Indiana Law Review


Indiana Law Review
Volume 31 1998 Number 1

NOTES

The State of Copyright Protection for Electronic
Databases beyond ProCD v. Zeidenberg: Are
Shrinkwrap Licenses a Viable Alternative

FOR Database Protection?

Jennett M. Hill*

Introduction

J-CAP Directories, Inc., specializing in computer disc technology, invests
$10 million researching and developing a comprehensive telephone listings

database. The marketing department finds great demand for such a listing in the
form of an electronic compilation. So, researchers compile 95 million listings

and incorporate them into an electronic database. The listings include residential

and commercial names, addresses and telephone numbers. The business listings

contain pertinent industry data to enable marketing companies to target their

customers. Software and database technicians develop a state-of-the-art database

and access software while data entry personnel begin loading the 95 million

records into the database. This database application^ enables the computer user

to search using any number of fields: name, town, state, zip-code, industry code

and telephone area code. The company stores the database application on CD-
ROM^ discs and packages the product, complete with a "how-to" manual, in an
appealing box encased in cellophane. The box displays a warning that the

purchase of this product is subject to a restrictive licensing agreement. In fact,

the creative software engineers included a licensing agreement screen that

appears each time the software is executed, forcing the user to respond by

pressing "Enter."

The CD-ROM product is a tremendous success, until an entrepreneurial
computer programmer purchases a copy of the database application. The
entrepreneur downloads the CD-ROM data onto his computer and uploads J-

* J.D. Candidate, 1998, Indiana University School of Law—Indianapolis; B.A., 1985,
DePauw University, Greencastle, Indiana. The author would like to thank Professor Kenneth D.

Crews for his guidance in the initial draft of this Note. The author would also like to give special

thanks to her husband, Alan P. Hill, for his love, encouragement and support that made this

Note—and law school—possible.

1

.

A database application, for purposes of this Note, includes the database (compilation of
data) and the software used to access the data.

2. CD-ROM: Compact disk-read only memory.



144 INDIANA LAW REVIEW [Vol. 3 1 : 143

cap's sophisticated database onto an Internet host computer. The computer
wizard develops his own software to access the downloaded database across the
Internet. He then sells access to the Internet database for a fee. The entrepreneur
accomplishes this in less than three months, investing only $50,000.

J-CAP discovers its million dollar investment on the Internet and files suit
alleging copyright infringement and a breach of the license agreement. To the
company's surprise, the court finds no database protection under copyright law

and holds the license agreement unenforceable as a matter of contract law! In

essence, J-CAP Directories spent millions on a product it could not protect from
subsequent developers. This hypothetical demonstrates the commercial

inequities of database protection under copyright law. Within the last five years

the courts have eroded and then propped up electronic database protection under

both copyright and contract law. This Note analyzes the recent developments of
copyright protection as it pertains to electronic databases.

Lacking sufficient copyright protection, many companies and state
governments have turned to "shrinkwrap licenses,"^ as an alternative to database

protection. However, this raises a fundamental question: should other

approaches to electronic database protection prevail in light ofweak and unclear
copyright protection given the specific preemption clause in § 301 of the

Copyright Act?^ This Note examines these approaches and submits that the

United States legislature should evaluate the enactment of a sui generis right for

database protection to protect valuable economic and global resources.

Part I of this Note addresses the dilemma of electronic database protection
through an analysis of two recent cases: Feist Publications, Inc. v. Rural

Telephone Service Co.^ and ProCD, Inc. v. Zeidenberg.^ These cases highlight
database protection issues under current copyright law. Part II of this Note

discusses the evolution of the Copyright Act and its impact on computerized

materials. This section discusses the preemption clause of the Act, and the role

it plays in determining the validity of shrinkwrap licenses. This section further

examines Congress' intent in enacting its 1976 revision of the Act and whether

their policy and goals continue to guide the judiciary. Part III summarizes the

state of database protection in view of the preceding cases and copyright law.

Due to uncertain copyright protection for electronic databases, companies
developed other methods of protection. Part IV evaluates these developments,
specifically, shrink-wrap licenses as successfully secured in ProCDj the recent
draft of the Uniform Commercial Code, which includes a new licensing section;
and the international community's database protection proposals issued to the

3. The term "shrinkwrap Hcenses" evolved from using a cellophane or plastic wrapping to

package computer applications. Companies often enclosed a license agreement and referred to a

brief provision of the agreement which presumably became effective once the purchaser opened the

cellophane (or shrinkwrap) or executed the program. See infra note 154 and accompanying text.

4. 17 U.S.C. §301(1994).

5. 499 U.S. 340(1991).

6. 86 F.3d 1447 (7th Cir. 1996).

7. Id.



1 998] DATABASE PROTECTION 1 45

World Intellectual Property Organization. This section also discusses the United

States' response to international pressures regarding database protection.

Finally, Part V analyzes methods for future database protection.

I. Case Law Impact ON Database Protection

Case law developments have weakened database protection under copyright

law. In 1991, the Supreme Court eviscerated a popular theory upon which many
courts and database developers relied—^the "sweat of the brow" theory.^ With
reduced copyright protection for databases, the technology industry turned to

contract law by adopting the "shrinkwrap license" as their preferred method of
protection. Some courts have declared shrinkwrap licenses unenforceable as a
matter of contract law^ and federal preemption laws.'° In 1996, however, the

Seventh Circuit held that a shrinkwrap license, which limited the use of a

database application and secured exclusive rights in the database, was
enforceable under contract law and was not preempted by the Copyright Act."

A. Feist." The Key to Protection is Originality

In Feist, the Supreme Court held that "white pages" in a phone book were not

subject to copyright protection.'^ Rural Telephone, a public utility company
providing telephone service to communities in northwest Kansas, alleged that

Feist Publications infringed on its copyright by publishing Rural' s listings in

Feist's area-wide directory.'^ To compile white pages listings. Feist solicited
area telephone publishing companies requesting licensing permission and

offering to pay for the right to publish the listings in its directory.''* All

companies agreed to grant a license except Rural. '^ To avoid a large gap in its
listings. Feist published 1,309 of Rural's listings and added the individuals' street

addresses to its directory.'^ The Supreme Court granted certiorari to determine
"whether the copyright in Rural's directory protects the names, towns, and

telephone numbers copied by Feist."
'^

The Court focused on the requirement of "originality" to secure copyright
protection and conceded that the threshold requirement for establishing

8. The "sweat of the brow," or "industrious collection", theory protected a database when

a significant amount of work was invested in compiling facts. See Feist, 499 U.S. at 352.

9. See, e.g., Step-Saver Data Sys., Inc. v. Wyse Tech., Inc., 939 F.2d 91 (3d Cir. 1991);

Arizona Retail Sys., Inc. v. Software Link, Inc., 831 F. Supp. 759 (D. Ariz. 1993).

10. See, e.g., Vault Corp. v. Quaid Software Ltd., 847 F.2d 255 (5th Cir. 1988).

11. P/-oCA86F.3datl455.

12. Few^ 499 U.S. at 362-63.

13. Mat 344.
14. /^. at 343.

15. Id.

16. Id at 344. Rural's directory contained approximately 7, 700 total listings. Id. at 342.

17. Mat 344.



146 INDIANA LAW REVIEW [Vol. 3 1 : 143

originality was low.'^ Although individual facts are not copyrightable, factual
"compilations"^^ pass the requisite originality test because the author must select
and arrange the facts.^° The Court found an explicit originality requirement in
the Copyright Act^^ as well as an implicit requirement of originality in the

Copyright Clause of the Constitution.^^

In defining originality, Feist denounced the "sweat of the brow" or
"industrial collection" theories relied upon by lower courts to protect
compilations. The court found that the purpose of copyright was to motivate
authors to create works and not reward them based solely on industrious efforts.^^

"[T]he 1976 revisions to the Copyright Act leave no doubt that originality, not

'sweat of the brow,' is the touchstone of copyright protection in directories and

other fact-based works.
"^"^

The Court in Feist upheld a compiler's "selection and arrangement" as a
method of demonstrating originality in a compilation.^^ Thus, the selection and

18. "The sine qua non of copyright is originality." Id. at 345. "To be sure, the requisite

level of creativity is extremely low; even a slight amount will suffice." Id.

19. "A 'compilation' is a work formed by the collection and assembling of preexisting

materials or of data that are selected, coordinated, or arranged in such a way that the resulting work

as a whole constitutes an original work of authorship." 17 U.S.C. § 101 (1994).

20. Feist, 499 U.S. at 348. "[C]hoices as to selection and arrangement, so long as they are

made independently by the compiler and entail a minimal degree of creativity, are sufficiently

original that Congress may protect such compilations through the copyright laws." Id. (citing 1

Melville B. Nimmer & David Nimmer, Nimmer on Copyright §§ 2. 1 1 [D], 3.03 (1990)).
21

.

Id. at 355 (citations omitted). The Court found the originality requirement in the phrase

"original works of authorship" in § 102(a) ofthe Copyright Act. Id. "The two fundamental criteria

of copyright protection [are] originality and fixation in tangible form .... The phrase 'original

works of authorship,' which is purposely left undefined, is intended to incorporate without change

the standard of originality established by the courts under the present [1909] copyright statute."

Id (quoting H.R. REP. No. 94-1476, at 51 (1976); S. REP. No. 94-473, at 50 (1975), reprinted in

1976, U.S.C.C.A.N. 5659, 5664).

22. Id. at 351. The Court explained that "originality is a constitutionally mandated

prerequisite for copyright protection." Id. The Copyright Clause authorizes Congress to "secur[e]

for Hmited Times to Authors ... the exclusive Right to their respective Writings." U.S. CONST, art.

I., § 8, cl. 8. [hereinafter Copyright Clause]. Interestingly, this is the first time since 1879 that the

Court has held a work unworthy of copyright protection on Constitutional grounds. Ralph Oman,

Reflections on the Changing Shape ofDatabase Protection, 40 FED. B. NEWS & J. 232, 237 n.l8
(1993). In the 1800's, the Supreme Court decided two landmark cases that addressed the

constitutional scope of works: Burrow-Giles Lithographic Co. v. Sarony, 1 1 1 U.S. 53 (1884); and

The Trade-Mark Cases, 100 U.S. 82 (1879).

23. Feist, 499 U.S. at 349. "The primary objective of copyright is not to reward the labor

of authors, but '[t]o promote the Progress of Science and useful Arts.'" Id. (quoting U.S. CONST,

art. I., § 8, cl. 8).

24. Id at 359-60.

25. Id. at 350. "[0]nly the compiler's selection and arrangement may be protected; the raw

facts may be copied at will." Id.



1998] DATABASE PROTECTION 147

arrangement of the factual compilation underlie an author's claim to originality.

In Feist, however, the selection and arrangement "lack[ed] the modicum of
creativity necessary to transform mere selection into copyrightable expression.

Rural expended sufficient effort to make the white pages directory useful, but
insufficient creativity to make it original.''^^ Although the Court reminded us
that the originality requirement is rooted in the Constitution, it did not ignore the

statutory requirements of originality either:

The [1976 Copyright Act] revisions explain with painstaking clarity that
copyright requires originality, § 102(a); that facts are never original, §
102(b); that the copyright in a compilation does not extend to the facts

it contains, § 103(b); and that a compilation is copyrightable only to the

extent that it features an original selection, coordination, or arrangement,

§ 101.2'

The Court was unwilling to stretch the concept of authorship to protect an
author's labor.^* Instead, only "those products that evince intellectual

authorship" are protected under copyright law.^^ Consequently, Feist has

diminished copyright protection for databases. Although the selection and

arrangement theory remains, it merely prevents copying the format of the data,

but does not protect the tedious, expensive and comprehensive collection of the

data itself
'°

The selection and arrangement theory has been applied in subsequent
cases.^^ For example, the Second Circuit found that a publisher's valuation for

used vehicles (the "Red Book") was protected as a compilation under Feist.^^

26. Id. at 362-63 (emphasis added).

27. Id. at 360.

28. Oman, supra note 22, at 234.

29. Id

30. See generally John F. Hayden, Recent Development, Copyright Protection ofComputer

Databases After Feist, 5 Harv. J.L. &TECH. 215, 236 (1991) (selection and arrangement "fails to

protect the database's main contribution"—the collection of the data and database development);
Jessica Litman, After Feist, 17 U. DAYTON L. REV. 607, 609 (1992) (author concedes that

"computer databases are surely sufficiently original to merit copyright protection").

3 1

.

See e.g., CCC Info. Serv., Inc. v. Maclean Hunter Market Reports, Inc., 44 F.3d 61 (2d
Cir. 1994), cert, denied, 1 16 S. Ct. 72 (1995); BellSouth Adver. & Publ'g Corp. v. Donnelley Info.
Publ'g, Inc., 999 F.2d 1436 (11th Cir. 1993), cert, denied, 510 U.S. 1101 (1994) (a telephone

publisher's competitor was permitted to copy elements of the publisher's compilation (name,

address, etc.) without infringement because the competitor did not copy the selection, coordination

or arrangement of the data); Victor Lalli Enter, v. Big Red Apples, Inc., 936 F.2d 671 (2d Cir.

1991) (finding that a compilation of horse racing statistics formatted in a static fashion lacked

sufficient selection and arrangement to substantiate an original work); Montgomery County Ass'n

ofRealtors, Inc. V. Realty Photo Master Corp., 878 F.Supp. 804 (D.Md. 1995), off'd, 9\ F.3d 132

(4th Cir. 1996).

32. Maclean, 44 F.3d at 67. "Compilations that devise new and useful selections and

arrangements of information unquestionably contribute to public knowledge by providing cheaper.



148 INDIANA LAW REVIEW [Vol. 3 1 : 1 43

"The fact that the arrangement of data responds logically to the needs of the
market for which the compilation was prepared does not negate originality.""
In 1995, a Maryland court found an electronic database of real estate listings
accompanied by photographs met the selection and arrangement originality
requirement and granted the creator copyright protection .^"^ Nonetheless, many
companies are unsure of the stability of copyright protection for databases, and

have therefore resorted to using contracts to protect their works.

B. ProCD." A Viable approach to Database Protection?

ProCD invested ten million dollars to compile a comprehensive directory
comprising 3,000 telephone directories in one computer database.^^ ProCD
packaged this database application and sold the product as "SelectPhone" on CD-
ROM.^^ On the outside of each box ProCD alerted purchasers that a license was
enclosed in the database application.^^ This license, which limited use of the
database application to non-commercial purposes, was not only printed in the
manual, but also appeared on the computer screen each time the enduser executed

the software.^^ Computer science student Matthew Zeidenberg purchased a
consumer version of the database application and developed his own software to
access the database.^^ He then placed the database on an Internet server and
charged his clients to access the database through his company, Silken Mountain

Web Services, Inc.'**' ProCD asserted that Zeidenberg went beyond the scope of
the shrinkwrap license when he placed the database on the server and provided
access across the Internet."*^

Contrary to prior circuit court decisions,"*^ the court in ProCD held that a

easier, and better organized access to information." Id. at 66.

33. Id. at 67 (emphasis added).

34. Montgomery, 878 F. Supp. at 810. The district court held that the computer database's

arrangement was sufficient to sustain the originaHty requirement under Feist. The court concluded

that the database developer added "marketing puffery" for each home which could not be

categorized as factual, further supporting an original "presentation" and "arrangement." Id.

35. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1449 (7th Cir. 1996).

36. Id

37. Mat 1450.
38. Id. "Enduser" is used to refer to the person using the electronic database for searches.

For example, a student accessing Westlaw's database to perform legal searches is an "enduser" for

purposes of this Note.

39. Id

40. Id

41. Id

42. Step-Saver Data Sys., Inc. v. Wyse Tech., Inc., 939 F.2d 91 (3d Cir. 1991) ("limited use

license agreement" printed on package containing computer software did not become part of the

parties' agreement and was therefore unenforceable); Vault Corp. v. Quaid Software Ltd., 847 F.2d

255 (5th Cir. 1988) (provisions in plaintiffs license agreement, which prohibited decompilation

or disassembly of its program, was unenforceable); Arizona Retail Sys. Inc. v. Software Link, Inc.,



1998] DATABASE PROTECTION 149

shrinkwrap license, imposing restrictions on an enduser, was enforceable."*^ In
reaching its decision, the court relied upon contract law finding that "[a] vendor,

as master of the offer, may invite acceptance by conduct, and may propose
limitations on the kind of conduct that constitutes acceptance."^"* Further, "the
U.C.C. consistently permits the parties to structure their relations so that the

buyer has a chance to make a final decision after a detailed review.'"*^
As to preemption, the court held that copyright law did not preempt private

contracts as "courts usually read preemption clauses to leave private contracts

unaffected. . . . [j]ust as [the copyright preemption clause] does not itself

interfere with private transactions in intellectual property, so it does not prevent

states from respecting those transactions.""*^ Moreover, "whether a particular

license is generous or restrictive, a simple two-party contract is not 'equivalent

to any ofthe exclusive rights within the general scope of copyright' and therefore

may be enforced."^^ Breaking precedent, the Seventh Circuit created a circuit
split by enforcing shrinkwrap licenses in spite of copyright preemption."*^ In
short, the Seventh Circuit endorsed the use of shrinkwrap licenses as a valid

method for database protection.

II. Historical Developments in Computer Copyright Protection

A. Copyright Protectionfor Compilations

The Constitution grants Congress the power "[t]o 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 framers

831 F. Supp. 759 (D. Ariz. 1993) (buyer was aware of the terms of the license before purchasing

the software because the buyer requested an evaluation diskette detailing similar terms). See infra

note 125 and accompanying text.

43. ProCD, 86 F.3d at 1449.

44. Id. at 1452. The court, relying on several sections of the U.C.C. as adopted by

Wisconsin, stated:

A contract for sale of goods may be made in any manner sufficient to show agreement,
including conduct by both parties which recognizes the existence of such a contract.

.

. . A buyer accepts goods under § 2-606(1 )(b) when, after an opportunity to inspect, he
fails to make an effective rejection under § 2-602(1). ProCD extended an opportunity

to reject if a buyer should find the license terms unsatisfactory; Zeidenberg inspected

the package, tried out the software, learned of the license, and did not reject the goods.

Id. at 1452-53 (citations omitted).

45. Id. at 1453.

46. Id. at 1454-55. The copyright preemption clause (§ 301(a)), in pertinent part, provides

that "all legal or equitable rights that are equivalent to any of the exclusive rights within the general

scope of copyright. . . are governed exclusively by this title." 17 U.S.C. § 301(a) (1994).

47. ProCD, 86 F.3d at 1455 (citing 17 U.S.C. § 301(a) (1994)).

48. See infra note 125 and accompanying text.

49. U.S. Const, art. I, § 8, cl. 8.



1 50 INDIANA LAW REVIEW [Vol. 3 1 : 143

intended copyright law to induce creative works which benefit the public.^^
However, protecting an author's creative rights may conflict with the public's
right to access the work.^' To balance these competing interests, Congress
enacted the 1790 copyright statute.^^

This first statute provided only limited protection ^^ but, by 1909, copyright
protection also included compilations of facts.^"* Today, the 1976 Copyright Act
expressly covers nine categories of works including compilations.^^ "A
'compilation' results from a process of selecting, bringing together, organizing,

and arranging previously existing material of all kinds, regardless of whether the

individual items in the material have been or ever could have been subject of

copyright."^^ The subject matter of a compilation, however, "extends only to the
material contributed by the author of such work, as distinguished from the

preexisting material employed in the work, and does not imply any exclusive

right in the preexisting material."^^

In response to emerging technologies, Congress formed a national

commission to provide recommendations for copyright reform .^^ Based upon
recommendations from this commission (CONTU), Congress amended the Act
to explicitly protect computer programs as literary works.^^ Amended § 1 17, for

50. Deborah Kemp, Limitations Upon the Software Producer 's Rights: Vault Corp. v.

Quaid Software Ltd., 16 RUTGERS COMPUTER & TECH. L.J. 85, 89 (1990). The purpose of
copyright law is "to promote the advancement of knowledge and learning by giving authors

economic incentives (in the form of exclusive rights to their creations) to labor on creative,

knowledge-enriching works." CCC Info. Serv., Inc. v. Maclean Hunter Market Reports, Inc., 44
F.3d61,65(2dCir. 1994).

5 1

.

Kemp, supra note 50, at 89.

52. Irvin R. Gross, A New Frameworkfor Software Protection: Distinguishing Between

Interactive and Non-Interactive Aspects ofComputer Programs, 20 RUTGERS COMPUTER & TECH.
L.J. 107, 128 (1994) (citing Act of May 31, 1790, ch. 15, 1 Stat. 124) (repealed 1802)).

53. Id. The Act of May 31, 1790 protected only a "book, map or chart." Id. at 128 n.83.

54. Copyright Act of 1909, ch. 320, § 5(a), 35 Stat. 1075, 1076 (1909) (current version at

17U.S.C. §§ 101-1101(1994)).

55. 17 U.S.C. § 102(a) (1994). Section 102 covers eight of the nine categories: "literary

works; musical works, including any accompanying words; dramatic works, including any

accompanying music; pantomimes and choreographic works; pictorial, graphic, and sculptural

works; motion pictures and other audiovisual works; sound recordings; and, architectural works."

Id. Section 103 of the Copyright Act addresses the ninth category: copyright for compilations. See

generally 17 U.S.C. § 103 (1994).

56. H.R. Rep. No. 94-1476, at 57 (1976).

57. 17U.S.C.§ 103(b) (1994).

58. National Commission on New Technological Uses of Copyrighted Works
(CONTU), 93d Cong., 2d Sess., Final Report of the National Commission on New
Technological Uses of Copyrighted Works 1 (Comm. Print 1978) [hereinafter CONTU
Report].

59. Gross, supra note 52, at 1 29 n.88 (citing Computer Software Copyright Act, Pub. L. No.

96-517, § 10(b), 94 Stat. 3028 (codified as amended at 17 U.S.C. § 1 17 (1994)).



1998] DATABASE PROTECTION 151

example, now permits the owner of a computer program to make a backup copy
of the program without copyright infringement.^^ The 1976 Act also codified
case law developments under the 1909 Act by including key terms such as

"selection" and "arrangement."^* Although the CONTU Report did not expressly
address "selection" and "arrangement" theories defined in the Copyright Act, it

did cite three cases which followed both the "sweat ofthe brow"^^ and "selection

and arrangement" theories.^^

CONTU recognized that a database is an electronic version of a
comprehensive compilation of facts.^"* As such, courts treat databases as
"compilations" under the Copyright Act.^^ A commercially viable electronic
database includes as many facts (data) as necessary to meet the needs of its
enduser. A successfully compiled and designed database then allows the enduser
to select and arrange the data in a fashion suitable to his or her needs.^^ A
compilation's pre-existing "facts," however, remain unprotected.^^

60. 17U.S.C. § 117(1994).

61. See, e.g.. Jeweler's Circular Publ'g Co. v. Keystone Publ'g Co., 281 F. 83, 88 (2d Cir.

1922).

62. A work is sufficiently copyrightable under the "sweat of the brow" or "industrious
collection" theories due to the amount of labor involved in database research and design. See

Jeweler's Circular Publ'g Co. v. Keystone Publ'g Co., 281 F. 83, 88 (2d Cir. 1922). But see Feist

Publications, Inc. v. Rural Tele. Serv. Co., Inc., 499 U.S. 340, 353 (1991) (rejecting the sweat of

the brow theory).

63. CONTU Report, supra note 58, at 42 n. 171 (citing Leon v. Pacific Tel. & Tel. Co., 91
F.2d 484 (9th Cir. 1937); Jeweler 's, 281 F. at 88; New York Times Co. v. Roxbury Data Interface,
Inc., 434 F. Supp. 217 (D.N.J. 1977)).

64. CONTU Report, supra note 58, at 38. The CONTU report states that:
[djictionaries, encyclopedias, and tables of numeric information are all forms of data

bases [sic] which long antedate the computer, and for which copyright protection has

been and will continue to be available under the copyright law. . . . This entitlement to

copyright is not diminished by the fixation of the data base in a medium requiring the

intervention of a computer to communicate its information content. Accordingly, a data

base, whether printed in traditional hard copy or fixed in an electromagnetic medium,

is protected by copyright under the terms of the new law.

Id. (footnotes omitted); see also Gerard J. Lewis, Jr., Comment, Copyright Protectionfor Purely

Factual Compilations under Feist Publications, Inc. v. Rural Telephone Service Co. : How does
Feist Protect Electronic Data Bases ofFacts?, 8 SANTA CLARA COMPUTER & HIGH TECH. L.J. 1 69,
197(1992).

65. ^ee^Mpra note 19 and accompanying text.

66. Lewis, supra note 64, at 197.

67. See Feist Publications, Inc. v. Rural Tele. Serv. Co., Inc., 499 U.S. 340, 344 (1991).

"Section 102(b) is universally understood to prohibit any copyright in facts." Id. at 356. "In no

case does copyright protection for an original work of authorship extend to any idea, procedure,

process, system, method of operation, concept, principle, or discovery, regardless of the form in

which it is described, explained, illustrated, or embodied in such work." 17 U.S.C. § 102(b)

(1994). See also Harper «& Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 556 (1985)



1 52 INDIANA LAW REVIEW [Vol. 3 1 : 1 43

Consequently, although the "compilation" of facts may be original under a
sufficient showing of arrangement or selection, the individual facts comprising

the compilation are not copyrightable. To establish that a compilation falls
within the scope of copyright protections it must meet three criteria: (1) fixation

in a tangible medium; (2) expression; and (3) originality.^^ For a database, this
would include (1) fixation of the database application on diskette or CD-ROM;
(2) a selection of facts representing an expression of the author; and (3) a

modicum of originality exhibited via database arrangement.^^

B. The Scope ofCopyright Protection: Limitations on

the Owner 's Exclusive Rights

Copyright in a compilation grants certain exclusive rights to the author ofthe

work.^° However, in the interest of balancing protection of the owner's creative

rights with public access to the work, the Copyright Act limits an owner's

rights.^^ For example, libraries retain special reproduction rights in a copyrighted

work.^^ Another limitation to the owner's exclusive rights is the "first sale

doctrine."^^ Under this doctrine, once an author sells a copy of the work, she
relinquishes control of the work and may not dictate the terms of its further
disposition or transfer.^"* Hence, the "first sale" doctrine, despite the potential

("[n]o author may copyright his ideas or the facts he narrates").

68. 17 U.S.C. § 102(a) (1994). Section 102 provides that "[c]opyright protection subsists,

... in original works of authorship fixed in any tangible medium of expression. . . ." See also

Timothy D. Howell, Comment, Intellectual Property Pirates: Congress Raises the Stakes in the

Modern Battle to Protect Copyrights andSafeguard the United States Economy, 27 St. Mary'S L.J.

613, 631 n.49 (1996) (citing 1 Paul Goldstein, Copyright: Principles, Law and Practice §
1 .3, at 24-5 (1989)) ("[T]he work must be original in the sense that it was not copied from some

other source; the work must consist of 'expression' and not just 'ideas'; and, the work must be

embodied in a tangible medium of expression, specifically a 'copy' or 'phonorecord.'").

69. See also WILLIAM F. PATRY, THE FAIR USE PRIVILEGE IN COPYRIGHT LAW 5 1 7- 1 8 (2d
ed. 1995) (footnotes omitted). To constitute an original work of authorship, a database must be "(1)

an independent collecting and assembling of particular preexisting material or data (2) from which

a selection, coordination, or arrangement is made (3) in such a way that the resulting work as a

whole 'possesses at least some minimal degree of creativity.'" Id.

70. Among some of the rights afforded the copyright owner in section 1 06 of the Copyright

Act: the right to reproduce the copyright work; to prepare derivative works based upon the

copyrighted work; and, distribute copies of work through "sale or other transfer of ownership, or

by rental, lease, or lending." 17 U.S.C. § 106(3) (1994). See 17 U.S.C. § 106 for a full listing of

the owner's exclusive rights in a copyrighted work.

71. 17U.S.C.§§ 107-121 (1994).

72. Id § 108.

73. Id § 109.

74. Id. The first sale doctrine provides in pertinent part that "the owner of a particular copy

. . . lawfully made under this title, or any person authorized by such owner, is entitled, without the

authority of the copyright owner, to sell or otherwise dispose of the possession of that copy." Id.



1 998] DATABASE PROTECTION 1 53

risk of copyright infringement, allows an enduser to lend computer software to

friends for evaluative purposes or to sell the software to a third party.

One of the most extensive limitations on the use of a copyrighted work is
found in § 107: fair use7^ A defendant may assert that his use of the copyrighted
work was fair by applying the four factors defined in § 107:^^

In determining whether the use made of a work in any particular case is
a fair use the factors to be considered shall include—(1) the purpose and
character of the use, including whether such use is of a commercial

nature or is for nonprofit educational purposes; (2) the nature of the

copyrighted work; (3) the amount and substantiality of the portion used

in relation to the copyrighted work as a whole; and (4) the effect of the
use upon the potential market for or value of the copyrighted work7^

The preamble, however, to § 107^^ indicates that these fair use factors are not
exhaustiveJ^ Courts have applied other factors to determine fair use which

Congress condoned in its 1992 amendment of § 107.^° As such, courts have
applied additional factors such as "defendant's good faith or lack thereof or

"wrongful denial of exploitative conduct towards the work of another" to
determine fair use of a copyrighted work.^^ Yet, when a court applies the fair use
doctrine to compilations, it may only assess the amount and substantiality of the
protectable portions used; thus, after Feist, this leaves only the "selection or

arrangement" of the work—^the unprotectable content (facts) may not be
considered.^^

Finally, § 301 ofthe Copyright Act^^ calls for preemption of a state law that

grants "rights that are equivalent to any of the exclusive rights within the general

scope of copyright as specified by § 106 in works of authorship that . . . come

75. 17 U.S.C. § 107. Fair use is a codification ofjudicial doctrine. See Patry, supra note

69, at 413. "Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted

work, including such use by reproduction in copies . .
.

, for purposes such as criticism, comment,

news reporting, teaching (including multiple copies for classroom use), scholarship, or research,

is not an infringement of copyright." 17 U.S.C. § 107.

76. Id.

11. Id.

78. Id

79. Patry, supra note 69, at 568. "The preamble to Section 107 uses the phrase 'including

such,' the term 'such as,' and the word 'include' .... The listing of fair use purposes and factors

is thus 'not intended to be exhaustive.'" Id. (quoting Harper & Row Publishers, Inc. v. Nation
Enters., 471 U.S. 539(1985)).

80. Id (quoting H.R. REP. No. 836, at 9-10 (1992)).

81. Mat 568-89.
82. Id. at 518. This secures the protection of originality while leaving the facts contained

in the compilation in the public domain. In a database, the court may assess the fair use of the

arrangementbut not of the facts themselves. Id.

83. 17 U.S.C. §301(1994).



1 54 INDIANA LAW REVIEW [Vol. 3 1 : 1 43

within the subject matter of copyright as specified by §§ 102 and 103 .. .
."^'*

Generally, copyright preemption requires: (1) the work fall within the subject
matter of copyright as defined in §§ 102 and 103; and (2) the state right granted

must be "equivalent" to one or more rights granted by § 106 of the Copyright
Act.^^ Consequently, a state law protecting an electronic databases' content

should be preempted pursuant to § 301.^^ However, if a state law requires an
"extra element" not required by copyright, then the right does not lie "within the

general scope of copyright" and escapes § 301 preemption.^^ The extra element
test is met if the state cause of action is "qualitatively different from an action for
copyright."^^

C Advancing the Goals ofCopyright

By enacting the copyright provisions. Congress met the goals of the
Constitutions' s Copyright Clause. The fundamental policy behind the Copyright
Clause is best represented in Mazer v. Stein: "The economic philosophy behind
the clause empowering Congress to grant patents and copyrights 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.'"^^ The Copyright Clause also serves to reward the public.^^
After a period of time, the Copyright Act vests the public with rights to the work
unencumbered by copyright infringement laws.^'

84. 17 U.S.C.§ 301(a) (1994).

85. National Car Rental Sys., Inc. v. Computer Assoc. Int'l, Inc., 991 F.2d 426, 428 (8th Cir.

1993) (quoting Harper & Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195, 200 (2d Cir. 1983).
See also III PAUL GOLDSTEIN, COPYRIGHT § 1 5. 1 2. 1 (2d ed. 1996) (adding a third element: fixation

in a tangible medium).

86. Goldstein, supra note 83, § 15.12.1 n.4.

87. 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright, § 1 -0 1 [B] [ 1 ], at 1 -
1 5 (2d ed. 1996) [hereinafter Nimmer]. Nimmer asserts that if other elements "are required instead

of, or in addition to, the acts of reproduction, performance, distribution or display," then the state

created right may not be preempted. See also Harper & Row, Publishers, Inc. v. Nation Enters.,
501 F. Supp. 848 (S.D.N.Y. 1980), affd, 123 F.2d 195 (2d Cir. 1983), rev 'don other grounds, 471

U.S. 539 (1985) (Second Circuit court found that the state law was not preempted because the

equivalent rights test was not satisfied given the extra elements found in the conversion and

interference with contractual relations claims).

88. National Car Rental, 99 1 F.2d at 43 1

.

89. 347 U.S. 201,219(1954).

90. Kemp, supra note 52, at 89. "The idea is that the public good is served by protecting

creators in their intellectual property." Id. at 89 n.l5.

91. 1 7 U. S.C. § 302(a) ( 1 994). Section 302 generally provides that the copyright protection

"endures for a term consisting ofthe life ofthe author and fifty years after the author's death." Id.

For works created within the scope of employment (a "work made for hire"), the public acquires

rights to the work after a period of seventy-five years from date of publication or 100 years after the

work is created, "whichever expires first." 17 U.S.C. § 302(c) (1994).



1 998] DATABASE PROTECTION 155

"The primary objective ofcopyright is not to reward the labor of authors, but

'[t]o promote the Progress of Science and useful Arts.'"^^ To this end, the
Copyright Act reserves "facts" for the public domain, allowing authors to create

and build upon them so as to enrich the public. "[C]opyright does not prevent
subsequent users from copying from a prior author's work those constituent
elements that are not original—for example . . . facts, or materials in the public
domain—as long as such use does not unfairly appropriate the author's original
contributions."^^ The Copyright Act serves to protect this building block
approach "without impeding the public's access to that information which gives

meaning to our society's highly valued freedom of expression."^'^

These policies apply to compilations and computer databases.

"Maximization ofpublic access to information contained in automated data bases

[sic] is ... a significant goal of [the] national information policy."^^ Further,

encouraging database development for dissemination to the public supports the

underlying policies of the Copyright Act.^^ However, "[t]here is an inherent

conflict in the competing interests of the author and the public. Protecting the

rights ofthe author could be detrimental to the public's interest in access to the

work of authorship."^^ The Copyright Act "seeks to balance these potentially
conflicting interests."^^ The delicate balance of encouraging database
development for the benefit of the public has in some respects become skewed
in favor of public access.^^ Database development comes with significant costs

92. Feist Publications, Inc. v. Rural Tele. Serv. Co., Inc., 499 U.S. 340, 349 (1991) (quoting

U.S. Const, art. I, § 8, cl. 8) (emphasis added). The Court reasoned that this underlying policy

assures the author protection of his expression but also encourages other authors to "build freely

upon the ideas and expressions conveyed by a work." Id. at 350.

93. Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 548 (1985). The court
in Vault v. Quaid directs this underlying policy toward computer technology: "After

acknowledging the importance of balancing the interest of proprietors in obtaining 'reasonable

protection' against the risks of 'unduly burdening users of programs and the general public' . . .

[CONTU] recommended the repeal of section 117... and the enactment of a new section 1 17 which

would proscribe the unauthorized copying of computer programs but permit a 'rightful possessor'

of a program to make or authorize the making of another copy . . . ." Vault Corp. v. Quaid Software

Ltd., 847 F.2d 255, 259-60 (5th Cir. 1988) (footnotes omitted).

94. Harper & Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195, 202 (2d Cir. 1983).
95. CONTU Report, supra note 58, at 38 n. 1 59 (citing REPORT TO THE PRESIDENT OF THE

United States on National Information Policy 70 (1976)).

96. CONTU Report, supra note 58, at 38. The report encourages the registration of the
compilation work so as to make the public aware of these works and gain access to its useful

information.

97. Kemp, supra note 52, at 89.

98. Id

99. The lower court in ProCD left the database unprotected: "the Select Phone^"^ listings

themselves are uncopyrightable." ProCD, Inc. v. Zeidenberg, 908 F. Supp. 640, 647 (W.D. Wis.

1996), overruled by ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (also finding

database uncopyrightable pursuant to Feist.).



1 56 INDIANA LAW REVIEW [Vol. 3 1 : 143

both to the developer and the public. '*^° Without database protection, the

developer might be discouraged from compiling comprehensive repositories of

information—^to the detriment of the public. The reduction in the available
repositories would negatively impact the "Progress of Science and useful
Arts."'°' Therefore, the balance should be restored in line with the policies set

forth by the courts, Congress and the Constitution.

III. The State of Database Protection under Copyright Law

Copyright protection for databases has weakened. The Supreme Court's
decision in Feist eroded database protection when it refuted the "sweat of the
brow" theory. '°^ Even though the Seventh Circuit in ProCD ultimately protected
the database, the court did so outside the confines of copyright law.'°^ Database

developers have relied upon state contract law to protect their valuable

investment and, in the Seventh Circuit at least, this reliance was well placed.
Ironically, the same result could have been reached in Feist without

eliminating the "sweat of the brow" theory. The Court could have applied the
fair use doctrine—a long standing judicially-created device to protect both
creators and users of copyrighted works. '^"^ Feist Publications copied a nominal

amount of data from the Rural directory to supplement Feist's area-wide
directory. ^°^ This would constitute a fair use because "[t]he only material Feist
took from Rural' s white pages were raw facts which were themselves

uncopyrightable .... [M]erely using [these raw facts] as a reference work could
easily suffice as fair use under § 107 of the Copyright Act."'°^

After Feist, however, only the selection and arrangement theory remain to

protect an electronic database. ^°^ A database designer must creatively select and
arrange the data to secure copyright protection in this investment. In light of

Feist, the ProCD court, in passing, noted that the SelectPhone'^'^ database was
not copyrightable. ^^^ However, a more extensive analysis might have revealed

100. ProCD argued that "it is unfair and commercially destructive to allow [Zeidenberg] to

take the information [ProCD] assembled with a significant investment of time, effort and money

and use it for commercial purposes without paying any compensation. . . ." ProCD, 908 F. Supp.

at 646.

101. U.S. Const, art. I, sec. 8, cl. 8. See Paul J. Heald, The Vices ofOriginality, 1991 SuP.

Ct.Rev. 143, 152(1991).

102. Feist Publications, Inc. v. Rural Tele. Serv. Co., 499 U.S. 340, 349 (1991).

103. ProCD, 86 F.3d at 1455.

1 04. See supra note 75 and accompanying text.

105. Feist, 499 U.S. at 343. The Court noted that Feist only selected 1 309 listings (four of

which were dummy listings) of Rural's 7700 listings. Id. at 343-44. This constituted seventeen

percent of Rural's factual listing.

1 06. Heald, supra note 99, at 1 47 (footnotes omitted).

107. See Feist, 499 U.S. at 362 and supra note 25 and accompanying text.

108. ProCD, 86 F.3d at 1449. Presumably, the court did not pursue this analysis as the Feist

decision found that white pages were uncopyrightable because they lacked the requisite originality



1998] DATABASE PROTECTION 157

that SelectPhone^^ could have been protected under the "selection" and

"arrangement" criteria which Feist upheld. '^^ The court alludes to such
protection: "[w]e may assume that this database cannot be copyrighted, although
it is more complex, contains more information (nine-digit zip codes and census
industrial codes), is organized differently, and therefore is more original than the

single alphabetical directory at issue in [Feisty
'^^^

The selection and
arrangement of the ProCD database met the "modicum of creativity" required to
find originality in the work.*'^ Assuming originality in the database, the court

might have found that Zeidenberg copied a substantial amount of the database

arrangement, thereby infringing ProCD's copyright.* ^^ However, instead of

copyright, the ProCD court protected the database through a shrinkwrap
license—contract law."^

A competitive database requires the developer to provide an all-inclusive
repository of information. In turn, the enduser "selects" only that information

pertinent to his research. A comprehensive database therefore, penalizes the
developer because the selection element is not met due to the all-inclusiveness

of the data. Although the arrangement of the database qualifies the work for

copyright protection, extensive protection of the entire database—^the facts—is
lacking. Only the arrangement is protected and not the data comprising the

database. A competitor can then take the data by simply "rearranging" the facts
in a new compilation.**"* Yet, this is the very thing the database vendor seeks to
protect—^the electronic compilation of facts; therein resides the company's
exhaustive and expensive research.

To protect electronic databases from misappropriation, the facts need
protection.**^ However, "[t]he most fundamental axiom of copyright law is that

required by the Constitution. Feist, 499 U.S. at 362-63. The ProCD database represents an

electronic version of the white pages.

109. Feist, 499 U.S. at 362. Some commentators have asserted that electronic databases

would still benefit from copyright protection as the arrangement of the database would sufficiently

satisfy the originality requirement for copyrighted compilations. See, e.g., Litman, supra note 30,

at 609 ("Unlike white pages directories, computer databases are surely sufficiently original to merit

copyright protection"); Lewis, supra note 64, at 205 ("The selection theory is well-suited for

electronic data bases because it reflects the intrinsic value of databases and the selection process

used to create and update data bases."). But see Hayden, supra note 30, at 219 (author asserts the

Feist standard of selection and arrangement is difficult to apply to computer databases given their

comprehensiveness in data selection).

1 10. ProCD, 86 F.3d at 1449 (emphasis added).

111. /^mr, 499 U.S. at 346.

112. Zeidenberg copied the entire SelectPhone^"^ database to the Internet for his customers

to access. ProCD, 86 F.3d at 1450. This would constitute the copying of the arrangement, hence,

the creativity of ProCD developers.

113. ProCD, 86 F.3d at 1449.

1 14. Litman, supra note 30, at 609. "[A] competitor would be infringing no copyright if it

simply stole the data and left the base." Id. (footnote omitted).

1 1 5. Professor Ginsburg characterizes comprehensive databases as "low authorship works."



158 INDIANA LAW REVIEW [Vol. 3 1 : 143

'[n]o author may copyright his ideas or the facts he narrates.'"''^ However, the
lack of protection for these facts within an electronic database may lead to low
incentives for creating beneficial works."^ In the end, the public suffers.

Therefore, the goal of copyright reform for compilations should center around

"maximiz[ing] public welfare through a coherent system of incentives."^
^^

The goal of the Copyright Act and the Copyright Clause seeks to "promote"
the creation of works. Feist, by eroding database protection, discourages the

creation of such useful tools. "^ The technology industry has therefore attempted
to strengthen database protection through other avenues—^the shrinkwrap license.
Fortunately, for ProCD, a sympathetic court enforced ProCD's shrinkwrap
license resulting in an exclusive right to the database. Such exclusive rights,

while protecting the developer (creator), interfere with the rights of endusers.

Shrinkwrap licenses and other methods of database protection have emerged as
a result of eroding copyright protection for databases. However, alternative

methods must continue to honor the underlying policy of the Constitution: the
promotion of "Science and useful Arts."

IV. An Analysis of Various Efforts to Reform Database Protection

A. Shrinkwrap Licenses and the Copyright Act

Prior to the 1980 Copyright amendment, copyright protection for software

programs was as uncertain as database protection is today. To advance an

Low authorship works are "personality-deprived information compilations such as directories,

indexes and data bases [sic]." Jane C. Ginsburg, Creation and Commercial Value: Copyright

Protection of Works ofInformation, 90 COLUM. L. REV. 1865, 1866 (1990).

1 1 6. Feist, 499 U.S. at 344 (citing Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S.
539,556(1985).

1 1 7. See generally Robert C. Denicola, Copyright in Collections ofFacts: A Theoryfor the

Protection ofNonfiction Literary Works, 81 COLUM. L. REV. 516 (1981) (contending that low

protection leads to low incentives which would deplete the level of works available to the public

and therefore advocates rewarding industrious efforts in compiling low authorship works);

Ginsburg, supra note 1 13 (concluding that the lack of protection of low authorship works would

lead to low incentive to create such works and therefore less variety of low authorship works). But

see Litman, supra note 30, at 646 (Professor Litman rejects statutory provisions which protect facts

within compilations. She argues that the only "legitimate justification for conferring statutory

protection on facts is ensuring that public access to factual compilations is enhanced."); Raymond

T. Nimmer, Information Age in Law: New Frontiers in Property and Contract, 68 N.Y. St. B. J.

28 (1996) (the author recognizes that "[a] balance must exist between private control . . . and public

access or use"); L. Ray Patterson & Craig Joyce, Monopolizing the Law: ^The Scope ofCopyright
Protectionfor Law Reports and Statutory Compilations, 36 UCLA L. Rev. 719 (1989) (contending
that low authorship works are overprotected allowing public domain materials to be monopolized

by authors who compile facts).

1 1 8. Heald, supra note 99, at 1 54.

1 19. See generally Ginsburg, supra note 113; Heald, supra note 99.



1 998] DATABASE PROTECTION 1 59

appearance of protection, the software industry developed the "shrinkwrap

license."'^^ Under a shrinkwrap license, for example, an enduser agrees to use
the software on his system only and to refrain from copying the software.'^' Such

licenses projected the image of copyright protection in the electronic work.'^^

1. Case Law Interpretations of Shrinkwrap Licenses.—Recognizing the
limitations of copyright law, ProCD protected its database through the use of a
shrinkwrap license. ^^^ ProCD included an electronic shrinkwrap license to which
Zeidenberg assented before using the database application. ^^"^ While the district
court in ProCD followed judicial precedent in holding the shrinkwrap license
unenforceable,'^^ the Seventh Circuit reversed this holding and further held that

the shrinkwrap license was not preempted by the federal Copyright Act.'^^
Only three lower courts have addressed the enforceability of shrinkwrap

licenses. '^^ In a battle of the forms case, the Third Circuit held that a shrinkwrap

license may not modify the terms of a previous contract. Thus, as a matter of
contract law, the shrinkwrap license was unenforceable.'^^ Similarly, in Arizona
Retail Systems, Inc. v. The Software Link, Inc., a district court held the

shrinkwrap license unenforceable because its terms included "additional terms"

which "materially altered" the contract without the express acceptance of the
party.'^^ In 1988, the Fifth Circuit concluded that a shrinkwrap license, although

120. These licenses are sometimes referred to as "box top" licenses but serve the same

purpose as shrinkwrap licenses.

121. Some commentators classify shrinkwrap licenses as "contracts of adhesion" because they

"deprive the purchaser of important rights which he has not relinquished voluntarily." Page M.

Kaufman, Note, The Enforceability ofState "Shrink-Wrap" License Statutes in Light o/ Vault

Corp. V. Quaid Software, Ltd., 74 CORNELL L. Rev. 222, 235 (1988).

122. Today, an electronic version of the shrinkwrap license has evolved where the vendor

creates a separate "licensing" screen which informs the user of the license to which the user much

assent before using the product. See, e.g., ProCD, 86 F.3d at 1450.

123. ProCD, Inc. v. Zeidenberg, 908 F. Supp. 640, 650 (W.D. Wis. 1996). "Before

marketing SelectPhone^"^, plaintiff recognized the potential limitations of copyright law and

included an agreement in the software package that sought to impose limitations concerning the

distribution and use of the telephone listings." Id.

124. This electronic license was duplicated in detail in the user manual. ProCD, 86 F.3d at

1450.

125. ProCD, 908 F. Supp. at 644. The district court held that the shrinkwrap license was

unenforceable and preempted by copyright law. Id.

126. ProCD, 86 F.3d at 1455.

127. See Step-Saver Data Sys., Inc. v. Wyse Tech., 939 F.2d 91 (3d Cir. 1991); Vault Corp.

V. Quaid Software, Ltd., 847 F.2d 255 (5th Cir. 1988); Arizona Retail Sys., Inc. v. The Software

Link, Inc., 831 F. Supp. 759 (D. Ariz. 1993).

128. Step-Saver, 939 F.2d at 105. The court applied U.C.C. § 2-207 to determine that

disclaimers of warranty and liability (contained in the license) between a software developer and

a value-added retailer were additions to the contract which materially altered the agreement and

therefore could not be incorporated in the contract. Id.

129. Arizona Retail, 831 F. Supp. at 764-66. This case opened the shrinkwrap license door



160 INDIANA LAW REVIEW [Vol. 3 1 : 143

compliant with the state's Software License Act, was preempted by federal
copyright law and therefore unenforceable.

^^°

Notwithstanding prior decisions, the Seventh Circuit broke new ground by
enforcing the restrictive license in ProCD}^^ Judge Easterbrook afforded ProCD
rights it did not have under copyright law.'^^ Under Feist, the court concluded

slightly by acknowledging the validity of shrinkwrap licenses when accompanied by a software

evaluation diskette. The court held that if Arizona Retail "requested an evaluation diskette and

then, by keeping the live disk, agreed to purchase the copy of [the software] that accompanied the

evaluation diskette after evaluating [the software], the license agreement applies to the initial

transaction. Under such facts, the contract was . . . formed . . . after [Arizona Retail] opened the

shrink wrap [sic] on the live version of [the software] which [Arizona Retail] had notice would

result in a contract being formed." Id. at 763.

130. Vault Corp., 847 F.2d at 270. The Software License Act limited the user's right to

reverse engineer the software. Id. at 257 n.2. See infra note 157 and accompanying text.

131. ProCD, 86 F.3d at 1450. The license in ProCD limited the use of the database

application to "non-commercial" purposes. Id. The license, which appeared on the screen when

the enduser accessed the software program, contained the following information:

The listings on this product are licensed for authorized users only. The user agreement

provides that copying o/the software and the data may be done only for individual or

personal use and that distribution, sublicense or lease of the software or the data is

prohibited. . . .[Y]ou will not make the Software or the Listings in whole or in part

available to any other user in any networked or time-shared environment, or transfer the

Listings in whole or in part to any computer other than the computer used to access the

Listings.

ProCD, Inc. v. Zeidenberg, 908 F. Supp. 640, 645 (W.D. Wis. 1996) (emphasis added).

132. "[W]hile contractual provisions can be helpful in determining the scope of a creator's

proprietary interest in software, a 'license' of computer software that is nothing more than a

disguised sale should not be enforceable as a 'back door' way of expanding the Copyright Act's

protection." Thomas Lee Hazen, Contract Principles as a Guide for Protecting Intellectual

Property Rights in Computer Software: The Limits ofCopyright Protection, the Evolving Concept

ofDerivative Works, and the Proper Limits ofLicensing Arrangements, 20 U.C. Davis L. Rev. 105,

1 12 (1986). See also Kaufman, supra note 1 19, at 224 (asserting that shrinkwrap licenses should

remain unenforceable as they "purport to grant rights that are either equivalent to or in direct

conflict with rights granted under the Copyright Act"). Another commentator suggests that

shrinkwrap licenses modify copyright law in several ways (evaluating the Vault v. Quaid licensing

agreement):

[1] [T]he license prevents the user from selling or otherwise disposing of that particular

copy of the software. This conflicts with the "first sale" doctrine in copyright law,

which (with some statutory restrictions on renting and lending in the case of computer

software) allows purchasers of a particular copy of a work to give or sell that copy to

another. [2] [T]he license prevents the user from copying, modifying, translating, or

converting the program for any purpose. This provision at least potentially conflicts

with section 1 17 of the Copyright Act .... [3] [T]he license provides that the user may

not "decompile or disassemble" the program for any purpose. This provision conflicts

with the majority rule in copyright law that users may "reverse engineer" computer



1 998] DATABASE PROTECTION 1 6

1

that ProCD did not have copyright protection in the database.'" Nonetheless, the
enforcement of the shrinkwrap license afforded ProCD exclusive rights in the
database. The court effectively (1) extended database protection by preventing
the enduser from copying the database application; (2) by-passed copyright's first

sale doctrine; (3) permitted an ambiguous acceptance of contract terms following

the purchase of a product; and, (4) ignored the doctrine of fair use.'^'*

Unlike copyright law, the shrinkwrap license prohibited the user from

copying the data contained in the database or from leasing the application.'^^ The
ProCD license prohibited the lease or other disposition of the database
application to another party which is in direct conflict with the first sale doctrine

of copyright law.'^^ Prohibiting copying of the database application may
interfere with the Copyright Act's "fair use" doctrine, especially if the database

were used for educational purposes.'" The ProCD shrinkwrap license secured
protection in the raw data whereas copyright law does not protect facts contained
in a compilation.'^^ Hence, although ProCD successfully protected the database,
it did so at the expense of the enduser' s rights—rights which copyright law
protects.

Further, the Seventh Circuit, by enforcing the shrinkwrap license, endorsed

the use of ambiguous terms for contract acceptance after the purchase of a

product. '^^ Relying on section 2-204(1) of the Uniform Commercial Code, the

court found that ProCD, as "master of the offer," displayed its license terms on

the screen and "invited" acceptance by requiring the buyer to perform a certain

act—pressing "Enter"—^before proceeding."*^ Although the buyer had notice of

programs when necessary to have access to unprotected ideas contained in those

programs.

Mark A. Lemley, Intellectual Property and Shrinkwrap Licenses, 68 S. Cal. L. Rev. 1 239, 1 246-47

(1995).

133. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1449 (7th Cir. 1996).

134. See generally id. 2A HM

.

135. ProCD, Inc. v. Zeidenberg, 908 F. Supp. 640, 645 (W.D. Wis. 1996). See supra note

132 for the pertinent text of the ProCD license agreement.

136. See 17 U.S.C. § 109(a) (1994). "The rightful owner of a copy of a copyrighted work has

the right to sell that copy, but nothing more." Hazen, supra note 130, at 112. Professor Hazen

further asserts that the computer industry relies on licensing agreements to avoid the first sale

doctrine. Id.

137. 5eel7U.S.C.§ 107(1994).

138. Harper & Row, Publishers, Inc. v. Nation Enters., 471 U.S. 539, 556 (1985).
139. Some courts have held that a shrinkwrap license is unenforceable as a matter of contract

law because the user has not assented to the terms prior to the purchase of the product. See, e.g.,

Step-Saver Data Sys., Inc. v. Wyse Tech., Inc., 939 F.2d 91 (3d Cir. 1991); Arizona Retail Sys. v.

Software Link, Inc., 831 F. Supp. 759 (D. Ariz. 1993).

140. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1452 (7th Cir. 1996). "[U.C.C] § 2-204(1)

[states that] '[a] contract for sale of goods may be made in any manner sufficient to show

agreement, including conduct by both parties which recognizes the existence of such a contract' .

. . ProCD proposed a contract that a buyer would accept by using the software after having an



162 INDIANA LAW REVIEW [Vol. 3 1 : 143

a restrictive license because the packaging displayed such a warning, the explicit

terms of the license were unknown to the buyer until he purchased the product.''^'
However, the court reasoned that "ProCD extended an opportunity to reject [the
product] if a buyer [found] the license terms unsatisfactory."'"^^ Ultimately,

Judge Easterbrook construed the U.C.C. in such a manner so as to grant
protection in the ProCD database.

2. The U.C.C. Draft and Its Interpretation of Shrinkwrap Licenses.—The
American Law Institute (ALI) along with the National Conference of
Commissioners on Uniform State Laws Committee supports Judge Easterbrook'

s

rationale in its new draft section of the Uniform Commercial Code ("U.C.C"),
section 2B-308, entitled "Mass Market Licenses."'^^ Section 2B-308 of the draft
validates shrinkwrap licenses.''*^ Pursuant to section 2B-308, if the buyer assents

to the terms in a manner prescribed by the licensor, the shrinkwrap license is
enforceable.'"*^ In ProCD, simply selecting "OK" from the screen displaying key

opportunity to read the license at leisure. This Zeidenberg did. He had no choice, because the

software splashed the license on the screen and would not let him proceed without indicating

acceptance." Id. (emphasis added).

141. /^. at 1450. It is this process which commentators find disturbing. One commentator

identifies two major problems with enforcing shrinkwrap licenses: "[1] that consideration has

passed before the license terms are placed before the user, and [2] there is an ambiguous act of

acceptance by the user to the license terms." Joel Rothstein Wolfson, Information Transactions

on the Information Superhighway: It 's Not Just Software Law Anymore, 6 No. 1 1 J. PROPRIETARY

Rts. 2 (November 1994).

142. ProCD, 86 F.3d at 1452-53. The court applied section 2-606 of the U.C.C, which

defines "acceptance of goods" as support for its reasoning. Any buyer who is dissatisfied with the

terms of the agreement "can prevent formation of the contract by returning the package, as can any

consumer who concludes that the terms of the license make the software worth less than the

purchase price." Id at 1452. See also Hill v. Gateway 200, Inc., 105 F.3d 1 147, 1 148-49 (7th Cir.

1997) (Easterbrook maintains that parties agree to all the terms of a contract "in a box" if a party

has an opportunity to accept or return the product).

1 43. Henry Beck, Uniform Commercial Code Article 2B—Licenses, 478 PLI/Pat. 1 03, 1 74
(1997) [hereinafter U.C.C. Draft]. This article contains the body of the U.C.C. Draft Article 2B

with Reporter's notes, A copy of the applicable "Mass Market Licenses" section (§ 2B-308), as of
the publication of this Note, is replicated in the Appendix. The U.C.C. Draft defines a mass market

license as follows:

a standard prepared for and used in a retail market for information which is directed to

the general public as a whole under substantially the same terms for the same

information, if the licensee is an end user and acquired the information in a transaction

under terms and in a quantity consistent with an ordinary transaction in the general retail

distribution. The term includes consumer contracts.

Id 2B-102(a)(25).

144. Id

145. Id. at 174. "[A] party adopts the terms of a mass market license if, the party agrees or

manifests assent to the mass market license before or in connection with the initial use of or access

to the information." Id. (citing § 2B-308(a)).



1998] DATABASE PROTECTION 163

license terms would have been sufficient to manifest assent under section 2B-308

rendering the shrinkwrap license enforceable.

The Drafting Committee characterizes the shrinkwrap license as a standard
from contract and, as such, the shrinkwrap license must comply with standard

procedures outlined in section 2B-307."*^ Thus, the licensee manifests assent

through his signature or conduct. The Committee defines "manifest assent" as
an opportunity to review the license agreement before assenting to the terms of

the license.'"*^ The electronic license agreement in ProCD, for example,
presented the enduser with an opportunity to review the pertinent terms of the

agreement prior to acceptance. ^"^^ This is not the only safeguard available to the

purchaser of a product with a shrinkwrap license. If a term in the license causes

undue surprise or deviates from industry standards, that term is unenforceable

regardless of consent.
^"^^

146. Id at 172 (citing § 2B-307(a)). As of the publication of this Note, section 2B-307 reads

in its entirety as follows:

(a) Except as otherwise provided in subsection (c) and Sections 2B-308 and 2B-309, a

party adopts the terms of a record, including a standard form, if the party agrees to or

manifests assent to the record before or in connection with the initial use of or access

to the information. If agreement or assent to a record does not occur by that time, but

the parties commence performance or use the information with the expectation that their

agreement will be later represented in whole or in part by a record that the party has not

yet had an opportunity to review or that has not yet been completed, a party adopts the

terms of the later record if the party agrees to or manifests assent to that record.

(b) A term adopted under subsection (a) becomes part of the contract without regard to
the knowledge or understanding of the individual term by the party assenting to the

record whether or not the part read the record.

(c) A term of a record which is unenforceable for failure to satisfy a requirement of
another provision of this article, such as a provision that expressly requires use of

conspicuous language or manifested assent to the term, is not part of the contract.

147. Id. at 174-75.

This concept adopts procedural safeguards allowing the party bound by the standard

form an opportunity to review terms and to reject the contract if the terms are not

acceptable. The two safeguards are in the concept of "opportunity to review" (see 2B-

114) and "manifests assent" (see 2B-113). Under these definitions, a party cannot

manifest assent to a form or a provision of a form unless it has had an opportunity to

review that form before being asked to react.

Id

148. ProCD V. Zeidenberg, 86 F.3d 1447, 1452 (7th Cir. 1996).

149. See U.C.C. Draft, supra note 141, at 174 (citing § 2B-308(b)(l)). Section 2B-308(b)

provides in relevant part:

[A] term does not become part of the contract if the term creates an obligation or

imposes a limitation which: (1) the party proposing the form should know would cause

an ordinary and reasonable person acquiring this type of information and receiving the



1 64 INDIANA LAW REVIEW [Vol. 3 1 : 143

Although assenting to terms in a contract before review is a significant issue

presented by shrinkwrap licenses, the most disturbing issue is its direct
interference and conflict with federal copyright law. Opponents of this provision

are concerned with diminished user's rights resulting from shrinkwrap license

enforcement. ^^° They support the addition of a provision that provides for the
abatement of any terms in the contract that are inconsistent with copyright law.^^'

Others maintain that such incorporation of copyright law into contract law is ill-

advised.'^^ These advocates mention that Copyright's preemption clause and fair

use doctrine equip the judiciary with adequate tools that can address these

concerns. '^^ However, the preemption clause and fair use doctrine were scantily
applied in ProCD affording protection that would not otherwise be afforded a
database under copyright law.

Shrinkwrap licenses are typically designed to limit the user's rights to the

database application which copyright law would permit—for example, limiting
the duplication of data within the database. Consequently, the Committee has
offered a form of database protection outside the realm of copyright law. In

ProCD, the shrinkwrap license protected the database from commercial copying
which is essentially protection against unfair competition.'^"* Database
developers are concerned with a commercial user copying their work and
developing a competing product at a lower cost. This is what shrinkwrap

licenses ultimately seek to prevent. However, the U.C.C. Draft jeopardizes the

form to refuse the license if that party knew that the license contained the particular

form . . . ."

Id.

1 50. Copyrights: ALI Votes That New UCC Provision Must Be Consistent with Copyright
Act, BNA Patent, Trademark & Copyright Law Daily, June 6, 1997, at D2 (opponents are
concerned with the ability of this provision to contract copyright rights away as well as the loss of

rights the education and library sectors enjoy under copyright law).

151. Copyright: ALI Wants Law on Information Licensing to Include Current Copyright

Statute, BNA Patent, Trademark & Copyright Law Daily, May 22, 1997, at D3. The proposed
provision provides that a "term that is inconsistent with 17 U.S.C. Section 102(b) or with the

limitations on exclusive rights contained in 17 U.S.C. Section 107-1 12 and 1 17 cannot become part

of a contract under this [Mass Marketing license] section." Id.

152. Id

153. Id

1 54. Understanding the ease at which electronic works can be copied and misappropriated,

CONTU assessed the value of unfair competition laws.
The common law doctrine of unfair competition of the misappropriation variety is based

upon the principle that one may not appropriate a competitor's skill, expenditure, and

labor. . . . While there is a small body of federal unfair competition law, it is largely

a state doctrine with the same lack of national uniformity that besets trade secrecy.

Although unfair competition may provide relief ancillary to copyright in certain

situations, its scope is not as broad, and it seems unlikely that it alone could provide

sufficient protection against the misappropriation of programs.

CONTU Report, supra note 58, at 18.



1 998] DATABASE PROTECTION 1 65

delicate balance between protecting an author's right (misappropriation) and the

public's right to access information in a work. Can traditional judicial doctrines
of fair use or copyright preemption retain the balance sought by the founders of

the Constitution?

3. An Analysis of Preemption and Shrinkwrap Licenses.—Although
shrinkwrap licenses may provide database protection under contract law, § 301
of the Copyright Act preempts such licenses. '^^ Many law review articles
support the unenforceability of shrinkwrap licenses for precisely this reason.

^^^

While some courts wrestle with the contractual implications of shrinkwrap
licenses/^^ others carefully construe the shrinkwrap license under federal

preemption. ^^^ Vault Corp. v. Quaid Software Ltd.^^^ is the most notable case
addressing the preemption issue and shrinkwrap licenses.

Vault created a copy protection program ("Prolock") designed to prevent the

unlawful copying of software by "locking" the protected software. '^^ In other

words, a software developer could use Prolock to prevent his software from being

copied. Vault sold Prolock under a shrinkwrap license which prohibited the

reverse engineering of the software.'^' Nonetheless, Quaid purchased the

software and reverse engineered the package to unlock the "locking" function.

Quaid' s product, which disabled Prolock, was sold as "Ramkey."'"

155. 5'eel7U.S.C§301 (1994).

156. See, e.g., David A. Einhorn, Box-Top Licenses and the Battle-of-the-Forms, 5

Software L.J. 401 (1992); Gary W. Hamilton and Jeffrey C. Hood, The Shrink-Wrap License—Is

It Really Necessary?, 10 No. 8 COMPUTER LAW. 16 (1993); Hazen, supra note 130; David A. Rice,

Public Goods, Private Contract and Public Policy: Federal Preemption of Software License

Prohibitions Against Reverse Engineering, 53 U. PiTT. L. REV. 543 (1992); Karen Puhala, Note,

The Protection ofComputer Software Through Shrink-Wrap License Agreements, 42 WASH. & LEE
L. Rev. 1347 (1985). But see Robert W. Gomulkiewicz and Mary L. Williamson, Article: A Brief

Defense ofMass Market Software License Agreements, 11 RUTGERS COMPUTER & TECH. L.J. 335
(1996); Robert P. Merges, Intellectual Property and the Costs ofCommercial Exchange: A Review

Essay, 93 MiCH. L. REV. 1570 (1995).

1 57. See, e.g, ProCD v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996); Arizona Retail Sys., Inc.

V. The Software Link, Inc., 831 F. Supp. 759 (D. Ariz. 1993).

1 58. Vault Corp. v. Quaid Software, Ltd., 847 F.2d 255 (5th Cir. 1988).

159. Id

160. Id at 156.

161

.

Id. aX 256-57. The process of reverse engineering is complicated. Computer programs

consist of source code (COBOL, FORTRAN . . . ) which programmers are trained to understand.
The source code is translated into "object code," or machine-readable language. "Reverse

engineering, as the name implies, involves going backwards from a finished product and

determining how the program works. One method of reverse engineering involves the use of

disassemblers, which allow someone to convert object code into a form more easily read by humans

[source code]." Sega Enter. Ltd. v. Accolade, Inc., 785 F. Supp. 1392, 1394-95 (N.D. Cal. 1992),

aff'dinpart, rev'dinpart, 977 F.2d 1510 (9th Cir. 1992).

162. Vault, S47F.ld at 157.



1 66 INDIANA LAW REVIEW [Vol. 3 1 : 143

Notwithstanding its compliance with the Louisiana Software License Act,'" the

Fifth Circuit held the shrinkwrap license unenforceable because federal law

preempted this state law.'^ The court's conclusion that a state could not expand

the rights of authorship granted by the copyright law has been followed in

subsequent casesJ^^

Interestingly, Vault did not apply § 301 of the Copyright Act but relied

instead upon Supremacy Clause preemption.'^^ Section 301 ofthe Copyright Act

calls for preemption if (1) the work falls within the subject matter of copyright

as defined in §§ 102 and 103 of the Copyright Act; and (2) the state right granted

is "equivalent" to one or more rights granted by § 106 of the Copyright Act.'^^
Section 301 expressly declares Congress' intent: to preempt state law where

"equivalent" rights to copyright are extended. '^^ The court in Vault, however.

163. Id. at 268-70 (citing La. Rev. Stat. Ann. §§ 51:1961-1965 (West 1987)).

164. Id. at 270.

The provision in Louisiana's License Act, which permits a software producer to prohibit

the adaptation of its licensed computer program by decompilation or disassembly,

conflicts with the rights of computer program owners under § 1 17 and clearly 'touches

upon an area' of federal copyright law. For this reason, and the reasons set forth by the

district court, we hold that at least this provision of the Louisiana's License Act is

preempted by federal law, and thus that the restriction in Vault's license agreement

against decompilation or disassembly is unenforceable.

Id.

165. See, e.g., SQL Solutions, Inc. v. Oracle Corp., No. C-91-1079 MHP, 1991 MP, 1991
WL 626458 (N.D. Cal. Dec. 18, 1991); Wolff v. Institute of Elec. & Elecs. Eng'rs., Inc., 768 F.
Supp. 66 (S.D.N.Y. 1991).

166. Vault, 847 F.2d at 269-70 (5th Cir. 1988). Some commentators criticize the court's

reliance on the Supremacy Clause. See, e.g., Gary H. Moore & J. David Hadden, On-Line Software
Distribution: New Lifefor 'Shrink-wrap' Licenses?, 13 No. 4 COMPUTER LAW. 1, 5 (1996) (citing

Sears, Roebuck v. Stiffel Co., 376 U.S. 225, 229 (1964)) (the authors assert that the problem with

the Vault v. Quaid decision is that it is "not based on § 301 of the Copyright Act" and instead

"relied on the 1964 Supreme Court case Sears, Roebuck v. Stiffel Co. for the proposition that "when

state law touches upon the area of [patent or copyright statutes], it is 'familiar doctrine' that the

federal policy 'may not be set at naught, or its benefits denied' by the state law." Id. The authors

further assert that "[t]he existence of § 301. . . rnakes suspect Vault's reliance on patent law

preemption cases, since the Patent Act, unlike the Copyright Act, contains no such explicit pre-

emption [sic] provision." Id.).

167. See supra note 82 and accompanying text. Constitutional preemption generally permits

three types of preemption: (1) the state statute directly conflicts with a federal statute; (2) Congress

may "preempt the field;" and (3) the state law stands "as an obstacle" to Congressional objectives

and purposes. See Lemley, supra note 130, at 1269-70.

1 68. One commentator agrees that the "federal right to copy unprotected subject matter can

be contractually waived by the purchaser." D.C. Toedt, Shrinkwrap License Enforceability Issues,

453 PLI/Pat. 613, 627 (1996). However, the state law supporting such licenses, or contracts, has

the

effect of permitting the vendor to impose restrictions on the purchaser's 'federal right



1 998] DATABASE PROTECTION 1 67

applied a constitutional analysis declaring that federal copyright law preempted

the state statute and avoided basing its preemption decision on § 301 of the

Copyright Act.'^^ It is unclear as to the court's reason for applying Supremacy
Clause preemption before § 301 copyright preemption. Perhaps the court found

the breadth of § 301 copyright preemption unclear, and therefore relied on

Supremacy Clause preemption.'^° Or, in the alternative, the court believed that

the state cause of action passed the copyright preemption test and subsequently

applied Supremacy Clause preemption.^^' In either case, the courts have

consistently failed to effectively construe and rely upon § 301 copyright
preemption when analyzing the enforceability of shrinkwrap licenses.

The "equivalent right" element of Copyright preemption is the crucial
element in determining whether copyright law preempts elements in a contract

or license. ^^^ Software programs and databases are subject matter covered by the

Copyright Act; hence, it is this second element of copyright preemption which

consumes most ofthe analysis when determining copyright preemption. Nimmer
characterizes the equivalent right element as consisting of an "extra element"

test.*^^ The extra element test was applied in Harper & Row}^^ The court
required "a qualitative difference between the asserted right and the exclusive

right under the [Copyright] Act" and concluded that the state law cause of action

to copy' unprotected subject matter without clear pre-purchase post-purchase notice of

those restrictions. As a result, the state law is preempted by the Supremacy Clause as

'stand[ing] as an obstacle to the accomplishment and execution ofthe full purposes and

objectives of Congress.' ... by interfering with the federal scheme permitting the public

to copy unprotectable subject matter.

Id. at 628.

169. Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 269 (5th Cir. 1988). However, the

court concluded that Vault's shrinkwrap license, which prohibited the decompilation of the

software, directly conflicted with § 117 of the Copyright Act and therefore preempted the statute

as it "clearly 'touche[d] upon an area' of federal copyright law." Id. at 270.

170. Kemp, supra note 50, at 1 19. "However explicitly Congress provided for preemption

in section 301, the breadth of its application is in no way clear." Id.

171. IddX 96-97. "[A] state cause of action that passes the section 301 preemption doctrine

may still be subject to preemption if it conflicts with the federal purpose, under the Supremacy

Clause of the United States Constitution." Id.

172. Note that "equivalent right" captures both a broad or narrow interpretation of the right

involved. Nimmer asserts that irrespective of the created rights restriction on copyrights, "'[t]he

preemption of rights under State law is complete . . . even though the scope of exclusive rights

given the work under [Copyright Act] is narrower than the scope of common law rights in the work

might have been.'" Nimmer, § 1.01[B][1], supra note 85, at 1-1 1 (citing H.R. Rep. No. 101-514,

101st Cong. 2d Sess. 21 (1990)). Therefore, in Vault, for example, where the software developer

sought to restrict rights to its software package, such a restriction constitutes an "equivalent" right

under the Copyright Act and should be preempted.

1 73. See supra note 85 and accompanying text.

174. Harper & Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195 (2d Cir. 1983), rev 'd
on other grounds, 471 U.S. 539 (1985).



168 INDIANA LAW REVIEW [Vol. 3 1 : 143

did not "establish qualitatively different conduct on the part of the infringing

party, nor a fundamental nonequivalence between the state and federal rights

implicated."^^^

This extra element test applies to breach of contract claims such as those

asserted by vendors of shrinkwrap licenses. If the user breaches the terms of the
license, a breach of contract claim is filed and a court must establish whether
such a claim is "qualitatively" different from a claim in copyright

infringement.*^^ For example, in National Car Rental System, Inc. v. Computer
Associates International, Inc., a, software developer's licensing agreement

restricted the use of its computer programs to the processing of the purchaser's

data.*^^ The purchaser subcontracted its data processing department to a
computer consulting company. All parties agreed that the consulting company
could use the licensed software to operate the purchaser's computer systems.

*^^

The software developer asserted the purchaser made an unauthorized copy of the
programs by allowing the computer consulting company to process third-party
data.*^^ The Eighth Circuit held that the breach of contract claim was not
preempted because "the alleged contractual restriction on [the purchaser's] use

of the licensed programs constitutes an extra element in addition to the copyright

rights making this cause of action qualitatively different from an action for
copyright."*^^ Thus, National Car "stands for the proposition that a breach of
contract action is qualitatively different from a claim on copyright infringement

when the right or obligation being enforced would not exist butfor the parties

'

agreement.
''^^^

Unlike the licensing agreement in National Car, however, shrinkwrap

licenses are not negotiated contracts. Under a shrinkwrap license, the parties do

175. Mat 201.
176. See supra note 86 and accompanying text. Courts have wrestled with this application

in breach of contract claims. See Wolff v, Inst, of Elec. & Elecs. Eng'rs, Inc., 768 F. Supp. 66
(S.D.N.Y. 1991) (holding that where the act which caused the breach of contract is the same act

which would trigger a claim in copyright infringement, the breach of contract claim is preempted).

5m/ 5e^ National Car Rental Sys., Inc. v. Computer Assoc. Int'l, Inc.. 991 F.2d 426 (8th Cir. 1993)

(reversing the district courts' finding of preemption).

177. National Car, 991 F.2d at 427-28.

178. Mat 428.
179. Id.

1 80. Id. at 43 1 . The court further concluded that "the contractual restriction on use of the

programs constitutes an additional element making this cause of action not equivalent to a copyright

action." Id. at 432.

181. Maureen A. O'Rourke, Drawing the Boundary Between Copyright and Contract:

Copyright Preemption ofSoftware License Terms, 45 DukeL.J. 479, 521 (1995) (emphasis added).

Professor O'Rourke suggests that the bargaining which occurs in negotiated contracts provides the

extra element required to satisfy the "equivalent" rights test of § 301. Id. at 522. Yet, as far as

standard form contracts are concerned, as the U.C.C. Draft indicates, the mutual assent through

conduct may also constitute the extra element necessary to avoid preemption. Id. at 530-31; see

also U.C.C. Draft, supra note 141, at § 2B-308.



1 998] DATABASE PROTECTION 1 69

not confer and come to an agreement on the terms of the contract limiting usage
rights. Thus, this lack of negotiation, or bargaining, does not satisfy the extra

element test as applied in National Car. Therefore, the extra element of "party

agreement," established in National Car, forecloses similar application to

shrinkwrap licenses.
^^^

Instead, Judge Easterbrook considered and relied upon market conditions to
determine shrinkwrap license enforceability under the rubric of a § 301

preemption analysis.'^^ ProCD asserted that contracts of "private ordering" were
"essential to the efficient functioning ofmarkets."'^"^ Easterbrook focused on the

value of ProCD's database to the marketplace and described the theory and
justification of price discrimination between commercial and non-commercial

products.^^^ Yet, unlike Vault v. Quaid, which omitted a section 301 "equivalent

rights" analysis. Judge Easterbrook applied the equivalent rights test in his

preemption analysis. The court in ProCD held that rights created by contract,
presumably even if not negotiated, are not "equivalent to any of the exclusive

rights within the general scope of copyright."'^^

Copyright law forbids duplication, public performance, and so on, unless

the person wishing to copy or perform the work gets permission; silence
means a ban on copying. A copyright is a right against the world.
Contracts, by contrast, generally affect only their parties; strangers may
do as they please, so contracts do not create "exclusive rights."

Someone who found a copy of SelectPhone''"'^ on the street would not be
affected by the shrinkwrap license—^though the federal copyright laws
of their own force would limit the finder's ability to copy or transmit the
application program.

'^^

The Seventh Circuit did not apply the extra element test, but instead
compared copyright preemption to another federal preemption clause involving

airline carriers.'^^ The court borrowed the reasoning in American Airlines, Inc.
V. Wolens which concluded that "[t]erms and conditions offered by contract

182. O'Rourke, supra note 179, at 522-23. Yet, when such limiting provisions are found

in non-negotiated, standard form licenses, such as shrinkwrap licenses, "the argument for

nonpreemption of breach of contract actions is more tenuous." However, Professor O'Rourke

concedes that in either case, the court should "make a deeper inquiry into market conditions before

making the preemption decision." Id.

183. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1449-50 (7th Cir. 1996).

184. Mat 1455.
185. Id. at 1449-50. Judge Easterbrook likened computer purchases to insurance purchases,

airline ticket purchases and concert ticket purchases characterizing them as "[t]ransaction[s] . . .

[where the] money precedes the communication of detailed terms." Id. at 1451.

186. Mat 1455.
187. Mat 1454.
188. Id (quoting 49 U.S.C. App. §1305(a)(l) (1988)) ("[This] federal statute preempts any

state 'law, rule, regulation, standard, or other provision . . . relating to rates, routes, or services of

any air carrier.").



1 70 INDIANA LAW REVIEW [Vol. 3 1 : 1 43

reflect private ordering, essential to the efficient functioning of markets."^^^

Under this reasoning, a shrinkwrap license may reflect "private ordering" and
should prevail over national directives in order to support efficient marketing

systems. However, the court refined its ruling, maintaining that merely because

a claim might fall under the auspices of a "contract," it did not automatically

avoid § 301 preemption analysis.
'^° Some contracts could interfere with the

national objectives of copyright law,'^^ but in ProCD, the shrinkwrap license did
not interfere with copyright objectives.^'^ "[W]hether a particular license is

generous or restrictive, a simple two-party contract is not 'equivalent to any of

the exclusive rights within the general scope of copyright' and therefore may be
enforced."'"'

ProCD marks a new era of shrinkwrap license enforcement. Certainly, this
decision follows the course which the U.C.C. Drafting Committee has charted.'""^

The court's rational, however, tends to interfere with copyright policy. When a
shrinkwrap license grants or restricts rights which affect the public domain,

copyright law should prevail.'"^ A court should assess the effect shrinkwrap
license enforcement has upon the balance between the author's right and the

public's right to access information.'"^ As such, the U.C.C. Drafting Committee
should also recognize this balance and invalidate a shrinkwrap license if it

purports to afford or restrict rights "equivalent" to the Copyright Act.'"^

The shrinkwrap license serves as a crutch to database protection. The
database developer seeks to protect against a commercial invasion of the work

189. Id at 1455 (quoting American Airlines, Inc. v. Wolens, 1 15 S. Ct. 817, 824-25 (1995)).

190. Id. The court pointed to Wolens and National Car for support in this conclusion:

"National Car Rental likewise recognizes the possibility that some applications of the law of

contract could interfere with the attainment of national objectives and therefore come within the

domain of § 301(a)." Id

191. Id. The court's comparative analysis found that § 301(a) and § 1305(a)(1) provide a

similar function: they "preventQ states from substituting their own regulatory systems for those of

the national government." Id.

192. Id

193. Id

194. The next version of the U.C.C. Draft is sure to cite to the ProCD decision in its

Reporter's Notes section to support the Committee's position of the viability and enforceability of

shrinkwrap licenses.

195. 17 U.S.C. §301(1994).

196. See Lemley, supra note 130. The author contends that the federal intellectual property

law is "sufficiently comprehensive" and "that no two parties should be allowed to alter or avoid

some aspect of intellectual property law where the result is to disadvantage others who are not a

party to the contract." Id. at 1291.

197. Id. The author recommends a limitation for the U.C.C. Draft Mass Market License

Section 2B-308: "a term does not become part of the license if the term . . . creates an obligation

or imposes a limitation on the licensee that is inconsistent with federal intellectual property law, or

that deprives the licensee of a right or privilege granted the licensee under federal intellectual

property law." Id. at 1292.



1 998] DATABASE PROTECTION 1 7

1

which would lower development costs of the subsequent developer.'^^ In
essence, the database developer seeks an unfair competition law to protect the

initial investment. The shrinkwrap license presumably serves as this protection.
However, while it may protect the developer from commercial exploitation, it
also limits endusers' rights—a non-commercial user.

What is actually sought is the protection of the first compiler's
information

—

a "compulsory license."*^^ A compulsory license could provide the
"appropriate balance[] between securing the commercial value of low authorship

compilations on the one hand and promoting creation of and access to a wide

variety of informational works on the other."^°° Under a compulsory licensing
scheme, the subsequent developer, seeking to use the initial developer's work,

would request a license from the initial developer prior to using any information

in the initial developer's database. The subsequent developer would pay a fee
to the initial developer to use the information. Such a licensing scheme would
provide sufficient protection to the database developer with significant

investment in data compilation yet still afford the public access to derivative

databases.^^'

Without assurance that the database is protected by copyright law or

shrinkwrap licenses, the database developer might be reluctant to create

comprehensive works.^^^ This conflicts with the policy of motivating authors to

198. Hayden, supra note 30, at 240. "A developer's real concern is that a competitor will

take the product of his efforts and use it to develop a competing product that, because of its reduced

development costs, can be sold at a much lower price. Expansive protection . . . would simply

prevent unjust enrichment by subsequent developers." Id.

199. Ginsburg, supra note 1 13, at 1917. Professor Ginsburg advocates amending copyright

law to "recognize the first compiler's rights over derivative versions of informational works, but

would qualify those rights by compelling information providers to license rights to produce

derivative compilations." Id. at 1916.

200. Id. Professor Ginsburg provides the rationale for compulsory licensing supporting the

balance between incentives and public access through an example of a database:

Maximum incentives might be afforded to data collection were the first gatherer of the

dataset to receive exclusive control over any recombinations that might be made of

information contained within the compilation; nonetheless, vesting this control in a

single compiler would cut off public access to new informational works that could be

generated from the data, but that the compiler declines to license. It is not a sufficient

answer to reply that, once the copyright expires, anyone may freely revise the data;

seventy-five years is a long time to suspend the public interest in the new combinations

of gathered information.

201. Id

202. Robert Gorman, Copyright Protectionfor the Collection and Representation ofFacts,

76 Harv. L. Rev. 1569 (1962); Heald, supra note 99, at 152 (citing William M. Landes & Richard
A. Posner, An Economic Analysis ofCopyright Law, 1 8 J. LEGAL STUD. 325 ( 1 989); Jessica Litman,

The Public Domain, 39 EMORY L.J. 965 (1990); Ginsburg, supra note 1 13); John S. Wiley Jr.,
Copyright at the School ofPatent, 58 U. Chi. L. Rev. 1 19 (1991).



1 72 INDIANA LAW REVIEW [Vol. 3 1 : 143

create works for the public good.^°^ Thus, where does the database developer
turn to get the assurance needed to motivate her to create databases the public

seeks and which ultimately "promote the Progress of Science and useful Arts"?^^

B. In Search ofa Sui Generis Rightfor Database Protection

1. An International Solution to the Database Protection Dilemma.—
Database protection through shrinkwrap licenses leaves the developer exposed

to potential copyright preemption.^°^ Although the Seventh Circuit enforced a

shrinkwrap license, if the other courts followed suit, the United States would be
among the few countries in the Western world enforcing such licenses?^^ Other
countries either directly refuse to enforce shrinkwrap licenses or place

restrictions on the effect of such licenses.^°^ However, restrictions lend

themselves to uncertain database protection as well—^the precise dilemma we
face today. Hence, the database developer maintains limited legal protection.

To improve database protection, some advocate the creation of a sui generis
right.2'«

To encourage investment in database development, the European Community
(EC) recently adopted the EC Database Directive creating a sui generis right
protecting a database from "unauthorized extraction or re-utilization" of database

contents.^°^ This directive creates a protective right outside the realm of member

203. Heald, supra note 99, at 1 52-55.

204. U.S. Const, art. I, § 8, cl. 8.

205. But c.f. ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996) (court enforces

shrinkwrap license and holds copyright preemption does not prevail).

206. See Lemley, supra note 130, at 1253 n.54. The author asserts that only five countries

enforce shrinkwrap licenses: Austria, Dominican Republic, Hong Kong, Korea, and Malaysia. Id.

207. Id. at 1253 n.53. Some of these foreign countries will enforce shrinkwrap licenses if

certain conditions are met. Id.

208. For articles supporting the creation of sui generis right for database protection, see

generally, Gross, note 52 (author argues that there is a need for sui generis legislation for software

programs); Hayden, supra note 30 (argues current copyright law is ineffective for database

protection and asserts that a sui generis right for such protection is necessary); Howell, supra note

68 (author supports development of supplemental legislation to protect databases against piracy;

supports specifically the passage of the legislation which criminalizes piracy: the proposed

Criminal Copyright Improvement Act of 1995); Teddy C. Kim, Note, Taming the Electronic

Frontier: Software Copyright Protection in the Wake ©/"United States v. Lamacchia, 80 MiNN. L.

Rev. 1255 (1996) (arguing that criminal sanctions for piracy is "unworkable and undesirable" and

that Congress should revise the current Copyright Act in order to protect digital technologies). But

see Ginsburg, supra note 1 13 (Professor Ginsburg advocates the amendment of the Copyright Act

in support of compulsory licensing for derivative works); Litman, supra note 30 (author is leery of

advancing the need for a sui generis right under the Commerce Clause for protection of facts as it

would potentially limit public access to this information).

209. Paul Durdik, Ancient Debate, New Technology: The European Community Moves to
Protect Computer Databases, 12 B.U. INT'L L.J. 153, 165 (1994) [hereinafter EC Database



1 998] DATABASE PROTECTION 1 73

countries' copyright law, that prevents "unfair use of database contents where

significant cost and efforts were expended to create it."^'° Under Feist, such cost

and labor-based protection does not exist for a U.S. compilation. Perhaps in

recognition of the limitations Feist imposes on U.S. technology companies, the

EC Database Directive does not reciprocate protection unless the contracting
country has similar protection for its national databases.^^^ This leaves United

States technology companies vulnerable in the European Community.

In September 1995, the European Community submitted a discussion paper
to the Committee of Experts of the World Intellectual Property Organization
("WIPO") on the sui generis right for database protection. Six months later, the
European Community submitted their proposal for "international harmonization
of the sui generis protection of databases" to WIPO.^^^ The WIPO Database
Treaty's preamble asserts that the contracting parties

[rjecognizing that databases are a vital element in the development of a

global information infrastructure and an essential tool for promoting

economic, cultural and technological advancement, [r]ecognizing that

the making of databases requires the investment ofconsiderable human,

technical andfinancial resources but that such databases can be copied
or accessed at a fraction of the cost needed to design them

independently, [and] [d]esiring to establish a new form of protection for
databases by granting rights adequate to enable the makers of databases

to recover the investment they have made in their databases and by
providing international protection in a manner as effective and uniform

as possible. . . }^^

The very preamble ofthe Database Treaty rejects Feist by resurrecting the "sweat

ofthe brow" theory as does the EC Database Directive. Article 1 of the Database
Treaty further asserts that

[the] [c]ontracting [p]arties shall protect any database that represents a

substantial investment in the collection, assembly, verification,

organization or presentation of the contents of the database. . . . The
protection granted under this Treaty shall be provided irrespective of any

Directive]. The author points to the compulsory licensing provision which the EC Database
Directive includes to avoid the monopolization of information compiled in these databases. Id. at

166.

210. Barry D. Weiss, Barbed Wires and Branding in Cyberspace: The Future ofCopyright

Protection, 450 PLI/Pat. 397, 404 (1996).

211. Id

212. Basic Proposal for the Substantive Provisions of the Treaty on Intellectual

Property in Respect of Databases to be Considered by the Diplomatic Conference, World

Intellectual Property Organization (WIPO), CRNR/DC/6, 6 (Aug. 30, 1996).

<http://www.loc.gov./copyright/wipo6.html> [hereinafter WIPO Draft Database Treaty]. The
European Community has been instrumental in the draft of the Database Treaty. Id. at 5.

213. Id. dX Preamble (emphasis added).



174 INDIANA LAW REVIEW [Vol. 3 1 : 143

protection provided for a database or its contents by copyright or by
other rights granted by Contracting Parties in their national legislation.^^"^

An additional provision ofthe Database Treaty allows "[t]he maker of a database
. . . [to] have the right to authorize or prohibit the extraction or utilization of its

contents."^^^ Thus, the very extraction of data from a database, which took
considerable human and technical resources to develop, would violate this treaty.
Yet, even WIPO recognizes the treaty's potential conflict with copyright laws.

Article 12 [of the Database Treaty] deals with the relationship between

the protection accorded under the proposed Treaty and existing or future

rights and obligations. The protection granted under the proposed Treaty
shall leave intact and shall in no way affect any "conventional" rights in
the database or its contents.^^^

The European Community has led the way in database protection reform.
Now, the United States and other countries must decide if and how they intend
to operate in the global technology industry. U.S. Internet and online service

providers oppose the support of the WIPO Database Treaty because database
protection issues have not been fully discussed domestically .^^^ Others contend

that it is premature to push an untested area of law into the international arena

without having experienced the ramifications of database protection

domestically.^'^ WIPO agreed. In December 1996, WIPO held a Diplomatic

214. Id. art. I.

215. Id.dxi. III. The term "extraction" is defined as "the permanent or temporary transfer of

all or a substantial part of the contents of a database to another medium by any means or in any

form." Id. art. II.

216. Id. art. XII (notes to Article 12). Article 12 reads:

The protection accorded under this Treaty shall be without prejudice to any other rights

in, or obligations with respect to, a database or its contents, including laws in respect

of copyright, rights related to copyright, patent, trademark, design rights, antitrust or

competition, trade secrets, data protection and privacy, access to public documents and

the law of contract.

Id

217. Copyrights: Clinton WIPO Treaty Proposals Meet with Significant Opposition, BNA
Pat., Trademark & Copyright L. Daily, Sept. 23, 1996, at D2. Senator Orrin G. Hatch:
"Congress will not wish to be in the position of having its hands tied by international developments

on the basis of proposed legislation that has stalled precisely because it contains so many

unresolved issues." Id. Professor Pamela Samuelson, professor of law and information

management at the University of California at Berkeley, contends that the "administration's

international proposals are aimed at partially preempting domestic discussion on contentious

copyright issues." Id.

218. Id. However, others have noted the EC Database Directive requires reciprocity "which

means that any producer of databases not located in a European Union country would not be given

protection unless the producer's home nation had comparable legislation in place." Id. The EC

Database Directive generally provides for Member States to enact such legislation by 1998. EC



1 998] DATABASE PROTECTION 1 75

Conference in Geneva to discuss the WIPO Database Treaty proposal.^^^ The
Conference, proved that many countries "weren't ready to address" extending
protection to the data in a database.^^° The Conference concluded that further
study of the proposed treaty was needed.^^^ Hence, even the international
community has come full circle demonstrating their uncertainty as to the best
approach for electronic database protection.

2. A U.S. Proposal for Database Protection: The Intellectual Property
Antipiracy Act.—^Amending the Copyright Act for increased database protection
may be prohibitive. Feist may have tied Congressional hands when it held that
originality was not only a statutory requirement for determining copyrightability,
but a Constitutional one as well.^^^ Although the Copyright Clause charges

Congress with "increas[ing] public welfare by providing incentives for creation,"
the decision in Feist effectively "forbids [the] protection of labor, research, or

industrious collection" thereby dampening the economic incentive to develop
commercially viable databases.^^^

One constitutional option remains. Congress can create sui generis database
protection under the Commerce Clause.^^"^ Since the Court prohibited protection
of low authorship works under the Copyright Clause, evading Feist by
resurrecting the sweat of the brow theory under the Commerce Clause might not
gather much support.^^^ The Copyright Clause mandates the protection of

Database Directive, supra note 207, at art. 32, 33. However, Member States can apply for three to

nine year delays in enacting such legislation. Id. This demonstrates some reluctance on the part

of the very countries that proposed this international treaty evidencing uncertainty as to the best

method of database reform.

219. Copyright Accords GuardAgainst Software Piracy, WALL ST. J., Dec. 23, 1996, at B6.
220. Id

221

.

Lehman Calls WIPO Conference a Success; Attention now Turns to Treaty Ratification,

BNA Patent, Trademark «& Copyright Law Daily, Jan. 22, 1997, at D2. In asserting the need
to further study database protection, Lehman noted that "it took six years to study the copyright

treaties." Id.

111. Feist Publications, Inc. v. Rural Tele. Serv. Co., Inc., 499 U.S. 340, 351 (1991).

Professor Heald suggests that "the familiar white pages are unprotected and Congress apparently

can do nothing to render them protectable short of initiating a constitutional amendment." Heald,

supra note 99, at 144.

223. Id. at 158. Professor Heald further contends that the Supreme Court in Feist clearly

"locks Congress into . . . [providing] virtually no protection . . . [for] labor and research because

the cost of such protection is simply too high." Id. at 159.

224. Id. at 168. Should Congress respond to Feist by protecting works through a "sweat of

the brow" theory, Congress would have to "enact a broader unfair competition statute prohibiting

the copying of any 'industrious collection.'" Id.

115. Id. at 175. Professor Heald also points out that enacting such legislation under the

Commerce Clause could "pose[] serious difficulties because the Court made it clear in Feist that

such protection would directly conflict with the purpose of the [Copyright] Clause. According to

the Court, the clause not only tells us what may be protected, but what must remain in the public

domain." Id. at 172.



1 76 INDIANA LAW REVIEW [Vol. 3 1 : 143

original works of authorship; circumventing this originality requirement by
enacting legislation under the Commerce Clause may be unconstitutional.^^^

Nonetheless, in May 1996, Representative Moorhead introduced the
Database Investment and Intellectual Property Antipiracy Act of 1996 which
proposed an amendment to Title 15 of the United States Code.^^^ The Database
Investment Act prohibited the "extract[ion], use or reuse of all or a substantial

part . . . of the contents of a database . . . that conflicts with the database owner's

normal exploitation of the database or adversely affects the actual or potential

market for the database. . . ."^^^ The Act further proscribed the use of the
extracted data in a market which "directly or indirectly" competed in the market

from which the data was extracted.^^^ This act also provided an abridged version
of fair use: "a lawful user of a database made available to the public or placed
in commercial use is not prohibited from extracting, using or reusing

insubstantial parts of its contents, qualitatively or quantitatively, for any purposes

whatsoever."^^^ A limiting aspect of this section concerns the lack of fair use
rights to libraries or the educational community.^^* The boldest provision,
however, appears in section three of the Database Investment Act.

A database is subject to the Act if it is the result of a qualitatively or
quantitatively substantial investment ofhuman, technical, financial or

other resources in the collection, assembly, verification, organization or

presentation of the database contents, and (i) the database is used or

reused in commerce; or (ii) the database owner intends to use or reuse

the database in commerce.^^^

This adaptation advocated the protection of databases as a result of "industrious

collection" in direct contravention to the Feist decision.^"

226. Professor Heald analogizes such action under the Bankruptcy Clause. In 1 980, Congress

attempted to protect "employees of the bankrupt . . . Rock Island estate, and not [extend such

protection] to other railroad bankruptcies" which violated the "uniform" requirement of the

Bankruptcy Clause. A unanimous Court responded that Congress could not enact such legislation
under the Commerce Clause to bypass the Bankruptcy Clause's requirement of uniformity. Id.

111. H.R. 3531, 104th Cong., 2d Sess. (1996) [hereinafter Database Investment Act]. This

bill is also available on the Internet at gopher://wgate.house.gov. The official title of this bill reads:

A bill to amend title 15, United States Code, to promote investment and prevent intellectual
property piracy with respect to databases.

228. Database Investment Act, supra note 225, at § 4(a)(1).

229. Id. § 4(b)(1).

230. Id § 5(a).

231. See 17 U.S.C. §§ 107, 108 (1994) for fair use rights extended to libraries and the

educational community. See supra notes 75 and accompanying text.

232. Database Investment Act, supra note 225, at § 3(a) (emphasis added).

233. However, in a section entitled "Relationship to Other Laws," this act expressly

acknowledged Feist, copyright law, and shrinkwrap licenses. Id. § 9.

The remedies against violations hereunder shall be without prejudice to any remedies

under any copyright that may subsist in the database, any contents of the database, or



1 998] DATABASE PROTECTION 1 77

The bill could have threatened the delicate balance of rights in the author's
work with its availability to the public. The incentive to create would prevail as
the database developer would then have assurances that the information in the

database would not be misappropriated in a commercial fashion to compete with

their database creation.^^"* However, the same Act failed to adequately protect

public access to the information in the developer's database—how much
information could a student copy for use in a research project?^^^

The Database Investment Act died on the house floor at the end of the 104th
session.^^^ The reluctance to extend protection to facts, as in Geneva, prevails in

Congress. Such a monopolistic approach to data is undesirable. Even if
Congress drafts a bill which does not threaten the balance between the rights of

the author and the availability to the public, a Constitutional question remains:

may Congress constitutionally overrule the Feist decision by enacting a statute
under the Commerce Clause? The answer remains tenuous at best.

V. An Analysis of Alternative Approaches to Database Protection

A. ALTERNATIVE I: The Shrinkwrap License

Shrinkwrap licenses perpetuate a false sense of reliance in database

protection. Shrinkwrap licenses furnish database developers with a security

blanket because they project an illusion of protection. Conversely, ProCD and
the U.C.C. Draft, which uphold shrinkwrap license enforceability, provide

additional assurances to the developer. Why then this false sense of security?
Copyright preemption. Section 301 of the Copyright Act explicitly preempts

attempts to create "equivalent" rights to copyright law.^^^

The U.C.C. Draft recognized that shrinkwrap licenses tend to expand or

restrict rights that conflict with copyright law. Consequently, the drafters are

currently debating a proposed amendment to U.C.C. 2B-308 that prevents a term
inconsistent with copyright law from becoming part of the contract.^^^

the selection, coordination or arrangement of such contents. . . . Nothing in this Act

shall restrict the rights of parties freely to enter into licenses or any other contracts with

respect to databases or their contents.

Id. § 9(a) & (b).
234. Id. § 4.

235. Id. § 5. The Database Investment Act, for example, failed to provide fair use provisions

for educational purposes. Id. Further, the Act acknowledged the "rights of parties freely to enter

into licenses or any other contracts with respect to databases or their contents." Id. § 9(b). This

is the type of legislation Professor Litman feared: protection of database rights at the expense of

the public domain. Litman, supra note 200.

236. Lisa H. Greene & Steven J. Rizzi, Database Protection Developments: Proposals Stall
in the United States and WIPO, 9 No. 1 J. PROPRIETARY Rts. 2, 5 (1997).

237. 17 U.S.C. §301(1994).

238. Copyright, supra note 149, at D3. See also Lemley, supra note 130, at 1292 (proposing

a similar amendment under an older draft of the mass market license section: "a term does not



1 78 INDIANA LAW REVIEW [Vol. 3 1 : 143

Yet, even this provision does not remedy the fundamental issue of copyright
preemption of shrinkwrap licenses. Congress explicitly included a preemption

section in the Copyright Act instead of relying solely upon the Supremacy
Clause. This further demonstrates Congress' intent to protect copyright laws

w^ithout succumbing to agreements which arbitrarily expanded an owner's rights

in a work. Therefore, when properly analyzed and applied, copyright preemption
weakens the shrinkwrap license approach as a viable solution to database
protection.

B. ALTERNATIVE II: A Sui Generis Rightfor Database Protection

A more viable alternative might include sui generis database protection under
the Commerce Clause. This option would preserve copyright policies—creating
incentives for database development while meeting public demands for access
to large repositories of information. Moreover, this option supports the assertion

that if the work would otherwise go uncreated, there is a need to protect it.^^^
Additionally, given the EC Database Directive, sucK works may go unprotected
if reciprocal protection is not provided nationally.^'*^

The issue, however, is whether Such legislation can survive judicial scrutiny.

The Commerce Clause grants to Congress the power "[t]o regulate Commerce
with foreign Nations, and among the several States. . . ."^"^^ In response to
international activities, Congress may assert its mandated right to create
legislation to "regulate Commerce with foreign Nations."^'*^ The EC Directive
calls for reciprocal legislation protecting database investments.^"*^ The EC, as
well as database developers, seek legislation which would prohibit substantial

extraction or re-use of the database. This would prevent a subsequent developer

from misappropriating the work and marketing it in a similar market thereby
adversely affecting the original developer's market potential. Without such

protection, EC technology companies will be less likely to participate in the U.S.
market while U.S. technology companies lose their viability in the global

economy. This lack of availability and access to global electronic databases also

disturbs the founders desire to provide the public with creative works to stimulate

and foster progress. Hence, it is likely that sui generis database protection,

responding to international commerce concerns, could survive judicial scrutiny.
This option provides two avenues for developing such protection: copyright

laws or the protectionary provisions under sui generis legislation. Providing two

avenues of protection to the technology industry is not a new development. For

become part of the license if the term: . . . creates an obligation or imposes a limitation on the

licensee that is inconsistent with federal intellectual property law, or that deprives the licensee of

a right or privilege granted the licensee under federal intellectual property law.").

239. Heald, supra note 99, at 152-55.

240. See supra note 209 and accompanying text.

241

.

U.S. Const, art. I, § 8, cl. 3 (the Commerce Clause).

242. Id.

243. See supra note 209 and accompanying text.



1 998] DATABASE PROTECTION 1 79

example, software vendors may opt for protection pursuant to the Copyright Act,
patent laws^"*"^ or trade secret laws.^"*^ Although providing protection across two

areas of federal law might appear unappealing, such direction has been taken in

the past and may offer a viable alternative for the future.
Congress should consider including compulsory licensing as part of this new

form of protection.^"^^ The database developer seeks the protection of his
exhaustive investment. A compulsory licensing provision could provide for
protection of the first compilation of facts, but require subsequent developers to

procure a license from the initial developer for commercial derivative

databases.^"*^ This option permits facts to remain in the public domain while

promoting the development of future works.

Additionally, the sui generis right should elaborate on fair use rights to the

work. Such a provision should extend fair use to the education and research

communities. Further, a fair use provision could provide limitations on the abuse

of database extraction. Such a provision should allow a lawful user of a

commercial database to extract or reuse insubstantial amounts of data from the

database. If the extracted data serves educational needs (e.g., library use,

classroom copies or research use), and is not used to compete commercially with

the database, such use should be deemed inconsequential. A fair use provision
is best applicable "when the objectives of the . . . system would be frustrated
rather than furthered by a finding of [misappropriation]."^"*^

Given that the recent Database Investment Act died on the House floor,
considerable study and discussion is needed to evaluate this sensitive area of law.

Congress may again need to turn to a committee to assess the needs of both the
technology industry and the general public to establish proper reform. In 1974,

Congress established CONTU to address copyright issues with respect to
technology which resulted in effective recommendations.^"*^ Perhaps it is time for

Congress to institute "CONTU 11" to address similar protectionary needs in the
database industry. Such a commission should assess the viability of developing

a new sui generis right, with elements of fair use as well as preventive measures
for commercial misappropriation. This would protect developers' rights in the
works, the public domain, and the common enduser/consumer of electronic
goods. This alternative could provide effective protection domestically and

244. See generally Wayne M. Kennard, Obtaining and Litigating Software Patents and

Protecting Software on the Internet, 444 PLI/Pat. 275 (1996).

245

.

See generally Victoria A. Cundiff, Protecting Computer Software as a Trade Secret, 444

PLI/Pat. 7(1996).

246. See Ginsburg, supra note 113, at 1925. A similar approach is advocated tlirough
amendment of the Copyright Act to allow for compulsory licensure of low authorship works. Id.

at 1927.

247. Id. at 1924-27. "The effect of compulsory license is to grant open access to the covered

material, subject to an obligation to pay the owner for the use. Compulsory licensing substitutes

compensation for control over the copyrighted work." Id. at 1925.

248. Denicola, supra note 1 15, at 524.

249. See generally CONTU Report, supra note 58.



1 80 INDIANA LAW REVIEW [Vol. 3 1 : 143

internationally without offending the fundamental principles of the Copyright
Clause. The creation of a sui generis right offers the best viable alternative to
database protection.

Conclusion

Database protection under copyright lav^ has deteriorated. Today, users seek

information that is presented in a more efficient manner; this has fueled the
demand for access to databases. Copyright law has had difficulty keeping pace.
Consequently, shrinkwrap licenses have increased as the prevalent method for
database protection. Yet, given the copyright preemption provision, such

methods are ineffective.

This Note supports the creation ofa sui generis right for database protection.
While such an approach develops and endures refinement and debate, database
developers, in the interim, will have to rely upon current copyright laws. In so
doing, developers could advocate fair use of their database to protect against

commercial inequities or misappropriation.

In repairing database protection, careful consideration should be given to the

underlying policies of copyright law that stem from the framers of the

Constitution.^^° Congress has a constitutional mandate to provide incentives to
authors to create works for the benefit of the public.^^* Moreover, reform must
effectively balance the protection of copyrighted works with the public interest.
This necessarily includes an assessment ofthis balance in a global economy. The
European Community has recognized the need and has aggressively pursued a
solution. The Executive Branch also recognizes the need to ensure better
copyright protection of online materials: "[t]he [Intellectual Property and the

National Information Infrastructure] report suggests that the Internet will not

flourish if significant protection against theft and copyright abuse is not

offered."^^^ Similarly, the database industry will not flourish if proper protection

is denied. To encourage database development, an aggressive study and resulting
legislation is needed in order to continue to further the "Progress of Science and

useful Arts."'^^

250. The framers expressly granted to Congress the power "[t]o 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." U.S. CONST, art. I, § 8, cl. 8.

251. Denicola, supra note 115, at 519. "[T]his mandate embraces a tension between

economic incentives to produce, which are provided through the recognition of exclusive rights,

and unfettered access to creative works in order to maximize dissemination and to enable past

inventiveness to serve as the foundation for future contributions." Id.

252. ProCD, Inc. v. Zeidenberg, 908 F. Supp. 640, 647 (W.D. Wise. 1996) (citing Guy

Alvarez, New Legal Issues on the Net, AM. LAW. 28, 29 (Dec. Supp. 1995)).
253. U.S. Const, art. I, § 8, cl. 8.



1 998] DATABASE PROTECTION 1 8

1

APPENDIX: U.C.C. Draft § 2B-308. Mass Market Licenses.

(a) Except as otherwise provided in section and Section 28-309, a party

adopts the terms ofa mass-market license if the party agrees or manifests

assent to the mass market license before or in connection with the initial

use of or access to the information.

(b) Terms adopted under subsection (a) include all of the terms of the
license without regard to the knowledge or understanding of individual

terms by the party assenting to the form. However, except as otherwise

provided in this section, a term does not become part of the contract if
the term creates an obligation or imposes a limitation which:

(1) the party proposing the form should know would cause an
ordinary and reasonable person acquiring this type of

information and receiving the form to refuse the license if that

party knew that the license contained the particular term; or

(2) conflicts with the previously negotiated terms of agreement.

(c) A term excluded under subsection (b) is part of the contract if the
party that did not prepare the form manifests assent to the term or if,

under the circumstances, the limitation or obligation in the term was
clearly disclosed to the party before it agreed or manifested assent to the

mass market license.

(d) A term of a mass market license which is unenforceable for failure
to satisfy a *175 requirement of another provision of this article, such as

a provision that expressly requires use of conspicuous language or

manifested assent to the term, is not part of the contract.

(e) A mass-market license must be interpreted whenever reasonable as
treating in a similar fashion all parties situated similarly without regard

to their knowledge or understanding of the terms of the record.

(f) A term that states a limitation that would be placed on the party by
copyright or patent law in the absence of the term does not within

subsection (b)(1).