Australia: Can use of a database be protected via a contract or license?

Big data: Legal challenges
Last Updated: 7 February 2014
Article by Mark Vincent and Katrina Crooks

Big Data: Legal Challenges (Full Report)

For databases which are securely controlled, a contract is the best method to restrict and control access and use of the data. Often the database owner will seek to form such a contract online, which gives rise to issues as to the way in which traditional contract law principles apply to online agreements.

Enforceability of contracts purported to be made online

'Clickwrap' agreements, which require the user to indicate assent by clicking 'ok' or a similar button, have been routinely upheld in US law50 by application of orthodox principles of contract law in cases where it has been established that the terms of the contract have been drawn to the attention of the offeree and the offeree has manifested acceptance to those terms.

The position appears to be the same in Australia. In eBay International v Creative Festival Entertainment51, the Federal Court held that clickwrap agreements made on two websites were valid contracts. Similarly, in Smythe v Thomas 52, the Supreme Court of New South Wales held there was a binding contract where a purchaser bid in, and "won", an auction on eBay.

The position in relation to so called "browsewrap" agreements is less clear. In these cases a set of terms and conditions is available via a hyperlink on the website but the user is not forced to open the relevant web page, or click "I agree" after reading such terms. The information on the website is not protected for access to contracting parties only. In the United States, the position appears to be that browsewrap agreements are unenforceable unless the enforcing party can show that the other party had actual or constructive notice of the terms53. Whether browsewrap agreements are enforceable in Australia remains to be seen.

The enforceability of such online contracts has come to the fore in the context of website "scraping". "Scraping" refers to wholesale copying of data or information from websites, usually through automatic software programs54. The scraper can then use the data in competition with the website owner. The question arises as to whether a website owner which prohibits scraping in its website terms and conditions can claim breach of contract against a scraper.

The United States Court of Appeals for the Second Circuit in v Verio55 considered a breach of contract claim against a scraper of domain name registration data ("WHOIS data"). The website owner,, claimed that Verio's scraping of WHOIS data breached its terms of use. Verio admitted that it was aware of's terms (which were shown together with the requested WHOIS data), but argued that it had never agreed to them. Based on Verio's actual knowledge of the terms, the Court held that Verio had agreed to them56:

"We recognize that contract offers on the Internet often require the offeree to click on an 'I agree' icon. And no doubt, in many circumstances, such a statement of agreement by the offeree is essential to the formation of a contract. But not in all circumstances. While new commerce on the Internet has exposed courts to many new situations, it has not fundamentally changed the principles of contract. It is standard contract doctrine that when a benefit is offered subject to stated conditions, and the offeree makes a decision to take the benefit with knowledge of the terms of the offer, the taking constitutes an acceptance of the terms, which accordingly become binding on the offeree. ..."

Across the Atlantic, the High Court of Ireland held in Ryanair v GmbH57 that a data scraper was bound by Ryanair's terms of use, which were accessible by a hyperlink from Ryanair's website. Hanna J reasoned:

"[I]t is a well established general principle of law that parties to a contract cannot be bound by terms which they have not had an opportunity of reading prior to making the contract. That is not to say that a party will not be bound because they have not read the terms - they will only escape being bound if they can show they were not afforded a reasonable opportunity to read the term in question before entering into the contract. In Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433 it was held that where a condition is particularly onerous or unusual, the party seeking to enforce it must show that that condition was fairly brought to the notice of the other party. ...
In [Thornton v Shoe Lane Parking [1971] 2 WLR 585], the House of Lords held that the defendants had not taken sufficient steps to ensure that the notice containing the exclusion of liability clause was brought to the attention of customers of the car-park before they purchased their tickets and in those circumstances that the clause was invalid and of no effect. Here, the exclusive jurisdiction clause was contained in the Terms of Use on the plaintiff's website, highlighted by way of a hyperlink. In such circumstances, the Terms of Use on Ryanair's website were 'fairly brought to the attention of the other party'. It seems that the Terms of Use were clearly accessible by way of a hyperlink which was at all times clearly visible to users of the plaintiff's site. The Terms were not hidden in an awkward part of the screen or in any way concealed or difficult to find. The inclusion by Ryanair of their website terms of use via a hyperlink that the website user is required to view and assent to results in the user entering into what is known as 'a click-wrap agreement' with Ryanair."

Because of the limitations of contract law, database owners (and their lawyers) have turned to other, more imaginative causes of action against data scrapers. In the United States, classifieds website operator Craigslist has sued 3Taps and other data scrapers citing no less than 17 different causes of action, including violation of Computer Fraud and Abuse Act58. In Australia, UK domain registry operator Nominet successfully sued a WHOIS data scraper under copyright and misleading or deceptive conduct59.

Licensing of data

In circumstances where a data controller can limit access to the data, the licence agreement becomes all important in restricting use of the data by authorised users. However the ability of data owners to license data has not been without doubt. In Attheraces v The British Horse Racing Board60 it was argued that absent intellectual property rights in data, it cannot be licensed. The English High Court rejected the proposition61:

"I agree with BHB that it is entitled, in principle, to impose a charge for use of its pre-race data by, and for the benefit of, overseas bookmakers, whether or not BHB has IP rights in respect of the data, and, in particular, database rights under the Databases Directive and the Databases Regulations or copyright, and irrespective of the extent of any such rights. BHB has, in the data, a valuable commodity, for which it is entitled to charge. There is no authority to the contrary, including the William Hill case."

A similar conclusion was reached by the US Court of Appeals for the Seventh Circuit in ProCD v Zeidenberg62, in which the defendant argued that a claim for breach of contract for copying of electronic telephone directory data was "pre-empted" by copyright law. The Court rejected the defendant's argument, holding that "a simple two-party contract is not 'equivalent to any of the exclusive rights within the general scope of copyright' and therefore may be enforced."63

There is no reason to expect that any court in Australia or New Zealand would take a different approach. It is our view that "mere information" in the form of a large unstructured or semi-structured data set can be licensed in the absence of IP rights in the data. This control over access, use and return of the data would be a condition of access to the "data owner's" servers and such contract would be enforceable. However, in the absence of IP rights in the data, the underlying information or insights derived from their use would be much more difficult to restrict.

Competition law

In many cases, owners of Big Data databases with commercial value may be dominant in the market for supply of data stored in the database. As such, they may become subject to the restraints of competition law.

Australian and New Zealand law prohibit a party with a substantial degree of power in a market taking advantage of that power for certain anti-competitive purposes64. While the New Zealand legislation contains a general provision that enforcement of an intellectual property right does not amount to such taking advantage65, the equivalent Australian provision is more limited in that it exempts only provisions in intellectual property licences and assignments and does not refer to the enforcement of intellectual property rights in general66. In any event, as has been outlined above, it is not clear that such databases will be entitled to intellectual property protection so as to fall within any such exemptions.

Examples of action taken by relevant authorities to ensure access to data can be found in many jurisdictions. In Australia, as far as back as 1997 the Australian Competition and Consumer Commission initiated action against Telstra to ensure access (for a licence fee) for third parties to the name, address and telephone information it collects67. The European Commission has also investigated various cases in which the provision of data has featured68.

The British Horseracing Board ("BHB") database discussed above in relation to the European database right and copyright has also been the subject of a competition claim. In ATTHERACES Ltd v The British Horse Racing Board69, the claimants ("ATR") ran a website and television channel including coverage of horse races and provided pre-race data to viewers and prospective betters which was derived from the BHB database. ATR alleged that BHB had abused its dominant position contrary to Article 82 of the EC Treaty by way of the terms it sought to impose for supply of pre-race data, including excessive, unfair and discriminatory pricing. The English High Court found these claims to be made out.

Anti-competition claims have also been made by defendants in the context of the 'scraping' cases in the United States. In eBay v Bidder's Edge70, Bidder's Edge, an auction data aggregator used a 'crawler' to obtain data from the eBay website. eBay issued proceedings in respect of such 'scraping' on a number of grounds, which were met with a counterclaim from Bidder's Edge on anti-competition grounds. An application for a preliminary injunction was heard and having found that eBay had a likelihood of success in its claims, the Court was not required to consider the merits of the anti-trust claims. The case was subsequently settled so the anti-competition arguments were not tested.

Related links


50Hancock v AT&T, 701 F 3d 1248, 1256 (2012, 10th Cir)
51(2006) 170 FCR 450
52(2007) 71 NSWLR 537
53Recent US cases include Roller v TV Guide Holdings, LLC, 2013 Ark 285, Ajemian v Yahoo!, Inc, 83 Mass App Ct 565 (2013), In Re, Inc, 893 F Supp 2d 1058 (2012) and Nguyen v Barnes & Noble, Inc, (USDC CD Cal, Case No. 8:12-cv-0812-JST (RNBx), 28 August 2012)
54See Wikipedia, "Web scraping":
55356 F.3d 393 (2004)
56Ibid, 403
57[2010] IEHC 47
58Craigslist, Inc v 3Taps, Inc (USDC ND Cal, Case No CV 12-03816 CRB, 30 April 2012): "The FAC alleges claims for (1) trespass; (2) breach of contract; (3) misappropriation; (4) copyright infringement; (5) contributory copyright infringement; (6) federal trademark infringement; (7) federal false designation of origin; (8) federal dilution of a famous mark; (9) federal cyberpiracy prevention; (10) California trademark infringement; (11) common law trademark infringement; (12) California unfair competition; (13) violations of the Computer Fraud and Abuse Act (CFAA); (14) violations of the California Comprehensive Computer Data Access and Fraud Act; (15) aiding and abetting trespass; (16) aiding and abetting misappropriation; and (17) an accounting."
59Nominet UK v Diverse Internet Pty Ltd (2004) 63 IPR 543
60[2005] EWHC 3015
61Ibid [285]
62ProCD, Inc v Zeidenberg, 86 F.3d 1447 (1996)
63Ibid 1455
64Section 46, Competition and Consumer Act 2010 (Australia); section 36, Commerce Act 1986 (New Zealand)
65See section 36(3), Commerce Act 1986
66Section 51(3), Competition and Consumer Act 2010
67 See
68See for example, proceedings initiated against Thomson Reuters in relation to restrictions on use of certain real-time market data which limited customers' ability to switch data providers:; and two investigations in relation to the Credit Default Swaps market in particular examining privileged access to CDS transaction data by Markit, an information service provider:
69[2005] EWHC 3015 (Ch)
70100 F.Supp.2d 1058 (N.D. Cal. 2000)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Shelston IP has been awarded the MIP Global Award for Australian IP Firm of the Year 2013.

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