Music publishers and record companies are often asked to deliver databases of information about their catalogs to online retailers.  In many countries of the world outside of the United States, a “database right” exists in computer databases of information as a property right separate and apart from copyright.

This is particularly true in Europe (Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases) and in the UK (The Copyright and Rights in Databases Regulations of 1997).  While there have been efforts at passing a comparable statute in the U.S., there is no direct right of database protection and such rights have been found to be outside of copyright.  (See, e.g., Feist Publications, Inc., v. Rural Telephone Service Co., 499 U.S. 340 (1991), not sufficient originality in ordering of “facts” in white pages or yellow pages for copyright to attach.)

The issue of originality is key–a court would likely ask whether the decisions made by the database owner in selecting and arranging the “facts” in the database require the exercise of sufficient discretion to make the selection or arrangment of the data an original work of authorship to which copyright will attach.  If the ordering of facts is simply alphabetical or numeric, copyright is less likely to attach, but a copyright owner’s database, particularly a music publishing database, may be ordered in such a way that originality may attach and not all information in the database is necessarily public (such as song splits and payee information) or may include data that is original to the copyright owner (such as a royalty account number or particular contract terms).

When a database of catalog information is transferred to a digital retailer without restriction, there may be an issue as to whether any copyright that could be asserted over the database is somehow compromised.  It is also the case that over time the copyright owners who have licensed the retailer may have unwittingly transferred a valuable property right in the information—or the “metadata”—to what is essentially a complete snapshot of property rights in potentially millions of works with no contractual restriction on what else can be done with that database by the retailer.  

While the same database right that is available in other countries is not yet U.S. law, and while copyright may not be available for a database in all cases, the database owner may still be entitled to assert claims for trespass or unfair competition.

But most importantly for our purposes, as a condition of the license the copyright owner may require that the licensee agree to contract provisions such as an acknowledgement by the licensee of the copyright owner’s database interest as well as a confidentiality provision and other restrictions on the use, reproduction, distribution or sublicense of the database.  There is also a rational reason why the license might include a post-termination condition on the licensee to destroy the database or to maintain the confidentiality of the data (like a customer list or a trade secret).

If that contract right exists, it will be another argument against any court-ordered transfer of the copyright owner’s property right in their data or making any court-ordered transfer of data subject to the same confidentiality requirements as exist in any license at issue.

We spoke with Keith Bernstein, CEO of Royalty Review Council and Crunch Digital about this issue.

MTP:  Why would you care about the unrestricted transfer of metadata to an online retailer?

Bernstein:  If you don’t restrict what can be done with your metadata, digital retailers can possibly compile it and resell it without your knowledge, perhaps to competitors or to other databases that will also make it available.

MTP:  Why is that a problem?

Bernstein:  Aside from someone free riding on your asset?

MTP:  Well, that is a problem that they tried to get at in the European database protection statutes to let firms capture the value of these assets in a property right.  But, yes, beyond free riding.

Bernstein:  It can lead to confusion in the marketplace which can result in mistakes in payments and credits under a license.  If you control your own metadata you will have an incentive to keep it current, at least to include new acquisitions or sales. It can also allow competitors to map your metadata to other databases, such as which songs have been registered for copyright and that information can be used competitively to the disadvantage of the copyright owner.

MTP:  So there is a direct connection between the rights granted and the need for confidential treatment of the metadata and database?

Bernstein:  I think that’s pretty clearly the case.

MTP:  Does it matter which kind of digital retailer gets your metadata?  Compare a pureplay retailer with a retailer that’s part of a larger company, like a larger company that has a search engine.

Bernstein:  If the retailer also has a search engine, then there’s the immediate question of whether there’s any restriction on the retailer making your metadata available to its affiliates, like to its search engine affiliate.

MTP:  Why would that matter?

Bernstein:  Because the search engine could use it in the background to train its search algorithm to map your metadata to illegal search results from lyric sites, cyberlockers or bit torrent trackers.  Or other purposes you didn’t authorize.

MTP:  I think they call that non-display uses, like what Google is rumored to be doing with all the books it scanned before it lost the Google Books case.

Bernstein:  That sounds right, things they could be doing in the background without you ever knowing they were doing it.  They could also have a greater ability to sell keywords based on your metadata.

MTP:  In Europe, the database right also covers updates to the database.  I wonder how updates would get disseminated once the metadata is sold?

Bernstein:  They probably wouldn’t.   And then you would have people using search engines to find information that was stale.

MTP:  That sounds like a real mess.

Bernstein:  At Crunch Digital we call it “Songageddon”.

MTP:  Right.  These problems could be reduced if there was a confidentiality provision in the license.  I remember you used to see those in digital phonorecord delivery licenses starting in the late 1990s.

Bernstein:  That’s right, I remember those, too.  We still see confidentiality clauses, but sometimes it’s overlooked, and other times it’s an afterthought.

MTP:  If I recall, those clauses typically dealt with what the service could do with the information with third parties, not so much with affiliates.

Bernstein:  Times have changed.

MTP:  Wakey wakey.

Bernstein:  Songageddon.

MTP:  Right.  Something else to look forward to.  Thanks, Keith, very uplifting.

Bernstein:  It’s a good news, bad news situation.

MTP:  The price of liberty is eternal vigilance.