February 2008

"It is, I think, an elementary principle of copyright law that an author has no copyright in ideas but only in his expression of them. The law of copyright does not give him any monopoly in the use of the ideas with which he deals or any property in them, even if they are original. His copyright is confined to the literary work in which he has expressed them. The ideas are public property, the literary work is his own."

Justice Thorson P. in Moreau v. St. Vincent

One of the essentials of a healthy and democratic economy is that the rules of engagement should be understandable to people whose interests are affected by them. There are two aspects of copyright law to which all software and database professionals ought to be familiar, but usually are not. First, they should know that factual data listed in an obvious structure is not covered by copyright law, no matter how much work went into collecting it. Second, they should know that under the Canadian Copyright Act, programming code is considered to be a "literary work".

This article outlines how copyright is related to source data and source code, and why this is important to both technical and business professionals in the field.

Origins and Implications of Copyright

After Johann Gutenberg invented the printing press in 1440, it became easier for people to disseminate heretical and seditious works, challenging both church and state. In order to control what was being said, Henry VIII of England in 1538 invoked royal prerogative, on questionable constitutional grounds, to establish printing patents, as a form of censorship. Then, by a royal charter in 1557, the Stationers' Company was created by the British Crown to oversee a guild system in which the right to print a book was limited to members of the guild, who were the printers and sellers of books, not the authors. The Stationers' Company charter declared:

"Know ye that we, considering and manifestly perceiving that certain seditious and heretical books rhymes and treatises are daily published and printed by divers scandalous malicious schismatical and heretical persons, not only moving our subjects and lieges to sedition and disobedience against us, our crown and dignity, but also to renew and move very great and detestable heresies against the faith and sound catholic doctrine of Holy Mother Church, and wishing to provide a suitable remedy in this behalf..."

Much has changed in 350 years, but copyright in Canada today should still be interpreted in its historical context, with attention to our own current Copyright Act, case law as it has developed through court decisions, as well as international conventions. Under Section 91(23) of the Constitution Act, 1867, the federal government was granted exclusive power to enact laws within Canada related to copyright. But Canada remained under British Copyright until 1921 when the Canadian Parliament passed its own Copyright Act. So, when the United Kingdom ratified the Berne Convention for the Protection of Literary and Artistic Works in 1887, they also ratified it on behalf of Canada. Canada only ratified the Berne Convention as a separate country in 1928. Even Canada's Copyright Act, enacted in 1921, and which came into force in 1924, was closely modelled on the English Copyright Act of 1911. It is a common experience in bilingual and multilingual settings to encounter problems of confusion when semantic meaning gets lost in translation. In this case, we find something gained in translation with the French phrase droits d'auteur, which is evidently not "droit de copier". The English word copyright refers to a straightforward economic right to make copies of a work.

This is extended in the French droits d'auteur in a way that draws upon the European continental civil law (civiliste) tradition. It holds that the right of reproduction goes beyond the simple right to make new copies of a work, to the more complex notion of protecting the integrity and paternity of the work, because it is linked to the author's reputation in society.

Droits d'auteur does not refer strictly to the dollars-and-cents linkage between an author and the creative work. Instead, the work is considered to represent something about the author, whose dignity deserves protection, although the courts have been clear that the author cannot be the judge in their own cause. The Theberge v. Galerie d'Art du Petit Champlain Inc. case provides an excellent description of these concepts.

Copyright in today's socio-economic milieu has come to take on a different purpose. In today's global digital age of peer-to-peer computing, data warehouses, mash-ups, wikis and free/libre licensing, one must also realize that the key concepts and definitions in each country remain a little different, which inevitably leaves much room for confusion. Even within our own Canadian legal context, it is challenging for database and software professionals to steer clear of misunderstanding due to the conceptual differences between the droit d'auteur continental civiliste tradition that emphasizes personal reputation, and the English copyright tradition that emphasizes artistic and literary works as articles of commerce.

In Canada, Parliament has sought to draw upon both traditions, providing a legal scenario that some would say holds true to the comment that Canadian publisher Stuart Keate made about the country in general: "in any world menu, Canada must be considered the vichyssoise of nations, it's cold, half-French, and difficult to stir." But the duality Canadian legislators have tried to accommodate is: i) a right that is centred on the reputation of the person of the author (denoted "moral right"); and, ii) a right centered on the economic role of the work as an object of commerce. Thus, in addition to having the right to assert controls and issue licenses over publishing, production, reproduction or performance of a original work in material form, in whole or in part, Canada's Act provides that the author has a right to the integrity of the work and the right, where reasonable in the circumstances, to be associated with the work as its author by name or under a pseudonym, and the right to remain anonymous.

Section 28.2(1) specifies, however, that "the author's right to the integrity of a work is infringed only if the work is, to the prejudice of the honour or reputation of the author" as a result of the work being "distorted, mutilated or otherwise modified" or "used in association with a product, service, cause or institution". In Canada, the reputation (moral) rights of an author can be waived, but not transferred through assignment or sale, whereas copyright can be sold or assigned to a person or entity other than the original author.

Implications of Copyright for Data and Database Professionals

The boundary line regarding the applicability of copyright law to data was clarified in a 1997 case at the Canadian Federal Court of Appeal ( TeleDirect Inc. v. American Business Information Inc.,). In his decision, Judge J.A. Denault explained: "Under subsection 5(1) of the (Copyright) Act, copyright subsists not in a compilation of data per se, but in an original work... the selection or arrangement of data only results in a protected compilation if the end result qualifies as an original intellectual creation". He reiterated a United States Supreme Court decision ( Feist Publications, Inc. v. Rural Telephone Service Co. Inc.) which found that listings of routine factual data, such as names, towns and telephone numbers in a telephone directory, are uncopyrightable facts, because they are not selected, coordinated, or arranged in an original way.

The Agreement on Trade-Related Aspects of Intellectual Property Rights ( TRIPS) also states: "Compilations of data or other material, whether in machine readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations shall be protected as such. Such protection, which shall not extend to the data or material itself, shall be without prejudice to any copyright subsisting in the data or material itself." Further, Subsection 2.1(2) of the Copyright Act states that the "mere fact that a work is included in a compilation does not increase, decrease or otherwise affect the protection conferred by this Act in respect of the copyright in the work". The courts have consistently found that the amount of effort required to collect and manage the information is not a criterion for copyrightability.

What does this mean for database professionals? It provides that while published financial reports are copyrightable, the generic compilation of source data behind them is not. For example, the Public Accounts of Canada report is distinguished from the Accounts of Canada maintained in the Central Financial Management and Reporting System, in the Financial Administration Act. The Accounts of Canada is a database containing records of expenditures, revenues and other payments to and from the Consolidated Revenue Fund, as well as records of assets, liabilities and reserves. In contrast, the Public Accounts is "a report...prepared by the Receiver General for each fiscal year and...laid before the House of Commons...in such form as the President of the Treasury Board and the Minister may direct". The report not only includes summary statements of financial expenditures and revenues, assets liabilities and contingencies; it also contains the opinion of the Auditor General, and additional information to communicate the financial position of the government.

Rights in the other constituent parts of a database also warrant consideration. Copyright title to generic documentation of the source data model and metadata schema may be held by an international standards body, such as the International Public Sector Accounting Standards Board.

Similarly, title to other discrete parts of the database would be determined according to what organizations the database analysts/architects worked for, their terms of employment with those organizations, and the terms of the federal contracts under which the work was performed.

From the above, it is therefore important for database professionals to consider copyright title to technical documentation of the source data model such as entity-relationship diagrams and UML (unified modeling language) diagrams, to the implemented database tables, indices and functions, and even to the data entry forms, queries, and output views. The above also suggests a way to filter out some potential copyright complications when obtaining data from other third party compilations, in order to ensure a simpler, more practical business rules scenario for one's own users. The key is to populate one's own database with flat comma separated value imports of selected pure source data.

Implications of Copyright for Source Code Professionals

Under the Copyright Act, a computer program is a literary work/oeuvre litteraire, of a type that occurs as "a set of instructions or statements, expressed, fixed, embodied or stored in any manner, that is to be used directly or indirectly in a computer in order to bring about a specific result". Similarly, the international TRIPS agreement states that "computer programs, whether in source or object code, shall be protected as literary works under the Berne Convention (1971)". Accordingly, an expression in C such as:

 #include  int main() {     std::cout << "Hello, world!
"; } 

or in Ruby:

 for i in 1..1     puts "Hello World!" end 

has the same essential characteristics, in terms of information management and intellectual rights, as the English expression in pre-formatted text such as:

 Print: ?Hello World!? 

It is important for any organization to maintain a consistent approach to written works, whether the intended readers are people or machines. Just as the text you are reading presently is also machine-readable via optical character recognition technology, the source code for the browser you are using is readable by someone fluent in the given programming language. Under the Copyright Act, they are identical.

In this light then, it does seem out-of-place to treat the acquisition of computer programming code like the acquisition of hard drives, as if one should consider stories to be similar to books. The methods of commerce applied to trade in licences for units of restricted-access software since the early 1990s have made it seem common sense for procurement professionals to treat software programs in terms of commodity units. But when one thinks of programming code composed under contract, or in-house by one's own employees, or code that is downloaded from external sources under free/libre/open license terms, it quickly becomes apparent that each of these are acquisitions of streams or compilations of information, like reports. Spending for programming code that is prepared under contract is accounted for under professional services; and when the code is written in-house, the money shows up as salaries. On the contrary, payments to vendors for unit licenses are really rental and support fees in exchange for the installation or use of that software, which is usually bundled with financial services fees and other services fees. The latter are not acquisitions of software copyright. Accounting and acquisitions policies and practices that perceive this genre of literary work as commodity units rather than as streams or compilations of information, can be misleading.

It is psychologically tempting for end-users to think they actually own a copy of software, especially when it is delivered to them on physical media. But all they have is permission from the owner(s), through a license, to have a copy of the information, and to read it or have a machine read it. People talk in a colloquial manner about owning a copy of some software that they paid a license for.

The gap between owning a license and owning a commodity becomes quickly apparent as soon as they want to give it to somebody else. Under RENT (Restrictive/Exclusive/Negotiated Title) licenses, they cannot. Under FLOW (Free/Libre/ Open Work) licenses, they can, within certain conditions. None of these licenses transfer any ownership of physical assets or intellectual rights to the copy holder.

In his Principles of Economics, Alfred Marshall observed that: "The distinction between public and private property in knowledge and organization is of greater importance than that between public and private property in material things; and partly for that reason it seems best sometimes to reckon Organization apart as a distinct agent of production." A hundred years earlier, Thomas Jefferson wrote a letter to Isaac McPherson to articulate the practical distinction between public/private property considerations in relation to intellectual versus material things:

"If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me."

Jefferson's emphasis that the possession of intellectual things can be infinitely concurrent, while the possession of material things is ultimately exclusive, even when held in common, is obviously critical to any consideration of licensing and contracting.

The confusion over whether a software application is a commodity, like a book, or information, like a story, even shows up in formal accounting rules. The Canadian Institute of Chartered Accountants and its counterpart professional bodies internationally have, for twenty years, permitted the capitalization of software spending. This means the amount spent can be depreciated in the same way that material goods can be, to reflect declining market value due to wear and tear.

Professor Charles Mulford and Jack Roberts at the Georgia Institute of Technology recently analyzed how the capitalization of software expenditure causes financial reports to significantly overstate earnings for the fiscal year in which the money is spent, and then, through amortization, to cause earnings to be understated in subsequent years.

Finding that the majority of software development companies do not capitalize software spending, and that amongst firms where it is done, the methods are arbitrary, they recommend that accounting standards bodies should revoke the provisions that permit this practice. They propose that software development costs should be returned to the pre-1980s treatment as research and development, which is expensed. Such a step "would be more closely aligned with the realities of the software industry today".

The Main Points

Copyright began as a means of censorship, but eventually became grounded in a general rights framework, which, in Canada, draws upon both British and French legal concepts. If you work with databases or software, it is important that you understand how copyright law affects your rights today, so that you can make informed licensing and contracting choices.

Database professionals should be aware that basic facts displayed in an obvious structure are not covered by copyright. However, technical documentation, implemented database tables, indices and functions, data entry forms, queries, and output views are typically covered by copyright. The application of copyright should be considered by parties to contracts involving the use of or creation of databases. Software professionals also need to pay attention to what software is. Confusion is widespread regarding whether software is a commodity or information. Misunderstanding on this point leads to a variety of errors in business judgement, that extend all the way to errors in financial reporting.

An initial overview of this paper was delivered by the author as the keynote presentation at the 2007 Annual General Meeting of the Statistical Society of Ottawa.

Recommended Resources

Chronology of Canadian Copyright Law

The Business of Sharing: Accounting for Open Source

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