Whose Info Is It, Anyway?
Who owns The New York Times best-seller list? The answer may not be as simple as you think.
Last May, Amazon.com began offering steep discounts on Times best-sellers. Soon after, the Times, which has an exclusive deal with barnesandnoble.com, told Amazon it couldn't use the best-seller list without permission. In early June, Amazon sued the Times. Its argument: no one can own the fact that a particular book is selling lots of copies.
On Aug. 9, the online bookseller and the Times reached a settlement, Amazon can list the books in alphabetical order rather than by sales volume. But the deal does not settle the heart of the dispute over who owns the data itself, and that question has become Exhibit A in a larger battle on Capitol Hill.
Legislation headed for the House floor this fall could determine whether companies in the Information Age can claim property rights to any of the factoids coursing through the Internet. If they can, prices might start rising for bits of data--whether it's a stat needed by a fantasy baseball player, a court decision used by a lawyer, or a scientific nugget used by a researcher.
Old-style database and newspaper publishers are lining up behind a bill that would give them more control over the information in which they've invested heavily. But Internet portals and online brokers that often use such data to create products are working furiously against it. They contend that many simple facts might become exclusive assets of database owners. Says Peter A. Jaszi, a professor at American University's Washington College of Law: "Collectively, we all get more in the way of useful new information products if the raw materials remain available for use."
Maybe so, say database publishers, but where's the incentive to collect important information? Real-estate agents, for instance, say vast amounts of house-sale data on their Web sites can be easily lifted and posted on the pages of digital pirates. "The question is whether someone has the right to take your investment without compensating you," says Gail H. Littlejohn, vice-president of Lexis-Nexis owner Reed Elsevier PLC.
London-based Reed Elsevier and Toronto-based Thomson Corp. are spearheading the drive to protect databases. They back a bill, introduced by Representative Howard Coble (R-N.C.) of the House Judiciary Committee, that would undo a 1991 Supreme Court decision. The court held that collections of facts, such as the phone book, aren't covered by copyright laws and that a database owner is protected only if there is "creativity" in the way it arranges facts.
Coble's bill would make it illegal to copy parts of a database gathered "through the investment of substantial...resources." And the bill would forbid use of data in ways harming the database owner's market. (The McGraw-Hill Companies, owner of Standard & Poor's financial databases and BUSINESS WEEK, backs the bill.) Aggrieved companies would be able to file suit.
A coalition of libraries, universities, and Internet companies argues that the bill would cramp E-commerce by restricting their ability to reorganize data into "value-added" products such as the book reviews and reader comments that complement the Times best-seller list on Amazon. They back a bill approved by the House Commerce Committee on Aug. 5. It would ban rival companies from reselling duplicates, or near-duplicates, of existing databases. But database owners could only go to the Federal Trade Commission, not to the courts, to seek relief.
One of the hardest-fought battles is being waged over ownership of stock quotes. The New York Stock Exchange, which already charges traders for real-time quotes, says it's lobbying for the Coble bill to protect against fraudulent operators who could hack into systems and resell the information. But online brokers and financial-services companies say the bill would give the Big Board undisputed ownership of quotes. That would allow the NYSE, which plans to go public soon, to tout this huge asset to potential shareholders.
Bloomberg Financial Markets worries that exchanges could start charging for historical data, though the NYSE denies it intends to do so. And online brokers grouse that its traders, who are charged for every quote, already pay more than full-service brokers, who pay a flat fee. "No one can legitimately claim to own market data," says Carrie E. Dwyer, general counsel for Charles Schwab Corp. "Investors and broker-dealers, not exchanges, create these facts."
With so much at stake, lobbying has been intense. The NYSE invited Coble to ring the closing bell, and Charles Schwab has done some one-on-one lobbying on Capitol Hill. Odds are the battle will only get more bruising as Congress attempts to reset the property lines in cyberspace.