Feature: Is this the end of the database right? - October 2005  

In the first part of a two-part feature, Dominic Bray and Lucy Otterwell from law firm Kirkpatrick & Lockhart Nicholson Graham assess how a major ruling impacts on the database rights of sports properties.

In a landmark decision, the English Court of Appeal has upheld the European Court of Justice's (ECJ’s) controversial ruling in the case of British Horseracing Board (BHB) versus bookmaker William Hill. The decision, which was unanimous, confirms the ECJ's highly restrictive interpretation of the database right and leaves the BHB, and other database owners, in the unenviable position of having to re-assess the extent of their rights and the value of their databases as a source of revenue. The decision has particular impact on those involved in the creation or licensing of sports results and related data.
This is the latest in a series of cases for the BHB concerning the exploitation of pre-race data and, in particular, its sale to bookmakers. In May 2005, the Court ruled in favour of the BHB and its distributor, the Press Association, on an application by Victor Chandler seeking to prevent the BHB terminating its feed of pre-race data. Victor Chandler had refused to pay for that data following the ECJ’s ruling in the William Hill case in November 2004. It argued that its data licence from the BHB was entered into on basis of a mistake of law and/or a misrepresentation, and also that the BHB was abusing a dominant position in the market by charging excessive prices for the use of the data. The Court roundly rejected Victor Chandler's arguments saying that, regardless of whether database rights subsisted in the data, the BHB was providing a service and Victor Chandler should pay for if it wanted to continue receiving data from the BHB.
In June 2005, Attheraces took the BHB to Court on the competition issue, asserting various abuses of a dominant position, including excessive pricing, unjustified cessation of supply and unfair purchase and trading conditions. The BHB failed in its application to strike out the claim and Atthreraces was granted an interim injunction to prevent termination of the supply of pre-race data.
The claims brought by Victor Chandler and Attheraces demonstrate the practical ramifications of the ECJ’s decision in the William Hill case, and the latest from the Court of Appeal is not going to help the BHB’s position.

Stand alone IP

The facts and background to the BHB's claim against William Hill are well-rehearsed. The BHB's claim is based on the database right, a stand alone intellectual property right that stems from the European Database Directive and was introduced into UK law on 1 January 1998. The database right protects databases that are the result of a substantial investment in either the obtaining, verification, or presentation of the contents of those databases. Owners of databases can prevent others from extracting and/or re-utilising the whole or a substantial part of the database, and from repeatedly and systematically extracting and/or re-utilising insubstantial parts of the database.
The BHB invests substantial sums (approximately £4m each year) creating and maintaining a database of horseracing information, including "pre-race information", principally the runners and riders for all races in its fixture list. Whilst the BHB is responsible for creating the fixture list, it obtains the pre-race information from owners, trainers and tracks. The final list of declared runners and riders is published by the BHB, but only after it has been subject to various checks for accuracy and compliance with BHB regulations.
William Hill used BHB's pre-race information for its internet betting service without obtaining the BHB's consent. BHB claimed that it owned database rights in the pre-race information and that Williams Hill's unauthorised extraction and re-utilisation of that information infringed those rights.
When the case first came before the English courts, Laddie J found in favour of BHB. William Hill appealed to the Court of Appeal who referred various questions to the ECJ, in essence asking for guidance on the interpretation of the database right and whether it would apply to the database created by the BHB.
In November 2004, the ECJ gave a ruling that turned accepted thinking on its head. It held that the BHB's database was not protected by the database right. Despite the fact that the BHB invested £4m a year on the database, that investment was not of the right sort for the database to qualify for protection. The Directive provides that, for database rights to subsist, there must be substantial investment in obtaining, verifying or presenting the data within that database. The ECJ interpreted this as meaning that there must be investment in creating the database as such rather than investment in creating the data itself. The ECJ held that when compiling the list of declared runners and riders, the BHB was investing money in creating data, rather than obtaining it, and that such investment did not entitle the BHB to protection. In addition, even though the BHB spent time and money verifying the runners and riders and associated information, those checks amounted to investment at the stage of creation, rather than in the verification of existing data, and was equally unable to qualify for protection.

Investment issues

Prior to the ECJ decision, it was commonly thought that the £4m spent by the BHB in gathering and checking the pre-race information would be more than sufficient to entitle the BHB's database to protection. After all, the BHB had no role in choosing which horses were to run or the weight or saddle colours of those horses; it simply collected that information from trainers and tracks and entered it into the database. This seemed to fall easily within the concept of investment in obtaining and verifying data. However, the ECJ interpreted this as data creation. Until the BHB put together the data that x horse would run in y race bearing z colours, that data did not exist. All the time and money invested in checking that data related to checks at the stage of creation. Accordingly, none of the BHB's £4m investment qualified its database for protection.
The controversial nature of the ECJ decision led to some speculation that the English Court might find that the ECJ had either undertaken an illegitimate fact finding exercise, or simply misunderstood the facts, and would then apply the ECJ's reasoning to the facts and find in favour of the BHB. The BHB ran these arguments before the Court of Appeal and failed on both. The Court of Appeal accepted the ECJ's interpretation and found that the BHB's database was not entitled to database right protection.
So, where does this leave database rights? Find out in next month’s S&T….

Dominic Bray is a partner and Lucy Otterwell is an assistant in the Intellectual Property, Technology and Sports Department at Kirkpatrick & Lockhart Nicholson Graham LLP - +44(0) 20 7648 9000 / dbray@klng.com / lotterwell@klng.com

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