British Horseracing Board v. William Hill: The race is never lost, till won
“This case is all about a new type of intellectual property right called database right.” So said Laddie J. in February 2001, in the first judgment of the High Court on database rights, British Horseracing Board (“BHB”) v. William Hill (“WH”). Laddie J. was referring to the right which was created by the Database Directive 96/9/EC. The Directive calls it the sui generis right, meaning “of its own kind”, in order to distinguish it from copyright. The intention behind creating the new database right was to encourage and protect investment in databases which did not qualify for copyright protection.
In the BHB v. WH case, Laddie J. held that BHB’s database was protected by database rights. The database comprised a huge number of records relating to horseracing, including the names of horses, owners, trainers, jockeys, as well as the fixture lists. He also held that WH’s use of the fixture lists on its Internet betting site was an infringement of those database rights.
WH appealed. The Court of Appeal, whilst referring various questions to the ECJ, appeared broadly supportive of the position taken by Laddie J. Advocate General Stix-Hackl also gave an opinion in BHB’s favour. However, and much to my surprise, the ECJ did not follow the AG’s opinion, instead giving a judgment very much in favour of WH.
In this article, I briefly summarise what is protected by database rights in the light of the judgments given by the ECJ in BHB v. WH and three other cases all involving the same claimant, Fixtures Marketing, the judgments all being given on the same day. Finally, I consider the implications of those judgments for the parties and generally.
Database rights defined
The Directive defines a database for both the purposes of database protection and copyright protection 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 ECJ stated that a database should be defined very broadly. Thus, any collection of independent works is covered, provided that each work can be separately retrieved. Consequently, not only will those things which are normally thought of as databases qualify, including contact lists, telephone directories and compilations of copyright works such as collections of poems, but also websites, newspapers, magazines and training manuals.
Database rights exist where:
there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents
In a key part of its judgment, the ECJ held that the investment has to be in the obtaining, verification or presentation of the contents of the database. This is to be distinguished from the investment in the data itself which cannot be taken into account when considering whether the investment has been substantial.
The ECJ provided the following definitions: “obtaining” - seeking out and collecting the data in the database; “verification” - ensuring the reliability of the information contained in the database and monitoring its accuracy; and “presentation” - the arrangement of the data in the database. The requirement for “quantitative” investment refers to quantifiable resources, whereas “qualitative” investment refers to efforts which could not be quantified such as intellectual effort or energy.
Infringement occurs where there has been:
extraction and/or re-utilization of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database …
(a) “extraction” - the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form;
(b) “re-utilization” - any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission. The first sale of a copy of a database within the Community by the rightholder or with his consent shall exhaust the right to control resale of that copy within the Community 
The ECJ held that, on the question of whether a part of a database is quantitatively or qualitatively substantial, reference has to be made to the investment in that database and the prejudice caused to that investment by the infringement. Thus, there will be infringement where the volume of data taken by the infringer is substantial when compared to the total volume of the contents of the database ie, it is quantitatively substantial. Further, a quantitatively negligible part of the database which requires significant human, technical or financial investment may amount to a “substantial part evaluated qualitatively” when compared to the scale of investment in the obtaining, verifying and presenting of the contents of the database.
Both “extraction” and “re-utilisation” have wide meanings, referring to any unauthorised act of appropriation or distribution. Neither term implies that the infringer has to have direct access to the database concerned. Third parties can consult a published database, but the maker’s rights are not exhausted by such publication. As a consequence, the contents of the database can be protected even if the infringer obtains the data from an intermediate source such as a newspaper or the Internet.
Infringement also occurs where there has been:
the repeated and systematic extraction and/or re-utilization of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted
The ECJ held that infringement only occurs if the cumulative effect of the extraction or reutilisation leads to the reconstitution of the database as a whole or a substantial part of it and thereby seriously prejudices the investment made by the database maker.
Applying the definitions in the BHB v. WH case
The ECJ found that the resources deployed by BHB in the selection of the horses admitted to run in each race related to the creation of the data and not the database. In other words, the investment was not independent of the resources spent on creating the database, despite the fact that the process of entering a horse in a race requires a significant number of checks as to the identity of the person making the entry, the horse, its owner and the jockey. Since such investment was not of the right sort, no account could be taken of it when considering whether database rights existed in the database.
Further, the ECJ found that WH had not taken a quantitative or qualitative substantial part of the database, despite the fact that the data were vital to the organisation of horse races, because no account could be taken of the intrinsic value of the data. As a consequence of its findings that the investment made by BHB in such data was not of the right sort for the purposes of whether database rights existed, the ECJ stated that the same data could not comprise, in qualitative terms, a substantial part of the database.
The ECJ also found that there was “no possibility” that through their actions of putting information relating to each day’s races on the Internet, WH might reconstitute the whole or a substantial part of BHB’s database.
As a consequence, the ECJ clearly signalled that, in its view, database rights did not exist in the BHB database. In any event, WH did not infringe those rights by taking either a substantial part or insubstantial parts.
… and in the Fixtures Marketing cases
These three cases were referred to the ECJ from Sweden, Finland and Greece. Fixtures Marketing is backed by the Football Association and others and handles the exploitation of the football fixtures lists for the Premier League, the Football League and the Scottish Football League. Before the start of each season, the fixtures lists are drawn up. The fixtures lists are set out both chronologically and by reference to each team participating in the relevant league. In both Sweden and Finland, Fixtures Marketing objected to the defendant’s use of the data in the fixtures lists in pools betting. In Greece, the defendant used the data on its Internet site.
The ECJ held, following the broad definition it had given to databases, that the football fixtures lists qualified as databases. The date of the matches, the time and identity of the teams were all independent data. The fact that lots were drawn to decide which teams played each other was irrelevant.
However, the ECJ was of the view that finding and collecting the data which makes up football fixture lists does not require any particular effort on the part of the professional leagues as those activities are indivisibly linked to their responsibility to create those data. Further, no particular effort is required in monitoring the accuracy of the data and that its presentation is too closely linked to the data’s creation to be taken into account. Therefore, the ECJ found that there was no independent investment in the database over and above that put into creating the data. In other words, it accepted the argument that the database was merely a spin-off of the work done in putting together the fixtures lists.
In the light of its findings, the ECJ held that further questions related to infringement did not need a reply.
Consequences for BHB
The case will be returned to the Court of Appeal which will have to consider how to apply the judgment of ECJ. Unusually for the ECJ, it applied its construction of the Directive to the facts in the case. Those finding contrast with statements made by the Court of Appeal and Laddie J. In particular, the Courts found that BHB had expended considerable costs, of the order of £4 million per annum, in the development and maintenance of the database, a significant and painstaking process which involved approximately 80 employees.
The Court of Appeal would be entitled to disregard any conclusion reached by the ECJ, in so far as it was based upon a factual background inconsistent with its judgment. No doubt this will be the subject of the parties’ submissions before the Court of Appeal, as it was in Arsenal Football Club v. Reed. In that case the Court of Appeal held that the conclusions of the ECJ were not inconsistent with the findings of fact and Laddie J. should have followed the ruling of the ECJ. The outcome of the Court of Appeal’s decision is awaited with interest.
If the Court of Appeal follows the ECJ’s findings, it will have a significant impact on horseracing in the UK. At present, a large proportion of funding for the horseracing industry is derived from a payment to the Levy Board made by the betting industry on a statutory basis which is then distributed back into racing. Following a Competition Act inquiry by the Office of Fair Trading (“OFT”), which was published a few days after the AG’s opinions, BHB announced that, as part of a package to modernise British horseracing, it would be replacing the levy by a licence fee. The fee would be payable by all betting companies before they could make use of racecard information, such as runners and riders, derived from BHB’s database. The current plan is for the Levy Board to close on 30 September 2006. The ECJ’s judgment therefore threatens to jeopardise the whole of BHB’s modernisation plans for the horseracing industry.
… and for Fixtures Marketing
The cases will now be returned to their national courts. Fixtures Marketing is unlikely to prevail, given that the ECJ clearly held that establishing the dates, times and the team pairing did not attest to substantial investment which could justify database right protection in the football fixtures lists, despite the fact that £11.5 million per annum is spent on the upkeep of the fixtures lists.
The ECJ’s judgment came at a difficult time in negotiations for the 2004-5 UK season between the Newspaper Publishers Association, who negotiate on behalf of all newspaper publishers, and Football DataCo, the company charged with exploiting the fixtures lists on behalf of the football leagues in the UK. Football DataCo was reportedly seeking restrictions on use of pictures from Premier League and Football League matches, and licences for use of league match data in newspapers’ fantasy football league competitions. I have since found one report stating that these negotiations have been concluded, and that “Fleet Street seems to have won”.
The effect of the ECJ’s judgments is to rein in database rights, particularly in relation to what is protected. The requirement for investment to be in the creation of the database, as opposed to the data, is a significant hurdle for database owners to overcome.
Distinguishing between monies spent on collecting data and monies spent on creating data will be very difficult for some companies, such as BHB, which both create the data and the database. They may therefore fail to prove that they have a protectable database. Companies which do not create the data, merely collect them, as in telephone directories, will not have such a problem. Companies in the first category should, therefore, consider whether they need to restructure their organisation so that the functional aspects of creating the data and creating the database are kept separate and are separately budgeted.
Another difficulty arising out of the ECJ’s judgments is how to effectively protect large databases. The ECJ held that no infringement will occur unless the investment in the whole database is prejudiced. As BHB found, small, but intrinsically valuable pieces of data, will not be protected. One solution may be to chop a large database into a number of smaller databases, making it easier to prove that there has been a substantial taking of the whole, or a number of insubstantial takings which cumulative amount to a substantial part of the whole.
The ECJ’s judgments may also cause concern regarding the potential to create monopolies in raw data where those data come from a single source. The point can be clearly demonstrated using the facts in the Fixtures Marketing cases. The data on the pools coupons comes from various sources including daily newspapers, teletext and the football teams themselves. But all this data will have been sourced indirectly from the Fixtures Marketing database at one stage or another. Following the ECJ’s judgments, it will be no defence to say that the information was sourced from publicly available information. However, the effect of this is very much watered down by the other aspects of the ECJ’s judgment.
One effect of the ECJ’s judgments will be to turn attention again to whether a database can be protected by copyright. The database right differs materially from copyright in both duration, 15 years, and scope. (It should be noted that the ECJ did not refer to the existence of a rolling right in dynamic databases. But the definition given to the word “substantial” will in any event curtail, and in most cases extinguish, the possibility of such a right existing.)
For copyright protection to apply to a database, the database has to be the author’s own intellectual creation. This is a significant qualitative hurdle: sheer “sweat of the brow” will not do. Nevertheless, claimants may be able to rely on copyright in those databases in which the investment has not been substantial, but the resulting database could not have been created by many others and therefore qualifies as the author’s own intellectual creation. Such situations are likely to be few.
To conclude, the effects of the ECJ’s judgments will be significant for two major reasons. Firstly, securing database right protection will be more difficult since investment has to be of the right sort. Secondly, the ECJ’s narrow construction given to the infringement provisions will mean that proving infringement will be more difficult unless there has been wholesale copying from the database.
Also published in the January 2005 issue of the ITMA Review.
 With apologies to George Crabbe for usurping and mangling the quote from ‘Gretna Green’: ‘The game’ he said ‘is never lost till won’
 Implemented in the UK by the Copyright and Rights in Databases (Amendment) Regulations 2003, SI 2003 No. 2501
 Case C-203/02, 9 November 2004
 Fixtures Marketing Ltd v. Oy Veikkaus AB (C-46/02); Fixtures Marketing Ltd v. Svenska Spel AB (C-338/02); Fixtures Marketing Ltd v. Organismos Prognostikon Agonon Podosfairou (C-444/02)