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European Union Database Developments: An Update on the Status of Intellectual Property Protections for Factual Compilations

August 2001

By
Randal C. Picker
Leffmann Professor of Commercial Law, The University of Chicago Law School; Consultant to Sidley Austin Brown & Wood

and
Alan Charles Raul
Partner, Sidley Austin Brown & Wood

On July 31st, a British appellate court issued a decision addressing database rights in the European Union. This is one of the first decisions examining the terms of the European database directive issued in March, 1996 and that went effective as of January 1, 1998. The decision is important both for its status within the European Union and for the insight it might offer for pending database legislation in the United States. The pending legislation would accord some intellectual property protections to factual compilations that are not sufficiently “original” to qualify for copyright protection.

William Hill is a large United Kingdom bookmaker, with over 1500 licensed betting offices, plus telephone betting. With the rise of the Internet, Hill naturally moved into online bookmaking. Much information is naturally displayed on its website, so that potential bettors can make their choices.

The appellate court explained the Directive as follows:

At this point it is convenient to refer to the material provisions of the Directive. The mischief which it was designed to meet is clearly set out in the Recitals: databases were not sufficiently protected in all member states by existing legislation (Recital (1)), there were differences in that protection between member states which distorted the functioning of the internal market (Recitals (2) (4)), and the making of databases involved the investment of considerable human, technical and financial resources, which investment required protection against the unauthorised extraction or reutilisation of the whole or a substantial part of the contents of the database (Recitals (6) (8), (38) (41)). The Directive’s intention was to give protection to the structure of the database by copyright and to its contents against unauthorised extraction and reutilisation or both by the new right called “the sui generis right” (Recital (58)).

The trial court applied the Directive in favor of the plaintiff, holding that “[d]atabase rights protect the unlicensed taking and use of information. What William Hill has in mind involves the manipulation of the same information but its presentation in a different manner …. As long as substantially the same information is made available on the website, the same acts of extraction and re-utilization will have taken place.”

Although there was some dispute about this in the case, much of the information displayed by Hill comes from the British Horseracing Board (“BHB”), the governing authority for the British horseracing industry. Hill holds licenses, either express or implied, for many uses of the information, but the BHB contended that the Internet use by Hill exceeded the scope of the license, and in turn violated the BHB’s database rights as implemented in the European database directive as enacted into British law.

Standard informational databases are situated in a tricky spot in property law. An enormous amount of work can be required to assemble and verify the information in the database, but once it is there, copying it is straightforward. In the United States, the leading decision on the status of these databases is Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991). In that case, the United States Supreme Court ruled that as a matter of federal constitutional law, Congress could protect works under its copyright powers only if the work had a sufficient level of originality. The court found that telephone book at issue in Feist lacked sufficient originality to be protected.

This created a concern among owners of fact-driven databases that they might not enjoy copyright protection. Some of these issues may be addressed by contract, as seen in the well-known decision in ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 (7th Cir. 1996). Other aspects may be addressed through old doctrines, such as the virtual trespass found in eBay, Inc. v. Bidder’s Edge, Inc., 100 F.Supp.2d 1058 (N.D. Calif. 2000). Legislation has also been introduced in Congress to address these issues, but passage is uncertain, and Congress would need to act under its Commerce Clause power, rather than the Copyright clause (due to the lack of originality in factual compilations). It is certainly possible that the Supreme Court could ultimately conclude that Congress cannot do under the Commerce Clause indirectly what it could not do under the Copyright Clause directly.

The database directive from the European Union will give us some sense of the importance of an independent right protecting databases. That right focuses on extractions of information from qualifying databases. The directive creates a textured regime, and much of the analysis in the lower court focused on the particulars of the directive. Although the appellate court found much of the lower court’s analysis persuasive, the appellate court ultimately concluded that it should refer the case to the European Court of Justice.

There has been no interpretation of the Directive to date by the European Court of Justice. Interestingly, the UK courts did not address (because the parties did not argue) the relevance of the UK regulations implementing the Directive, only the provisions and intentions of the Directive itself were deemed relevant. The appellate court, however, was clearly influenced by the defendant’s argument that certain national decisions of other country’s courts had construed the Directive and database protections more narrowly than the trial court had. The appellate court stated:

William Hill’s arguments of substance go to whether the judge correctly interpreted the Directive. The judge has given a wide meaning to the database right and what it protects. Mr. Platts-Mills says that the effect of the judge’s judgment is far-reaching and that it is capable of application to commercial activities far removed from the horserace betting context with which we are concerned.

Information which might have been thought to have entered the public domain and to be freely usable might prove to be derived from a database the right in which was protected even though the user was unaware of that ultimate source and right. He drew our attention to certain decisions of the courts of other member states, which appear to have adopted a somewhat narrower approach to database right (notably Fixtures Marketing Ltd. v AB Svenska Spel, Gotland City Court, 11 April 2000, and in the Swedish Court of Appeal, 3 May 2001, and NV Holdingmaatschappij de Telegraaf v Nederlandse Omroep Stichting, Court of Appeal of the Hague, 30 January 2001). He pointed out that there has as yet been no ruling by the European Court of Justice on the interpretation of the Directive.

Like the recent decisions in the U.S. in New York Times Co., Inc. v. Tasini, 121 S.Ct. 2381 (2001), Bonneville Intern. Corp. v. Peters, 2001 WL 869625 (E.D. Pa.) and Random House, Inc. v. Rosetta Books LLC, 150 F.Supp.2d 613 (S.D.N.Y. 2001), the William Hill decision in the UK is another case demonstrating the importance of dealing with Internet issues specifically by contract: if parties license certain uses of intellectual property but do not address Internet use by contract, Internet uses may not be deemed included within the license for non-Internet uses no matter how related or reasonable the Internet use seems to the previously licensed uses.


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