Toby Bond analyses a European Court of Justice opinion that could affect companies’ use of database rights to protect their information assets.
This article was first published in Global Data Review and is republished here with permission. The original version can be accessed here.
CV-Online Latvia is a European Court of Justice (ECJ) referral from the Riga Regional Court concerning infringement of database rights.
CV-Online Latvia owns and manages cv.lv, which provides a searchable database of job ads published by employers. The defendant, Melons, operates a specialist search engine for job ads, KurDarbs.lv, which indexes websites containing jobs ads, including those featured on cv.lv. Search results presented to users of KurDarbs.lv display information including job titles, employers, geographical location of jobs, and dates. KurDarbs.lv obtains this information in advance by indexing pages from the cv.lv website, based on metatags added to each page by cv.lv. The search results shown by KurDarbs.lv also provide hyperlinks to job ads on cv.lv.
The questions referred to the ECJ were whether (a) the use of a hyperlink to redirect users to cv.lv constitutes re-utilisation of the underlying database of job ads and (b) the use of the metatag data constitutes an extraction from the database.
Advocate-general Maciej Szpunar gave his opinion on 14 January 2021. Instead of focusing on the specific questions relating to the interpretation of “extraction” and “re-utilisation” of a database, Szpunar reframes both questions as whether the maker of a database that is freely accessible on the internet is entitled to prevent the use of that database by an internet search engine (such as content aggregator) that specialises in searching the contents of specific databases.
The opinion suggests that in order to enforce a database right, there would need to be both an extraction or re-utilisation or all or substantial part of the contents of the database and that the extraction or re-utilisation would need to adversely affect the investment made by the maker of the database by constituting a risk to the possibility of the maker recouping their investment through normal exploitation of the database.
While the advocate-general is correct that previous ECJ decisions such as BHB and Innoweb have looked at whether the alleged infringement causes significant detriment to the investment made in creating the database, this has always been through the lens of asking whether there has been an extraction or re-utilisation of all or a substantial part of the database.
For example in, 77m v Ordnance Survey the English High Court was asked to decide where the dividing line was between merely consulting a database and a prohibited extraction. It held that the scale on which the defendant had accessed the database resulted in them appropriating a substantial part of the investment in the database with the result the activity was a prohibited extraction and not a permitted consultation.
Prior to Szpunar’s opinion, it was generally assumed that extracting or re-utilising all or a substantial part of a database would necessarily cause significant detriment to the investment and constitute an infringement. The opinion suggests this analysis is not correct, and that there may be some cases where there is an extraction or re-utilisation of all or a substantial part of a database which does not adversely affect the investment and should not be considered an infringement.
This approach of adding additional criteria that are required in order to establish infringement of an IP right is exactly what the ECJ did in relation to trade mark law. The court added a new requirement not present in the legislation – that the use of a trade mark must adversely affect the functions of the mark in order for that use to constitute infringement. This gave rise to a number of situations – such as the purchase of online advertising keywords – where it became harder for trade mark owners to enforce their rights.
In the CV-Online reference, the way in which the advocate-general has framed the adverse effect which the extraction or re-utilisation must have on the investment is also quite narrow. He states it must “risk the possibility of recouping the investment”. This focuses solely on immediate harm that could be suffered by the maker of the database, but ignores that makers of a database want to do more than just recoup their investment: they want to make a profit from their investment. It also focuses solely on harm suffered by the maker of the database, and ignores any benefit the infringer is obtaining by appropriating that investment. This could be contrasted with the usual approach to assessing damages for IP rights infringement (eg under Article 13 of the IP Enforcement Directive), which is to take into account both profits which have been lost by the IP owner and any unfair profits made by the infringer.
The advocate-general states that database rights are intended to prevent the creation of parasitical competing products, but should not disproportionality limit innovation in the market for information.
This is good news for online aggregator services and others involved in web-scraping activities which are not going to directly compete with the database. However, it is bad news for database rights holders who make their databases publicly accessible online and may want to explore new opportunities to monetise their databases by licensing them for new, innovative purposes. It is also potentially a significant departure from the traditional approach to IP rights where (subject to exceptions to infringement expressly set out in legislation) the owner has the exclusive right to control all possible forms of commercialisation of the subject matter – and not just those which compete with the manner in which they have themselves commercialise it.
If the advocate-general’s opinion is adopted, it would potentially limit the opportunities for database rights holders who make their databases available online to rely on their database rights as the basis for licensing the database for new, innovative uses. This also needs to be considered in the context of the text and data mining exceptions to both copyright and database rights contained in Articles 3 and 4 of the Digital Copyright Directive. These are due to be transposed into EU national law by 7 June 2021, and already provide a limit on the ability of database rights holders to prevent automated text and data mining. Database rights holders in the UK currently have a reprieve, as the UK has decided not to implement the directive, although the UK Intellectual Property Office’s recent consultation on AI and IP issues specifically asked whether the UK should adopt new text and data mining exceptions.
In response to the advocate-general’s opinion, database rights holders may move towards relying on other forms of protection to prevent third parties appropriating the value of their investment. These could include a greater emphasis on technical measures to prohibit web scraping, placing databases behind paywalls, and greater enforcement of website terms and conditions which prohibit scraping activities.
However, even with these alternative methods of protections, the advocate-general’s competition law analysis will potentially be concerning for database rights. Justifying his conclusion that database right infringement requires a risk to the maker recouping their investment, Szpunar referred to the ECJ conclusion in IMS that refusing access to information which is indispensable for carrying on a particular business can potentially be an abuse of dominance if it prevents the emergence of a new product for which there is potential demand. This line of reasoning may encourage those engage in web scraping and other forms of re-use of online databases to try to use competition law as a mechanism to force the database owner to grant them access.
In the longer term, the opinion – if adopted – could also potentially act as a disincentive for database rights holders to develop new data formats and tools such as APIs that would encourage third parties to access their database for innovative purposes, as the rights holder’s ability to restrict access to only paying licensees based on their database rights could be called into question in certain circumstances.