Vladimir Khodosh

Monday, 23 May 2005 12:03

Protecting your digital assets

As the Information Age evolves, computer databases continue to play a central role in the collection and dissemination of information. Database developers and owners continue to seek legal protection for their investments. Varying degrees of protection are available under copyright laws for so-called automated databases.

An automated database is a body of facts, data or other information assembled into an organized format suitable for use in a computer. The database may be considered protectable as a form of compilation, which is defined as a work formed by the collection and assembling of pre-existing materials or data that are selected, coordinated or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.

Issues routinely raised are whether the pre-existing works are sufficiently collected, assembled, coordinated or arranged to create an original work of authorship. Despite such questions and related risks, copyright registration remains the only registration system available in the United States for databases.

The deposit requirement and application filing procedure vary depending on certain characteristics of the database and on the frequency of the updates, if any. For an initial registration for a new database, a "Single Basic Registration" may be appropriate. Such registration requires a completed Form TX, the filing fee of $30 and the appropriate deposit.

Database licensing

Licensing starts with addressing issues found in other types of intellectual property licenses. A departure occurs in limiting access, copying, data use in derivative works, considerations for escrow and end-user concerns.

Payment provisions may be stated in terms of flat fees for an entire distributed database or in terms of monthly or periodic access fees or usage-based fees. Payment provisions may be tied to other variables, including total or concurrent users, bandwidth metering, per-query or per-result pricing, and other variables. Restrictions or alternative pricing may also be provided for access to data or delivery by alternative media, for example, one price for online access, another for a database compilation delivered on CD-ROM by mail.

Typical license provisions may also appear, including right of use, distribution, treatment of derivative works or commingled data and allotment of copies for testing, backup and disaster recovery purposes.

Termination provisions should also appear, addressing topics such as breach of confidentiality, unauthorized use of data or the software delivering the data, copying, distribution, reverse engineering or material breach of payment terms. The issue of access to historical data or previously downloaded data should be addressed.

Intellectual property issues should also be considered. The licensor, or its third party provider, generally should retain all rights to the data and data delivery software. Data should be characterized as a trade secret where appropriate.

Requirements for proprietary notices to follow the database, data and/or related reports should also be stated. Warranty, warranty disclaimer, limitations on liability and indemnification provisions are also typical. These provisions are often heavily negotiated, but in many cases, equity calls for the licensor to bear some responsibility for the product being licensed. Where the data is being collected from outside sources, disclaimers for accuracy, timeliness and/or noninfringement may be suitable. Software and/or data escrow should also be addressed.

Related provisions or accompanying agreements may provide further terms for maintenance, support, upgrades, revisions, consultant fees and so forth. Support terms may include tech support response times, conditions or restrictions for what types of errors fall under support, and support contact information.

Database protection and licensing continues to play an important role in the Information Age. Automated database registrations provide a mechanism for capturing data developed over periods of time, and clients can benefit from developing procedures to regularly register such information.

Database licenses should be carefully crafted to include provisions that recognize unique aspects of the database licensing.

Vladimir Khodosh is an associate in the Chicago office of Barnes & Thornburg LLP and is a member of the Intellectual Property and Business, Tax & Real Estate departments. His practice focuses primarily in technology and Internet law, and in the negotiation and drafting of patent, trademark and copyright licenses. Reach him at (312) 338-5917 or vladimir.khodosh@btlaw.com.