UK: The Bookies Win Again?

(European Court of Justice, November 2004) On 9 November 2004 the European Court of Justice ("ECJ") handed down its judgement in the case of BHB v William Hill. Hill

The ECJ decision reversed the judgment of the UK High Court and held that William Hill did not infringe any database right owned by BHB.

The case concerned "database right", a law introduced by the Copyright and Rights in Databases Regulations 1997 (SI 1997/3032). This implemented European Parliament and Council Directive 96/9/EC of 11 March 1996 on the Legal Protection of Databases ("the Directive"). Since the Regulations were made pursuant to the Directive the case only concerned the interpretation of the Directive. In essence, William Hill’s online betting service was using parts of the database of information that the BHB compiles regularly in order to publicise and regulate horseracing: as this use was not authorised by the BHB, they brought an action for a breach of their database right.

At fi rst instance the High Court found in favour of BHB; this was appealed to the Court of Appeal ("CoA") who referred several questions to the ECJ. The ECJ has now given its judgement on these issues.

The Directive provides that a database is only protected by the database right if there has been substantial investment in obtaining, verifying and presenting its contents.

The ECJ has clarifi ed that this substantial investment must be independent of any investment in creating the database contents. The BHB had substantial investment in preparing the list of horses running in particular races but it had not established that there was substantial investment in taking the data that it had created and including it in a database.

Similarly, if a party creates information for a database (as opposed to collating it from various sources), although this may require substantial investment, there may be little investment required for the subsequent steps of obtaining and verifying the data for inclusion in the database. If so, the database will not be protected.

The ECJ has confi rmed that the database right can be infringed directly or indirectly (e.g. from a secondary source) and that this applies even though the database may have been made available to the public. Extraction is the transfer of data from the database and re-utilisation is making the data available to the public.

This section is in effect a restatement of what was understood to be the effect of the Directive.

Extraction and/or re-utilisation of all or a substantial part of the database protected by the database right is not permitted. It appears this is analogous to the copyright test with quantitative and qualitative (e.g. how much was invested in the part extracted?) tests to be applied.

The more important ruling of the ECJ is that, contrary to the assumed position, repeated extraction and /or reutilisation of insubstantial parts of the database will not be an infringement unless the cumulative effect is that all or a substantial part has been extracted and/or re-utilised. Otherwise, the ECJ did not consider that the database owner’s rights were being seriously prejudiced.

This is potentially counter-intuitive in that the larger the database the greater the degree of copying which may be allowed. For example, a party creating its own database may access other such databases and extract insubstantial parts on a number of occasions: each such extraction will not infringe the database on its own. Furthermore, it is unlikely that the repeated extractions will be on such a scale that they amount to a substantial part of the database having been extracted.

Unfortunately the ECJ chose not to consider whether the re-ordering of a substantial part of a database that had been extracted would constitute infringement as it had found for William Hill on point 1 and 3 above, so this issue remains open for argument.

(The ECJ also did not answer whether a new database was created and so whether a new 15 years’ protection period then applied, although in theory if there is substantial investment in the new version of the database, this seems possible.)

The ECJ has narrowed signifi cantly the scope of the database right. It is more diffi cult to establish the existence of the right as the substantial investment must be directed at the collection of data and formation of the database, and investment in the creation of data is to be excluded. It is also more diffi cult to establish infringement as it must be shown in every case that at least a substantial part of the database has been extracted/ re-utilised (whether this is on one occasion or by a series of insubstantial extractions/re-utilisations).

The position on copyright protection for databases remains unchanged. Databases may be protected by copyright if they are the author’s own intellectual creation and the contents of the database may be protected by literary copyright. Again, infringement must be copying of a substantial part.

The result is that those utilising the databases of others are likely to be in a stronger position should allegations of infringement of rights in third party databases be made. Any rights holder will have to demonstrate a substantial part of its database has been extracted/re-utilised/copied (as appropriate) for the creation of another party’s database—a threshold that is higher than previously thought.

Although William Hill appear to have won by a nose, in the aftermath of the case the BHB have said that they believe that the ECJ’s interpretation of the law is, in fact, favourable to their case but that the application of that interpretation to the facts is inconsistent with that interpretation. They are continuing with the case in the Court of Appeal. The chairman of the BHB has said that whatever the outcome of the Court of Appeal Case, the ECJ’s ruling gives them a "road map to enable us to reconfi gure our processes to meet the legal requirements for charging for data". This is vital for the horseracing industry in the UK as the value of the BHB’s business is likely to have dropped considerably after the ECJ ruling.

Going forward, therefore, it is clear that those who create databases will need to structure their business very carefully in order to avoid inadvertently failing to avail themselves of the database right.

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