Database Rights :: Laurence Kaye

DATABASE RIGHTS European Court of Justice (ECJ) delivers blow to Database owners. In a series of 4 judgments delivered in November 2004 the ECJ has taken the information industry by surprise by narrowing the scope of of the sui generis/database right for organisations like the British Horseracing Board and the Football League who generate 'downstream' licensing income from data which is a by product of their core 'upstream' activities. Background The 1997 Directive for the Legal Protection of Databases created a 'two tier' level of protection for databases copyright and the sui generis right (known as the "database right" in UK law). The threshhold for copyright protection is higher than under old-style 'sweat of the brow' UK copyright. It focuses on the originality of the database. In contrast, the sui generis right protects the database producer's investment. To qualify, the database producer has to make a 'substantial investment in either the obtaining, verification or presentation of the contents'. This investment can be qualitative or quantative. Until the ECJ decisions, it was generally thought that the database right was a 'supercharged' right for any organisation that compiles databases. In some ways, that remains true. The ECJ confirmed in these judgments that if a database qualifies for protection, the owner can control by contract all forms of exploitation of the whole or a 'substantial part' of the database. However, the ECJ has created some major gaps in protection, particularly where the creation of the database is a by-product of the owner's mainstream activities. The ECJ cases The ECJ ruled on four cases referred to it by EU national courts. Three cases involved Fixtures Marketing which, on behalf of the UK football leagues, licenses the fixture lists outside the UK. These cases concerned the use of football fixtures' data for pools betting in Finland, Sweden and Greece .The fourth was a referral by the UK Courts of the BHB v. William Hill case. This involved the use of information from the BHB database on the William Hill internet site for online betting. In all cases, the database owner alleged infringement of its sui generis right in its database by the unauthorised use of its data. The common factor in all four cases was the ECJ's ruling that the 'investment in the obtaining, verification or presentation of the contents' of the database refers to 'the resources used to seek out existing independent materials and collect them into the database and not to the resources used for the creation of such independent materials'. So in BHB's case, the ECJ decided that its investment went into the creation of the lists for racing, checking the identity of the person making the entry for the race and other information about the race and its entrants. All of this was part of its principal activity of organising horseracing and took place before the database was created. A similar line of reasoning appears in the three caes involving Fixtures Marketing. Put simply, the ECJ has decided that if a database is a by product of the database maker's principal activity, and that the investment goes into that activity and not into the gathering together of pre-existing materials, then no sui generis protection is available! There is further bad news for database owners in the BHB v. William Hill judgment. The Directive provides that repeated and systematic extraction or re-use of small ("insubstantial") parts of a database's contents can, cumulatively, amount to infringement of the sui generis right where this conflicts with the maker's legitimate interests. BHB argued that although only tiny amounts of the data in the BHB database were used each day by William Hill, it cumulatively amounted to infringement. But the ECJ decided on the facts that there was no

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possiblility that, cumulatively, William Hill could reconstitute and make available to the public the whole or a substantial part of the contents of the BHB database. William Hill did not therefore prejudice BHB's investment in the creation of the database. There is some comfort for 'upstream and downstream' database owners. The ECJ did rule that the fact that the database's creation is linked to the maker's principal activity does not, as such, preclude the creator from claiming sui generis right protection. What the maker will have to do is to show that there has been qualitative and/or quantitative investment in 'the obtaining, verification or presentation' of the contents. This will have to be independent of the resources used to create those materials. Where does this leave database owners? First, database owners will probably have to live with these decisions. There is no possiblility of further appeal in Europe. The decisions will now be referred back to the national courts (to the Court of Appeal in the BHB case) and the chances of the national courts not following the ECJ judgment are low. Second, the judgments have very specific implications for the British Horseracing and Football industries who will be studying the judgments carefully, bearing in mind the significant revenue generated from their data licensing activities. Third, all database owners need to examine their business models carefully if they generate database licensing revenue. If they are not in the 'upstream/downsteam' position of organisations like the BJB and the Football League, they can probably be more sanguine about meeting the 'substantial investment' test. But if they are, then a major re-think is required. If data licensing is a significant revenue stream, they must consider how to structure their arrangements so that there is real and demonstrable investment in the gathering, checking and presentation of the database content independent of the investment made to create that data in the first place. Laurence Kaye Laurence Kaye Solicitors © Laurence Kaye 2004 T: 01923 352 117 E: [email protected] www.laurencekaye.com http://laurencekaye.typepad.com/ This article is not intended to be exhaustive and it does not constitute or substitute legal advice, which should be sought on a case by case basis. Please feel free to copy or make available this article without modification in print or electronic form for noncommercial purposes. If you do so, please include this disclaimer and copyright wording with attribution. If you want to re-publish or make the whole or part of this article available in a commercial service or publication, please contact the author at [email protected].