“So far as The British Horseracing Board’s database consists of the officially identified names of riders and runners, it is not within the sui generis right of Art. 7(1) of the [Database] Directive” - so held that the Court of Appeal on 13 July 2005 when applying the judgment of the European Court of Justice and allowing the appeal by William Hill.
The case between The British Horseracing Board (“BHB”) and William Hill (“WH”) has been on-going for 5 years. It was the first case to be brought before the High Court in relation to database rights which at that point in time was a relatively new type of intellectual property right created by the Database Directive 96/9/EC.
In summary, the facts behind this case are as follows. The BHB is the governing authority for the British horseracing industry. It is concerned with the creation of the fixture lists for each year’s horse racing in Great Britain. It maintains an electronic database which contains details of horses, owners, trainers, jockeys and fixture lists. At least part of this database comprises pre-race data, that is, information concerning the place, date and time of each race and the runners and riders. When the list of declared horses for each race is finalised, it is published. WH took its information from this final list.
In the early years of the case, it looked as if it was all going BHB’s way. They won at first instance before Mr Justice Laddie. The Judge held that database rights existed in the BHB database and noted the extensive work involved in collecting and checking the data, estimated to cost BHB of the order of £4,000,000 a year and involving approximately 80 employees. He found that, in the words of Art. 7(1) of the Directive, “there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents [of the database].”
WH appealed. The Court of Appeal gave judgment supportive of the court below, but decided to refer various questions to the European Court of Justice (“ECJ”).
In a judgment which appeared to reverse the fortunes of BHB, the ECJ underlined the requirement that, in order to qualify for protection, there had to be substantial investment in the database itself. Resources spent in creating the data in the database could not be taken into account. Thus, the owner had to show that he had spent significant investment on the right sort of activities, i.e. obtaining, verifying or presenting contents, before the database right would attach to the database.
The ECJ went one step further and also said at the end of its first ruling that “the resources used to draw up a list of horses in a race and to carry out checks in that connection, do not constitute investment in the obtaining and verification of the contents of the database in which that list appears”.
The matter then reverted to the Court of Appeal – each side saying that the judgment of the ECJ meant that they had won. As stated above, the Court of Appeal has now given judgment in favour of WH.
BHB submitted that the ECJ was acting under a “misunderstanding”; if the Court of Appeal were to focus on the series of steps by which a blank programme was filled with runners and riders, it would find that there was a database right in the database so produced. Those steps included:
- Owners phoning in to BHB to say they wanted their horse entered in a particular race;
- BHB staff entering the information into the computer and checking its accuracy;
- After the provisional list had been firmed up by the owners and final checks run, the list was published.
These steps essentially amounted to no more than a gathering, recording and verifying exercise relating to pre-existing data, or so said BHB, and that this was to be distinguished from activity which was itself creative. Since the unpublished lists of runners and riders satisfied the ECJ’s main ruling as wholly gathered in and checked information, why not the published lists?
The Court of Appeal’s judgment
Lord Justice Jacob gave the main judgment for the Court. He did not accept these submissions for two reasons.
Firstly, the ECJ did not misunderstand the primary facts nor did it indulge in an illegitimate fact-finding exercise. He accepted WH’s submission that it is legitimate for the ECJ to rule on the legal consequences of given primary facts and there had been no erroneous assumption of those facts by the ECJ. Indeed, it appeared from the transcripts, that the points taken before the Court of Appeal had been fully put to the ECJ.
Secondly, the submissions involved an illegitimate process of deconstruction of the nature of the ultimate database. The ECJ had implicitly rejected the stepwise approach by which BHB sought to demonstrate that a database had been created. Instead, it focused on the final, published database. Lord Justice Jacob noted that what marked this database out from anything which had gone before was the BHB’s stamp of authority on it. Only the BHB could provide such an official list. Because of its very nature, the list contained unique information; it was the official list of runners and riders. This was something differing from a mere database of existing independent material.
Lord Justice Pill agreed and added his own short judgment. He admitted to having some difficulty in understanding the use to which the word “create” was put in the ECJ’s judgment and whether it was used consistently. However, the distinction he understood the ECJ to be making was between, on the one hand, the “database as such” and the contents of the database and, on the other hand, the creation of lists of entries which were independent materials created subsequently. Thus, resources used for creating, which included checking, the lists of entries were not used in obtaining or verifying the contents of the database within the meaning of the Directive.
Lord Justice Clarke agreed. He went so far as to say that he was inclined to think that Mr Justice Laddie’s decision was correct when the matter last before him. However, he noted that the whole point of the ECJ was to ensure that directives were construed in the same way throughout the European Union and therefore ECJ’s reasoning had to be followed.
It should be noted from the above, that the Court of Appeal has very clearly said that the judgment of the ECJ should be followed. However, the Court seemed to be implicitly making a point when it said that so far as the database consisted of the names of the runners and riders, it was not within the database right. The BHB database contains significantly more information than the list of runners and riders which it has gathered over many years. The judgment leaves open the question of whether database rights exist in the database as a whole.
In practice, this is not of much comfort to BHB since the really valuable part of the database is the official lists of runners and riders. This is the key information wanted by the punters, bookmakers and newspapers.
At present, many bookmakers license the use of BHB’s pre-race data. Since the judgment has been published, BHB has gone on record to say that contracts between BHB and others remain in force. In making such a statement, they have a judgment of Mr Justice Laddie to support them in relation to one such agreement.
Only a few weeks before the Court of Appeal decision was handed down, Mr Justice Laddie heard a case in which the bookmaker, Victor Chandler (International) Inc (“VCI”), had stopped paying the charges due for the supply of the BHB pre-race information. VCI’s reasoning was that the ECJ’s judgment had destroyed any intellection property rights underlying the agreement and therefore it was void. Mr Justice Laddie disagreed and held that if the supply of the data was withheld from VCI by BHB’s intermediary because of the refusal to pay, they would not be in breach of the agreement.
Long term, however, the judgment will have an impact on the BHB. The Horseracing Betting Levy, a tax on bookmakers, which currently funds and develops the horseracing industry is to be phased out. The result has been that the BHB has had to seek alternative sources of income. Its database was seen as a significant commercial asset since the licensing revenue would go some way to make up what was lost through the scrapping of the Levy. The Government has agreed to extend the Levy to 2009, but a long term solution to funding the industry will have to be found.
More generally, the clarification provided by the Court of Appeal in relation to the ECJ’s judgment is most welcome. Even were there to be an appeal to the House of Lords, the judgment would be very difficult to overturn. Therefore, after 5 years, it really is the end of the race for BHB.
First published in WIPR.
  RPC 31,  EWHC 516 (Pat)
 Peter Gibson, Clarke, Kay LJJ  EWCA Civ 1268
  RPC 260, Case C-203/02, 9 November 2004
 Pill, Clarke, Jacob LJJ  EWCA (Civ) 863
 see the judgment of the Court of Appeal in Arsenal v. Reed  RPC 39, EWCA Civ 696
 BHB Enterprises plc v. Victor Chandler (International) Ltd  EWCH
1074 (Ch), 27 May 2005