Ninth Circuit Provides Valuable Guide to Obtaining Copyright Protection for Customer Data

(Experian Information Solutions, Inc. v. Nationwide Marketing Services Inc.)

Those familiar with copyright law recognize the well-established principle that facts are not eligible for copyright protection. A compilation of facts may be eligible, however, if the selection or arrangement of facts reflects the requisite originality and creativity to warrant copyright protection. In Feist Publications v. Rural Telephone Service Co., the U.S. Supreme Court considered whether a compilation of facts in the form of a directory of customer names, addresses, and telephone numbers is eligible for copyright protection; the Court ultimately determined that the directory at issue, which merely listed all of Rural’s telephone subscribers in alphabetical order, lacked sufficient originality and creativity to be copyrightable. In a recent case, however, the U.S Court of Appeals for the Ninth Circuit determined that a similar list of customers could be – and indeed was – eligible for at least some level of copyright protection.

Experian Information Solutions, Inc. v. Nationwide Marketing Services Inc. focused on what plaintiff Experian – an information services company best known for credit scores and reports – terms its “ConsumerView Database,” or “CVD.” The CVD contains more than 250 million records, each pertaining to an individual consumer, and includes hundreds of data fields, including age, income, and purchase habits. Experian licenses portions of the CVD to various marketing companies for use in connection with marketing campaigns.

Although Experian gathers its consumer addresses from publicly-available sources, according to the lawsuit it expends significant resources to ensure that the addresses are accurate, selecting only those sources that it believes have reliable data, and reviewing and examining potential new sources before adding the information contained in that source to the CVD. Experian excludes name and address pairings that it does not believe are useful to its clients, such as business addresses, or addresses of individuals in prison. Experian additionally resolves conflicts between data sources utilizing certain algorithms to determine which information is accurate, and should therefore be included in the CVD.

Experian filed a lawsuit in the U.S. District Court for the District of Arizona when its competitor, Nationwide Marketing Services (known as “Natimark”), attempted to sell Experian a data compilation that Experian determined was highly similar to its own CVD. On a motion for summary judgment, the district court determined that the allegedly-infringed portion of the CVD lacked sufficient creativity or originality to be copyrightable. Natimark could not, therefore, be liable for copyright infringement.

On appeal, the Ninth Circuit reversed the District Court’s finding that Experian’s CVD was not protected by copyright. Unlike Rural Telephone Service’s simple alphabetical list of its telephone subscribers, the Court found that Experian’s CVD displayed the requisite level of creativity and originality in the selection of addresses that were ultimately included in the database, in that Experian culled data from multiple sources, and then selected the appropriate pairing of names with addresses. However, the court ultimately affirmed the dismissal of the claim because insufficient copying had taken place to justify a finding of infringement.

The Ninth Circuit’s decision confirms that factual compilations of customer information may be entitled to copyright protection, provided sufficient creativity is exercised in the selection and/or arrangement of the underlying information. However, the protection afforded to such compilations is minimal, and covers only the selection or arrangement of the customer information, not the information itself (which a competitor is free to use). Moreover, infringement of a factual compilation will not be found unless substantially the entire compilation has been copied. Experian was ultimately unsuccessful in asserting copyright infringement against Natimark because the Ninth Circuit determined that Natimark had copied, at most, 80% of Experian’s database as opposed to a “bodily appropriation.”

A customer-facing business that has collected valuable customer data may, by adhering to the guidelines and parameters set forth in the Ninth Circuit’s opinion, be able to seek copyright protection for the selection and arrangement of customer information. However, not all businesses will be able to demonstrate sufficient creativity in their selection and arrangement of such data to be able to obtain protection. Moreover, those businesses who can may nonetheless prefer to maintain the confidentiality of customer information, a goal at odds with the publicly-available deposit copy that must be submitted with a copyright application. For those businesses, alternate methods of protection, including protecting the customer data as a trade secret, should be considered, as they may be better suited to the company’s needs.