[House Report 105-525]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-525
_______________________________________________________________________


 
               COLLECTIONS OF INFORMATION ANTIPIRACY ACT

                                _______
                                

  May 12, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

_______________________________________________________________________


Mr. Coble, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 2652]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2652) to amend title 17, United States Code, to 
prevent the misappropriation of collections of information, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     6
Hearings.........................................................     9
Committee Consideration..........................................     9
Committee Oversight Findings.....................................    10
Committee on Government Reform and Oversight Findings............    10
New Budget Authority and Tax Expenditures........................    10
Congressional Budget Office Estimate.............................    10
Constitutional Authority Statement...............................    11
Section-by-Section Analysis and Discussion.......................    11
Changes in Existing Law Made by the Bill, as Reported............    22
Dissenting Views.................................................    28

  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Collections of Information Antipiracy 
Act''.

SEC. 2. MISAPPROPRIATION OF COLLECTIONS OF INFORMATION.

  Title 17, United States Code, is amended by adding at the end the 
following new chapter:

      ``CHAPTER 12--MISAPPROPRIATION OF COLLECTIONS OF INFORMATION

``Sec.
``1201. Definitions.
``1202. Prohibition against misappropriation.
``1203. Permitted acts.
``1204. Exclusions.
``1205. Relationship to other laws.
``1206. Civil remedies.
``1207. Criminal offenses and penalties.
``1208. Limitations on actions.

``Sec. 1201. Definitions

  ``As used in this chapter:
          ``(1) Collection of information.--The term `collection of 
        information' means information that has been collected and has 
        been organized for the purpose of bringing discrete items of 
        information together in one place or through one source so that 
        users may access them.
          ``(2) Information.--The term `information' means facts, data, 
        works of authorship, or any other intangible material capable 
        of being collected and organized in a systematic way.
          ``(3) Potential market.--The term `potential market' means 
        any market that a person claiming protection under section 1202 
        has current and demonstrable plans to exploit or that is 
        commonly exploited by persons offering similar products or 
        services incorporating collections of information.
          ``(4) Commerce.--The term `commerce' means all commerce which 
        may be lawfully regulated by the Congress.

``Sec. 1202. Prohibition against misappropriation

  ``Any person who extracts, or uses in commerce, all or a substantial 
part, measured either quantitatively or qualitatively, of a collection 
of information gathered, organized, or maintained by another person 
through the investment of substantial monetary or other resources, so 
as to cause harm to the actual or potential market of that other 
person, or a successor in interest of that other person, for a product 
or service that incorporates that collection of information and is 
offered or intended to be offered for sale or otherwise in commerce by 
that other person, or a successor in interest of that person, shall be 
liable to that person or successor in interest for the remedies set 
forth in section 1206.

``Sec. 1203. Permitted acts

  ``(a) Individual Items of Information and Other Insubstantial 
Parts.--Nothing in this chapter shall prevent the extraction or use of 
an individual item of information, or other insubstantial part of a 
collection of information, in itself. An individual item of 
information, including a work of authorship, shall not itself be 
considered a substantial part of a collection of information under 
section 1202. Nothing in this subsection shall permit the repeated or 
systematic extraction or use of individual items or insubstantial parts 
of a collection of information so as to circumvent the prohibition 
contained in section 1202.
  ``(b) Gathering or Use of Information Obtained Through Other Means.--
Nothing in this chapter shall restrict any person from independently 
gathering information or using information obtained by means other than 
extracting it from a collection of information gathered, organized, or 
maintained by another person through the investment of substantial 
monetary or other resources.
  ``(c) Use of Information for Verification.--Nothing in this chapter 
shall restrict any person from extracting information, or from using 
information within any entity or organization, for the sole purpose of 
verifying the accuracy of information independently gathered, 
organized, or maintained by that person. Under no circumstances shall 
the information so extracted or used be made available to others in a 
manner that harms the actual or potential market for the collection of 
information from which it is extracted or used.
  ``(d) Nonprofit Educational, Scientific, or Research Uses.--Nothing 
in this chapter shall restrict any person from extracting or using 
information for nonprofit educational, scientific, or research purposes 
in a manner that does not harm the actual or potential market for the 
product or service referred to in section 1202.
  ``(e) News Reporting.--Nothing in this chapter shall restrict any 
person from extracting or using information for the sole purpose of 
news reporting, including news gathering, dissemination, and comment, 
unless the information so extracted or used is time sensitive, has been 
gathered by a news reporting entity for distribution to a particular 
market, and has not yet been distributed to that market, and the 
extraction or use is part of a consistent pattern engaged in for the 
purpose of direct competition in that market.
  ``(f) Transfer of Copy.--Nothing in this chapter shall restrict the 
owner of a particular lawfully made copy of all or part of a collection 
of information from selling or otherwise disposing of the possession of 
that copy.

``Sec. 1204. Exclusions

  ``(a) Government Collections of Information.--
          ``(1) Exclusion.--Protection under this chapter shall not 
        extend to collections of information gathered, organized, or 
        maintained by or for a government entity, whether Federal, 
        State, or local, including any employee or agent of such 
        entity, or any person exclusively licensed by such entity, 
        within the scope of the employment, agency, or license. Nothing 
        in this subsection shall preclude protection under this chapter 
        for information gathered, organized, or maintained by such an 
        agent or licensee that is not within the scope of such agency 
        or license, or by a Federal or State educational institution in 
        the course of engaging in education or scholarship.
          ``(2) Exception.--The exclusion under paragraph (1) does not 
        apply to any information required to be collected and 
        disseminated by either a national securities exchange under the 
        Securities Exchange Act of 1934 or a contract market under the 
        Commodity Exchange Act.
  ``(b) Computer Programs.--
          ``(1) Protection not extended.--Subject to paragraph (2), 
        protection under this chapter shall not extend to computer 
        programs, including, but not limited to, any computer program 
        used in the manufacture, production, operation, or maintenance 
        of a collection of information, or any component of a computer 
        program necessary to its operation.
          ``(2) Incorporated collections of information.--A collection 
        of information that is otherwise subject to protection under 
        this chapter is not disqualified from such protection solely 
        because it is incorporated into a computer program.

``Sec. 1205. Relationship to other laws

  ``(a) Other Rights Not Affected.--Subject to subsection (b), nothing 
in this chapter shall affect rights, limitations, or remedies 
concerning copyright, or any other rights or obligations relating to 
information, including laws with respect to patent, trademark, design 
rights, antitrust, trade secrets, privacy, access to public documents, 
and the law of contract.
  ``(b) Preemption of State Law.--On or after the effective date of 
this chapter, all rights that are equivalent to the rights specified in 
section 1202 with respect to the subject matter of this chapter shall 
be governed exclusively by Federal law, and no person is entitled to 
any equivalent right in such subject matter under the common law or 
statutes of any State. State laws with respect to trademark, design 
rights, antitrust, trade secrets, privacy, access to public documents, 
and the law of contract shall not be deemed to provide equivalent 
rights for purposes of this subsection.
  ``(c) Relationship to Copyright.--Protection under this chapter is 
independent of, and does not affect or enlarge the scope, duration, 
ownership, or subsistence of, any copyright protection in any work of 
authorship that is contained in or consists in whole or part of a 
collection of information. This chapter does not provide any greater 
protection to a work of authorship contained in a collection of 
information, other than a work that is itself a collection of 
information, than is available to that work under any other chapter of 
this title.
  ``(d) Antitrust.--Nothing in this chapter shall limit in any way the 
constraints on the manner in which products and services may be 
provided to the public that are imposed by Federal and State antitrust 
laws, including those regarding single suppliers of products and 
services.
  ``(e) Licensing.--Nothing in this chapter shall restrict the rights 
of parties freely to enter into licenses or any other contracts with 
respect to the use of collections of information.
  ``(f) Communications Act of 1934.--Nothing in this chapter shall 
affect the operation of section 222(e) of the Communications Act of 
1934 (47 U.S.C. 222(e)), or shall restrict any person from extracting 
or using subscriber list information, as such term is defined in 
section 222(f)(3) of the Communications Act of 1934 (47 U.S.C. 
222(f)(3)), for the purpose of publishing telephone directories in any 
format.

``Sec. 1206. Civil remedies

  ``(a) Civil Actions.--Any person who is injured by a violation of 
section 1202 may bring a civil action for such a violation in an 
appropriate United States district court without regard to the amount 
in controversy, except that any action against a State governmental 
entity may be brought in any court that has jurisdiction over claims 
against such entity.
  ``(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 asthe court may deem 
reasonable, to prevent a violation of section 1202. 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) Impoundment.--At any time while an action under this section is 
pending, the court may order the impounding, on such terms as it deems 
reasonable, of all copies of contents of a collection of information 
extracted or used in violation of section 1202, 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 of section 1202, order the remedial 
modification or destruction of all copies of contents of a collection 
of information extracted or used in violation of section 1202, and of 
all masters, tapes, disks, diskettes, or other articles by means of 
which such copies may be reproduced.
  ``(d) Monetary Relief.--When a violation of section 1202 has been 
established in any civil action arising under this section, the 
plaintiff shall be entitled to recover any damages sustained by the 
plaintiff and defendant's profits not taken into account in computing 
the 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; defendant must prove all elements 
of cost or deduction claims. In assessing damages the court may enter 
judgment, according to the circumstances of the case, for any sum above 
the amount found as actual damages, not exceeding three times such 
amount. The court in its discretion may award reasonable costs and 
attorney's fees to the prevailing party and shall award such costs and 
fees where it determines that an action was brought under this chapter 
in bad faith against a nonprofit educational, scientific, or research 
institution, library, or archives, or an employee or agent of such an 
entity, acting within the scope of his or her employment.
  ``(e) Reduction or Remission of Monetary Relief for Nonprofit 
Educational, Scientific, or Research Institutions.--The court shall 
reduce or remit entirely monetary relief under subsection (d) in any 
case in which a defendant believed and had reasonable grounds for 
believing that his or her conduct was permissible under this chapter, 
if the defendant was an employee or agent of a nonprofit educational, 
scientific, or research institution, library, or archives acting within 
the scope of his or her employment.
  ``(f) Actions Against United States Government.--Subsections (b) and 
(c) 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.

``Sec. 1207. Criminal offenses and penalties

  ``(a) Violation.--
          ``(1) In general.--Any person who violates section 1202 
        willfully, and--
                  ``(A) does so for direct or indirect commercial 
                advantage or financial gain, or
                  ``(B) causes loss or damage aggregating $10,000 or 
                more in any 1-year period to the person who gathered, 
                organized, or maintained the information concerned,
        shall be punished as provided in subsection (b).
          ``(2) Inapplicability.--This section shall not apply to an 
        employee or agent of a nonprofit educational, scientific, or 
        research institution, library, or archives acting within the 
        scope of his or her employment.
  ``(b) Penalties.--An offense under subsection (a) shall be punishable 
by a fine of not more than $250,000 or imprisonment for not more than 5 
years, or both. A second or subsequent offense under subsection (a) 
shall be punishable by a fine of not more than $500,000 or imprisonment 
for not more than 10 years, or both.

``Sec. 1208. Limitations on actions

  ``(a) Criminal Proceedings.--No criminal proceeding shall be 
maintained under this chapter unless it is commenced within three years 
after the cause of action arises.
  ``(b) Civil Actions.--No civil action shall be maintained under this 
chapter unless it is commenced within three years after the cause of 
action arises or claim accrues.
  ``(c) Additional Limitation.--No criminal or civil action shall be 
maintained under this chapter for the extraction or use of all or a 
substantial part of a collection of information that occurs more than 
15 years after the investment of resources that qualified the portion 
of the collection of information for protection under this chapter that 
is extracted or used.''.

SEC. 3. CONFORMING AMENDMENT.

  The table of chapters for title 17, United States Code, is amended by 
adding at the end the following:

``12. Misappropriation of Collections of Information........    1201''.

SEC. 4. CONFORMING AMENDMENTS TO TITLE 28, UNITED STATES CODE.

  (a) Jurisdiction.--Section 1338 of title 28, United States Code, is 
amended--
          (1) in the section heading by inserting ``misappropriations 
        of collections of information,'' after ``trade-marks,''; and
          (2) by adding at the end the following:
  ``(d) The district courts shall have original jurisdiction of any 
civil action arising under chapter 12 of title 17, relating to 
misappropriation of collections of information. Such jurisdiction shall 
be exclusive of the courts of the States.''.
  (b) Conforming Amendment.--The item relating to section 1338 in the 
table of sections for chapter 85 of title 28, United States Code, is 
amended by inserting ``misappropriations of collections of 
information,'' after ``trade-marks,''.

SEC. 5. EFFECTIVE DATE.

  (a) In General.--This Act and the amendments made by this Act shall 
take effect on the date of the enactment of this Act, and shall apply 
to acts committed on or after that date.
  (b) Prior Acts Not Affected.--No person shall be liable under chapter 
12 of title 17, United States Code, as added by section 2 of this Act, 
for the use of information lawfully extracted from a collection of 
information prior to the effective date of this Act, by that person or 
by that person's predecessor in interest.

                          Purpose and Summary

    H.R. 2652, the ``Collections of Information Antipiracy 
Act,'' responds to a need to complement copyright law with a 
federal misappropriation law that prevents the wholesale 
copying of another's collection of information so as to harm 
the market for that collection. The bill ensures incentives for 
investment in the production and dissemination of collections 
of information, while maintaining continued access to 
information contained in such collections for public interest 
purposes such as education, science and research.
    The Collections of Information Antipiracy Act prohibits the 
misappropriation of commercially valuable collections by those 
who pirate data collected by others through substantial effort 
and expense, and use it in a way that causes market injury to 
the producer of the original collection. This protection is 
modeled in part on the Lanham Act, which already makes various 
types of unfair competition a civil wrong under federal law. 
Importantly, existing protections for collections of 
information afforded by other bodies of law, most notably 
copyright and contract rights, are maintained in their present 
form. The bill is intended to supplement these legal rights, 
not replace them.

                Background and the Need for Legislation

    Electronic collections, and other collections of factual 
material, are indispensable to the American economy on the 
verge of the 21st century. These information products put a 
wealth of data at the fingertips of business people, 
professionals, scientists, scholars, and consumers, and enable 
them to retrieve from this haystack of information the factual 
needles that they need to solve a particular economic, 
research, or educational problem. Whether databases contain 
financial, scientific, legal, medical, bibliographic, news, or 
other information, they are essential tools for improving 
productivity, advancing education and training, and creating a 
more informed citizenry. They are also the linchpins of a 
dynamic commercial information industry in the United States.
    Developing, compiling, distributing commercially 
significant collections of information, and maintaining them in 
current and accurate form, requires substantial investments of 
time, personnel, and money. Information companies must dedicate 
massive resources to gathering and verifying factual material, 
presenting it in a user-friendly way, and keeping it up to date 
and easily accessible to customers. U.S. firms have been the 
world leaders in this field. They have brought to market a wide 
range of valuable collections that meet the information needs 
of businesses, professionals, researchers, and consumers 
worldwide. But recent legal and technological developments 
threaten to cast a pall over this progress, by eroding the 
incentives for the continued investment needed to maintain and 
build upon the U.S. lead in world markets for information 
resources.
    Here in the U.S., the 1991 Supreme Court decision in Feist 
Publications v. Rural Telephone Service Co.1 marked 
a more restrictive approach toward claims of copyright in 
databases.2 The Court definitively rejected the 
longstanding ``sweat of the brow'' basis for copyright 
protection of compilations that was still prevalent in certain 
jurisdictions, and held that at least a minimal spark of 
creativity in selection, coordination or arrangement was 
required to protect a compilation under copyright. While 
reaffirming that most--although not all--compilations satisfy 
the ``originality'' standard, the Court emphasized that this 
protection is ``necessarily thin.'' Several subsequent lower 
court decisions have underscored that copyright cannot be 
relied on to prevent a competitor from lifting massive amounts 
of factual material from a copyrighted database to use in 
preparing its own competing product.3
---------------------------------------------------------------------------
    \1\ 499 U.S. 340 (1991).
    \2\ For a fuller explanation of the ``sweat of the brow'' doctrine, 
the Feist case, and its impact see The Collection of Information 
Antipiracy Hearing on H.R. 2652 before the Subcommittee on Courts and 
Intellectual Property of the House Committee on the Judiciary, 105th 
Cong., 1st Sess., Transcript (see testimony of Prof. Jane C. Ginsburg, 
and testimony of Register of Copyrights Marybeth Peters).
    \3\ See, e.g., Warren Publ. Inc. v. Microdos Data Corp., 115 F.3d 
1509 (11th Cir. 1997) (en banc); Martindale-Hubbell, Inc. v. Dunhill 
Int'l List Co., No. 88-6767-CIV-ROETTGER (S.D. Fla. Dec. 30, 1994).
---------------------------------------------------------------------------
    In Europe, a six-year process culminated in the issuance of 
a European Union Directive onLegal Protection of Databases in 
1996. Among other things, the Directive requires member states to 
create by 1998 a new, sui generis property right for databases, to 
supplement copyright. But this new protection will not be extended to 
U.S.-originated databases unless the U.S. is found to offer 
``comparable'' protection to European databases. When fully 
implemented, the European Directive could place U.S. firms at an 
enormous competitive disadvantage throughout the entire European Union 
market. This Act is intended to remedy that problem by providing 
protection comparable to that outlined in the Directive without regard 
to a database producer's country of origin. While based on a 
misappropriation approach rather than a grant of property rights, this 
protection addresses the core concerns of the Directive. Despite its 
different theoretical basis and formulation, the Act will prevent 
commercial harm to database producers and therefore ensure adequate 
incentives for the continued production and dissemination of databases. 
Producers of collections of information will be capable of continuing 
to transfer and license their collections, and to waive the protection 
provided under the Act.
    At the World Intellectual Property Organization (WIPO) in 
Geneva, discussions are ongoing as to the advisability of a new 
international treaty on protection for databases outside of 
copyright law, although no treaty language is currently under 
consideration. A previous WIPO draft treaty circulated in 1996 
proposed a sui generis property right approach, similar to the 
model in the European Union Directive, which is rejected in 
favor of a misappropriation model in this Act.
    Other relevant developments have been technological in 
nature. In cyberspace, new technology represents a threat as 
well as an opportunity for collections of information, as for 
other kinds of materials. Copying large quantities of materials 
from another's collection, and using it in a competing 
information product--behavior that copyright protection may not 
effectively prevent--is cheaper and easier than ever, through 
digital technology now in widespread use. Scanning permits non-
electronic collections to be digitized, and even massive 
quantities of copied material can be distributed 
instantaneously once in digital form.
    Various legal and technological options exist today for 
producers of collections of information to protect their 
investments. In 1997, the Copyright Office issued a Report on 
Legal Protection of Databases, which lists these options, and 
explains the benefits and shortcomings of each. Copyright, on 
the federal level, and the state contract law underlying 
licensing agreements, remain essential tools. But the coverage 
of copyright law is limited after Feist, and the protection of 
a contract binds only the parties to that contract. In at least 
some jurisdictions, state misappropriation law today offers 
protection to certain types of collections in certain 
circumstances. State misappropriation law, however, is 
unsettled and does not provide nationwide consistency. 
Moreover, to the extent that it is not preempted by federal 
copyright law, it is limited in scope, protecting only time-
sensitive information and only against direct 
competition.4 Other sources of protection, primarily 
trademark and trade secrecy law, or technological means such as 
encryption, are also available, but none is adequate to address 
the crux of the problem. Moreover, a balanced statutory 
solution may provide consumers with greater access to 
information than the restrictive contractual terms and 
technological protection measures likely to be adopted in the 
absence of adequate legal protections. In sum, there are 
meaningful gaps in protection that can best be filled by a new 
federal statute.
---------------------------------------------------------------------------
    \4\ See National Basketball Ass'n v. Motorola, Inc., 105 F.3d 841 
(2d Cir. 1997).
---------------------------------------------------------------------------
    When all of these legal and technological factors are added 
together, the bottom line is clear: there is a need to act to 
ensure adequate incentives for continued investment in the 
production and dissemination of collections of information. 
Already today, the lack of appropriate protection has begun to 
have a negative impact, with several court decisions that have 
resulted in serious damage to markets, and producers exhibiting 
a reluctance to make their products widely available over the 
Internet or in other easily copied formats. As noted by the 
Register of Copyrights in her testimony, appropriately 
delineated incentives should cause the public to benefit 
overall from increased availability of greater quantities of 
more accurate information. New federal legislation can serve to 
improve the market climate for collections of information in 
the U.S.; ensure protection for U.S. collections abroad on an 
equitable basis; place the U.S. on the leading edge of an 
emerging international consensus; and provide a balanced and 
measured response to the new challenges of cyberspace.
    The Collections of Information Antipiracy Act is such a 
balanced proposal. It is aimed at actual or threatened market 
injury from misappropriation of collections of information. The 
goal is to stimulate the creation of more collections, as well 
as increased dissemination to the public, and to encourage more 
competition among producers. The bill avoids conferring a 
monopoly on facts, or providing a breadth of protection that 
would be inconsistent with these goals.
    This bill differs significantly in approach and scope of 
coverage from H.R. 3531, introduced in the last Congress by 
then-Chairman Carlos Moorhead. H.R. 3531 proposed to enact a 
new form of sui generis exclusive property right in collections 
of information. In response to the concerns raised by 
interested parties and outlined in the Copyright Office Report 
on Legal Protection for Databases, H.R. 2652 adopts a different 
model for protection. It represents a minimalist approach 
grounded in the misappropriation branch of unfair competition 
law, focusing more precisely on the damage that can be done 
from substantial takings from collections of information. It 
also contains several additional provisions responsive to 
concerns of users, including more exceptions to and exclusions 
from the prohibition; specific definitions of important terms 
to clarify and narrow its coverage; a statute of limitations 
provision that limits the duration of the prohibition and 
prevents ``perpetual'' protection; and a reduction or 
elimination of civil and criminal penalties that could have a 
negative impact on public interest uses.
    The bill would prohibit the extraction or the use in 
commerce of all or a substantial part of a collection of 
information in a manner which causes harm to the market of the 
producer of the collection. Those who violate this act would be 
liable to the producer of the collection for damages in an 
amount equal to that the producer's damages plus any additional 
profits of the defendant, with the possibility of costs and 
attorney's fees, and could be held criminally liable in 
appropriate circumstances.
    In essence, the Act would restore a modified form of the 
``sweat of the brow'' protection available in the past as a 
separate doctrine and then under copyright law, but under 
appropriate Constitutional power and with appropriate 
limitations. Enactment of the bill is within Congress' 
authority to regulate interstate commerce under Article I, 
Section 8, Clause 3 of the Constitution. The form of protection 
provided is sufficiently different from copyright so as to 
avoid constitutionality issues under the Supreme Court's 
interpretation of the Patent and Copyright Clause in Feist. The 
Act does not create a property right like copyright, but rather 
a tort-based cause of action against misappropriation, founded 
on proof of market harm.5 It promotes different 
policies and by different means, encouraging investment rather 
than creativity and does so through a prohibition of harmful 
conduct rather than a grant of exclusive control regardless of 
harm. It is a form of unfair competition law, which like 
trademark and trade secrecy law is within Congress' commerce 
power.6
---------------------------------------------------------------------------
    \5\ The Collection of Information Anti-Piracy Act: Hearing on H.R. 
2652 before the Subcommittee on Courts and Intellectual Property of the 
House Committee on the Judiciary, 105th Congress., 1st Sess, Transcript 
at 70 (Testimony of Prof. Jane C. Ginsburg).
    \6\ See The Collection of Information Antipiracy Hearing on H.R. 
2652 before the Subcommittee on Courts and Intellectual Property of the 
House Committee on the Judiciary, 105th Cong., 1st Sess, Transcript 
(see testimony of Prof. Jane C. Ginsburg, and testimony of Register of 
Copyrights Marybeth Peters).
---------------------------------------------------------------------------

                                Hearings

    The Subcommittee on Courts and Intellectual Property 
conducted two days of legislative hearings on this legislation 
on October 23, 1997 and on February 12, 1998. Testifying on 
October 23 were Marybeth Peters, Register of Copyrights, U.S. 
Copyright Office; Paul Warren, Executive Publisher, Warren 
Publishing Incorporated; Laura D'Andrea Tyson, Professor, 
University of California at Berkeley, former National Economic 
Advisor to the President, and former Chair of theWhite House 
Counsel of Economic Advisors; James G. Neal, Sheridan Director of the 
Milton S. Eisenhower Library at John Hopkins University; Dr. William A. 
Wulf, President, National Academy of Engineering on behalf of the 
National Research Council; Professor Jerome Reichman, Senior Advisor to 
the National Research Council; and Dr. Robert S. Ledley, Director of 
Medical Computing, Biophysics Division, Georgetown University Medical 
Center. Testifying on February 12 were Robert Aber, Senior Vice 
President and General Counsel, NASDAQ Stock Market; Dr. Debra W. 
Stewart, Dean of the Graduate School, North Carolina State University, 
on behalf of the Association of American Universities; Dr. Richard 
Corlin, Speaker of the House of Delegates, American Medical 
Association; William Hammack, President of the Sunshine Pages; 
Professor Jane Ginsberg, Columbia University School of Law; Jonathan 
Band, on behalf of the On-Line Banking Association; and Tim Casey, for 
the Information Technology Association of America.

                        Committee Consideration

    The Subcommittee on Courts and Intellectual Property 
conducted a markup on this legislation on March 18, 1998. The 
Subcommittee reported the bill, H.R. 2652, as amended, to the 
full Committee, by voice vote, a quorum being present. On March 
24, 1998, the Committee conducted a markup and reported the 
bill, H.R. 2652, as amended, to the House by voice vote, a 
quorum being present.

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         Committee on Government Reform and Oversight Findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 2(l)(3)(B) of House rule XI is inapplicable because 
this legislation does not provide new budget authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to H.R. 2652, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under Section 403 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 14, 1998.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2652, the 
Collections of Information Antipiracy Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts for this 
estimate are Mark Grabowicz (for federal costs) and Pepper 
Santalucia (for the state and local impact).
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

H.R. 2652--Collections of Information Antipiracy Act

    CBO estimates that enacting this legislation would have no 
significant impact on the federal budget. While the bill could 
lead to increases in both direct spending and receipts, the 
amounts involved would be less than $500,000 a year. Because 
H.R. 2652 could affect direct spending and receipts, pay-as-
you-go procedures would apply.
    H.R. 2652 would attempt to protect substantial investments 
made in the collecting of information or the establishing of 
databases with commercial value. The legislation generally 
would prohibit the misappropriation of a substantial portion of 
such information in a way that would decrease its potential 
market value. Violators of the bill's provisions would be 
subject to a criminal fine, imprisonment, or civil action.
    Because H.R. 2652 would establish a new federal crime, CBO 
anticipates that the U.S. government would be able to pursue 
cases that it otherwise would be unable to prosecute. Based on 
information from the Department of Justice, however, we do not 
expect the government to pursue many additional cases. Thus, 
CBO estimates that enacting the bill would not have a 
significant impact on the cost of federal law enforcement 
activity. Implementing the bill also could increase costs to 
the federal courts if more civil suits are filed by private 
parties, but we do not expect many additional cases. Any 
additional costs to federal law enforcement agencies or to the 
federal courts would be subject to the availability of 
appropriated funds.
    Enacting H.R. 2652 could increase governmental receipts 
from fines, but we estimate that any such increase would be 
less than $500,000 annually. Criminal fines are deposited as 
revenues in the Crime Victims Fund and spent in the following 
year. Thus, any change in direct spending from the fund would 
match the increase in revenues with a one-year lag.
    H.R. 2652 would impose an intergovernmental mandate as 
defined in the Unfunded Mandates Reform Act of 1995 (UMRA), 
because it would preempt state laws regarding the protection of 
collections of information. However, CBO estimates that 
complying with this mandate would not have a significant impact 
on state budgets. The bill contains no private-sector mandates 
as defined in UMRA.
    The CBO staff contacts for this estimate are Mark Grabowicz 
(for federal costs) and Pepper Santalucia (for the state and 
local impact). This estimate was approved by Robert A. 
Sunshine, Deputy Assistant Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to rule XI, clause 2(l)(4) of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, section 8, clause 3 of the 
Constitution.

                      Section-by-Section Analysis

                      1. Section One--Short Title

    The short title of the act will be the ``Collections of 
Information Antipiracy Act.''

          2. Section Two--Prohibition Against Misappropriation

    Section 1202 sets out the central prohibition of the Act. 
It states that any person who extracts, or uses in commerce, 
all or a substantial part of a collection of information of 
another so as to cause harm to that other person's actual or 
potential market for a product or service is liable for the 
remedies established in this act. To be eligible for 
protection, the collection of information must be gathered, 
organized, or maintained through the investment of substantial 
monetary or other resources. The maintenance that is referred 
to may include updating or ongoing verification of the 
information collected. In order to qualify, the investment must 
be substantial, whether it consists of money, time, or effort. 
The protection would extend to any successor in interest of the 
person that produced the collection of information.
    The use of a substantial part of a collection of 
information cannot be unlawful under this act unless it is a 
use made in commerce. Accordingly, the use of information for 
purely private purposes, without a nexus to commerce such as 
dissemination to others, would not be prohibited. The intent of 
the Committee is to ensure that those with lawful access to a 
collection have the ability freely to use its contents for 
purposes of noncommercial internal study, research or analysis. 
In contrast, the act of extraction itself could fall within the 
prohibition of the bill even if it is noncommercial and 
private, in order to safeguard against the destruction of a 
market from the members of the intended market simply 
downloading a collection for their own use without 
authorization or payment.
    The prohibition of the Act applies only if either the 
entire collection, or a substantial part of the collection, is 
taken. The intent is to prohibit piratical takings that 
misappropriate the value of the collection itself, rather than 
particular items of information it contains. Since the taking 
of a substantial part of a collection may seriously harm the 
collection's market, the prohibition cannot be limited to the 
taking of the entire collection. Only portions of the 
collection that are substantial in amount or importance to the 
value of the collection as a whole would be covered. 
Qualitative harm may occur through the extraction of a 
quantitatively small but valuable portion of a collection of 
information. For example, the Physician's Desk Reference, a 
work that compiles generally available information about every 
prescription drug approved by the FDA, contains some several 
thousand drugs and is available to both consumers and medical 
professionals. If a second comer extracted information about 
the thousand most commonly prescribed medications and offered 
it for sale to the general public--for example under the title 
``Drugs Every Consumer Should Know''--that extraction and use, 
although a fraction of the total collection of information, 
would cause the kind of market harm that the Committee intends 
H.R. 2652 to prevent. Similarly, the extraction or use of real-
time quotes for all technology stocks from a securities 
database, while constituting a relatively small portion of 
actively traded or volatile securities, may be of such 
``qualitative''importance to the value of the database that it 
creates the type of commercial harm that the Committee intends section 
1202 to prevent.
    Under the misappropriation approach of this bill, liability 
is premised on harm to the actual or potential market for the 
collection of information. The element of market harm is 
therefore critical, and should be properly understood. 
Misappropriation under the chapter occurs only if the 
extraction or use in commerce directly causes harm to the 
actual or potential market for a collection of information 
produced by the aggrieved person. Clearly, extracting 
information from a database and using it in a new database 
which competes with the first database causes harm to the 
actual market for the first database. Similarly, if a person 
extracts so much of an online database that the person would be 
able, in the future, to avoid paying a subscription fee for 
access to the data it contains, that person has harmed the 
market for the database.
    The prohibition is written so as to avoid preventing 
consumer, scientific, or educational uses of information which 
has been acquired through lawful access. It would not, for 
example, prevent scientists from sharing data sets, or 
publishing the results of their analysis of data, since such 
acts do not ordinarily involve use in commerce that would harm 
the market for the database. Nor is the Act intended to cover 
indirect harm to the market for a product. For example, a 
chemical company which uses the information in a database (for 
which it paid) to create a new chemical which revolutionizes a 
segment of the industry, and thereby diminishes demand for the 
database by decreasing the number of companies in the industry, 
has not misappropriated information within the meaning of this 
chapter. The harm to the market was not directly caused by the 
use of the information, but by the changes to the industry that 
came about through the effect of the use of the information.
    Section 1201 provides several definitions. It defines 
``collection of information'' to mean information that has been 
collected and has been organized for the purpose of bringing 
discrete items of information together in one place or through 
one source so that users may access them. The definition is 
intended to avoid sweeping too broadly, particularly in the 
digital environment, where all types of material when in 
digital form could be viewed as collections of information. It 
makes clear that the statute protects what has been 
traditionally thought of as a database, involving a collection 
made by gathering together multiple discrete items with the 
purpose of forming a body of material that consumers can use as 
a resource in order to obtain the items themselves. This is in 
contrast to elements of information combined and ordered in a 
logical progression or other meaningful way in order to tell a 
story, communicate a message, represent something, or achieve a 
result. Thus, a novel would not be considered a ``collection of 
information'' even if it appears in electronic form, and 
therefore could be described as made up of elements of 
information that have been put together in some logical way. 
Similarly, material such as interface specifications would not 
ordinarily be covered, although a collection of such 
specifications created in order to provide consumers access to 
the individual specifications could be covered. The term ``in 
one place or through one source'' denotes the availability of 
the information to consumers in a single material object or 
through a specific address, location or other source. It does 
not require that all of the information be present at any 
particular physical site.
    The section also contains a definition of ``potential 
market,'' which means ``any market that a person claiming 
protection under section 1202 has current and demonstrable 
plans to exploit or that is commonly exploited by persons 
offering similar products or services incorporating collections 
of information.'' This definition, which is drawn from judicial 
interpretations of the fair use doctrine under copyright law, 
is intended to clarify that ``potential market'' is not to be 
interpreted in a circular way, so that any market that the 
producer of the collection could someday exploit is deemed a 
potential market sufficient to lead to liability.
    ``Information'' is defined to mean facts, data, works of 
authorship, or other intangible material capable of being 
collected and organized in a systematic way. It is important to 
ensure that databases made through substantial investments in 
collecting and organizing copyrightable works of authorship, 
which will be a critical source of entertainment and 
educational material for consumers on the Internet, may be 
protected under this Chapter.
    Paragraph (4) defines ``commerce'' as all commerce which 
may be lawfully regulated by the Congress. Given the breadth of 
this definition, a collection of information that is utilized 
within a particular organization or group of customers, but not 
made available to the general public, may qualify for 
protection under this Chapter as ``offered or intended to be 
offered for sale or otherwise . . . in commerce.'' Since many 
collections will be disseminated through licensing mechanisms, 
the relevant offer is not limited to one made for sale.

                    3. Section 1203--Permitted Acts

    Section 1203 sets out a list of acts that are permitted 
despite the language of the prohibition in section 1202. These 
permitted acts are designed for public policy purposes, to 
ensure that the statute does not have the unintended effect of 
providing ownership of information itself, or impeding 
appropriate and beneficial types of uses.
    Subsection (a) makes clear that the extraction or use of 
individual items of information is not prohibited. This is 
crucial in establishing that this legislation does not allow 
the producer of a collection to ``lock up'' individual pieces 
of information contained in the collection. The second sentence 
ensures that a single item in a collection cannot be considered 
either quantitatively or qualitatively substantial so as to 
give rise to liability under section 1202, even if it is in 
itself a valuable copyrighted work. On the other hand, this 
subsection would not excuse the extraction or use of many 
individual items in a repeated or systematic way, in order to 
evade the prohibition against extraction of a substantial 
portion.
    Subsection (b) further clarifies that the act does not 
grant protection of the information itself, despite its 
inclusion within a collection. Others remain free to 
independently gather and use the same information which is 
contained in another's collection of information, whether for 
their own use or to produce a competing collection.
    Subsection (c) exempts the use of information for purposes 
of verifying the accuracy of information independently gathered 
by the verifier. This concept stems from the early ``sweat of 
the brow'' copyright cases, which permitted subsequent 
compilers to use earlier compilations to verify the fruits of 
their own independent labor.7 Potential abuse is 
avoided by the limitations in the subsection requiring the 
information to be used only internally, not for distribution to 
others, and for the sole purpose of verifying accuracy rather 
than adding to or supplementing the information in the 
verifier's own collection. The exemption will be particularly 
important for scientists and other researchers, permitting them 
to use collections of information produced by others to check 
the results of their research.
---------------------------------------------------------------------------
    \7\ See Illinois Bell Tel. Co. v. Haines & Co., 683 F. Supp. 1204 
(N.D. Ill. 1988), aff'd, 905 F.2d 1081 (7th Cir. 1990), vacated and 
remanded, 499 U.S. 944 (1991); Rural Tel. Serv. Co. v. Feist 
Publications, Inc., 916 F.2d 718 (10th Cir. 1990).
---------------------------------------------------------------------------
    It will also be important for the securities and 
commodities industries, where it is a common practice to verify 
the current market as part of placing an order for a security 
or commodity. For example, investors frequently decide to 
purchase investments through an online securities trading 
system that they have followed by means of a delayed data 
service. Typically, the online trading system will allow the 
investor to verify electronically the last sale price or 
prevailing quote for the investment as a last step before the 
investor places the buy order--called a ``market check'' or 
``market verification'' service. In today's marketplace, 
providers of these services distribute millions of real-time 
quotations each month, aiding individuals by allowing them to 
attain easy and quick access to accurate information on which 
to decide whether to invest or trade in without unduly 
burdening them with the costs that would be associated with 
accessing a continual stream of real-time data. This subsection 
seeks to maintain the status quo and not to supercede any 
agreements with market verification services concerning the use 
of market quotation information. This provision permits the 
extraction of information for verification purposes unless it 
harms the market for those collections of information. Nothing 
in this subsection would permit delayed data subscribers to 
avoid fees when they verify delayed data by retrieving a real 
time price, a practice which is widespread within the industry.
    This subsection is not intended to allow unscrupulous 
pirates to extract and use real-time quotations of securities 
and commodities markets and clearing organizations without the 
permission of the securities and commodities markets that 
gather, organize and maintain that information. Such activities 
are not undertaken for legitimate accuracy verification 
purposes.
    Subsection (d) seeks to alleviate the concerns expressed by 
members of the research, scientific, and university communities 
that any new protection for collections of information would 
hinder their ability to carry on basic research. The subsection 
recognizes the value and importance of nonprofit educational, 
scientific and research purposes, permitting the extraction or 
use of information for such purposes as long as doing so does 
not harm the market for the original product or service. 
Ordinarily such uses will not cause market harm; it is 
typically where the user is a member of the intended market for 
the collection that the bill's prohibition would be called into 
play. The act also supplements this limitation by providing 
special relief for nonprofit educational, scientific or 
research institutions, libraries and archives, from substantial 
civil and criminal liability under the Act. As described below, 
such an institution is exempt from criminal liability and 
entitled to a reduction or remittal of monetary relief for good 
faith conduct, and may also obtain attorney's fees and costs 
when sued in bad faith.
    This provision seeks to maintain the status quo in relation 
to how academic institutions use market quotations. Security 
and futures markets and clearing organizations have 
traditionally made available unprecedented portions of their 
collections of information to academics and researchers and 
will continue to do so under the belief that such activity is 
in the pubic interest to do so. For example, a university 
professor could not open an account with a brokerage firm which 
grants access to real time quotations and subsequently 
disseminate those quotations university wide to the extent that 
he or she replicate a real time service. Such activity would 
fall outside of the permitted acts under this subsection.
    Section 1203(e) is premised on the Committee's cognizance 
of the essential role that the press plays in our 
constitutional system. This subsection reflects the Committee's 
intent that the act neither inhibit legitimate news gathering 
activities nor permit the labeling of conduct as ``news 
reporting'' as a pretext for usurping a compiler's investment 
in collecting information.8
---------------------------------------------------------------------------
    \8\ Cf. Wainwright Sec. v. Wall Street Transcript Corp., 558F.2d 91 
(2d Cir. 1977).
---------------------------------------------------------------------------
    For purposes of this subsection, ``news reporting'' should 
be construed to mean dissemination of news to the public, 
including sports scores and statistics, without regard to the 
means through which it is disseminated, whether by print media 
such as newspapers, by television news programs, or online.
    The Committee expects that news reporting will seldom fall 
within the prohibition of section 1202, and therefore this 
exemption will rarely need to be invoked. News articles 
typically use particular items of information from a collection 
rather than the collection as a whole. Even if substantial 
portions of a collection are used, the use often will not 
affect the market for the collection and therefore will not 
implicate section 1202.
    Section 1203(e) is applicable only if the extraction or use 
of all or a substantial part of another's collection of 
information is ``for the sole purpose of news reporting or 
comment.'' Courts should be ``chary of deciding what is and 
what is not news,'' 9 and should examine, on a case-
by-case basis, whether a claim under this provision is 
justified. In some circumstances, the amount taken from the 
collection may be relevant to a determination of whether the 
defendant's sole purpose was in fact news reporting. For 
example, the republication of an entire collection of 
information as an insert to a newspaper would not usually be 
excused by the mere fact that the newspaper as a whole is 
engaged in news reporting, or by the inclusion of an article 
related to the subject matter of only one distinct portion of 
the collection. Courts should, however, avoid second-guessing 
how much information is appropriate to use for a valid news 
reporting purpose.
---------------------------------------------------------------------------
    \9\ Harper & Row, Publishers, Inc. v. Nation Enterprises, Inc., 723 
F.2d 197, 215 (2d Cir. 1983) (Meskill, J., dissenting), rev'd on other 
grounds, 471 U.S. 539 (1985).
---------------------------------------------------------------------------
    This provision seeks to maintain the status quo in relation 
to how news operations use market quotations. While security 
and futures markets and clearing organizations have 
traditionally allowed news organizations to use market data in 
a reasonable manner that legitimately contributes to the news 
functions, this section would not allow news organizations to 
replicate real time quote services which harm the market for 
those collections of information. For example, an entity which 
establishes itself as a news service and opens an account with 
a brokerage firm which grants access to real time quotations 
and subsequently disseminates those quotations to the public to 
such an extent that it would replicate a real time service 
would not be protected from the prohibition contained in 
section 1202 by this subsection.
    The final clause of this subsection, excepting from its 
application a consistent pattern of competitive takings of 
time-sensitive information, is intended to preserve the holding 
in International News Service v. Associated Press \10\ and is 
therefore tailored to the specific facts in that case. It 
should not be interpreted to have any other meaning, including 
any implication as to the permissibility of conduct not falling 
within its narrow scope.
---------------------------------------------------------------------------
    \10\ 248 U.S. 215 (1918).
---------------------------------------------------------------------------
    Subsection (f) establishes the principle permitting resale 
or other sharing of a physical copy of a collection of 
information once that copy has been lawfully obtained. It does 
so by using language similar to that of the ``first sale 
doctrine'' in the Copyright Act, stating that the owner of a 
particular lawful copy of all or part of a collection of 
information may sell or otherwise dispose of that copy.

                      4. Section Four--Exclusions

    Subsection (a) rules out protection for government 
collections of information. It provides that the act's 
protection does not extend to collections of information 
gathered, organized or maintained by or for governmental 
entities, their employees, agents, or exclusive licensees. It 
is designed to ensure that information collected by the 
government at taxpayer expense will be made available for 
public knowledge and basic research. The provision responds to 
concerns that the bill would thwart access to government 
information currently available to the public, especially to 
the scientific, research and educational communities. The 
exclusion is broader than the similar provision in section 105 
of the Copyright Act; it applies to state and local governments 
as well as the federal government, and covers collections 
prepared for the government by independent contractors and 
exclusive licensees as well as employees.
    This subsection does not apply, however, to collections of 
information gathered, organized or maintained by agents or 
licensees of the government created outside the scope of their 
agency or license, or by Federal or State educational 
institutions in the course of engaging in education or 
scholarship. When a party retained by the government to perform 
one particular task also invests in producing databases that 
add value to the information it has produced or collected for 
the government, it should not be precluded from protection. 
Similarly, educational institutions that happen to be 
government owned should not be disadvantaged relative to 
private institutions when producing databases unrelated to the 
provision of regulatory government functions.
    Nor does the exclusion apply to information required to be 
collected and disseminated by securities, futures exchanges and 
clearing organizations operating under the Securities and 
Exchange Act of 1934 or the Commodity Exchange Act. Under the 
authority of both Acts, the dissemination of market data and 
price quotes in collections of information supplied by 
securities and commodities markets are regulated by the SEC and 
the CFTC, respectively. Because of the fact that the Securities 
Exchange Act of 1934 requires securities exchanges, securities 
associations, securities information processors and clearing 
organizations to register with the SEC, and the fact that the 
Commodity Exchange Act requires commodities markets to register 
with the CFTC, might cause the financial markets to be deemed 
agents or exclusive licensees of the SEC and CFTC, this 
language clarifies that the unique relationship between 
government regulatory authorities and the securities and 
commodities markets does not bar protection under this chapter 
for the collections of information those markets produce.
    Subsection (b) rules out protection under this chapter for 
computer programs. Computer programs are already closely linked 
with collections of information, and in the future will be even 
more so. The search engine for a large collection of 
information stored on CD-ROM is a type of computer program. 
Similarly, computer programs referred to as ``intelligent 
agents'' can gather information from the World Wide Web and 
create a collection of information. Section 1204(b)(1) is 
intended to make clear that notwithstanding the often close 
relationship between a program and a collection of information, 
computer programs are not protected under this chapter, 
including programs that are used in the manufacture, 
production, operation, or maintenance of a collection of 
information, or any elements of the program that are necessary 
for the program's operation.
    At the same time, Section 1204(b)(2) makes clear that a 
collection of information does not lose protection by virtue of 
its inclusion within a computer program. For example, a set of 
engineering constants contained in a program which performs 
mathematical calculations using those constants remains a 
protected collection of information, assuming it meets the 
criteria of the Act. Section 1204(b)(2) recognizes that the 
information in a data-file is distinct from the instructions 
that perform operations on that information.

              5. Section Five--Relationship to Other Laws

    Section 1205 deals with the relationship of the Act to 
existing legal rights or obligations relating to information. 
Subsection (a) clarifies that nothing in this act will affect 
the rights, limitations or remedies available to a party under 
current law, other than state rights preempted under subsection 
(b). For example, nothing in this act would negate the ability 
of a party to receive copyright protection for a collection of 
information should that collection qualify for protection as a 
``compilation'' under the Copyright Act. Similarly, other laws 
that may provide affirmative rights of access to information 
would remain unaffected. This subsection establishes the 
general principle of non-interference; subsequent subsections 
provide specific examples of areas of law particularly relevant 
to the coverage of this Chapter.
    Subsection (b) provides for preemption of state law to the 
extent it provides equivalent rights in the same subject 
matter. This subsection makes clear that federal law controls 
in this specific area, with state common law or statutes 
dealing with misappropriation of collections of information, as 
defined in section 1201, preempted by this Act. On the other 
hand, state law providing differentrights in collections of 
information are not preempted. The Act specifies that state laws 
regarding trademark, design rights, antitrust, trade secrets, privacy, 
access to public documents and the law of contract shall not be deemed 
to provide equivalent rights.
    Subsection (c) addresses the relationship between the 
protection provided by this Act and by copyright law. The first 
sentence clarifies that protection under this chapter is 
independent of, but complementary to, any copyright protection 
that may subsist in a work of authorship that is contained in 
or consists in whole or in part of a collection of information. 
In evaluating a claim under this chapter, it is not relevant 
whether copyright protection exists in the collection of 
information or any component thereof. Rather, a court's task is 
to determine whether the defendant has misappropriated all or a 
substantial portion of the plaintiff's collection of 
information in violation of this chapter--irrespective of 
whether or not part or all of the contents of such collection 
of information consists of copyrighted material. When a 
defendant's use or extraction is also alleged to constitute 
copyright infringement, the court should determine that issue 
exclusively under the Copyright Act.
    The second sentence of subsection (c) amplifies this 
principle. Because a collection of information protected under 
this chapter can consist, in whole or part, of one or more 
copyrighted works, this sentence affirms that an original work 
of authorship that is one of the items contained in a 
collection of information does not receive greater protection 
under this Act than it does under the copyright law. A work 
that is itself a collection of information, however, may 
receive greater protection against misappropriation under this 
chapter than it would receive against infringement as a 
compilation protected by copyright. Because the nature of the 
protection is distinct, a court evaluating a claim under this 
chapter need not distinguish between copyrightable and 
uncopyrightable components of collections of information. If 
the use or extraction of all or a substantial part of a 
collection of information violates this chapter, it is 
irrelevant whether copyright subsists in any part of that 
collection.
    Subsection (d) deals with the relationship to antitrust 
law. It states that this chapter will not limit application of 
antitrust laws, including those laws regarding single suppliers 
of products and services. The subsection is intended to address 
the so-called ``sole source'' issue, involving situations where 
the information within a collection is not available elsewhere 
for others to obtain, giving the producer of the collection a 
de facto monopoly over the facts contained therein. The 
Committee believes that an appropriate response to potential 
abuse, to the extent it is not dealt with by existing 
regulatory authorities overseeing certain industries, can be 
found in the antitrust laws, which are specifically designed to 
deal with such monopoly concerns. The essential facilities 
doctrine in particular may be particularly relevant to this 
issue.
    Subsection (e) reaffirms the basic principle of freedom of 
contract. It makes clear that nothing in this Act prevents the 
producer of the collection of information from entering into 
any licensing agreements or contracts concerning the use of the 
collection. In today's marketplace, licensing and other 
contractual mechanisms are widely relied upon in disseminating 
collections of information. The Committee intends to preserve 
the ability to structure and enforce contractual arrangements 
tailored to the particular circumstances of a transaction. The 
enforceability of such licenses was recently upheld in ProCD, 
Inc. v. Zeidenberg,\11\ which recognized the important role 
that private arrangements play in the efficient exploitation of 
information-based products to the benefit of both producers and 
users of these products.
---------------------------------------------------------------------------
    \11\ 86 F.3d 1447 (7th Cir. 1996).
---------------------------------------------------------------------------
    Subsection (f) provides that nothing in this chapter shall 
affect the operation of provisions of the Communications Act of 
1934, as amended. Consequently, nothing in this bill shall 
affect the operations of sections 251, 252, 271 or 272 of the 
Communications Act of 1934, as amended, and this bill shall not 
have any effect on any existing right contained in the 
Communications Act to extract or use information from a 
collection of information for the purpose of obtaining access 
to a network element, as such term is defined in section 
153(29) of the Communications Act of 1934, as amended, (47 
U.S.C. 153(29)), or otherwise to provide a telecommunications 
service as provided for under the Communications Act of 1934, 
as amended. Nor shall anything in this chapter affect the 
operation of section 222(e) of the Communications Act of 1934, 
as amended, (47 U.S.C. 222(e)), or shall restrict any person 
from extracting or using subscriber list information, as such 
term is defined in section 222(f)(3) of the Communications Act 
of 1934 (47 U.S.C. 222(f)(3)), for the purpose of publishing 
telephone directories in any format. This provision addresses 
the concerns of companies which presently use such information 
to publish independent directories separate from those 
published by the telephone service provider.

                     6. section six--civil remedies

    This section sets out the civil penalties which may be 
imposed for a violation of the act. Subsection (a) establishes 
exclusive subject matter jurisdiction in United States district 
courts. Subsection (b) gives courts the power to grant 
permanent and temporary injunctions to prevent violations of 
section 1202. An injunction may be served on a party anywhere 
in the United States and may be enforced by any district court 
having jurisdiction over the party.
    Subsection (c) allows the appropriate court to impound 
copies of contents of a collection of information extracted or 
used in violation of this act. The court may also, as part of a 
final judgement or decree, order the remedial modification or 
destruction of all contents of a collection of databases 
extracted or used in violation of this act. Both the injunction 
and order of destruction may extend to all masters, tapes, 
disks, diskettes, or other articles by means of which copies 
may be produced.
    Subsection (d) authorizes monetary damages for a violation 
of this act. The plaintiff is entitled to recover any damages 
it sustained as well as the defendant's profits not taken into 
account in computing damages. The plaintiff is required to 
prove the defendant's gross revenue only, while the defendant 
has the burden of proving all elements of cost or deduction 
claimed. The court may assess treble damages up to three times 
the amount of actual damages. The court may also award 
reasonable costs and attorney's fees to the prevailing party, 
and shall award such costs and fees if the action was brought 
in bad faith against a nonprofit educational, scientific or 
research institution, library or archives.
    Subsection (e) requires a court to reduce or remit entirely 
monetary relief in any case where a defendant believed and had 
reasonable grounds for believing that his or her conduct was 
permissible under this Act, if the defendant was acting within 
the scope of his or her employment by a nonprofit educational, 
scientific, or research institution, library or archives.
    The injunction and impoundment provisions of this act do 
not apply to any action against the United States Government. 
The relief provided under this section is available against a 
state entity only to the extent permitted by law.

                  7. section seven--criminal penalties

    Any person who willfully violates this Act for direct or 
indirect commercial advantage or financial gain, or causes loss 
or damages aggregating $10,000 or more in any one-year calendar 
period is criminally liable. Such an offense is punishable by a 
fine of not more than $250,000 or imprisonment for not more 
than five years, or both. A second or subsequent offense is 
punishable by a fine of not more than $500,000 or imprisonment 
for not more than 10 years, or both. Section 1207 does not 
apply to an employee or agent of a nonprofit educational, 
scientific, or research institution, library or archives, 
acting within the scope of his or her employment. Like the 
similar limitations on civil remedies, this exception is 
intended to avoid the chilling effect these substantial 
penalties might have on legitimate public interest uses of 
collections of information.

                8. section eight--limitations on actions

    Section 1208 establishes a two-prong statute of 
limitations. First, no criminal or civil proceedings may be 
maintained unless it is commenced within three years after the 
cause of action arises. Additionally, no action can be 
maintained more than fifteen years after the investment of 
resources that qualified for protection that portion of the 
collection of information that is extracted or used. This 
language means that new investments in an existing collection, 
if they are substantial enough to be worthy of protection, will 
themselves be able to be protected, ensuring that producers 
have the incentive to make such investments in expanding and 
refreshing their collections. At the same time, however, 
protection will not be perpetual; the substantial investment 
that is protected under the Act cannot be protected for more 
than fifteen years. By focusing on that investment that made 
the particular portion of the collection that has been 
extracted or used eligible for protection, the provision avoids 
providing ongoing protection to the entire collection every 
time there is an additional substantial investment made in its 
scope or maintenance.

                    9. section nine--effective date

    The provisions of this Act take effect upon enactment and 
are applicable to acts committed on or after that date, with 
respect to collections of information existing on that date or 
produced after that date. However, no person can be liable for 
the use of information from a collection of information where 
the information was lawfully extracted prior to the date of 
enactment of this Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (new matter is printed 
in italic and existing law in which no change is proposed is 
shown in roman):

                      TITLE 17, UNITED STATES CODE

Chap.                                                               Sec.
      Subject Matter and Scope of Copyright..........................101
     * * * * * * *
      Misappropriation of Collections of Information................1201
     * * * * * * *

       CHAPTER 12--MISAPPROPRIATION OF COLLECTIONS OF INFORMATION

Sec.
1201. Definitions.
1202. Prohibition against misappropriation.
1203. Permitted acts.
1204. Exclusions.
1205. Relationship to other laws.
1206. Civil remedies.
1207. Criminal offenses and penalties.
1208. Limitations on actions.

Sec. 1201. Definitions

  As used in this chapter:
          (1) Collection of information.--The term ``collection 
        of information'' means information that has been 
        collected and has been organized for the purpose of 
        bringing discrete items of information together in one 
        place or through one source so that users may access 
        them.
          (2) Information.--The term ``information'' means 
        facts, data, works of authorship, or any other 
        intangible material capable of being collected and 
        organized in a systematic way.
          (3) Potential market.--The term ``potential market'' 
        means any market that a person claiming protection 
        under section 1202 has current and demonstrable plans 
        to exploit or that is commonly exploited by persons 
        offering similar products or services incorporating 
        collections of information.
          (4) Commerce.--The term ``commerce'' means all 
        commerce which may be lawfully regulated by the 
        Congress.

Sec. 1202. Prohibition against misappropriation

  Any person who extracts, or uses in commerce, all or a 
substantial part, measured either quantitatively or 
qualitatively, of a collection of information gathered, 
organized, or maintained by another person through the 
investment of substantial monetary or other resources, so as to 
cause harm to the actual or potential market of that other 
person, or a successor in interest of that other person, for a 
product or service that incorporates that collection of 
information and is offered or intended to be offered for sale 
or otherwise in commerce by that other person, or a successor 
in interest of that person, shall be liable to that person or 
successor in interest for the remedies set forth in section 
1206.

Sec. 1203. Permitted acts

  (a) Individual Items of Information and Other Insubstantial 
Parts.--Nothing in this chapter shall prevent the extraction or 
use of an individual item of information, or other 
insubstantial part of a collection of information, in itself. 
An individual item of information, including a work of 
authorship, shall not itself be considered a substantial part 
of a collection of information under section 1202. Nothing in 
this subsection shall permit the repeated or systematic 
extraction or use of individual items or insubstantial parts of 
a collection of information so as to circumvent the prohibition 
contained in section 1202.
  (b) Gathering or Use of Information Obtained Through Other 
Means.--Nothing in this chapter shall restrict any person from 
independently gathering information or using information 
obtained by means other than extracting it from a collection of 
information gathered, organized, or maintained by another 
person through the investment of substantial monetary or other 
resources.
  (c) Use of Information for Verification.--Nothing in this 
chapter shall restrict any person from extracting information, 
or from using information within any entity or organization, 
for the sole purpose of verifying the accuracy of information 
independently gathered, organized, or maintained by that 
person. Under no circumstances shall the information so 
extracted or used be made available to others in a manner that 
harms the actual or potential market for the collection of 
information from which it is extracted or used.
  (d) Nonprofit Educational, Scientific, or Research Uses.--
Nothing in this chapter shall restrict any person from 
extracting or using information for nonprofit educational, 
scientific, or research purposes in a manner that does not harm 
the actual or potential market for the product or service 
referred to in section 1202.
  (e) News Reporting.--Nothing in this chapter shall restrict 
any person from extracting or using information for the sole 
purpose of news reporting, including news gathering, 
dissemination, and comment, unless the information so extracted 
or used is time sensitive, has been gathered by a news 
reporting entity for distribution to a particular market, and 
has not yet been distributed to that market, and the extraction 
or use is part of a consistent pattern engaged in for the 
purpose of direct competition in that market.
  (f) Transfer of Copy.--Nothing in this chapter shall restrict 
the owner of a particular lawfully made copy of all or part of 
a collection of information from selling or otherwise disposing 
of the possession of that copy.

Sec. 1204. Exclusions

  (a) Government Collections of Information.--
          (1) Exclusion.--Protection under this chapter shall 
        not extend to collections of information gathered, 
        organized, or maintainedby or for a government entity, 
whether Federal, State, or local, including any employee or agent of 
such entity, or any person exclusively licensed by such entity, within 
the scope of the employment, agency, or license. Nothing in this 
subsection shall preclude protection under this chapter for information 
gathered, organized, or maintained by such an agent or licensee that is 
not within the scope of such agency or license, or by a Federal or 
State educational institution in the course of engaging in education or 
scholarship.
          (2) Exception.--The exclusion under paragraph (1) 
        does not apply to any information required to be 
        collected and disseminated by either a national 
        securities exchange under the Securities Exchange Act 
        of 1934 or a contract market under the Commodity 
        Exchange Act.
  (b) Computer Programs.--
          (1) Protection not extended.--Subject to paragraph 
        (2), protection under this chapter shall not extend to 
        computer programs, including, but not limited to, any 
        computer program used in the manufacture, production, 
        operation, or maintenance of a collection of 
        information, or any component of a computer program 
        necessary to its operation.
          (2) Incorporated collections of information.--A 
        collection of information that is otherwise subject to 
        protection under this chapter is not disqualified from 
        such protection solely because it is incorporated into 
        a computer program.

Sec. 1205. Relationship to other laws

  (a) Other Rights Not Affected.--Subject to subsection (b), 
nothing in this chapter shall affect rights, limitations, or 
remedies concerning copyright, or any other rights or 
obligations relating to information, including laws with 
respect to patent, trademark, design rights, antitrust, trade 
secrets, privacy, access to public documents, and the law of 
contract.
  (b) Preemption of State Law.--On or after the effective date 
of this chapter, all rights that are equivalent to the rights 
specified in section 1202 with respect to the subject matter of 
this chapter shall be governed exclusively by Federal law, and 
no person is entitled to any equivalent right in such subject 
matter under the common law or statutes of any State. State 
laws with respect to trademark, design rights, antitrust, trade 
secrets, privacy, access to public documents, and the law of 
contract shall not be deemed to provide equivalent rights for 
purposes of this subsection.
  (c) Relationship to Copyright.--Protection under this chapter 
is independent of, and does not affect or enlarge the scope, 
duration, ownership, or subsistence of, any copyright 
protection in any work of authorship that is contained in or 
consists in whole or part of a collection of information. This 
chapter does not provide any greater protection to a work of 
authorship contained in a collection of information, other than 
a work that is itself a collection of information, than is 
available to that work under any other chapter of this title.
  (d) Antitrust.--Nothing in this chapter shall limit in any 
way the constraints on the manner in which products and 
services may be provided to the public that are imposed by 
Federal and State antitrust laws, including those regarding 
single suppliers of products and services.
  (e) Licensing.--Nothing in this chapter shall restrict the 
rights of parties freely to enter into licenses or any other 
contracts with respect to the use of collections of 
information.
  (f) Communications Act of 1934.--Nothing in this chapter 
shall affect the operation of section 222(e) of the 
Communications Act of 1934 (47 U.S.C. 222(e)), or shall 
restrict any person from extracting or using subscriber list 
information, as such term is defined in section 222(f)(3) of 
the Communications Act of 1934 (47 U.S.C. 222(f)(3)), for the 
purpose of publishing telephone directories in any format.

Sec. 1206. Civil remedies

  (a) Civil Actions.--Any person who is injured by a violation 
of section 1202 may bring a civil action for such a violation 
in an appropriate United States district court without regard 
to the amount in controversy, except that any action against a 
State governmental entity may be brought in any court that has 
jurisdiction over claims against such entity.
  (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 a violation of 
section 1202. 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) Impoundment.--At any time while an action under this 
section is pending, the court may order the impounding, on such 
terms as it deems reasonable, of all copies of contents of a 
collection of information extracted or used in violation of 
section 1202, 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 of section 1202, order the remedial modification or 
destruction of all copies of contents of a collection of 
information extracted or used in violation of section 1202, and 
of all masters, tapes, disks, diskettes, or other articles by 
means of which such copies may be reproduced.
  (d) Monetary Relief.--When a violation of section 1202 has 
been established in any civil action arising under this 
section, the plaintiff shall be entitled to recover any damages 
sustained by the plaintiff and defendant's profits not taken 
into account in computing the 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; defendant must prove all elements of cost 
or deduction claims. In assessing damages the court may enter 
judgment, according to the circumstances of the case, for any 
sum above the amount found as actual damages, not exceeding 
three times such amount. The court in its discretion may award 
reasonable costs and attorney's fees to the prevailing party 
and shall award such costs and fees where it determines that an 
action wasbrought under this chapter in bad faith against a 
nonprofit educational, scientific, or research institution, library, or 
archives, or an employee or agent of such an entity, acting within the 
scope of his or her employment.
  (e) Reduction or Remission of Monetary Relief for Nonprofit 
Educational, Scientific, or Research Institutions.--The court 
shall reduce or remit entirely monetary relief under subsection 
(d) in any case in which a defendant believed and had 
reasonable grounds for believing that his or her conduct was 
permissible under this chapter, if the defendant was an 
employee or agent of a nonprofit educational, scientific, or 
research institution, library, or archives acting within the 
scope of his or her employment.
  (f) Actions Against United States Government.--Subsections 
(b) and (c) 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.

Sec. 1207. Criminal offenses and penalties

  (a) Violation.--
          (1) In general.--Any person who violates section 1202 
        willfully, and--
                  (A) does so for direct or indirect commercial 
                advantage or financial gain, or
                  (B) causes loss or damage aggregating $10,000 
                or more in any 1-year period to the person who 
                gathered, organized, or maintained the 
                information concerned,
        shall be punished as provided in subsection (b).
          (2) Inapplicability.--This section shall not apply to 
        an employee or agent of a nonprofit educational, 
        scientific, or research institution, library, or 
        archives acting within the scope of his or her 
        employment.
  (b) Penalties.--An offense under subsection (a) shall be 
punishable by a fine of not more than $250,000 or imprisonment 
for not more than 5 years, or both. A second or subsequent 
offense under subsection (a) shall be punishable by a fine of 
not more than $500,000 or imprisonment for not more than 10 
years, or both.

Sec. 1208. Limitations on actions

  (a) Criminal Proceedings.--No criminal proceeding shall be 
maintained under this chapter unless it is commenced within 
three years after the cause of action arises.
  (b) Civil Actions.--No civil action shall be maintained under 
this chapter unless it is commenced within three years after 
the cause of action arises or claim accrues.
  (c) Additional Limitation.--No criminal or civil action shall 
be maintained under this chapter for the extraction or use of 
all or a substantial part of a collection of information that 
occurs more than 15 years after the investment of resources 
that qualified the portion of the collection of information for 
protection under this chapter that is extracted or used.
                              ----------                              


TITLE 28, UNITED STATES CODE

           *       *       *       *       *       *       *


PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *


               CHAPTER 85--DISTRICT COURTS; JURISDICTION

Sec.
1330. Actions against foreign states.
     * * * * * * *
1338. Patents, plant variety protection, copyrights, mask works, trade-
          marks, misappropriations of collections of information, and 
          unfair competition.
     * * * * * * *

Sec. 1338. Patents, plant variety protection, copyrights, mask works, 
                    trade-marks, misappropriations of collections of 
                    information, and unfair competition

  (a) The district courts shall have original jurisdiction of 
any civil action arising under any Act of Congress relating to 
patents, plant variety protection, copyrights and trade-marks. 
Such jurisdiction shall be exclusive of the courts of the 
states in patent, plant variety protection and copyright cases.
  (b) The district courts shall have original jurisdiction of 
any civil action asserting a claim of unfair competition when 
joined with a substantial and related claim under the 
copyright, patent, plant variety protection or trade-mark laws.
  (c) Subsections (a) and (b) apply to exclusive rights in mask 
works under chapter 9 of title 17 to the same extent as such 
subsections apply to copyrights.
  (d) The district courts shall have original jurisdiction of 
any civil action arising under chapter 12 of title 17, relating 
to misappropriation of collections of information. Such 
jurisdiction shall be exclusive of the courts of the States.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    I agree with the stated goals of this legislation--to 
protect database owners from misappropriation of their work 
product--but I do not believe that we should try to provide 
database owners with protection that is not within our power to 
grant. More precisely, I am convinced that the Copyright Clause 
and the First Amendment do not countenance the type of 
protection that the proponents of this bill would seek to 
bestow.
    Congress is of course limited in its authority by the 
powers enumerated in Article I and the amendments to the 
Constitution. Therefore, any power to provide protections for 
``collections of information'' must fall within the bounds of 
this authority.
    The Supreme Court has ruled out the establishment of 
protection for databases under the Copyright Clause (Article I, 
Section 8, clause 8) of the Constitution. In Feist Publications 
v. Rural Telephone Service Co, 499 U.S. 340 (1991), the Court 
unanimously held that the Copyright Clause protects only 
original works of authorship and prohibits protection for data 
and factual information. The Court outlined a two-part test for 
this ``originality'' requirement:

          To qualify for copyright protection, a work must be 
        original to the author. Harper & Row, [417 U.S. 539 
        (1985)] at 547-549. Original, as the term is used in 
        copyright, means only that the work was independently 
        created by the author (as opposed to copied from other 
        works), and that it possesses at least some minimal 
        degree of creativity.

Feist, 499 U.S. at 345.
    Lower courts have clarified that as a consequence of the 
requirement for originality for copyright protection, copyright 
cannot prevent a competitor from extracting factual information 
from a database, even if that work has been registered under 
the Copyright Act. In other words, copyright will only protect 
the original, creative material within a database.
    This legislation extends far beyond the original and 
creative elements of ``collections of information,'' and 
copyright cannot serve as the basis for its enactment by 
Congress.
    The drafters of H.R. 2652 have attempted to avoid this 
defect by styling the bill as a Federal ``misappropriation'' 
statute, as though we were not creating a new property right, 
but establishing a new tort. However, the bill seeks to 
establish a new property right for ``collections of 
information,'' complete with civil and criminal remedies for 
unauthorized use, and exceptions for the use of individual 
items or ``insubstantial parts,'' scholarly activity, and news 
reporting. Such characteristics belie the ``misappropriation'' 
label, and look suspiciously analogous to those of copyright 
(infringement, fair use, etc.).
    It is possible that congressional authority for enactment 
of H.R. 2652 could instead exist under the Commerce Clause 
(Article I, Section 8, clause 3). However, the Supreme Court's 
interpretation of the relationship between the Commerce Clause 
and another enumerated power (the Bankruptcy Clause) in Railway 
Labor Executives' Association v. Gibbons, 455 U.S. 457 (1982), 
seems to rule out this possibility.
    In Railway Labor, the Court struck down a statute providing 
protection to the employees of a railroad in bankruptcy. The 
Court found that the proposed statute violated the 
``uniformity'' requirement of the Bankruptcy Clause, which 
Congress could not circumvent by purporting to legislate under 
the Commerce Clause. Railway Labor, 455 U.S. at 469. The 
Railway Labor opinion makes clear that Congress cannot avoid 
the particular requirements (e.g., uniformity, originality) of 
one enumerated power (e.g., the Bankruptcy Clause, the 
Copyright Clause), by relying on the generality of the Commerce 
Clause.
    Perhaps a true misappropriation law, which does not impinge 
on the dictates of the Copyright Clause as elucidated by the 
Feist decision, could conceivably coexist with copyright under 
Congress' Commerce Clause authority. However, as the Court 
explained in Feist, this protection would be ``available under 
a theory of unfair competition.'' Feist, 499 U.S. at 354.
    Undoubtedly, supporters of H.R. 2652 will argue that 
``misappropriation'' fits within the definition of ``unfair 
competition,'' and that the bill is tailored to Justice 
O'Connor's statement in Feist regarding ``protection for the 
fruits of [data] research'' from unfair competition. However, 
``misappropriation'' under H.R.2652 cannot be reconciled with 
Justice O'Connor's, and the Supreme Court's, interpretation of 
``unfair competition.''
    Again writing for a unanimous Court in Bonito Boats v. 
Thunder Craft Boats, 489 U.S. 141 (1989) Justice O'Connor 
explained the relationship between the law of unfair 
competition and protection of property:

          The Law of unfair competition has its roots in the 
        common-law tort of deceit: its general concern is with 
        protecting consumers from confusion as to source. While 
        that concern may result in the creation of ``quasi-
        property rights'' in communicative symbols, the focus 
        is on the protection of consumers, not the protection 
        of producers as an incentive to product innovation.

Bonito Boats, 489 U.S. at 157 (emphasis in original).
    Even the supporters of H.R. 2652 would be hard-pressed to 
argue that this legislation is motivated by an intention to 
protect consumers. The bill's focus is on the ``investment of 
substantial monetary or other resources'' and the ``harm to the 
actual or potential market'' of the database producer. The 
courts have made clear that competition law is not intended to 
serve as an instrument for one competitor to use against 
another, but as a means of fostering competition for the 
benefit of consumers. See Northwest Power Products, Inc. v. 
Omark Indus., Inc., 576 F.2d 83, 89 (5th Cir. 1978); 
Manufacturing Research Corp. v. Greenleetool Co., 693 F.2d 
1037, 1043 (11th Cir. 1982).
    Finally, this legislation may also fall short of what is 
necessary under the FirstAmendment. Factual information and 
ideas are the building blocks of all forms of expression, and the 
Supreme Court has recognized that the First Amendment leaves little 
room for restrictions on the dissemination of ideas and factual 
information. In fact, the Court's ruling in Harper & Row, Publishers, 
Inc. v. Nation Enterprises, 471 U.S. 539 (1985), seems to indicate that 
our rights of expression under the First Amendment preclude Congress 
from limiting access to information in the manner contemplated by this 
legislation.

          Our ``profound national commitment to the principle 
        that debate on public issues should be uninhibited, 
        robust, and wide-open,'' New York Times Co. v. 
        Sullivan, 376 U.S. 254, 270 (1964), leaves no room for 
        a statutory monopoly over information and ideas. ``The 
        arena of public debate would be quiet, indeed, if a 
        politician could copyright his speeches or a 
        philosopher his treatises and thus obtain a monopoly on 
        the ideas they contained.'' Lee v. Runge, 404 U.S. 887, 
        893 (1971) (Douglas, J., dissenting from denial of 
        certiorari). A broad dissemination of principles, 
        ideas, and factual information is crucial to the robust 
        public debate and informed citizenry that are ``the 
        essence of self-government.'' Garrison v. Louisiana, 
        379 U.S. 64, 74-75 (1964). And every citizen must be 
        permitted freely to marshal ideas and facts in the 
        advocacy of particular political choices.

Harper & Row, 471 U.S. at 582 (emphasis added).
    The Court distinguished copyright protection from the 
rights protected by the First Amendment by making clear that 
copyright protection is limited to the author's expression of 
facts or ideas, not the facts or ideas themselves. In Harper & 
Row, the Court recited with approval the Second Circuits 
explanation that copyright's ``idea-expression'' dichotomy 
``strike[s] a definitional balance between the First Amendment 
and the Copyright Act by permitting free communication of facts 
while still protecting an author's expression.'' Harper & Row, 
471 U.S. at 556 (quoting 723 F.2d 195, 203 (2d Circuit 1983)). 
The Court goes on to make clear that ``[n]o author may 
copyright his ideas or the facts he narrates.'' Harper & Row, 
471 U.S. at 556.
    As I stated initially, I am extremely sympathetic to the 
efforts of my Colleagues to protect the misappropriation of the 
work and efforts of database publishers. Without a doubt, 
Congress should be concerned about the need to provide 
incentives to produce and maintain valuable collections of 
information. However, our efforts are nugatory if we do not 
enact legislation that comports with the requirements of the 
Constitution. I have attempted to lay out the relevant Supreme 
Court decisions that bear on these requirements, and I am 
convinced that the Court will not find the current bill 
satisfactory under these standards.
    Finally, I would like to point out what I believe is an 
unintended consequence of the legislation as it was reported by 
the Judiciary Committee.
    The Internet is actually itself a collection of 
interdependent databases linked through our telecommunications 
infrastructure. Many of the most primary and crucial elements 
of the Net are databases that make online communications 
possible. For example, the list of domain names is a database 
that depends on a lookup table (another database) to translate 
the characters making up a domain name into a numerical 
Internet address. Other tables (also databases) designate 
pathways over which to route messages across the Internet to 
the address of the intended recipient.
    As the legislation is currently drafted, a proprietary 
claim over these or other databases that comprise the Internet 
could be asserted. Such claims could restrict access to any 
domain name system, unified directory, translation, routing, or 
other lookup table essential to the functioning of the Internet 
in an open systems environment. The result would be a 
disastrous disruption in the operation of the Internet and for 
the millions of people who depend on its proper performance. 
The exploding growth of the Internet and online commerce would 
be impaired in that case.
    The bill as reported by the Committee does include an 
exception for subscriber list information necessary for the 
publication of traditional telephone directories, which are 
necessary for the use of the traditional, public switched-voice 
network operated by common carriers under the 
Telecommunications Act. However, not all communications 
networks are covered--specifically, those operating in a 
digital environment of computer-to-computer communications, 
offering enhanced information and telecommunications services.
    Should the Supreme Court somehow find this legislation 
constitutionally permissible, failure to include an exception 
for collections of information necessary for the operation and 
proper functioning of digital communications/computer networks 
could threaten the open systems precepts that underpin the 
almost unimaginable expansion of the Internet. I do not believe 
this is what the authors of this bill intended, and I look 
forward to working with them to rectify this oversight.

                                                       Zoe Lofgren.

                                
