in practice.l46 A similar intention seems manifest in the clause allowing publishers to impose separate licenses for networked use of a database within organizations, including nonprofit academic and scientific institutions, which can be construed as covering the extraction, use, or reuse even of insubstantial parts.l47 Taken together, these and other provisions of the proposed H.R. 3531 reinforce the single most disturbing aspect of the 1996 European Directive, namely, that it precludes formation of an evolving public domain from which third parties can freely draw.l48 To this end, the bill expressly confines permissible acts of "independent creation" to data or materials not found in a database subject to the proposed sui generis regime.l49 This restriction applies regardless of whether the unauthorized extraction or use is made for purposes of noncommercial scientific endeavor or for commercially important value-added products that build incrementally on existing compilations of data.
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3531 also embody some of the current administration's most controversial proposals concerning the regulation of national and global information infrastructures. For example, one provision, following a proposal from the IITF White Paper, would outlaw making or distributing any technical device (or performing any technical service)
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If successful, it would convert the IITF White Paper's "reform proposals" for a sui generis law to protect noncopyrightable compilations of data into international minimum standards of intellectual property protection binding on all signatories to the Berne Convention.~69 This "whiplash effect" would then oblige the United States to implement these same standards in its domestic laws, as a matter of international law, even if
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The case for moving so far and so fast rests largely on the supposed difficulties of enforcing territorially grounded intellectual property rights in cyberspacei72 and on the fear of "detaching information from the physical plane, where property law of all sorts has always found definition."~73 From a legal perspective, these developments raise daunting problems of conflicts of law, a field that has never found it easy to accommodate intangible property.~74 Yet, it will not do to exaggerate these difficulties while ignoring the harmonizing effects of the TRIPS Agreement, which requires all countries that belong to the World Trade Organization to adopt both the universal minimum standards of the Berne Convention (whether or not they adhere to that convention) and the additional standards concerning computer programs, compilations, and related subject matter set out in the TRIPS Agreement itself.~75 Regardless of whose law applies, in other words, digitally transmitted information goods will eventually become subject to the same international minimum standards of protection in all developed countries and in most developing countries as matters stand.~76 To be sure, these standards harbor "gray areas" that are open to different interpretations, notably with respect to the scope of copyright protection afforded borderline works, such as computer programs and those databases that otherwise meet the domestic criteria of eligibility.~77 But the developed countries have only just begun to grapple with these issues, and there is no basis for an empirically grounded consensus even with regard to computer programs or industrial designs,~78 let alone databases and other electronic information tools.
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This principle is indirectly undermined by the pending proposals concerning legal regulation of the national information infrastructure and directly threatened by the drive to institute sui generis intellectual property rights in the contents of electronic and other databases. As regards the database laws in particular, the foregoing analysis suggests that science and education have two paramount concerns that need to be pursued in the course of future legislative deliberations: .
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As discussed in Chapter 4, the adverse effects of Landsat commercialization on the scientific community were easy to document, although the value of lost research opportunities remains hard to quantify in terms of objective social costs. In other cases, however, it will prove harder to show the effects on science, especially if a commercialized database has many private downstream users who are better able to afford the rates, and there is no powerful upstream user community akin to the global change research users of Landsat data capable of voicing its distress in terms that cannot be ignored.
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Conversely, if a socially imbalanced, overly protective database law converts existing impediments into insuperable legal barriers to entry, the adverse effects on science absent offsetting legal safeguards would soon make themselves felt (see Box 5.5~. In this context, the scientific and educational communities like value-adding users and second comers in generalist would arguably fare better either under a simple unfair competition law that prohibits wholesale copying or under a sui generis regime built on more refined liability principles than under any regime based on exclusive property rights.
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THE TREND TOWARD STRENGTHENED INTELLECTUAL PROPERTY RIGHTS 165 With or without the more procompetitive conceptual framework of a liability model, a socially balanced database law should preserve and promote the publicgood aspects of science and education. This goal requires careful crafting of its technical legal machinery, as well as the inclusion of safeguards that address the specific needs of the scientific and educational communities.
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As in other cases, publishers require state intervention in the marketplace to enforce the fictitious portable fences on which the protection of intangible literary productions depends. In this case, however, the objects of protection data are functionally determined elements or particles of knowledge that fall well below the "grain size" threshold of existing intellectual property laws.~89 While database publishers need not contribute any intellectual achievement for which a reward is justifiable in terms of social costs, they have now staked a claim to subject matter that world intellectual property law had left unprotected as a building block of scientific and technological progress.
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From page 167... ...
Indeed, a sui generis law should never prevent anyone, including scientists, from reproducing or using an insubstantial part of the contents of a protected database for virtually any lawful purpose. Ascertaining fair uses that database owners must permit the scientific and educational communities to make on more favorable terms than those applicable to ordinary commercial users constitutes a more delicate task.
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While such a policy may conflict with the 1996 European Directive, depending on how the European Union member states choose to implement the relevant provisions, its adaptation in the United States could influence other countries, including even some European Union member states, which might decide to exercise their implementing option in precisely this way.~9i Conversely, when the private sector or other nongovernmental entities fund the generation or distribution of data, a different fair use calculus should come into play. Here the problem is that the ability of science to pay the going, commercial rates is not commensurate with its resources or with the public interest in a strong, basic scientific establishment.
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could itself incorporate an automatic license favoring second comers and value-adding users, which would kick in after an initial period of guaranteed lead time.~96 A refinement of this mechanism could then allow the scientific and educational communities to trigger a special compulsory license for essential needs in the event that publishers fail to provide reasonable terms and conditions.~97 If Congress ultimately adopts an exclusive rights regime for database owners, rather than an unfair competition model or a more refined liability model, such a regime could nonetheless include non-voluntary license provisions to meet the needs of these communities. In theory, such a clause permits either side to seek a judicial decision triggering, or blocking, the compulsory license for privileged uses.
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Pressures to integrate these and other international intellectual property standards ever more deeply into the global trade apparatus will certainly mount as countries move to implement and expand the TRIPS Agreement and related international conventions within the framework of the World Trade Organization and that of WIPO, which continues to administer the Paris and Berne conventions. The ensuing tensions and conflicts will make it more necessary than ever to develop a framework treaty to safeguard the full and open exchange of scientific data in an increasingly commercialized environment.
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representatives to the World Trade Organization and the World Intellectual Property Organization to ensure that the nation's interests in maintaining preeminence in science and technology are not undermined.
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6. Both international copyright law under the Berne Convention and the domestic laws of most developed countries require that authors of literary works obtain a "moral right" to proper attribution for their published creations.
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, "Electronic Information Tools The Outer Edge of World Intellectual Property Law," Int.
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Rev., 81:516, 525. For the view that legal protection of facts and data as such is consistent with the First Amendment on certain conditions, such as the availability of noncommercial fair use and compulsory licenses, see, e.g., Jane C
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Rosier (1995) , "The European Union's Proposed Directive for the Legal Protection of Databases: A New Threat to the Free Flow of Information," High Tech.
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. In a larger perspective, however, it has been argued that the legal problems of electronic databases are assimilable to those of industrial designs, computer programs, plant varieties, biogenetically engineered products, and numerous other forms of design-dependent, subpatentable innovation that fall into a widening penumbra between the increasingly obsolete patent and copyright paradigms.
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of the European Parliament and of the Council of March 11, 1996, on the legal protection of databases, 39 O.J.L.77/20, March 27, 1996 (hereinafter E.C. Directive on Databases or Final E.C.
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64. While the Commission claims that a key motive is the need to harmonize European Union law, critics debunk this claim because Article 10 of the TRIPS Agreement partly performed this function, and also because the E.C.'s database regime, as finally adopted, actually discourages harmonization on the crucial issue of fair use.
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, Amended Proposal for a Council Directive on the Legal Protection of Databases, COM (93) 464 finalSYN 393 (Amended E.C.
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80. See Commission of the European Communities, Amended Proposalfor a Council Directive on the Legal Protection of Databases, COM (93)
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95. See note 5 and accompanying text (citing 1996 WIPO documents favoring an international database regime as proposed by the United States and international copyright reforms concerning on-line transmissions as proposed by the European Union)
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111. Final Act Embodying the Result of the Uruguay Round of Multilateral Negotiations, Marrakesh Agreement Establishing the World Trade Organization, signed at Marrakesh, Morocco, April 5, 1994, Annex 1C, Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)
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, "The New E.U. Directive Concerning the Legal Protection of Data Bases," paper presented to the Fourth Fordham Conference (conceding that "the sui generis right was considerably strengthened during the legislative process" and that attacks on the right to extract even insubstantial parts of a protected database were barely repelled)
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federal courts have resisted a policy of "thick" or strong copyright protection for computer programs, there is reason to fear that the sui generis database law may be used to overturn these precedents.
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163. See further infra text accompanying notes 137-138.
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779-84 (uncertain scope of copyright protection for computer programs) ; Reichman, "Legal Hybrids," note 27, at pp.
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2385-86 (discussing limits of legal protection for single features of computer programs)
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Cf. TRIPS Agreement, note 111, article 31(b)
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