There is such a case. It is the "database right." 10
OWNING FACTS? 11
Europe adopted a Database Directive in 1996 which gave a high level of copyright protection to databases and conferred a new "sui generis" database right even on unoriginal compilations of facts. In the United States, by contrast, in a 1991 case called Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991), the Supreme Court made it clear that unoriginal compilations of facts are not copyrightable. 12
What does all this mean? Take the phone directory—that was the product at issue in the Feist case. A white pages directory is a database of names and numbers, compiled in alphabetical order by name. Does anyone have an intellectual property right over it? Not the particular dog-eared directory lying next to your phone. Does the phone company that compiled it own the facts, the numbers inside that directory? Could they forbid me from copying them, adding others from surrounding areas, and issuing a competing directory that I believed consumers would find more valuable? This was an important issue for Feist because it went to the heart of their business. They issued regional telephone directories, combining records from multiple phone companies. In this case, all the other companies in the region agreed to license their data to Feist. Rural did not, so Feist copied the information, checked as many entries as possible, adding addresses to some of the listings, and published the combined result. Rural sued and lost. The Supreme Court declared that mere alphabetical listings and other unoriginal assemblies of data cannot be copyrighted. 13
It may seem unfair that much of the fruit of the compiler's labor may be used by others without compensation. As Justice Brennan has correctly observed, however, this is not "some unforeseen byproduct of a statutory scheme." It is, rather, "the essence of copyright," and a constitutional requirement. The primary objective of copyright is not to reward the labor of authors, but "to promote the Progress of Science and useful Arts." To this end, copyright assures authors the right to their original expression, but encourages others to build freely upon the ideas and information conveyed by a work. This principle, known as the idea/expression or fact/expression dichotomy, applies to all works of authorship. As applied to a factual compilation, assuming the absence of original written expression, only the compiler's selection and arrangement may be protected; the raw facts may be copied at will. This result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of science and art.1 14
Feist was not as revolutionary as some critics claimed it to be. Most of the appeals courts in the United States had long held this to be the case. As the Court pointed out in the passage above, it is a fundamental tenet of the U.S. intellectual property system that neither facts nor ideas can be owned. Feist merely reiterated that point clearly and stressed that it was not just a policy choice, it was a constitutional requirement—a limit imposed by the Constitution's grant of power to Congress to make copyright and patent laws. 15
Daily politics cares little for the limitations imposed by constitutions or for the structural principle the Court describes—that we should leave facts free for others to build upon. Since 1991, a few database companies have lobbied the Congress strenuously and continuously to create a special database right over facts. Interestingly, apart from academics, scientists, and civil libertarians, many database companies, and even those well-known property haters, the U.S. Chamber of Commerce, oppose the creation of such a right. They believe that database providers can adequately protect themselves with contracts or technical means such as passwords, can rely on providing tied services, and so on. Moreover, they argue that strong database protection may make it harder to generate databases in the first place; the facts you need may be locked up. We need to focus on the inputs as well as the outputs of the process—a point I have tried to make throughout this book. The pressure to create a new right continues, however, aided by cries that the United States must "harmonize" with Europe, where, you will remember, compilations of facts are strongly protected by intellectual property rights, even if their arrangement is unoriginal. 16
So here we have our natural experiment. One major economy rejects such protection and resists pressure to create a new right. A different major economic region, at a comparable level of development, institutes the right with the explicit claim that it will help to produce new databases and make that segment of the economy more competitive. Presumably government economists in the United States and the European Union have been hard at work ever since, seeing if the right actually worked? Well, not exactly. 17
Despite the fact that the European Commission has a legal obligation to review the Database Directive for its effects on competition, it was more than three years late issuing its report. At first, during the review process, no attention was paid to the actual evidence of whether the Directive helps or hurts the European Union, or whether the database industry in the United States has collapsed or flourished. That is a shame, because the evidence was there and it was fairly shocking. Yet finally, at the end of the process, the Commission did turn to the evidence, as I will recount, and came to a remarkable conclusion—which was promptly stifled for political reasons. But we are getting ahead of ourselves. 18
How do we frame the empirical inquiry? Intellectual property rights allow the creation of state-backed monopolies, and "the general tendency of monopolies," as Macaulay pointed out, is "to make articles scarce, to make them dear, and to make them bad." Monopolies are an evil, but they must sometimes be accepted when they are necessary to the production of some good, some particular social goal. In this case, the "evil" is obviously going to be an increase in the price of databases and the legal ability to exclude competitors from their use—that, after all, is the point of granting the new right. This right of exclusion may then have dynamic effects, hampering the ability of subsequent innovators to build on what went before. The "good" is that we are supposed to get lots of new databases, databases that we would not have had but for the existence of the database right. 19