[Random-bits] Jamie Boyle on EU Database study

[James Love]

* the Commission found that =93The economic impact of the =93sui generis=94
right on database production is unproven.  Introduced to stimulate
the production of databases in Europe, the new instrument has had no
proven impact on the production of databases.=94

* The Commission coupled its empirical study of whether the Directive
had actually stimulated the production of new databases with another
intriguing kind of empiricism. It sent out a questionnaire to the
European database industry asking if they liked their intellectual
property right =96 a procedure with all the rigour of setting farm
policy by asking French farmers how they feel about agricultural
subsidies.

* Yet the report sometimes juxtaposes the two studies as if they were
of equivalent worth. Perhaps this method of decision-making could be
expanded to other areas. We could set communications policy by
conducting psychoanalytical interviews with state telephone companies
=96 let current incumbents=92 opinions determine what is good for the
market as a whole. =93What is your emotional relationship with your
monopoly?=94 =93I really like it!=94 =93Do you think it hurts competition?=
=94
=93Not at all!=94

* In practice, as the Commission=92s report observes, =93the ratio of
European/US database production, which was nearly 1:2 in 1996, has
become 1:3 in 2004.=94 Europe had higher protection and a smaller
market. Then it raised its level of protection, and lost even more
ground. Yet the report is oddly diffident about the possibility that
the US system is better. It also overstates the significance of an
important, but limited, European Court of Justice ruling in
curtailing the reach of the right.

*  Imagine applying these arguments to a drug trial. The patients in
the control group have done better than those given the drug, and
there is evidence that the drug might be harmful. But the drug
companies like their profits, and want to keep the drug on the
market. Though =93somewhat at odds=94 with the evidence, this is a
=93political reality.=94 Getting rid of the drug would reopen the debate
on the search for a cure. Change is costly =96 true. But what is the
purpose of a review, if the status quo is always to be preferred?

*  The European Commission has taken one important and laudable step
towards rational policy-making on database protection. Now it needs
to finish its journey.


http://news.ft.com/cms/s/99610a50-7bb2-11da-ab8e-0000779e2340.html

Comment & analysis
James Boyle: Two database cheers for the EU
By James Boyle
Published: January 2 2006

The European Commission recently did something amazing and admirable.
It conducted an empirical evaluation of whether an EU initiative was
actually doing any good.

The initiative in question was the Database Directive, which required
the creation of a broad new Community-wide =93sui generis=94 intellectual
property right over compilations of facts. The report honestly
describes this as =93a Community creation with no precedent in any
international convention.=94

Using a methodology similar to the one I described in an earlier
column on the subject (http://news.ft.com/cms/s/4cd4941e-3cab-11d9-
bb7b-00000e2511c8.html), the Commission found that =93The economic
impact of the =93sui generis=94 right on database production is
unproven.  Introduced to stimulate the production of databases in
Europe, the new instrument has had no proven impact on the production
of databases.=94

In fact, their study showed that the production of databases had
fallen to pre-Directive levels and that the US database industry,
which has no such intellectual property right, was growing faster
than the EU=92s. The gap appears to be widening. This is consistent
with the data I summarised in my earlier article, but the
Commission=92s study is more recent and, if anything, more damning.

Commission insiders hint that the study may be part of a larger =96 and
welcome =96 transformation in which a more professional and empirically-
based look is being taken at the competitive effects of intellectual
property protection. Could we be moving away from faith-based policy
in which the assumption is that the more new rights we create, the
better off we will be?

All this =96 particularly the comparison with the United States market
=96 is exactly what I called for in my earlier column. So why only two
cheers? Well, while the report is a dramatic improvement, traces of
the Commission=92s older predilection for faith-based policy and voodoo
economics still remain.

The Commission coupled its empirical study of whether the Directive
had actually stimulated the production of new databases with another
intriguing kind of empiricism. It sent out a questionnaire to the
European database industry asking if they liked their intellectual
property right =96 a procedure with all the rigour of setting farm
policy by asking French farmers how they feel about agricultural
subsidies.

Yet the report sometimes juxtaposes the two studies as if they were
of equivalent worth. Perhaps this method of decision-making could be
expanded to other areas. We could set communications policy by
conducting psychoanalytical interviews with state telephone companies
=96 let current incumbents=92 opinions determine what is good for the
market as a whole. =93What is your emotional relationship with your
monopoly?=94 =93I really like it!=94 =93Do you think it hurts competition?=
=94
=93Not at all!=94

There are also a few places where the reasoning in the report leaves
one scratching one=92s head. One goal of the database right was to help
the close the gap between the size of the European database market
and that of the US. Even before the Directive, most European
countries already gave greater protection than the US did to
compilations of fact.

The Directive raised the level still higher. The theory was that this
would help build European market share. Of course, the opposite is
also possible. Setting intellectual property rights too high can
actually stunt innovation.

In practice, as the Commission=92s report observes, =93the ratio of
European/US database production, which was nearly 1:2 in 1996, has
become 1:3 in 2004.=94 Europe had higher protection and a smaller
market. Then it raised its level of protection, and lost even more
ground. Yet the report is oddly diffident about the possibility that
the US system is better. It also overstates the significance of an
important, but limited, European Court of Justice ruling in
curtailing the reach of the right.

In its conclusion, the report offers a number of possibilities,
including repealing the Directive, amending it to limit or remove the
sui generis right while leaving the rest of the Directive in place,
and keeping the system as it is.

The first few options are easy to understand. Who would want to keep
a system when it is not increasing database production, or European
market-share and indeed might be actively harmful? But why would we
leave things as they are? The Report offers several reasons.

First, database companies want to keep the Directive. (The report
delicately notes that their =93endorsement.. is somewhat at odds with
the continued success of US publishing and database production that
thrives without... [such] protection=94 but nevertheless appears to be
=93a political reality=94.) Second, repealing the Directive would reopen
the debate on what level of protection is needed. Third, change may
be costly.

Imagine applying these arguments to a drug trial. The patients in the
control group have done better than those given the drug, and there
is evidence that the drug might be harmful. But the drug companies
like their profits, and want to keep the drug on the market. Though
=93somewhat at odds=94 with the evidence, this is a =93political reality.=
=94
Getting rid of the drug would reopen the debate on the search for a
cure. Change is costly =96 true. But what is the purpose of a review,
if the status quo is always to be preferred?

The European Commission has taken one important and laudable step
towards rational policy-making on database protection. Now it needs
to finish its journey.


---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040

"If everyone thinks the same: No one thinks."  Bill Walton