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European database right survives another review

But its scope and fitness for purpose is uncertain especially in the context of the data economy

14 December 2018

In the mid-1990s, the EU Commission was looking for flagship initiatives in the then new area of "multimedia". This breathed new life into sector-specific attempts by European commercial database publishers to secure clarity about the legal protection available in Europe for their products, ultimately leading to Directive 96/9/EC on the legal protection of databases (the Database Directive).

Background

The Database Directive confirmed protection under copyright for original selection and arrangement of database contents.  This is non-controversial since it substantially reflects Article 5 of the WIPO Copyright Treaty of 1996. 

More controversially, the Database Directive created a new sui generis intellectual property right for European "makers" of databases i.e. those who expend substantial investment in obtaining, verifying or presenting the contents of a database.  A "database" is defined as a collection of independent works, data, or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.  The sui generis right is often referred to as the "database right".  It protects the contents of a database (regardless of their subject matter and regardless of whether they may also be works in which copyright subsists) from unauthorised "extraction" or "re-utilisation".  

Subsequent rulings of the Court of Justice (CJEU) have cut back the scope of the database right to exclude "spin-off" databases from protection under the database right.  These arise where a database maker produces the database in the course of other activities (e.g. creating timetables for sports fixtures) and then tries to control the use of the spun-off data (e.g. by betting companies).  This is sometimes described as the distinction between people who invest in "creating" data as opposed to "obtaining" it and is said to be justified by the need to avoid "data lock-up".  

In 2005, the Database Directive was reviewed and the database right (as interpreted by the CJEU) was retained, on the basis that there was not a clear case for abolishing or amending it.  A further evaluation was undertaken, in the context of the EU's Digital Single Market initiative, and its outcome reported in one of a series of publications relating to different aspects of the data economy on 25 April 2018. 

This evaluation is timely in the context of ever-increasing awareness of the types and uses of data that may underpin the digital economy in the future. 

The Evaluation

According to the Commission staff evaluation report, key reasons for retaining the database right (for now) include:

  • single market benefits of a harmonised approach;
  • CJEU cases have reduced concern about data lock up;
  • lack of clear consensus about change/abolition.

The evaluation highlights certain issues and raises a number of questions, including:

  1. the original policy objectives were around stimulating the European database market.  Although harmonisation of the legal framework in Europe has probably been helpful, it is unclear whether the Database Directive has in fact materially stimulated the European database industry.  There is no equivalent right in the world's largest database-producing market, the USA;
  2.  in today's context, it can be increasingly difficult to distinguish between data "creation" and "obtaining" of data, including due to the increased use of sensors and other forms of automated data gathering.  Arguably, data gathering is not "creating" but "obtaining", but the position is not entirely clear following the CJEU decisions;
  3. what is a database in the modern world?  Is any dataset a database in which database rights could subsist if the appropriate conditions are fulfilled?
  4. is the 15-year term of protection appropriate, especially for constantly updated databases, which may effectively get perpetual protection?
  5. evidence suggests that the current criteria for allocating ownership to the "maker" may not always be optimal and may not target the proper areas of value generation;
  6. what is the threshold for making a substantial investment?  (national court decisions have varied on this);
  7. what is a substantial part of a database for infringement purposes? 
  8. adequacy of the scope of exceptions (which are not fully aligned with the copyright exceptions).

The Database Directive does not exist in a vacuum and is part of a much wider debate about ownership of and access to data in a connected digital environment, with many other data-related initiatives. These include:

Conclusion

It is probably right that the EU Commission has concluded that at this stage it is too early to look at root and branch reform of protection for the contents of databases.  The price for this, however, is areas of continued legal uncertainty.  

Notwithstanding this uncertainty, the evaluation and underlying studies provide a considered overview of the current legal position regarding ownership and rights of lawful use of data in databases.  This is an opportune time to review existing and planned business models involving creating, gathering, packaging or using potentially valuable data in Europe.