7th Circuit Rules that Extraction of Public Domain Data from Copyright-Protected Database Is Not Copyright Infringement

Southeastern Wisconsin municipalities collect various data regarding properties located on their territory (address, owner’s name, the age of the property, its assessed valuation, the number and type of rooms, etc.) in order to assess the value of the properties for property-tax purposes. These data are collected by tax assessors hired by the municipalities, who visit the property and by talking to the owner and poking around the property itself to obtain the information. Assessment Technologies (“AT”) has developed and copyrighted a computer program, called “Market Drive”, for compiling these data into a searchable database. Three southeastern Wisconsin municipalities use Market Drive under a license from AT. The tax assessor hired by the municipalities types into a computer the data that he has obtained from his visit to the property, and then the Market Drive program, in conjunction with Microsoft Access, automatically allocates the data to 456 fields (categories of information) grouped into 34 master categories (tables). Several types of data relating to the property, each allocated to a different field, are grouped together in a table called “Income Valuations,” others in a table called “Residential Buildings,” etc. The data collected and inputted by the tax assessors are stored in an electronic file, the database. The municipalities’ tax officials can use various queries in Market Drive to view the data in the database.

Wiredata wanted to obtain, for use by real estate brokers, data regarding specific properties (address, owner’s name, the age of the property, etc.) from the southeastern Wisconsin municipalities in which the properties are located. Ordinarily, in accordance with Wisconsin’s “open records” law, these municipalities are required to provide the data to anyone who will pay the modest cost of copying the data onto a disk. However, the three municipalities that are licensees of AT refused Wiredata’s request. The open records law contains an exception for copyrighted materials, and these municipalities were afraid that furnishing Wiredata the requested data would violate AT’s copyright.

Wiredata sued the municipalities in Wisconsin state court in an attempt to force them to divulge the data; those suits are still pending. Alarmed by Wiredata’s actions, AT brought suit against Wiredata to stop it from demanding that the municipalities give it access to the data. AT also sought to enforce its copyright, claiming that the data cannot be extracted without infringement of its copyright or theft of its trade secrets.

The U.S. District Court for the Eastern District of Wisconsin held for AT and issued a permanent injunction on the basis of AT’s copyright claim alone, without reaching the trade secret claim. On November 25, 2003, however, the U.S. Court of Appeals for the Seventh Circuit (Judge Richard Posner writing the opinion for the three judge panel), reversed and remanded with instructions to vacate the injunction and dismiss the copyright claim, holding that extracting the data from the database incorporated does not constitute copyright infringement.

Although ruling on the ultimate issue for Wiredata, the Court first rejected Wiredata’s argument that AT’s program lacked sufficient originality to be copyrightable. It said that copyright law unlike patent law does not require substantial originality, and that it requires only enough originality to enable a work to be distinguished from similar works that are in the public domain, since without some discernible distinction, it would be impossible to determine whether a subsequent work was copying a copyrighted work or a public-domain work. The court found that Market Drive satisfied this modest requirement: no other real estate assessment program arranges the data collected by the tax assessors in the 456 fields grouped into the 34 categories, and this structure is not so obvious or inevitable as to lack the minimal originality required as it would if the compilation simply listed the data in alphabetical or numerical order.

Having thus ruled that AT has a valid copyright on Market Drive, the Court held that the copyright had not been infringed. The court noted that Wiredata is not in the business of making tax assessments, which is the business for which Market Drive is designed, and that Wiredata does not want the copyrighted Market Drive compilation but only the raw data the tax assessors inputted into Market Drive – data that is not owned by AT, but that is in the public domain. The Court found that the process of extracting the raw data from the database does not involve copying Market Drive, or creating, as AT asserted, a derivative work. The Court made an analogy with Westlaw’s compilations of court opinions: Westlaw’s compilation of federal judicial opinions is copyrighted and copyrightable because it involves discretionary judgments regarding selection and arrangement, but the opinions themselves are in the public domain, so that Westlaw cannot prevent its licensees from copying the opinions themselves as distinct from the aspects of the database that are copyrightable.

In addition, the Court said that AT would lose the case even if the only way Wiredata could obtain the data would be by copying the data in the municipalities’ databases as embedded in Market Drive, so that it would be copying the compilation and not just the compiled data. The only purpose of such copying, the court held, would be to extract non-copyrighted material, which Wiredata was entitled to do under the latitude for reverse engineering established in Sega Enterprises Ltd. v. Accolade (977 F.2d 1510, 1520-28 (9th Circuit 1992)).

The Court also rejected AT’s argument that Wiredata does not need to obtain the data in digital form because they exist in an analog form, namely in the handwritten notes of the assessors, which are not covered by the Market Drive copyright. The Court said that (1) Wiredata could not possibly obtain all the data it wants, since the tax assessors no longer make handwritten notes but instead take their laptop to the site and input the information directly, and (2) AT, since it has no ownership or other legal interest in the data collected by the assessors, has no legal ground for making the acquisition of the data more costly for Wiredata.

The Court also pointed out that legislative proposals for database protection pending in Congress have no relevance because AT is not the collector of the data that go into the database, and that the terms of AT’s license with the municipalities too are irrelevant, since AT is not suing for breach of contract, which it could not, since Wiredata is not a party to those contracts.

The Courts concludes by listing four possible methods by which Wiredata can obtain the data without infringing AT’s copyright: (1) the municipalities use Market Drive to extract the data and place it in an electronic file, (2) they use Microsoft Access to create an electronic file of the data, (3) they allow programmers furnished by Wiredata to use their computers to extract the data from their databases, and (4) they copy the database file and give it to Wiredata to extract the data from.

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