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How much legal protection is available for those databases? Understanding the current level of database protection available under US law, and unraveling the implications of pending legislation, is a complicated, but worthwhile, endeavor for anyone whose business relies on databases.

For many of today's businesses, information is often more valuable than products. Advances in technology have made it cheaper and easier to store, compile, organize and use information. For some companies, this information is a valuable trade secret and, accordingly, is used for internal purposes only. More and more businesses are finding it lucrative to commercially exploit information such as client lists, marketing data, product lists, mailing lists, inventory reports and other market data. Database owners are faced with the dilemma of protecting their rights while exploiting the database. Databases are currently afforded some protection under US law, and recent legislative developments may increase that protection.

What Is a Database?
In technical terms, a database is a machine-readable compilation of information. In non-technical terms, a database is like a file cabinet. Inside the file cabinet, there are folders (called records in a database) that contain pages of information (called fields in a database). A database comprises three elements: the information it contains, the selection and arrangement of that information, and the software and database architecture in which the information is stored.

Is There Copyright Protection for Databases?

Copyright Basics

The United States Constitution grants Congress the power to give authors exclusive rights to their own works for a limited time. Through this power, Congress enacted the Copyright Act of 1976, which protects "original works of authorship," including "literary works." The term literary works has been deemed to include computer software. Section 103 of the Copyright Act protects "compilations," which are defined as "a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship."

In order to promote creative expression, copyright protection prevents anyone but the author from copying, distributing, displaying and making derivative works from a copyrighted work. Copyright protection does not prevent others from independently creating the same expression. A copyright usually extends for the life of the author plus 50 years.

Section 102(b) of the Copyright Act describes a significant limitation to copyright protection: While the original literary work is itself protected, any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form described therein are not copyright protected. Moreover, any preexisting material the author included in the work is not protected. This limitation presents an interesting problem for databases: while a copyright may protect the "creative expression" embodied in the compilation of a database and the underlying software, it does not protect the data itself.

Pre-Feist Case Law
Notwithstanding the unambiguous language in the Copyright Act, prior to 1991, various circuits of the United States Courts of Appeals were divided as to how much copyright protection should be afforded to databases. Some courts decided that copyright protection should only extend to the creative selection and arrangement of data and not to the data itself.

On the other hand, using a theory known as "sweat of the brow," numerous courts decided that the database creator's investment of time and money deserved some form of protection against a third party copying the entire database. Although the Copyright Act seems to directly conflict with this theory, many courts nonetheless felt that sweat-of-the-brow protection was necessary because, otherwise, there would be little incentive for the creation and distribution of databases.

The Issue Is Settled: The Feist Case
In 1991, the United States Supreme Court heard the landmark case of Feist Publications, Inc. v. Rural Telephone Service Company, which resolved this conflict in the various circuits of the United States Courts of Appeals. In that case, Feist and Rural Telephone both published telephone directories that competed for advertising space. Feist's telephone directory covered fifteen counties, one of which included Rural Telephone's service area. Rural refused to license its telephone directory information to Feist. Therefore, Feist copied Rural's telephone directory information.

Justice O'Connor stated that the copyright protection afforded to databases is "thin," only extending to the author's creative selection and arrangement of the data. The Court expressly rejected the sweat-of-the-brow theory of protection for databases. The Court further held that listing the names and numbers of all subscribers in a telephone service area in alphabetical order does not satisfy the minimum "original work of authorship" requirement to qualify for copyright protection.

As a consequence of the Feist decision, businesses that create and maintain databases currently have very limited protection under United States copyright law. Copyright protection for databases now definitively only covers the original selection, coordination and arrangement of data and does not protect the data itself. Furthermore, the selection, coordination and arrangement is only protected to the extent that it satisfies the threshold creativity requirement to constitute an "original work of authorship" under the Copyright Act.

The Response to Feist: Pending Legislation
To bridge the gap in protection for databases, The Collections of Information and Anti-Piracy Act (the Act) was introduced into the United States House of Representatives on October 9, 1997. The House of Representatives passed the Act on May 19, 1998, and it was referred to the Senate Committee on Judiciary on May 20, 1998. The Act would overturn the Court's decision in Feist and would create a new form of protection for databases and other collections of information.

The Act would specifically prohibit anyone from extracting or using in commerce all or a substantial part of a collection of information gathered or maintained by another person through the investment of substantial monetary or other resources. Under the Act, the misuse of the collection of information must cause harm to the actual or potential market of the collection's owner.

The Act does not prohibit a person from extracting or using one item of information contained within a collection, from gathering or using information obtained by means other than extracting it from a collection, using information in a collection to verify other information or from using the collection of information in a way that does not harm the actual or potential market of the owner of the collection. The Act also permits extracting or using collected information for non-profit, educational, scientific or research purposes and, in some cases, for news reporting and gathering.

The Act also is not intended to prohibit an entity from selling or otherwise disposing of its copy of a collection of information. The Act does not apply to government agency databases, except under certain circumstances.

The Act only protects information contained in a collection. It doesn't protect the computer program underlying the database (which may be protected by copyright). The Act specifically states that it does not preempt or otherwise supersede an individual's rights, limitations or remedies governed by copyright, patent, trademark, design rights, anti-trust, trade secrets, privacy, access to public documents and contract law. However, this Act would make the protection of a collection of information be governed solely by federal law and would preempt state laws on this issue.

If someone were to be violating the Act, a court could issue a temporary or permanent injunction against the party and impound all of that party's copies of the information. The collection's owner could then sue the infringing party for damages, attorney's fees and court costs.

Under the Act, anyone who, in violating it, causes more than $10,000 in loss or damage, could also incur criminal penalties to be imposed against an individual who willfully violates the Act and does so for direct or indirect commercial advantage or causes loss or damage in excess of $10,000 in any one year period. The criminal penalties include a maximum fine of $250,000 and/or a maximum prison sentence of five years. The fines and penalties are doubled for second or subsequent offenders.

The Act states that this protection of a qualified database or other collection of information extends for only 15 years after the investment of resources as opposed to the much longer term of protection afforded by copyright.

The Register of Copyrights of the United States Copyright Office is among the supporters of the passage of the Act. Since the Feist case, there is very little protection for database producers. With the Internet and CD-ROM technology, copying a database is easier than ever before. Furthermore, many people fear that database collections are not being made available to the public because of the lack of protection. US database producers are also at a disadvantage in Europe, where, under the reciprocity provisions of the European Directive, after January 1998, the absence of protection in the United States prohibits affording protection to United States companies' databases in Europe . This places US database producers at a competitive disadvantage.

Will the Act Pass?
Despite the support for passage of the Act, the complexity of the issue has prevented unified support. Previous efforts to pass legislation on this topic have all failed. Nonetheless, now that the Act has been passed by the House of Representatives and has been referred to the Senate, the United States may be closer to recognizing the significant investment companies make in their database information by affording them meaningful protection.