There has for a long time been a fierce debate as to whether databases should be protected by copyright. Developers of databases argue that protection is required to encourage them to invest. Users of databases argue that copyright should not protect factual information because it prevents that information being used efficiently.
There has also been a great deal of uncertainty as to whether certain databases are in fact protected by copyright.
The policy debate and legal uncertainty has not been confined to Australia. In the US the pendulum seems to have swung against protecting databases (Fiest Publication v Rural Telephone Service Co Inc  USSC 490). In Europe protection has been provided via a separate EU Directive (EU Directive on the Legal Protection of Databases 96/9/EC of 11 March 1996). In Australia the position is still unclear.
The most valuable and also most widely recognised databases in Australia are the White and Yellow Pages owned by Telstra (and its subsidiary Sensis). Telstra generates significant revenue from its directory businesses. For example in 2006 it generated more than $1.3 billion. Telstra has spent considerable amounts on developing its directory databases. For example its implementation of the Genesis computer system which is used to maintain and update the databases cost over $300 million. It is no surprise then that Telstra has gone to great lengths to argue that these databases are protected by copyright.
In 2002 Telstra ran a case against Desktop Marketing to the full federal court and it secured a favourable judgement to the effect that copyright subsists in the White and Yellow Pages (Desktop Marketing Systems Pty Ltd v Telstra Corporation Ltd (2002) 119 FCR 491). However in 2009 in IceTV Pty Limited v Nine Network Australia Pty Limited (2009) 254 ALR 386 the High Court of Australia cast significant doubt on the correctness of the Desktop Marketing case.
2. The Decision
This year in Telstra Corporation V Phone Directories Company Pty Ltd  FCA 44 Telstra had another opportunity to secure a favourable decision. Unfortunately for Telstra Justice Gordon in the Federal Court followed the reasoning in the IceTV case and found that copyright does not subsist in the White and Yellow pages.
In this case Phone Directories cleverly required Telstra to prove which individuals provided the authorial contribution to each work. Although it was clear that many individuals were involved in producing the databases Telstra struggled to identify the specific authors. This requirement of proving which individuals created a copyright work is a common issue in copyright litigation. In most cases companies struggle to identify the specific individuals because they are either unknown or have left the company or they were contractors and there is quite often no agreement with the contractor to secure copyright ownership.
In addition to losing on the issue of authorship Justice Gordon went further and found, based on the Ice TV reasoning, that the databases cannot be considered as original works because their creation did not involve "independent intellectual effort" and/or the exercise of "sufficient effort of a literary nature". In making this finding the judge seemed to be heavily influenced by the fact that the databases were largely computer generated.
If the reasoning in this case is applied to other databases it is difficult to think of a relational database that would be protected by copyright as virtually all relational databases are largely computer generated. The rules which determine the structure of the database are human generated but that does not seem to have been sufficient to establish copyright in this case.
Justice Gordon recognised in the case that relational databases will often not be capable of copyright protection and she referred to the European legislative solution and expressed a view that parliament in Australia should address the issue without delay.
3. An Appeal
Telstra have initiated an appeal of the Phone Directories case to the full Federal Court and regardless of the outcome it is likely that the case will proceed to the High Court so the law in this area is far from clear.
There are really two key issues (both of which require clarity to be provided by the High Court):
- Is it necessary to prove specific authors of a work to prove copyright ownership by a corporate employer of individuals that created the work?
- What is meant by "independent intellectual effort" or "sufficient effort of a literary nature" in the context of establishing subsistence of copyright in a relational database or in other words what degree and type of effort is enough to secure copyright protection for a relational database?
4. An Opinion
In my opinion, a corporate employer should not have to prove the specific authors of a work. To require this would make it very difficult to establish copyright in any substantial work created for a corporate. It should be sufficient if you are able to prove that your employees created a substantial part of the work, regardless of their specific identity.
With respect to what is meant by "independent intellectual effort" or "sufficient effort of a literary nature" in the context of establishing subsistence of copyright in a relational database in my opinion the degree of effort should be minimal and any type of effort should be sufficient (whether creative or not). Anything more leaves a position of great uncertainty as to what is meant by these terms. The effort in establishing the rules for a relational database should be considered to be sufficient even if the rules are not creative.
If this opinion is accepted then relational databases will generally be protected by copyright. Consideration should then be given to the issue of encouraging efficient use of information. There are many government departments and agencies in Australia that hold information which they obtain or generate as part of their statutory role as well as companies that obtain information due to their monopoly position. Examples include postal and bar code information held by Australia Post, spatial data held by State and Commonwealth agencies (and controlled companies) as well as telephone number and related information held by Telstra. In my opinion consideration should be given to requiring these agencies and companies by legislation to make this information (including updates of it) available free of charge to a publicly available database (in a standard format) that can then be accessed and used by companies that wish to develop value added products, including competing databases.
5. New Legislation
In addition to appealing the Phone Directories case, as the judge suggested in the case itself, Telstra is also likely to lobby government to introduce specific legislation to protect databases in line with what has occurred in Europe. However, it is by no means clear from a policy perspective that such legislation should be introduced especially considering the position in the US where relational databases are generally not protected and the valid policy arguments against protecting databases of factual information.
6. Implications for Database Owners
The key message for database owners is that it will be difficult for them to protect their databases through copyright. Therefore they need to carefully consider other forms of protection including:
- Confidentiality - keep the database confidential and ensure confidentiality agreements are in place with users
- Contract - secure protection via contractual arrangements with users
- Physical - build physical and technical protections that make it difficult to copy the database
- Updating - retain the ability to update the database so that copies quickly become out of date
In addition, database owners should also maximise their chance of securing copyright protection by keeping records of authors and the work they performed and ensuring that contracts are in place with all contractors with suitable copyright assignment provisions.
7. Implications for New Entrants
The key message for new entrants is that, even though there is now a decision in the Federal Court to the effect that there is no copyright in the White and Yellow Pages, the issue has not been finally resolved due to the pending appeal and also due to the risk of government legislation in this area. Therefore new entrants need to take great care in developing their strategy. New entrants also need to take care not to breach confidentiality or contractual obligations they may have.
Despite the very real risks and uncertainty that still exists for new entrants in my opinion we can expect new entrants to enter the market in an attempt to capture some of the over $1 billion generated by Telstra from its directories business as well as to capitalise on the undoubted very real business opportunities to offer new value added products (especially over the internet).
The issue of copyright in databases is far from resolved in Australia. Telstra has lost a case at first instance in the Federal Court. However, an appeal is underway and government intervention is a possibility. There is no doubt that the issue is a very important one for developers and users of databases as well as for looming new entrants.
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.