A couple of weeks ago, I reported on a database publisher who successfully brought a case against a company that tried to copy the database and sell it as its own. Now there's a very similar case in a different jurisiction that reached a similar conclusion. Could the tied finally be turning for U.S. database publishers? Are they finally getting the protection they so desperetaley deserve, and need? You decide.
The facts are as follows. Health Grades develops and distributes ratings of health care providers, such as hospitals, by reviewing various sources of publicly available information and using its own proprietary methodologies to rate these providers using its “1-3-5 Star” rating system. It publishes the ratings on its website, which is accessible by anyone who first agrees to a click-through agreement. This agreement allows the licensee to view the information and to copy, store and print a single copy of material on the site so long as it is for noncommercial use only and is not re-distributed to others.
In instances where a third party wants to use the ratings for commercial use or to re-distribute the information to others, Health Grades has reached a separate agreement with the third party. The revenue from these additional license agreements are what keeps Health Grades in business.
Robert Woods Johnson University Hospital (“RWJ”) is a hospital in New Jersey whose employees accessed the Health Grades website (more then 200 times), agreed to the click-through license agreement, and copied and distributed the ratings Health Grades gave to RWJ in numerous press release and articles in violation of the terms of the license agreement.
Health Grades sued RWJ in state court for copyright and trademark infringement and for breach of contract when RWJ refused to stop copying and distributing the ratings. RWJ then filed a motion to dismiss all three claims. The case was eventually moved to the U.S. District Court for the District of Colorado where the judge rejected virtually all of defendant RWJ’s motions to dismiss.
In its motion to dismiss the copyright infringement claims RWJ argued that Health Grades ratings were facts and, therefore, not protected by copyright. The court disagreed, saying that Health Grades used proprietary methodologies to produce their ratings for each health care provider they reviewed and that these ratings were not discovered as facts are, but rather are expressions created by Health Grades. According to the court “[t]hese ratings only exist because Health Grades has selected, weighed and arranged facts it has discovered to present the collected data in a form, Health Grades' ratings and awards for specific health care providers, that can be used more effectively by the reader to make judgments about providers.”
The court also concluded that the merger doctrine did not prevents the ratings from being protected. Significantly, in reaching this conclusion, the court found that “[t]he interest in free public access to ideas is also not seriously harmed by granting copyright protection to Health Grades' healthcare provider rankings” and that “[w]ithout the financial incentive, e.g., exclusive rights, to create their own proprietary healthcare rankings, Health Grades and others in this field might ‘direct their energies elsewhere, depriving the public of their creations and impeding the advance of learning.’”
Although RWJ lost its motion to dismiss both the copyright and trademark infringement claims, RWJ’s motion to dismiss the breach of contract claims was largely successful. The court concluded that the breach of contract claim was preempted by copyright law because there was no required extra element. The court found that the fact that a contract claim requires a showing of mutual assent by the parties to reach agreement on contract terms did not constitute an extra element -- even though copyright infringement claims do not require such proof. The court also rejected Health Grades’ argument that the extra element stems from its prohibition on commercial uses, in contrast to copyright claims that apply to commercial and noncommercial uses. In both cases, the court concluded that the improper uses were all uses within the rights granted by the Copyright Act and therefore did not support the required extra element to side step preemption.
The court did not preempt the entire breach of contract claim, however. The court concluded that to the extent these claims were based on a promise not to infringe on Health Grades trademarks the claims were not preempted.