[House Report 108-437]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-437

======================================================================
 
               CONSUMER ACCESS TO INFORMATION ACT OF 2004

                                _______
                                

 March 16, 2004.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

    Mr. Barton of Texas, from the Committee on Energy and Commerce, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 3872]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3872) to prohibit the misappropriation of 
databases while ensuring consumer access to factual 
information, having considered the same, report favorably 
thereon without amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for Legislation..............................     2
Hearings.........................................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     4
Committee Oversight Findings.....................................     4
Statement of General Performance Goals and Objectives............     4
New Budget Authority, Entitlement Authority, and Tax Expenditures     4
Committee Cost Estimate..........................................     5
Congressional Budget Office Estimate.............................     5
Federal Mandates Statement.......................................     6
Advisory Committee Statement.....................................     6
Constitutional Authority Statement...............................     6
Applicability to Legislative Branch..............................     6
Section-by-Section Analysis of the Legislation...................     7
Changes in Existing Law Made by the Bill, as Reported............     7

                          PURPOSE AND SUMMARY

    H.R. 3872, the Consumer Access to Information Act of 2004, 
prohibits the misappropriation of databases while preserving 
consumer access to factual information. The misappropriation of 
a database is treated as a violation of a rule defining an 
unfair or deceptive act or practice under the Federal Trade 
Commission Act.

                  BACKGROUND AND NEED FOR LEGISLATION

The importance of databases to commerce

    One of the basic tenets of intellectual property law holds 
that facts are not copyrightable, recognizing the great need to 
widely disseminate factual information. To qualify for 
copyright protection a work must be original to the author and 
possess a minimal degree of creativity. It is a well-
established principle that no one may claim originality as to 
facts. Facts, by their very nature, are discovered not created 
and therefore, are part of the public domain.
    This policy has served commerce well. The culture of 
business and science involves using existing data in different 
ways, or combining existing data with newly generated data. 
Information is the foundation to advances in medical and other 
scientific research. It is also a fundamental element of 
innovation in products and services. Allowing scientists and 
businesses to access and use factual information propels 
society forward rather than relegating important resources to 
``reproducing'' the same information.

The ``sweat of the brow'' doctrine and Feist

    While the majority of courts through U.S. history had 
upheld the policy that facts are not copyrightable, a minority 
of courts granted copyright protection to factual compilations 
under the ``sweat of thebrow'' doctrine. The courts reasoned 
that even in cases in which a database lacked creativity or 
originality, a publisher was entitled to protection because of the time 
and resources expended in collecting and organizing the information.
    In 1991, the Supreme Court in Feist Publications, Inc. v. 
Rural Tel. Ser. Co, 499 U.S. 340 (1991), rejected the ``sweat 
of the brow'' doctrine. The Court reaffirmed that originality 
is the central component of copyright. While explaining that 
the vast majority of factual compilations will pass the 
originality test, the Court emphasized that compilations of 
factual information would receive only limited protection. The 
Court explained that the copyright in a factual compilation 
extends only to the author's original contributions, not the 
facts or information conveyed.

History of congressional action

    The Feist decision started a debate as to whether database 
producers would continue to invest resources in the creation 
and maintenance of databases. This debate has been ongoing 
since the 104th Congress, with various versions of property 
rights and misappropriation bills moving between the Committee 
on Energy and Commerce and the Committee on the Judiciary.
    Over those years, the proponents of database legislation 
have produced no compelling evidence that there is any danger 
to the continued prosperity of the database industry. In fact, 
the 2003 report by Dr. Martha E. Williams entitled, ``The State 
of Databases Today,'' showed an increase in the total number of 
databases as well as an increase in the private sector's share 
of the database market. Since the Feist decision, the database 
market has grown 147 percent. The amount of information 
contained in the databases increased at an even greater rate, 
363 percent. In addition, there has been a steady shift in 
database production, away from government and academic 
production and toward private sector production. In 1990, 
government databases made up 17 percent of the database market, 
academic databases made up 12 percent, and private sector 
databases made up 68 percent. By 2002, the private sector had 
grown to constitute 90 percent of the total database market.
    Furthermore, there exist a number of state and Federal 
remedies to protect investments in databases. Those remedies 
include copyright, the Computer Fraud and Abuse Act, contract, 
and trespass to chattels. Database producers have been 
successful in protecting their products using these available 
remedies. Though the Committee has not seen compelling evidence 
of a ``gap'' in existing legal remedies after the decision in 
Feist, the Committee does support a narrowly tailored 
misappropriation statute that balances the needs of database 
producers with Constitutional protections involving the use of 
factual information.

Committee action

    The Committee opposes creating new and untested protection 
for factual information when harm has not been demonstrated and 
there exist a number of federal and state remedies to protect 
databases. The Committee received a referral on H.R. 3261, the 
Database and Collections of Information Misappropriation Act. 
Because of the limited nature of the referral, the Committee on 
Energy and Commerce was unable to address the many problems 
raised by the bill as reported by the Committee on the 
Judiciary.\1\ Instead, the Committee introduced and passed H.R. 
3872, the Consumer Access to Information Act of 2004. H.R. 3872 
offers more limited protection to databases while preserving 
consumer access to and use of factual information.
---------------------------------------------------------------------------
    \1\ Those problems are detailed in the Committee report to H.R. 
3261.
---------------------------------------------------------------------------
    H.R. 3872 is based on the Supreme Court decision in INS v. 
AP, 248 U.S. 215 (1918) and by the 2nd Circuit Court of Appeals 
decision in NBA v. Motorola, 105 F.3d 841 (2nd Cir. 1997). NBA 
v. Motorola sets forth the following five factor test to 
establish a claim for misappropriation and survive preemption 
by the federal Copyright Act: (1) a person generates or 
collects the information in the database at some cost or 
expense; (2) the value of the information is highly time 
sensitive; (3) another person's use of the information 
constitutes free-riding on the first person's costly efforts to 
generate or collect it; (4) the other person's use of the 
information is in direct competition with a product or service 
offered by the first person; and (5) the ability of other 
parties to free-ride on the efforts of the first person would 
so reduce the incentive to produce the product or service that 
its existence or quality would be substantially threatened. 
H.R. 3872 codifies this approach.
    The bill provides for effective enforcement by the Federal 
Trade Commission (FTC). The FTC has a long history in the areas 
of consumer protection and unfair competition. Exclusive 
enforcement by a federal regulator eliminates the fear that the 
legislation could be used as an anticompetitive tool that would 
chill the use of factual information.
    H.R. 3872 will offer protection for database producers 
while preserving important access to factual information. H.R. 
3872 should also pass Constitutional scrutiny because it tracks 
the strict misappropriation standards set forth by both the 
Supreme Court and the 2nd Circuit Court of Appeals.

                                HEARINGS

    The Subcommittee on Commerce, Trade and Consumer Protection 
has not held hearings on H.R. 3872. However, the Subcommittee 
held a joint hearing with the Committee on the Judiciary's 
Subcommittee on Courts, the Internet, and Intellectual Property 
on a discussion draft of what would become H.R. 3261 on 
September 23, 2003. At that hearing, the Subcommittee received 
testimony from: David Carson, General Counsel, United States 
Copyright Office; Thomas J. Donohue, President and CEO, Chamber 
of Commerce; Keith Kupferschmid, Vice President, Intellectual 
Property Policy & Enforcement, Software & Information Industry 
Association; and William Wulf, President, National Academy of 
Engineering and Vice Chairman, National Research Council.

                        COMMITTEE CONSIDERATION

    On February 25, 2004, the Subcommittee on Commerce, Trade, 
and Consumer Protection met in open markup session and approved 
H.R. 3872 for Full Committee consideration, without amendment, 
by a voice vote. On March 3, 2004, the Committee met in open 
markup session and ordered H.R. 3872 favorably reported to the 
House by a voice vote, a quorum being present.

                            COMMITTEE VOTES

    There were no record votes taken in connection with 
ordering H.R. 3872 reported. A motion by Chairman Barton to 
order H.R. 3872 reported to the House, without amendment, was 
agreed to by a voice vote.

                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee has not held oversight 
or legislative hearings on this legislation. However, the 
Subcommittee held a joint hearing with the Committee on the 
Judiciary's Subcommittee on Courts, the Internet, and 
Intellectual Property on a discussion draft of what would 
become H.R. 3261 on September 23, 2003.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    H.R. 3872 prohibits the misappropriation of databases while 
preserving consumer access to factual information.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
3872, the Consumer Access to Information Act, would result in 
no new or increased budget authority, entitlement authority, or 
tax expenditures or revenues.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  CONGRESSIONAL BUDGET OFFICE ESTIMATE

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 11, 2004.
Hon. Joe Barton,
Chairman, Committee on Energy and Commerce,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3872, the Consumer 
Access to Information Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Melissa E. 
Zimmerman (for federal costs), Sarah Puro (for the state and 
local impact), and Paige Piper/Bach (for the private-sector 
impact).
            Sincerely,
                                         Elizabeth Robinson
                               (For Douglas Holtz-Eakin, Director).
    Enclosure.

H.R. 3872--Consumer Access to Information Act of 2004

    H.R. 3872 would deem the misuse of another person's 
database an unfair method of competition and an unfair or 
deceptive act or practice in commerce. Under current law, the 
Federal Trade Commission (FTC) has the authority to monitor and 
take enforcement actions against such violations. Based on 
information provided by the FTC, CBO estimates that 
implementing H.R. 3872 would have no significant effect on 
spending subject to appropriation and would not affect direct 
spending. Because the FTC would have the authority to assess 
monetary penalties to enforce the bill, CBO estimates that 
enacting H.R. 3872 would increase revenues, but we expect that 
any additional revenues from penalties would be insignificant.
    H.R. 3872 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would impose no 
costs on state, local, or tribal governments.
    By prohibiting any person from misappropriating a database, 
H.R. 3872 would create a new private-sector mandate as defined 
in UMRA. Under the bill, the term ``misappropriation of a 
database'' generally means a person's use of information from a 
database generated by another person without proper 
authorization when: (1) the database was generated at some cost 
or expense; (2) the value of the information on the database is 
highly time-sensitive; (3) the use constitutes ``free-riding'' 
on the originator's costly efforts to generate or collect the 
data; (4) the use is in direct competition with a product or 
service offered by the originator; and (5) such use might 
eliminate the incentive to produce the product or service. 
Currently, database owners may seek relief for the misuse of a 
database under state misappropriation, contract, or unfair 
competition laws and, in some circumstances, under federal 
copyright laws.
    The cost of complying with the mandate would be either the 
cost of obtaining permission for using the data through a 
contract or license or the revenue forgone by not being able to 
use the data. CBO cannot estimate the cost of the mandate 
because we do not have enough information to determine the 
scope and incremental impact of this additional prohibition on 
misuse of a database.
    On February 10, 2004, CBO transmitted a cost estimate for 
H.R. 3261, the Database and Collections of Information 
Misappropriation Act, as ordered reported by the House 
Committee on the Judiciary on January 21, 2004. On March 8, 
2004, CBO transmitted a cost estimate for H.R. 3261, as ordered 
reported by the House Committee on Energy and Commerce on March 
3, 2004. The two versions of H.R. 3261 are identical. H.R. 3261 
would allow parties who create or maintain databases to file 
civil suits against persons who misuse those databases. H.R. 
3872 would create a new federal law prohibiting 
misappropriation of a database, which would be enforced by the 
FTC. What constitutes a misappropriation of a database is 
slightly different in the two bills. In both cases, CBO has no 
basis for estimating the costs of the mandate. CBO estimates 
that the federal cost of implementing either of the two bills 
would be insignificant.
    The CBO staff contacts for this estimate are Melissa E. 
Zimmerman (for federal costs), Sarah Puro (for the state and 
local impact), and Paige Piper/Bach (for the private-sector 
impact). The estimate was approved by Robert A. Sunshine, 
Assistant Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   CONSTITUTIONAL AUTHORITY STATEMENT

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    Section 1 establishes the short title of the Act as the 
``Consumer Access to Information Act of 2004.''

Section 2. Misappropriation of a database

    Section 2 deems the misappropriation of a database an 
unfair method of competition and an unfair or deceptive act or 
practice in commerce under section 5(a)(1) of the Federal Trade 
Commission Act. It sets forth a five-factor test to determine 
whether there has been a misappropriation. The five conditions 
to be proved are: (1) a person generates or collects the 
information in the database at some cost or expense; (2) the 
value of the information is highly time sensitive; (3) another 
person's use of the information constitutes free-riding on the 
first person's costly efforts to generate or collect it; (4) 
the other person's use of the information is in direct 
competition with a product or service offered by the first 
person; and (5) the ability of other parties to free-ride on 
the efforts of the first person would so reduce the incentive 
to produce the product or service that its existence or quality 
would be substantially threatened.

Section 3. Limitation on liability of certain entities

    Under Section 3, no provider of an interactive computer 
service can be held liable under the Act for making available 
information that is provided by another information content 
provider. The terms ``interactive computer service'' and 
``information content provider'' have the same meanings given 
to those terms in section 230(f) of the Communications Act of 
1934.

Section 4. Remedies

    Section 4 treats the violation of the Act as a violation of 
a rule defining an unfair or deceptive act or practice under 
section 18(a)(1)(B) of the Federal Trade Commission Act (FTC 
Act). It also grants the Federal Trade Commission authority to 
enforce the Act under the same terms and provisions for 
enforcement under the FTC Act.

Section 5. Exclusions

    Section 5 contains a savings clause for securities laws, 
regulations, and market data. The exclusion applies to 
information with respect to quotations for, or indications, 
orders, or transactions in, securities. This exclusion 
includes, but is not limited to, the National Best Bid and 
Offer. No new rights are created in market data by this Act.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                                
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