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of American Physicians and Surgeons, Inc.
A Voice for Private Physicians Since 1943
Omnia pro aegroto
Re: The Database and Collections of Information Misappropriation Act
We oppose the Database and Collections of Information Misappropriation Act (“Act”) and its creation of a new federal property right. There is no need for it. Nor does the Constitution authorize Congress to create property rights beyond those specified in the Copyright Clause. This bill would have devastating consequences.
The lifeblood of our economy is an unencumbered flow of information. Yet the Act would interfere with information exchange, creating monopolies to obstruct the use of data. It could severely hamper the benefits and growth of the internet. The casualties would include free enterprise and competition.
The bill seeks to overturn the splendid en banc decision of Judge Edith Jones in Veeck v. SBCCI, 293 F.3d 791 (5th Cir. June 7, 2002), cert. denied, 123 S. Ct. 2636 (June 27, 2003). She persuasively rejected an attempt by a database owner to interfere with usage by others. Despite vigorous pleas by database companies, both the Department of Justice and the U.S. Supreme Court declined to disturb her ruling. The Supreme Court earlier held, without dissent, that federal property rights do not and should not arise for someone simply because he expended effort in building a certain database. Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991). There is no reason to overrule these decisions.
The Act is precisely the sort of legislation that Thomas Jefferson, like many Founders, vigorously opposed. “Jefferson, like other Americans, had an instinctive aversion to monopolies. It was a monopoly on tea that sparked the Revolution and Jefferson certainly did not favor an equivalent form of monopoly under the new government.” Graham v. John Deere Co., 383 U.S. 1, 7 (1966). Jefferson felt that “the benefit even of limited monopolies is too doubtful to be opposed to that of their general suppression.” V Writings of Thomas Jefferson 47 (Ford ed., 1895). In short, federally created monopolies over databases are unneeded and undesirable.
Our specific objections to the Act include the following, listed in order of priority:
The exemption set forth in Section 5(a)(1)(B) is an empty promise. The vast majority of private databases are not created pursuant to a requirement of a statute or regulation. But often the usage of databases is required by statute or regulation, yet that usage is not exempt under the Act.
This issue is particularly important to health care, where practitioners are forced to use the AMA’s overpriced, unwieldy CPT database in medical billing. The unnecessary complexity of the CPT is profitable to the AMA, as its owner, but ensnares doctors in its byzantine form and even results in imprisonment as overzealous prosecutors portray mistakes as fraud.
Private ownership of a database imposed by law distorts policy and inflates costs. The monopolist inevitably adds complexity to the database to maximize profits, rather than improving its accessibility and usability. Section 5(a)(1)(B) should exempt databases having uses required by government.
The narrow exemption for nonprofit educational, scientific or research purposes in Section 4(b) is likewise objectionable. It allows usage only if a “court determines that the making available in commerce of the information in the database is reasonable under the circumstances.” Taken literally, this means that there is no research exemption unless and until the issue is litigated. Very few users of data can afford taking a chance on how a court might rule, and the legal uncertainty would chill productive activity. The free market needs clear rules to thrive, not more judicial fiat, as established by the Nobel Prize-winning Coase theorem and the Chicago School of Economics.
Section 3(a)(2) relies on the vague term “time sensitive,” defining it in Section 3(c) merely in terms of what “the court shall consider.” This invites litigation against any user of database information, subjecting the user to the whim of the courts. Most users will have to capitulate rather than fund the legal costs necessary to prove that their use was legitimate. In effect, the bill shifts the legal burdens to the user of information, when the burden of proof should remain entirely on the company seeking to assert ownership over a database.
The pejorative reference to a “free ride” in Section 3(a)(3) illustrates the biased approach taken by the Act. Every use of the internet is a “free ride,” as are many other salutary free market activities. The drafters of the bill apparently seek to suppress “free rides” with respect to databases, but this is inconsistent with free enterprise. For example, under the bill someone could post a database and then sue for payment by everyone who uses it. Private contracts and freedom drive the free market, not litigation. We do not want the federal judiciary assuming the role of a policeman monitoring database usage.
Section 7(h) allows private entities to invoke federal judicial process without ever filing a lawsuit. We object to this provision, which enables database owners to harass suspected violators with subpoenas obtained from the clerk of a federal district court. There is no judicial oversight. There is no case or controversy as required by the Constitution (Art. III, Sec. 2) to support federal jurisdiction. This provision should be stricken, and judicial process should not be available for exploitation by a private entity outside of litigation.
The bill also infringes on state sovereignty, expressly subjecting state government to private lawsuits. Meanwhile, the bill grants immunities to the federal government. Sections 7(f)&(g). This undermines federalism.
We beseech the Committee to reject this alarming assault on free enterprise, federalism, and revered judicial precedents. We urge defeat of this bill.