Out-Law Legal Update
Individuals advised to check whether they can still claim entrepreneurs' relief
Out-Law Guide | 16 May 2005 | 1:58 am | 11 min. read
This guide is based on UK law. It was last updated in September 2008.
The law protects this investment in two ways:
This basic guide explains the circumstances in which protection will arise and sets out some practical steps designed to make the most of any rights that exist.
A database is defined in the legislation as "a collection of independent works, data or other materials which are arranged in a systematic or methodical way and are individually accessible by electronic or other means."
This is a wide definition which will cover traditional mailing lists and lists of customers as well as telephone directories, encyclopedias and card indexes, whether held electronically or in paper form. There is however a distinction to be drawn between a database and its individual components, which may or may not be protected in their own right separately from any protection afforded to the database as a whole.
Any software which is used in the making or operation of a database is specifically excluded from protection as a database, software instead generally being protected by copyright as a literary work. Nevertheless, as software is often developed in modular form, it is possible that in some cases a collection of software modules may attract protection as a database. Also, some elements of a computer program (for example, on screen look up tables which users may search in order to find information) may constitute a database.
Databases are treated as a class of literary works and may therefore receive copyright protection for the selection and/or arrangement of the contents under the terms of the Copyright, Designs and Patents Act 1988.
In order for copyright protection to arise the selection and/or arrangement of the contents of the database must be original. A special test of originality applies in relation to databases created after 27 March 1996. Such databases are original "if, and only if, by reason of the selection or arrangement of the contents of the database the database constitutes the author's own intellectual creation".
Copyright in databases therefore seeks to protect the intellectual creativity of the author. The author's time, skill and labour must be directed to the selection and arrangement of the database, and not the mere gathering of information. Simply arranging a list of names in alphabetical order, for example, is unlikely to meet this standard.
Even if the set of data does not fall within the definition of a database, it may nonetheless attract copyright protection as a table or compilation depending on its nature. Tables and compilations are subject to the normal requirement of originality in that the author must have used his own skill and effort in creating the table or compilation.
If a database, table or compilation does attract copyright protection, this lasts for a period of 70 years from the end of the calendar year in which the author dies. Copyright protection gives a copyright owner the right to do various acts in relation to the work and the right to prevent others from doing so without permission, for example copying or adapting the work.
The copyright owner is generally the person who creates the work. This can sometimes cause confusion with commissioned works. For example a consultant will be the legal owner of copyright in a work created on behalf of the person or company commissioning it, unless ownership is dealt with contractually. However, if a copyright work is created by an employee it is the employer who is the first owner of the copyright provided the work was created in the course of the employee's employment.
For more information on Copyright see our article Copyright law: the basics.
Provided a set of data comes within the definition of a database, it will qualify for protection in its own right under the Regulations (irrespective of whether it benefits from protection under copyright) if there has been a "substantial investment" in obtaining, verifying or presenting the contents of the database.
Investment includes "any investment, whether of financial, human or technical resources" and substantial means "substantial in terms of quantity or quality or a combination of both".
The maker of a database is defined as the person who "takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation" and such person is the first owner of the database right. This definition is in contrast to that of an owner in copyright since where a database is commissioned, the commissioner will usually be the "maker" and first owner of the database right. If the database is made by an employee in the course of his employment, the employer will be regarded as the maker and therefore the owner of the database right subject to any agreement to the contrary.
A person infringes a database right if they extract or re-utilise all or a substantial part of the contents of a protected database without the consent of the owner. It should be noted, however, that extracting or re-utilising a substantial part of the contents can result from the repeated and systematic extraction or re-utilisation of insubstantial parts of the contents of a database.
There are a number of "permitted acts" set out in the Regulations. A database right in a database which has been made available to the public is not infringed by fair dealing with a substantial part of its content in certain defined circumstances, for example when someone with a right to use the database extracts data for teaching or research and not for any commercial purpose (provided they indicate the source of the material). Extraction and re-utilisation is also permitted when it is not possible by reasonable inquiry to ascertain the identity of the maker and it is reasonable to assume that the database right has expired.
Like copyright, a database right is an automatic right which exists as soon as the database exists in a recorded form. Database rights last for either 15 years from the end of the year in which the making of the database was completed or, if it was published during that period, 15 years from the end of the year in which the database was first made available to the public.
If there is a substantial change to the contents of the database then the 15 year protection period recommences. This includes a substantial change "resulting from the accumulation of successive additions, deletions or alterations, which would result in the database being considered to be a substantial new investment".
In November 2004, the European Court of Justice (ECJ) gave guidance on the application of the rules relating to database rights, significantly reducing the scope of protection given to the maker of a database under the Regulations. (Strictly speaking the ECJ considered database right principles under the EC Directive rather than the Regulations. However it is likely that the same principles will be applied to the interpretation of the UK legislation.)
The William Hill case involved a database operated by the British Horseracing Board (BHB) containing information relating to races, horses' registration details, jockeys, fixture lists, race conditions, entries, runners etc. It cost BHB approximately £4 million a year to maintain. William Hill displayed a small, specific amount of information from BHB's database on its website. BHB brought an action, alleging that William Hill's use of the information infringed BHB database right.
The Court considered whether there had been "substantial investment" in obtaining or verifying the content of the database. The Court decided that the expression "investment" refers to the resources used to seek out existing independent materials and collect them in a database. The protection did not cover the investment involved in actually creating the data which made up the contents of the database. On the facts the Court found that the resources used by BHB in creating the database did not constitute substantial investment in either obtaining or verifying the contents of the database. BHB therefore had no protection under a database right.
The Court went on to consider the question of what constituted an extraction or re-utilisation of a "substantial part" of the contents of a database. The Court observed that the question could be addressed either quantitatively or qualitatively. In order to determine whether the data constituted a substantial part in the quantitative sense, the data extracted or re-utilised must be assessed in relation to the total volume of the content of the database. The use by William Hill of the information from the database represented a very small part of BHB's whole database. There was therefore no extraction or re-utilisation of a substantial part in the quantitative sense.
In order to determine whether the data constituted a substantial part in the qualitative sense, the Court said that reference must be made to the scale of investment in the obtaining, verification or presentation of the contents of the database that are extracted and/or re-utilised. Since no separate effort had been employed to obtain, verify or present the particular part of the database used by William Hill, such part could not be substantial.
In the Fixtures Marketing cases, Fixtures Marketing Limited ("FML") brought actions against three defendants, Oy Veikkaus AB from Finland, AB Svenska Spel from Sweden, and Organismos Prognostikon Agonon Pododfairou AE (OPAP) from Greece. FML alleged that all three organisations had extracted and/or re-utilised data from football fixture lists for the English premier league and its Scottish equivalent, which FML develops and administers at a cost of over £11.5 million a year.
As in the William Hill case, the Court ruled that only investment to seek out existing materials and collect them into a database will give rise to a database right. Resources used for the creation of materials that make up the database will not be sufficient to give rise to protection.
The Court held that neither the obtaining, verification, nor presentation of the contents of a football fixture list reflected substantial investment which could justify protection by a database right. FML could therefore not rely on a database right to prevent the use of its data by the defendants.
For more information on these cases see our Case Report
The following points should be noted following the ECJ 's decision:
The European Commission has conducted its first evaluation of whether the Database Directive has been successful in achieving its goals. In 2005 the Commission published its report which concluded that, amongst other things, the Database Directive had failed to stimulate the creation of more databases within the EU, and that the ECJ's narrow construction in the BHB and Fixtures Marketing cases went against the Commission's original intention of protecting databases which were not sufficiently original to attract copyright protection. Following this, the Commission consulted interested parties on possible measures for reform. However, it is understood that currently the Commission's preferred option is to leave the Database Directive as it is, despite its flaws, and maintain the status quo.
Also, at the time of writing, ECJ guidance has been sought by the German courts in respect of the concept of "extraction". The opinion of the Advocate General (AG), which is often (but not always) followed by the ECJ, is that "extraction" should be given a broad interpretation. The AG thought that extraction (which is defined as transferring all or the substantial part of the contents of a database to another medium) should not be limited to the physical copying of data, but should extend to situation where someone had consulted a database and then reproduced its contents elsewhere. The ECJ's ruling is therefore awaited with interest.
Anyone creating, organising or administering databases, or anyone extracting or re-utilising the contents of databases belonging to others, should review their position in relation to the use of such data. In particular:
It is worth noting that information contained in a database which is not in the public domain may, in addition, be protected under the law of confidence. For more information, please see our guide on Confidential Information.
It is not the intention in this guide to deal with issues of data protection in any detail. However, it is important to remember that the Data Protection Act 1998 ("DPA") deals with the use of personal data held both manually and in automated form and will therefore often be applicable to databases. Personal data is defined as data which relate to a living individual ("data subject") who can be identified from those data or from the data together with other information in the possession or likely to come into the possession of the holder of the data ("data controller").
The DPA attempts to protect personal data in a number of ways, for example:
Data controllers must therefore ensure that the way that they obtain, hold and deal with personal data complies with this legislation as the Information Commissioner has wide powers of enforcement and individual data subjects have the right to compensation in certain cases. In particular, data controllers should bear in mind the requirements on them if they intend data to be processed on their behalf by third parties, for example in the context of commissioning a database.
For more information on Data Protection see our article on Data Protection.
Out-Law Legal Update
Individuals advised to check whether they can still claim entrepreneurs' relief