Database rights - Advocate General's opinion points the way to valuable "sports rights"

28 April 2005

Hubert Best, Jerker Edström

Click here to read Hubert and Jerker's article on the ECJ decisions on database rights which follows this article.

On 8 June 2004, Advocate General Christine Stix-Hackl delivered opinions concerning the interpretation of the Database Directive (96/9 of 11 March 1996 on the Legal protection of databases, which for the purpose of this article is referred to as the Directive) in four cases where national courts had referred questions to the European Court of Justice (“ECJ”). The cases referred for preliminary rulings were:

  • Case C-338/02 Fixtures Marketing Ltd v Svenska SpelAB (referred from Sweden)

  • Case C203/02 British Horeracing Board Ltd and others v William Hill Organization Ltd (referred from the UK)

  • Case C-46/02 Fixtures Marketing Ltd v Oy Veikkaus (referred from Finland)

  • Case C-444/02 Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou (referred from Greece).

The database rights in question are the sui generis rights of extraction and re-utilisation as transposed into national law pursuant to the Directive, as applied to fixtures lists and racing information. The fixtures lists determine functional provisions with respect to sports information, such as the order in which teams will play, team pairings, co-ordination of national with international fixtures etc. The racing information includes the racing equivalent of fixtures lists, as well as much pre-race information including the form, as well as results. The compilation and making of fixtures lists and racing information involves a substantial investment of time and money, and thus potentially fall within the scope of the Directive (the above sui generis rights arising through substantial investment in obtaining, verifying or presenting the contents of a database).

The interpretation of the Directive is particularly significant for the sports industry with regards to financial issues. No true authors’ rights subsist in the essence of a game as it is played on the field, but a widely drawn protection for database rights may enable football leagues, horse racing organisations, lacrosse teams and other “sports rights owners” (the usual generic term) the prospect of generating considerable present - and much more future - income from sports data by means of selling or licensing them. This is an increasingly significant issue as sports information, beginning with the fixtures lists and ending with the results, is exploited on more and more platforms for ever wider audiences. For example 3G operators are now offering betting services.

The Directive (art. 7) imposes an obligation on Member States to provide a right for the maker of a database who has qualitatively and/or quantitatively made - a substantial investment in either the - obtaining, verification or presentation of the contents - to prevent extraction and/or reutilisation of the - whole or of a substantial part of the database - evaluated qualitatively and/or quantitatively.

The references to the ECJ have shown uncertainties in the interpretation of the Directive, particularly in relation to the italicised words above.

The Advocate General has addressed many of these uncertainties, and – if the Advocate General’s opinion is followed - the result will be that the extent of the sui generis rights will be widely drawn. This article is mainly based on the Advocate General’s opinion concerning the William Hill case referred from the UK, as the queries made by the UK Court of Appeal were the most comprehensive. Therefore, for the purpose of this article, all references to the Advocate General’s opinion refer to her opinion in the William Hill case, unless otherwise noted.

Conditions for protection

It is interesting to note that, despite the strictly economic basis of the sui generis rights, the Advocate General refers to “creation” as an umbrella term for obtaining, verifying and presenting information in a database.

The Advocate General thus initially focuses on the issue of what is protected in terms of “creative” measures of the maker of the database, in particular on the words “obtaining” and “verifying”.

If the word “obtaining” is only related to existing data, the protection of the investment would cover only such data (and not data created by the one who obtains it). However the Advocate General takes the view that the Directive does not cover the mere generation of data, but also the creation of the data provided the creation took place at the same time as its processing and was inseparable from it, that is where the creation of data coincides with its collection and screening.

The term ”verification” is, according to the Advocate General, not to be interpreted as being limited to ensuring from time to time that information in the database is correct. In other words, it is not limited to the verification of the existing contents, but it may also be deemed as verification, according to the Directive’s wording, where monitoring activities take place before registration (and the product of that monitoring becomes part of the database). The substantial investment must concern at least part of those activities.

Another prerequisite for protection is that a substantial investment must be involved in the above acts. In the opinion it is noted that the objective pursued in obtaining the contents of the database is not relevant. This view allows for what could be described as protection for “indirect investment”. In the case referred from Sweden, it was found that investment for the purpose of drawing up the fixture lists in a databank were taken into account even though the purpose of the investment was the organisation of the league and the database was a mere by-product.

Content of the right

Article 7 contains two different categories of rights for the maker of the database, which the Advocate General addresses separately. Paragraph 1 grants the right to prevent use of all or a substantial part of a database, whereas paragraph 5 prohibits certain acts relating to an insubstantial part of a database. What constitutes a substantial or an insubstantial part of database is essential for the scope of protection, but is far from clear.

First of all the Advocate General sets out that Article 7 does cover data derived from the database, even though it does not have the same systematic or methodical arrangement, and individual accessibility, of the original database. It is thus not a prerequisite for protection, as William Hill argued, that the extracted or re-utilised data are arranged in the same systematic and methodical way as they were in the original database.

Then she moves on to the true notion of the words “substantial” and ”insubstantial”. The Directive does not provide a definition for these terms. From the Directive’s wording, however, it is clear that this may be evaluated qualitatively or quantitatively.

The qualitative evaluation is, she says, to be interpreted as meaning that the technical or commercial value of the affected part must be taken into account. It is stated that the economic value may be determined by (i) the drop of demand caused by the prohibited act, or (ii) in terms of what the person extracting or re-utilising has saved by doing so – that is to say, from the (potential) infringer’s point of view. This latter perspective is logical considering that the database rights protect the arrangement of content and not the content itself.

The quantitative evaluation may be interpreted in relative or absolute terms. That is to say, should the substantiality be related to the investment made in the whole or in the specific part of the database? A relative valuation would encompass a comparison between the amount in question and the whole of the contents of the database, whereas an absolute valuation would focus on the amount of the affected part in itself. In her conclusions the Advocate General states that “…Article 7(1) of the Directive is to be interpreted as meaning that the amount of the affected part is relevant. However…it is not solely the relative amount of the affected part as a proportion of the contents as a whole that is relevant.”

The Advocate General appears to be suggesting that the relative approach should be the main rule. This may however - as is noted in the opinion - disadvantage makers of large databases (since the larger amount of data the less substantial the affected part would be, relatively speaking).

The question also arises whether the quantitative assessment can be combined with the qualitative. The Advocate General takes the (logical) position that nothing prevents the affected parts from being assessed according to both methods.

What constitutes an insubstantial part of the contents of a database (and thus is protected under paragraph 5) it to be interpreted as meaning that such parts are more than individual items of data (which fall outside the scope of protection) but less than substantial parts. Thus, extraction or re-utilisation of two items of data could constitute an insubstantial part of a database for the purposes of the Directive.

Prohibitions relating to substantial and insubstantial parts of the contents of a database

The maker as provided under Article 7 (1) of the Directive has the exclusive rights to prohibit the acts of extraction and/or re-utilisation. According to the Advocate General extraction only covers the transfer of the contents of the database directly from the database to another medium.

What has prompted more discussion is how the “re-utilisation” right, or the right of making available to the public, should be interpreted. In her opinion, the Advocate General stresses that that in case of doubt, the term “making available” is to be construed widely. She also states that the making available need not be direct and that the data may be obtained from a source independent of the original database, such as the Internet. Thus, re-utilisation of information that form a substantial part of a protected database from a source widely available to the public, such as the Internet or a newspaper, would be prohibited (provided of course that the other prerequisites listed below are met).

Article 7(5) prohibits the extraction or re-utilisation of insubstantial parts of a database. The protection provided by this article differs, as the Advocate General points out, in three ways in comparison with the protection conferred by article 7(1). First, only repeated and systematic acts of extraction or re-utilisation are prohibited. However – secondly - the prohibition applies also to insubstantial data. Thirdly - such unauthorised acts must neither conflict with a normal exploitation of that database nor unreasonably prejudice the legitimate interests of the maker of the database (a shadow of the Berne three step test).

What determines “normal exploitation” and what is to be considered as “unreasonably prejudic[ing] legitimate interests”? In relation to the case referred from Sweden, the Advocate General state that acts which affect the right owner’s economic exploitation even in potential markets are to be considered as acts which conflict with normal exploitation of that database. Further, it is stated that acts which damage the legitimate economic interests of the maker to a degree which exceeds certain thresholds are to be considered to be acts which “unreasonably prejudice” the legitimate interests of the maker of that database. Again, the sui generis rights are stretched very far indeed, at least with regard to what is considered to be normal exploitation, as even potential markets are to be considered. What is to be deemed to unreasonably prejudice the legitimate interests on the other hand should be left up to national courts to decide to a great extent, as the opinion provides no guidance with regards to the size of the thresholds.

Changes to the contents of a database and term of protection

Then there is the question of dynamic databases which are renewed continuously - which of course often is the case with fixture lists containing sports information which are often renewed on a daily basis. The initial term of protection for a database is 15 years, however according to the wording of Article 10(3) a substantial change, under certain circumstances, “shall qualify the database resulting from that investment for its own term of protection.” This wording is quite vague and has been subject for debate. Should the entire database be protected for a further term if part of the database is updated? Could this amount to an everlasting monopoly preventing access to information?

In the opinion it is stated that “Article 10(3) is to be interpreted as meaning that any “substantial change “ to the contents of a database which qualifies the database for its own term of protection, entails that the resulting database must be considered to be a new, separate database, including for the purposes of Article 7(5).”

This seems to mean that there are now two databases: the original, un-amended database (with its term of protection of 15 years) and the new, separate, amended database (with its own, different term of protection of 15 years, starting and finishing later than the first database’s term of protection), and so on, as many times as the database is substantially changed.

Should the ECJ follow the Advocate General’s opinion, periodic further substantial investment could result in a perpetually enduring right for the data which remain in the database.

It will be interesting – and important to sports, betting and other information-based industries – to see whether the ECJ follows the Advocate General’s opinion in some or all aspects, and whether it elucidates issues which remain unclear.