Eagle Forum

to the Subcommittee on Telecommunications, Trade and Consumer Protection
of the U.S. House Committee on Commerce

Re: H.R. 1858
June 15, 1999

Mr. Chairman and Members of the Subcommittee. I am Phyllis Schlafly, president of Eagle Forum. Thank you for giving me this opportunity to testify.

Eagle Forum, a nationwide organization with some 80,000 members, both compiles databases and uses database information compiled by others. Among the important current issues we are concerned about is the defense of the rights of patients to access and control their own medical information. We oppose new federal entitlements to special interests, such as expansive new federal rights to control databases. We also oppose expansion of the federal criminal justice system to include routine business disputes. Eagle Forum has published numerous reports on these topics.

Eagle Forum supports H.R. 1858 because, while it prohibits unfair copying of databases, it does not prohibit the extraction of information from databases. It is increasingly important for individuals and small businesses to be able to extract information from databases. Individuals, for example, need to access their own medical data in order to obtain second and third medical opinions. We also need unrestricted access to public-domain medical information to learn about side effects of prescription drugs and vaccines. Analysts have estimated that almost half of all Internet users have searched for medical information online. We oppose any database legislation that creates new barriers to legitimate access to medical data.

Small businesses likewise need access to data simply to survive in our information-dominated society. We do not want new legislation that encourages the monopolization of data or makes access to data suddenly costly or impossible. Data, like facts, belong to all of us, not merely to the government or to special interests. We all benefit from and use the transformation of facts and data into interesting or valuable forms. Whether it is a comparison of Mark McGwire's home run statistics to Babe Ruth's, or an analysis of real estate or automobile sales in a community, the free market rather than the federal government should be guiding the transformation of facts into useful forms. No federal database legislation should make it more difficult for us to obtain legitimate access to data.

We support H.R. 1858 because it protects the existing rights of individuals to extract essential data such as their medical records. We support H.R. 1858 because it does not create draconian new federal crimes with respect to facts or databases. We support H.R. 1858 because it excludes from its protection those who misuse data. We support H.R. 1858 because it treats database issues as within the jurisdiction of the Commerce Committee rather than the Subcommittee on Courts and Intellectual Property.

On each of these important points, H.R. 1858 is far superior to H.R. 354, which was recently approved by the Subcommittee on Courts and Intellectual Property.

I. Individuals' Right to Access Data

Individuals must retain their right to access data such as their medical records. Both Republicans and Democrats support this right. For example, one year ago Vice President Gore declared in a commencement address at New York University that "you should have the right to choose whether your personal information is disclosed; you should have the right to know how, when, and how much of that information is being used; and you should have the right to see it yourself, to know if it's accurate."

H.R. 1858 protects this right of individuals to access data such as their medical records. It only limits the competitive sale or distribution to the public of a copy of someone else's database. H.R. 1858 does not limit the right of access to or extraction of data. State laws guaranteeing the right of individuals to access data such as their medical records thus remain intact under H.R. 1858.

Let's look at an example. When a family switches doctors or obtains a second medical opinion, it needs to access all of its medical records immediately and transfer them to the new doctor. Many state laws protect the right of families to gain access to their medical records, and thus guarantee that a patient always has access to his medical records. State laws ensure that patient access to medical records is prompt, which is particularly important when a patient is seeking a second medical opinion.

When it comes to medical information, no entity should have a proprietary interest that can exclude legitimate access by others. When families switch health plans or doctors, they should not have to duplicate medical tests because their initial health plan refuses to release their records. Federal legislation should not preempt state laws that guarantee to patients the right to access their own medical records. Special interests should not obtain federal entitlements to databases that enable them to exclude access by others.

H.R. 1858 properly avoids preemption of state laws that assure rights of access to medical records and other information. It is far superior to H.R. 354, which preempts these fundamental rights of individuals. Section 1405(b) of H.R. 354 preempts existing state laws guaranteeing access to data, and thereby allows health care providers to deny patients access to medical records. Under the doctrine of expressio unius est exclusio alterius, H.R. 354 preempts state laws guaranteeing an individual's right of access to his own records. While H.R. 354 itself does not prohibit the extraction of an "individual item of information," its preemption of the state laws deprives the patient of his right to access his own medical information.

In response to criticism, Section 1405(h) was recently added to H.R. 354 to state that "[n]othing in this chapter shall be construed to authorize any person to ... extract personally identifying information, including medical information." But this addition only exacerbates the central defect of H.R. 354 in prohibiting legitimate access to information. Families need access to medical information, and H.R. 354 improperly denies them such access.

New federal legislation concerning databases must limit itself to the issue of unfair copying, not deny existing rights to access and extract information. H.R. 1858 incorporates the best approach, while H.R. 354 is fatally defective.

II. Avoidance of Draconian New Federal Crimes

H.R. 1858 is far better than H.R. 354 with respect to federal criminal law. It is undesirable to expand federal criminal jurisdiction over business disputes. The free market should function through competition, not through the federal criminal court system. Businesses should not be encouraged to demand that federal prosecutors bring actions against competitors. Civil court is where business disputes belong, and it is a mistake to expand federal criminal law to commercial disagreements.

In contrast to H.R. 354, H.R. 1858 admirably refrains from establishing draconian new federal crimes in order to protect narrow special interests. H.R. 354 creates new prison sentences of 5 and 10 years for routine business activities that are now perfectly legal. H.R. 354 also creates new federal fines of $250,000 and $500,000 for such activities. Neither the public nor the federal court system benefits from the creation of vast new federal crimes that are designed to police activities such as the posting of public domain medical information or baseball statistics on the Internet.

Severe new criminal penalties are particularly inappropriate when the legislation is ambiguous. New federal crimes that are framed in ambiguous language have the effect of chilling lawful, beneficial activity. The central provision of H.R. 354 is filled with ambiguous terms such as "substantial part," "material harm to the primary market or a related market," and "intended to be offered in commerce." It is impossible to predict how the courts would interpret these terms, and thus criminal penalties of up to 10 years in prison and $500,000 fines would have an unwarranted chilling effect on many legitimate and valuable activities. H.R. 354 even includes a provision to permit an alleged database owner to submit a "victim impact statement" about his alleged business injury from someone else's use of facts such as medical information or baseball statistics. H.R. 354 thereby attempts to transform competition into a federal crime, and trivializes federal criminal law in the process.

H.R. 1858 uses clearer language than H.R. 354, and omits the draconian new criminal penalties. H.R. 1858 thereby avoids the chilling effects of H.R. 354, and avoids expanding federal criminal law to include ordinary business disputes.

III. Exclusion of Protection for Misuse of Data

We support the exclusion in H.R. 1858 of statutory protection for any database that has been misused. The doctrine of misuse is well-established in copyright law and H.R. 1858 wisely incorporates this doctrine into this database statute as well. The rationale is simple: misuse of rights over a database disqualifies the perpetrator from legal protection. Our legal system disfavors providing relief to wrongdoers under the doctrine of unclean hands. H.R. 1858 incorporates this principle.

H.R. 354, however, conspicuously bestows legal entitlements on those who misuse databases. Indeed, one of the original purposes of H.R. 354 was to overturn a Ninth Circuit decision that had found misuse by the American Medical Association (AMA) in control of a database. In Practice Management Info. Corp. v. AMA, 121 F.3d 516 (9th Cir. 1997), the Ninth Circuit denied the enforceability of AMA copyright on its medical billing CPT coding system because the AMA had "misused" its copyright. As a result, the Ninth Circuit denied enforceability by the AMA of exclusive rights to the CPT database.

It was only two months later that the predecessor to H.R. 354 was introduced in the House, and six months later the AMA provided the key testimony in support of that bill. H.R. 354 bestows special federal entitlements even on those who are found to have misused their rights. H.R. 354 is apparently designed to benefit special interests such as the AMA by overturning well-reasoned appellate decisions.

IV. Database Is a Commerce Issue, Not an Intellectual Property Issue

In the unanimous Supreme Court decision of Feist Publications v. Rural Telephone Service, 499 U.S. 340 (1991), the Court held that: "Facts, whether alone or as part of a compilation, are not original, and therefore may not be copyrighted. ... [O]riginality is a constitutionally mandated prerequisite for copyright protection." There is widespread agreement with this ruling, and it deserves credit in promoting the information-based economy that has benefited everyone in recent years.

In light of this unanimous decision, new federal protections for databases, as compilation of facts, should be addressed by this Subcommittee rather than the Subcommittee on Courts and Intellectual Property. Automatically generated databases of public domain facts are not a form of intellectual property, nor should they be. Rather, databases are compilations of data useful to individuals and businesses in commerce.

H.R. 1858 recognizes that unfair copying of a database should be treated as an unfair or deceptive act or practice under section 5 of the Federal Trade Commission Act. Section 107(c) of H.R. 1858 recognizes that there is no intellectual property issue at stake with respect to databases. The attempt by H.R. 354 to create a new sui generis intellectual property right in databases is contrary to the Constitution. The extent to which the Constitution allows copyrights to cover factual compilations has already been delimited by the Feist decision.

Moreover, the sine qua non of intellectual property law is to encourage the creation of works that might not otherwise be created. The Constitution expressly includes this requirement in Article I, Section 8, clause 8: "To promote the Progress of Science and useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." The Supreme Court has repeatedly affirmed that the plain meaning of this clause is "the conviction that encouragement of individual effort by personal gain is the best way to advance public welfare through the talents of authors and inventors in `Science and useful Arts.'" Mazer v. Stein, 347 U.S. 201, 219 (1954), which was quoted with approval in Harper & Row Publishers v. Nation Enterprises, 471 U.S. 539, 558 (1985).

But H.R. 354 seeks to protect databases already in existence, for which no incentive is necessary. Its retroactive application violates the very purpose of intellectual property law, and thus amounts to a giveaway to a few special interests. H.R. 1858 properly applies only to a database "that was collected and organized after that date." Thus H.R. 1858 does not favor existing entrenched interests, and limits its protections to databases to which the incentive applies.

V. Need for a Time Limitation

Finally, I suggest that H.R. 1858 be modified to include a time limitation on the protections provided by this Act. Not even copyright or patent rights last forever; nor should new database rights be in perpetuity. Databases are being compiled at an unprecedented rate, and it is far from clear that new federal protections of databases are even economically desirable.

The markets for databases of facts and other public domain information appear to demand timely updates to the databases, so I do not believe that new protections for old databases will promote commerce.

Five years of federal protection should give a more than adequate opportunity for a compiler of data to attain a return on its investment. Thereafter the public should not be prohibited from copying any uncopyrighted data for lawful and beneficial purposes.

Mr. Chairman, I am grateful for this opportunity to discuss the advantages of H.R. 1858. I appreciate the Members of this Subcommittee in drafting this superior legislation and holding this important hearing. We look forward to working with this Subcommittee on this legislation.

Eagle Forum, a national conservative, profamily volunteer organization, has chapters in every state and offices at 316 Pennsylvania Avenue, S.E., Suite 203, Washington, D.C. 20003, (202) 544-0353, fax: (202) 547-6996; and at 322 State Street, Suite 301, Alton, Illinois 62002, (618) 462-5415, fax: (618) 462-8909. Eagle Forum Education Center is located at 7800 Bonhomme Avenue, St. Louis, Missouri, (314) 721-1213, fax: (314) 721-3373. www.eagleforum.org. [email protected]

Neither Eagle Forum nor Phyllis Schlafly receives any federal grants, contracts, or moneys of any kind.

Phyllis Schlafly, the president of Eagle Forum, is an attorney, syndicated columnist, radio commentator, and author of 16 books and owner of the copyright on them.

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