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Digital Business Lawyer
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The value in the creation of a data producer’s right

In the digital era, databases and the data within them are increasingly valuable assets. Data has the potential to be leveraged by businesses and governments for commercial and social ends. Theo Savvides, Sarah Blair and Sean Ibbetson of Bristows consider in this article the deficiencies of database rights in the UK and whether the European Commission’s recently proposed data producer’s right might address these issues by extending the scope of protection to data itself.

Database rights

While the definition of ‘database’ provided in Directive 96/9/EC (the ‘Database Directive’) is extremely broad, showing that a database falls within the scope of the Database Directive and benefits from the protection it confers has proven challenging. This has resulted in numerous references to the Court of Justice of the European Union (‘CJEU’) and a critical review of the law by the European Commission in 2005.

The Database Directive’s predominant purpose was to remove the trade-distorting differences in the level of protection of databases created by the non-harmonised copyright laws of EU Member States. Some Member States with a low threshold for ‘originality’ were routinely protecting databases, those with higher thresholds were not.

The Database Directive harmonised the law across the EU. It was hoped that this would secure continuing investment by database owners and also protect the legitimate interests of users (via exceptions), and in doing so significantly boost database creation and their movement across the EU.

The Database Directive attempted this by clarifying existing rights under copyright and simultaneously introducing a completely novel form of intellectual property: the sui generis database right.

In short, the two different rights are:

• copyright arising from intellectual creativity in the selection or arrangement of the data in the database, and 

• a ‘sui generis’ database right in the contents of the database, where there has been a substantial investment in obtaining, verifying or presenting them. Database rights prevent the extraction and/or reutilisation of the whole or a substantial part of the contents (Article 3), subject to certain exceptions.

The scope of database rights

Unfortunately, the perceived scope of the Database Directive was quickly curtailed by the CJEU in the case of British Horseracing Board v. William Hill (C-203/02). In that case the CJEU held that, in assessing whether database rights subsisted in a database and its contents, resources invested in the creation of the data were not relevant. The only relevant investment was in obtaining existing independent information, their verification or their presentation.

The CJEU made clear that where a person both creates a database and is also the creator of its data, it must show that there was a substantial investment in either obtaining, verifying or presenting the materials which is independent of the resources used in creating the materials. Therefore, machine generated data, for example, does not gain protection independent of this investment. Nor is it possible to protect this data through copyright, either under the Database Directive which concerns only a database’s structure (Football Dataco, C-604/10), or under copyright law since the data often is not the result of intellectual effort and/or have any degree of originality.

As a result of British Horseracing, many who seek to develop and exploit databases have sought to protect their investment in them by limiting access to databases, encrypting data and/or through contractual restrictions over the use of data as an alternative to relying on database rights. As a result the Database Directive’s effectiveness continues to be questioned.

The Commission’s evaluation of the Database Directive published in 2005 reported no proven impact on increasing production of databases and the evaluation identified uncertainty in the database industry over the use, application and enforcement of database rights.

Since then the Commission has begun to implement its Digital Single Market Strategy and, as part of this Strategy, is considering whether to make any changes to the Database Directive. The Commission has recently published its Data Economy Package, which includes a Consultation on Building the European Data Economy. The Consultation is accompanied by a Communication and a Staff Working Paper. One proposal therein is a new ‘data producer’s right’ which may go some way to address the above concerns.

The proposed data producer’s right

The European Commission has said that non-personal and machine generated data has huge potential as a resource for economic growth within the EU. With the aim of building a vibrant European Data Economy, the Commission seeks to enable the free flow of non-personal data between EU Member States and to promote and enable access to data sets which are being created within the EU but not necessarily used to their full potential.

The type of datasets which the Commission contemplates providing access to by creating a data producer’s right is the “ever-increasing amounts of data […] generated by machines or processes based on emerging technologies, such as the Internet of Things, the factories of the future and autonomous connected systems.” One example might be the vast amount of data about cities that is being collected by companies exploring the viability of driverless cars.

The Commission believes that currently companies who are creating large datasets typically hold on to them for their own purposes, which, in the Commission’s words, “potentially restrict[s] reuse [of the data] in downstream markets.” Companies are further discouraged from providing third parties with access to the data because of uncertainty in how it might be protected.

The Commission has therefore set out a number of possible solutions to address this problem and to encourage (or even force) companies to grant third parties access to their data. One possible solution is the creation of a so-called data producer’s right. The Commission has not yet provided much detail as to the precise scope of this right, but it is envisioned to concern non-personal or anonymised machine generated data which is not yet structured in a protected database. It may therefore fill a void left by the interpretation of database rights by the CJEU.

One possibility is that the data producer’s right would be a property right: the data producer could assign or license use of its data and enforce its rights against third parties independent of contractual relations. A data producer could also seek damages upon unauthorised access to and use of the data. Alternatively, it could be a purely defensive right: allowing only for the suing of parties in cases of illicit misappropriation.

Importantly, the Commission has also suggested a number of mechanisms by which a data producer might be required to grant access to its data in order to rectify the concern that data does not currently flow around the economy sufficiently. Two of the Commission’s proposals are considered below:

• When it is in the public interest: The Commission suggests that public authorities could be granted access to third parties’ data sets where it would be in the “general interest” and would considerably improve the functioning of the public sector. One can envisage, for example, local authorities being granted the right to access real time traffic data which is collected from private vehicles, in order to improve traffic management or perhaps even monitor and try to control air pollution. 

• On FRAND terms: The Commission also raises the possibility of establishing a framework in which companies are obliged to license the data they hold which is generated by their machines or devices on ‘fair, reasonable and non-discriminatory’ (‘FRAND’) terms. To date, the EU has only mandated the compulsory licensing of IP rights on FRAND terms in exceptional circumstances, such as where the owner of a patent has a dominant position and there are no alternatives to using the patented technology. Expanding compulsory licensing to large datasets is therefore a significant potential development.

It might therefore be a somewhat give-and-take right. While a data producer might be required to provide access to its data, the value of that data is acknowledged and provided for. The data producer might have a right to remuneration and would have enforceable rights against any misappropriation or misuse which is currently unavailable by way of database rights or copyright.

Conclusion

These are currently merely proposals set out by the Commission, and it is hoped that further details will emerge during the course of 2017. Until such detail is released it is difficult to fully assess the extent to which a data producer’s right might overcome some of the deficiencies of database rights.

Companies may begin considering whether their positions are sufficiently well protected and may consider taking technological steps now to cope with future developments. From a technical perspective, firms across a variety of sectors will benefit from investing in application programming interface technologies in order to provide access to data in a convenient, low-cost way with a view to monetising their own under utilised non-personal data.

Whether the opportunities and risks presented by the Commission’s proposals affect UK companies will depend, like many things, on the negotiations between the UK Government and the EU over the following months and years. Nevertheless, companies who may be affected by the proposed changes should engage with Commission and Government consultations in order to shape the development of data sharing rules for the near future.

Theo Savvides Joint Managing Partner

theo.savvides@bristows.com

Sarah Blair Associate

sarah.blair@bristows.com

Sean Ibbetson Associate

sean.ibbetson@bristows.com

Bristows, London

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