By: Thomas Stanton, Esq.

The passing of the EU Database Directive signified an important change for Europe. If nothing else, it helped establish the intentions of Europe to be competitive on a global stage within the Information Technology sector. On March 11, 1996 the European Union officially adopted the Database Directive.[i] All Member States were obligated to implement the Directive by January 1, 1998.[ii] Ultimately the objective was to harmonize copyright protection across the EU and set standards for originality, exclusive rights and exceptions to them.

There were many iterations of the Directive that started to take form around 1988 and over the next 8 years it evolved from being unsure about the need and no support for sui generis rights, to a position that it was necessary for the competitiveness of Europe. This evolution occurred due to global market forces, particularly the United States, and the desire to protect the investment into technology within Europe. This led to the final adopted directive which includes copyright protection for database structure and sui generis rights for database content, regardless of originality.

The copyright protection applies to databases that, “by reason of the selection or arrangement of [its] contents, constitute the author’s own intellectual creation.”[iii] The copyright owner is granted certain exclusive rights that allows them to restrict reproduction, adaptation, distribution, and display or performance of the database content to the public.[iv]

The biggest change came in the form of a sui generis right that protects a “substantial investment in either the obtaining, verification or presentation of the contents” regardless of whether or not they can be copyrighted.[v] This also prevents others from extracting or re-utilizing the database in whole or a substantial part of the contents. Insubstantial parts of the contents are not covered and cannot be included even through contractual means.

Member States can adopt exceptions under the Directive, but only for the copyright portion. The sui generis right cannot have exceptions other than what is included in the Directive. The copyright exceptions can include extractions “for private purposes of the contents of a non-electronic database”, “for the purposes of illustration for teaching or scientific research,” and for “the purposes of public security or an administrative or judicial procedure.”[vi]

The sui generis right comes with additional limitations in scope. The protection lasts for fifteen years and can be extended for an additional fifteen-year extension if a qualitative or quantitative “substantial change” “which would result in the database being considered to be a substantial new investment.”[vii] The right is only available to EU nationals or habitual residents, including business entities with a presence in the EU.[viii] Non-EU individuals or corporations can only get the sui generis right if their respective country offers reciprocity. This means that comparable protection to databases created by EU nationals must be offered in order to gain reciprocity. [ix]

Since the Directive’s implementation, there have been a few court cases that have exposed some confusion in the language. “Substantial investment” is probably the most confusing for courts, but discussions about what actually is a database and who is the database maker has drawn debates as well.

The European Court of Justice opinion that has garnered the most attention is from the British Horse-racing case in 2004 which focused extensively on the “substantial investment” terminology.[x] The facts in this case surround British Horseracing Board (BHB) and their activities around the horse racing industry in the United Kingdom. They maintain a database that contains large amounts of data supplied by horse owners, trainers, horse race organizers, and other racing industry related sources. This information includes the name, place, date, distance, criteria, entry deadlines, entry fees, and prize winnings for all horse races in the United Kingdom.[xi]

The BHB database compilers perform three main functions, first, they register and record the performance of owners, trainers, jockeys, and horses. Second, they weight and handicap the horses for various races, and third, they compile a list of horses that are running in the various races.[xii] BHB has invested a lot of money and effort in order to get this information. They have 32 operators working on this and they ensure the process is followed by each horse owner, and record phone calls for accuracy, then create a number for each horse and determine what stall they start from.[xiii]

BHB’s database is accessible through their website and they sell subscription services to be able to access the data.[xiv] William Hill was a subscriber and formed an online betting website that used BHB’s data to display information about the horses on his betting website.[xv] BHB sued claiming infringement of their sui generis right to the database, thus violating Article 7(1) of the Directive which prevents the extraction of the whole database or a substantial part of it.[xvi]

The European Court of Justice ruled that William Hill was not infringing because while BHB had invested a substantial amount of money to create the database, they were simply inputting the collected independent data and did not verify that data or invest a lot of resources to collect the data.[xvii] The courts described it as “‘investment in … the … verification … of the contents’ of a database must be understood to refer to the resources used, with a view to ensuring the reliability of the information contained in that database, to monitor the accuracy of the materials collected when the database was created and during its operation.” [xviii]

This ruling was interesting because it sort of undercut the broad protection that sui generis rights give to the database creator. The courts clarified the substantial investment to mean that it has to be an investment in verifying and collecting the data that is used, not just investing in the creation of a database filled with, independent unverified by the author, data.

[i] Council Directive 96/9, Legal Protection of Databases, 1996 O.J. (L 77/20) (EC).
[ii] Database Directive, at art. 1.6.
[iii] Database Directive, at art. 3(1).
[iv] Database Directive, at art. 5.
[v] Database Directive, at art. 7(1).
[vi] Database Directive, at art. 9(a)-(c).
[vii] Database Directive, at art. 10(3).
[viii] Database Directive, at art. 11(1).
[ix] Database Directive, at art. 11(3).
[x] British Horseracing Bd. Ltd. v. William Hill Org. Ltd., 2004 E.C.R. I-10415.
[xi] Id. at I-10422.
[xii] Id. at I-10423.
[xiii] Id.
[xiv] Id. at I-10424.
[xv] Id.
[xvi] Id.
[xvii] Id. at I-10495.
[xviii] Id.

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