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DATABASE RIGHT AFTER WILLIAM HILL: DARK HORSE OR NON-STARTER?

January 2005

In November, the European Court of Justice (ECJ) delivered its first judgments on database right in the William Hill[i] and Fixtures Marketing Cases[ii]. The cases constitute a substantial narrowing of database right.

Database Directive

Database right was brought in by the EU Database Directive [iii] and implemented into UK law by the Copyright and Database Right Regulations[iv] (‘CDDR’). ‘Database’ is defined as a collection of independent works, data or other materials, systematically or methodically arranged and individually searchable. Database right subsists in a database where there is a ‘substantial investment in obtaining, verifying or presenting’ (‘O/V/P-ing’) its contents. The right is infringed if a person without the owner’s consent ‘extracts or re-utilises all or a substantial part of the contents’ or carries out ‘repeated and systematic extraction/re-utilisation of insubstantial parts’. ‘Extraction’ involves transferring the contents to another medium and ‘re-utilisation’ is making available to the public by any means. The new UK regulations introduced a number of new concepts and raised important questions to be worked through.

Fixtures Marketing Cases

The Fixtures Marketing Cases were references to the ECJ from three national courts based on similar facts, where Fixtures Marketing Ltd (‘FML’), on behalf of professional UK football leagues, granted licences to exploit UK football fixture lists (for around 2,000 matches per season) outside the UK . The defendants used FML data without licence. FML sued for infringement in the local national courts and the cases were referred to the ECJ.

The ECJ judgments settled three points. First, in defining database as a collection of ‘independent’ materials, ‘independent’ meant that the materials, etc should be separable from one another ‘without the value of their contents being affected’. Secondly, for ‘obtaining’, the ECJ made a key distinction between investing in obtaining the materials and collecting them into a database (which counted as investment for database right purposes) and investing in obtaining the underlying materials themselves (which did not). Thirdly, for ‘presenting’, the court also held that there was no investment in the presentation of the fixture lists independent of that in their creation. The Court held that there had been no relevant investment in obtaining or presenting and so database right did not arise in the FML fixture lists.

William Hill

The ECJ built on this restrictive approach in William Hill. Here, the British Horseracing Board (‘Board’) kept a database of the million or so UK racehorses and details of each race. William Hill indirectly [v] obtained information from this database via two sources; newspapers published the day before the race, and from a feed provided by Racing Pages Ltd (which is partly controlled by the Board) who was authorised to supply information to its members, which included William Hill. William Hill’s licence to use the information either as a reader of the newspapers or a member of Racing Pages Ltd was limited to ‘consultation’ but not extraction or re-utilisation. When it displayed the information on its online betting websites the Board sued, claiming infringement of database right.

The UK trial judge found for the Board in a judgment[vi] which is in line with the traditional UK approach that what is ‘worth copying or paying for is worth protecting’. William Hill appealed[vii] to the Court of Appeal which referred a number of questions to the ECJ including on the definition of ‘obtaining’ (where the ECJ’s judgment was in line with the Fixtures Marketing Cases) and what was meant by ‘extraction’ and ‘re-utilisation’ (where, as noted above, the ECJ confirmed that indirect as well as direct taking could constitute extraction or re-utilisation).

Interpretation of substantial

The ECJ went on to consider what was meant by ‘substantial’. Under Article 7(1) of the Database Directive, only extraction or utilisation of a ‘substantial’ part ‘evaluated quantitatively and/or qualitatively’ of the contents of the database is infringing. Here, the judgment is surprising. On the ‘quantitative’ evaluation, the Court held that you looked at the proportion of ‘the volume of data’ lifted in relation to the ‘total volume of the contents of the database’. On the ‘qualitative’ assessment, you looked at the scale of investment in O/V/P-ing the contents ‘lifted’ and only if there was a substantial investment in that act was the criterion met. The ECJ held that there had not been a substantial investment in O/V/P-ing the contents of the database by the Board, so database right didn’t arise, and even if it did, there had been no infringing extraction or re-utilisation.

Value in discrete data items

The four judgments have significant implications for owners, developers and users of databases. First, a database will not be a ‘database’ within the UK rules if, as we saw in Fixtures, its materials etc are not independent and separation of those materials affects its value. This is important for financial databases – such as price or other historical time-series created from real-time market data feeds – where although each component may carry value as a record of a single trade, it is the aggregation of each trade into a ‘history’ that carries value. (Where, however, a collection of materials is judged not to be a database because the materials are not independent, compilation copyright, a different and arguably more beneficial right, may apply[viii]).

Qualifying investment

Secondly, the ECJ’s approach to separating out investment in creating the content (which does not count) and in O/V/P-ing that content (which does) is anachronistic in the digital age where creating content , putting it into the database and making it searchable are commonly contemporaneous. This arcane distinction means that database developers wishing to benefit from database right will need to modify internal policies and procedures to ensure that O/V/P-ing is a separate stage and carries substantial investment.

Meaning of substantial

Thirdly, it is in the ‘quantitatively/qualitatively substantial’ assessment that the ECJ’s judgment is most illogical. On the ‘quantitative’ assessment, where the volume of data extracted is the same, a small database developer will find it easier to show infringement than a large database maker, even where the latter has made greater investment in making the database more comprehensive, etc. On the ‘qualitative’ assessment side, looking at the investment in O/V/P-ing the ‘lifted’ data without regard to underlying economic value amounts to a screen scraper’s[ix] charter, again a counter intuitive result.

Renaissance of traditional rights?

The restricted scope of database right means the database developers will need to consider other forms of protection. The UK law of confidentiality provides scope here where it can be shown that the database is not in the public domain. This is because English law holds that aggregated information can benefit from confidentiality protection even though underlying constituent parts are freely publicly available.

The cases go back to their national Courts for final resolution. In the UK , it will be interesting to see whether the Court of Appeal accepts the ECJ’s ruling or whether the ‘what is worth copying/paying for is worth protecting’ approach will prevail.

Richard Kemp/Caspar Gibbons

[1]Case C-203/02, The British Horseracing Board Ltd and Others v The William Hill Organization Ltd (http://tinyurl.com/5784h )

[2] Cases C-46/02, Fixtures Marketing Ltd v Oy Veikkaus Ab ; C-338/02, Fixtures Marketing Ltd v Svenska Spel AB ; and C-444/02, Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou AE (http://tinyurl.com/5qdxt )

[3]http://tinyurl.com/6s8vw

[4] SI 1997/3032 http://www.hmso.gov.uk/si/si1997/1973032.htm

[5] In the Directive extraction is 'by any means or in any form' and re-utilisation is by ‘any form'. On appeal to the ECJ, the Court held that use of these expressions indicated that the Community legislature intended to give the concepts of extraction and re-utilisation a wide definition and could thus be interpreted as referring to an indirect act of appropriation or making available to the public as long as it is without licence and depriving the database maker of revenue. Thus the fact William Hill had no direct access to the Board’s database was not fatal to the Board’s case.

[6][2001] RPC 612.

[7][2001] EWCA Civ 1268

[8]The CDDR specifically excluded databases from the class of compilations referred to in Section 3(1)(a) of the Copyright, Designs and Patents Act 1988; thus, if a collection of materials is not a database under the CDDR, it may benefit from Section 3(1)(a).

[9]‘Screen scraping’ is the use of software to harvest data from 3rd party websites. The results are often compiled for commercial gain: e.g. in the air travel industry to search for flight schedules and fares from a particular airline. Extracts are aggregated, generating a cross-carrier picture, and posted on a host site to attract users. Revenue is generated from advertising.