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STATEMENT BY PHYLLIS SCHLAFLY
President of EAGLE FORUM
TO THE SUBCOMMITTEE ON COURTS AND INTELLECTUAL PROPERTY
OF THE HOUSE JUDICIARY COMMITTEE

March 18, 1999

Thank you for accepting my statement regarding H.R. 354, the Collections of Information Antipiracy Act, on behalf of Eagle Forum, a national policy organization.

As a national membership organization of some 80,000, Eagle Forum is well aware of the importance and usefulness of collections of information in computer databases. Computer databases make it possible for us to communicate easily with our members and carry out our activities. As the author of 16 books, I am well aware of the importance and usefulness of legal protections of intellectual property, particularly through the copyright protection established in the United States Constitution.

We urge you to reject H.R. 354 as misguided and dangerous legislation. It would lay the groundwork for corporations to control, manipulate, and market our most intimate medical records.

H.R. 354 would grant a new federal right to corporations that build databases of patients' medical records. It would protect the corporations' control of these databases by threatening to prosecute anyone who interferes with this new right. It would impose draconian penalties of a $250,000 fine and five years in jail for the first infringement, and twice that for the second.

By creating new federal crimes, H.R. 354 would significantly expand the jurisdiction of the already activist federal judiciary. H.R. 354 would give federal judges the power to seize assets without a finding of guilt, and impose huge fines and prison sentences, for the mere copying of a part of a corporation's database.

We oppose creating these new rights for all databases, but this bill is particularly offensive because of its effect on personal medical records, which are now being massively collected in databases. The provisions of H.R. 354 certainly are not what we had in mind when we heard Members of Congress talk about "health care reform" or a "patient protection act." We had hoped that the 106th Congress would address the health care and HMO issue by giving more power to patients, but H.R. 354 takes away power from patients and gives vast new powers to corporations collecting databases containing their personal medical information. Corporations should not have the power to control data about individuals' doctor visits, diagnoses, prescriptions, etc.

We all know that the right of writers to get legal protection, called a copyright, is a precious constitutional right. But we also know that this right is available only to authors of original writings; it is not available to those who collect information or data. The Supreme Court correctly and unanimously ruled in Feist Pub. Inc. v. Rural Telephone Service Co. (499 U.S. 340, 1991) that, under the U.S. Constitution, copyright protection is granted only to authors who create new works, not to corporations that merely collect data and, therefore, the phone companies do not own their listings of phone numbers just because they spent money collecting them. The Court rejected the so-called "sweat of the brow" argument that corporations are entitled to legal protection of their collections of telephone numbers just because they expended funds and resources to compile them.

H.R. 354 does not assert copyright protection for databases, or ownership by the corporations that compile them, because that language would probably not be constitutional. Instead, H.R. 354 would create a brand new federal right in "collections of information," and make it a powerful right supported by federal police and judicial power to prosecute for crimes that carry extraordinary penalties.

Cui bono? It appears that the primary push for this bill comes from the American Medical Association (AMA), which has built very profitable databases, such as its database of the Medicare codes that all health providers are required to use, and its database of all doctors, both members and nonmembers, stored with all sorts of information. The marketing of databases is a very profitable part of the AMA's annual $230 million budget, since only a fourth of physicians are full dues-paying members and they provide less than a third of the AMA's revenue.

In August 1997, the AMA lost a court case (Practice Management Information Corp. v. AMA, 121 F.3d 516) in which the issue was whether the AMA could control and charge fees for the sale of materials containing the Medicare codes that all providers are required to use. The court held that the AMA had "misused" its rights in the Medicare code database. The AMA then looked to Congress to arrange a legislative fix.

The Collections of Information Antipiracy Act was introduced on October 9, 1997. Appearing as a key witness on February 12, 1998, the AMA testified in enthusiastic support of this bill, stating that the purpose of the Collections of Information Antipiracy bill is "to protect collections of information, including databases such as ours." The AMA testimony makes clear that the Collections of Information bill would create new rights not constitutionally available under copyright laws.

However, the AMA demanded a significant change in wording. As originally introduced, the bill would have applied its extraordinary penalties against any person who interferes with "all or a substantial part of a collection of information" on a database. The AMA demanded that the term "substantial part" be changed by inserting the words "qualitative or quantitative" to modify "substantial," which of course would effectively eviscerate the requirement that infringement of a database be truly "substantial." The AMA testimony makes clear that this change was designed to ensure its control of its database of Medicare codes.

The next online version of the bill was reported to the House on May 12, 1998, and it then included the key phrase from the AMA testimony. The key provision then read: "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 . . ."

Unable to get copyright protection for its databases, and having lost in court the exclusive control of the Medicare database that the AMA was demanding, the AMA is now trying to get Congress to create a new federal right called "collections of information," and use federal prosecutors and courts to defend its exploitation of this new right.

There are obviously thousands of organizations and businesses that have created "collections of information" on databases and depend on them for doing business of all kinds. H.R. 354 has tried to accommodate some other interests by giving special exclusions to telephone listings, stock quotes, and the news media, and may be considering exclusions for universities and libraries. But H.R. 354 does not exclude medical records, which is the area of most concern to the average American because medical records contain the most personal, private, intimate information.

The Collections of Information bill passed the House last year, but failed to pass the Senate. When the sponsor, Rep. Howard Coble, reintroduced it as H.R. 354, he said that medical information is one of the focuses of the bill and that its purpose is to get around "recent cases."

Databases of personal information are a tremendous financial asset because they can be used for so many commercial purposes such as targeted marketing and health insurance underwriting. Since the health care database market is growing by a billion dollars a year, all kinds of corporations in the health care industry, including HMOs, already have ample incentives to build databases and make big money off of them, and they don't need Congress to legislate any new incentives.

Patients, physicians, small businesses, and bank depositors all stand to lose big if this bill passes. Small businesses could be ruined by politically-connected competitors alleging that a customer list was copied. H.R. 354 would even encourage banks to develop databases about personal deposits and withdrawals, despite the recent public outrage over the Know Your Customer regulation H.R. 354 would give banks a financial incentive to accomplish that same obnoxious goal.

Ambiguous language in H.R. 354 preempts state laws that currently ensure legitimate access by patients and physicians to their medical records. HMOs would be able to deny access, impose delays, or charge huge fees before providing essential medical records to patients or their physicians.

Most states have laws that guarantee patients the right to access their own medical records, but H.R. 354 would preempt these laws even though it exempts certain other state laws. H.R. 354 purports to exempt state privacy laws, but that exemption would be overridden by another bill that Congress is expected to pass, the Patient Protection Act, H.R. 448.

By giving all these new rights to companies that build databases, H.R. 354 will make it difficult, expensive or impossible for individual Americans to access or restrict usage of their own personal information. We don't want the federal government to create new federal rights or incentives to encourage corporations to collect, manipulate, control, or market databases of medical records.

We urge you to reject H.R. 354 because of its dangerous and inappropriate creation of new federal rights and new federal crimes that will be extremely hurtful to individual Americans, particularly patients. Eagle Forum joins with the more than a hundred organizations, from Amazon.com to Yale University, that strongly oppose this bill.

 
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