Intellectual Property Rights in Data

The Authors trace the evolution of hybrid intellectual property rights protecting the contents of noncopyrightable databases from early European Commission proposals sounding in unfair competition law to the strong and potentially perpetual exclusive property right embodied in the final E.C. Directive on Databases adopted in March 1996. Also Examined are parallel legislative proposals pending before Congress and the draft international treaty on the legal protection of databases to be considered at a Diplomatic Conference hosted by the World Intellectual Property Organization in December 1996. The Authors endorse the need to provide some ancillary legal relief for investors in the generation and distribution of digitzed data over telecommunications networks, lest free-riders appropriate the fruits of these investments. They deplore, however, the creation of strong legal barriers to enty in a field of endeavor already characterized by a pronounced lack of competition and by the preponderance of sole-source database providers. They shos that, under both the existing and proposed sui generis reimes, most commercially valuable compliations of data will never enter the public domain, despite the "Limited Times" Clause of the U.S. Constitution; that the dependence of the scientific and educational communities on plentiful and affordable supplies of data has been virtually ignored, despite the constitutional mandate "to promote the progress of science and [the] useful arts;" and that the very existence of value-adding use industries in this sector would be jeopardized, notwithstanding the Supreme Court's procompetitive mandate in Feist and Bonito Boats. For these and other reasons, the proposed regimes to protect investments in databases- though requiring no creative achievement as a precondition of eligibility- have paradoxically applied one of the strongest and most anti-competitive intellectual property rights ever conceived to the elementary particles and building blocks of knowledge. The Authors re-examine the economic and legal justifications for providing investors in information goods with a measure of artificial lead time that would enable them to recuperate their investments and turn a profit in a digitized envirnonment. They conclude that a weak intellectual property right- consistent with first amendment values and with other constitutional constraints- could overcome the risk of market failure without creating legal barriers to entry. To this end, they propose two alternative models, one based on simple unfair competition principles. Either model could increase the level of investment in the production and distribution of databases, while stimulating, rather than discouraging the formation of more competitive market segments. The Article ends with a detailed analysis of the exceptions and other measures favoring science and education that will become indispensable under any sui generis regime protecting the contents of databases if the United States is not to jeopardize its pre-eminent role in basic science and the downstream technological innovation to which it gives rise.