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96/9/EC Interpretation Case Study: The British Horseracing Board Ltd and Others v. William Hill Organization Ltd

The Facts

The British Horseracing Board (BHB) is the governing authority for the British horse racing industry, and maintains a large database containing some 214 tables and 20 million records. BHB works in conjunction with Weatherbys, who has since 1793 maintained horse lineage information through the Stud Book. It is from this information that the BHB database ultimately originated.

Weatherbys performs several functions in compiling horse and race data:

  1. Registration of data concerning horses, and their owners, trainers, and jockeys.
  2. Compiling a list of running horses for each race occurring under BHB’s oversight. This occurs in a call center. A caller identifies himself, the code for the race he wants to enter, the horse who will run, and the horse’s owner.

    1. First, Weatherbys must check that each horse is qualified to race. This takes two stages.

      1. In stage one, a call operator verifies that the horse is qualified by age and sex; that the caller is authorized to enter this horse; that the horse’s owner is registered; that the horse’s trainer is licensed; that the horse’s name is registered; and that Weatherbys has been advised that the horse is in the trainer’s care.

        1. After this step, a “provisional” list of running horses is compiled.
        2. Later in the day, a recording of each call is verified against the data in the computer - but not by the same call operator who took the call.
      2. In the second stage, each horse is double checked for eligibility and the horse’s past performance is analyzed to assign odds to the horse for its upcoming race. This list becomes a “confirmed” list of runners.
    2. Finally, the horse’s trainer must confirm (“declare”) that he wants to race the horse, on the day before the race.
  3. After all of this, the system assigns numbers and starting positions to each horse for the race.
The cost of maintaining this database is estimated at 4 million pounds UK per year - a fairly significant investment. Weatherbys recovers some of the costs by selling the information to bookmakers and other information services. The data is available to publishers, bookies, and to the public.

William Hill is a bookmaker, which provides betting services through its offices throughout the UK. In its offices the company provides live coverage of horse races, as well as screens displaying current odds for upcoming races. At the time of the dispute both services were provided by Satellite Information Services (SIS); SIS received its horse racing information as a data feed from BHB.

The dispute in this case centered on William Hill’s expansion into Internet betting services. In early 2000, the company began to offer Internet betting on all races in the UK, using data from the feed William Hill received from SIS, which in turn contained the BHB-supplied information. BHB sued, claiming both that it owned the rights in the database, and that William Hill’s use of the data constituted an unlicensed use.

BHB relied on two 96/9/EC provisions in its claim. “First [BHB] says that each day’s use by William Hill of data taken from the SIS [feed] is an extraction or re-utilization of a substantial part of the contents of its database contrary to art 7(1) of the Directive. Second, it says that, even if the individual extracts are not substantial, nevertheless the totality of William Hill’s actions amount to repeated and systematic extraction or re-utilization of insubstantial parts of the contents of the database contrary to art 7(5).”

Round 1: BHB Wins

Britain’s High Court of Justice first found for BHB. The key reasoning given by the court was that, although the investment put forth in creating the data was not a relevant issue, investment in gathering the data was relevant; in fact, it was the investment in such a database that the Directive was meant to protect.

In the light of this it appears that for database right to exist, there must be investment in its creation and, in particular, that investment must be directed at obtaining, verifying or presenting the contents. As is apparent from art 7(1), the investment must be substantial enough to justify protection. ... [W]hatever the [required level of investment], it is not suggested that the investment in the BHB Database falls below it.

Of more significance to this dispute is the type of investment involved. As one would expect, effort put into creating the actual data which is subsequently collected together in the database is irrelevant. This is confirmed by art 7(4) which draws a distinction between rights in the database and rights in the data within the database...

On the other hand, the efforts which go into gathering all the data together, including the dates of fixtures, is relevant. Such activities constitute “obtaining” the data, one of the types of investment referred to in art 7(1) and Recital 40. In practice where one person both creates the underlying data and gathers it together, as BHB does, it may be difficult to draw a sharp dividing line between the two activities.
Investment in “verifying” the data was also found to be relevant.

Investment in “verification” is also relevant to the subsistence and protection of database right. Verification consists of ensuring the accuracy of a collection of data. Thus even if the content or form of the collection of data are substantially unchanged, effort put into ensuring its accuracy, or continuing accuracy, is relevant and is to be protected.
In addition, investment in “presentation” was a factor.

Finally, investment in “presentation” also counts. It appears to me that this must cover at least the effort and resources put into making the data more readily accessible by the user. Effort put into the design of the layout of the information should count.
William Hill argued that the sui generis protections extended only to the structure of the database itself, not the underlying facts; and that since only the facts and hot the structure were used, BHB’s rights had not been violated.

[William Hill] says that one must distinguish between the data or information within a database and the characteristics which give rise to the new type of protection. Database right does not protect the information within a database per se. It is crucial that BHB cannot use any database right which it may own to prevent William Hill, or anyone else, from making use of any facts within its Database. Taking the facts, and only the facts, can never infringe database right, whether one fact is taken or all of them. What is protected is what he calls the “database-ness” of the collection of information.

These recitals make it clear that infringement of the new right is not avoided by taking the contents and rearranging them. On the contrary, what has to be protected is not primarily the form but the investment which went into “obtaining, verifying or presenting the contents” of the database... It is for this reason that substantial investment in verification (where the form is substantially unchanged) still qualifies for database right... In such a case, the infringer takes advantage of the relevant investment if he makes use of the accuracy of the data in the database, not because he takes it in a particular form.
The Court concluded that William Hill had extracted substantial parts of the database in violation of Article 7 § 1:

It follows that William Hill’s actions of taking information from the [feed] and loading it onto its own computers for the purpose of making it available on its website is an unlicensed act of extracting a substantial part of the BHB Database and the subsequent transmission of that data onto its website for access by members of the public is a reutilization. The defendant infringes BHB’s rights in both ways.
In addition, William Hill argued that since the database was being continuously updated, it was for all practical purposes not the same database on any two days, and thus the day-to-day use of the information could not be considered repeated extraction. However, the Court rejected this argument, concluding that William Hill violated Article 7 § 5 by repeated unauthorized extractions of insubstantial parts:

In my view the BHB Database is a single database which is in a constant state of refinement. It seems to have been so regarded by all the witnesses. An attempt to split it into a series of discrete databases, besides being impossible to do, would not reflect reality... William Hill’s borrowing from it from day to day come within art 7(5) as repeated and systematic extractions and re-utilizations of parts of its contents... For these reasons, I have come to the conclusion that William Hill also breaches BHB’s rights under art 7(5).

Round 2: Interpretation Difficulties and Language Barriers

On appeal, William Hill raised questions of how to interpret several key terms in Article 7, sections 1 and 5 of the Directive. First was whether data read from a database but subsequently rearranged even fell within the Directive’s protections:

May either of the expressions: (a) “substantial part of the contents of the database”; or (b) “insubstantial parts of the contents of the database” in Article 7 of the Directive include works, data or other materials derived from the database but which do not have the same systematic or methodical arrangement of and individual accessibility to be found in the database?
Next, what precisely did the Directive mean by “obtaining” data - did this mean both gathering and creating data? In her opinion of June 8, 2004, Advocate General Stix-Hackl turned to translated versions of the Directive for guidance.

What is meant by obtaining’ in Article 7(1) of the Directive? In particular, are the facts and matters in paragraphs 24-31 [describing Weatherby’s process of data collection] capable of amounting to such obtaining?

If we start with the term Beschaffung, used in the German version of Article 7(1), it can only concern existing data, as it can only apply to something which already exists. In that light Beschaffung is the exact opposite of Erschaffung (creation). Analysis of the wording of the Portuguese, French, Spanish and English versions, which are all based on the Latin obtenere, to receive, yields the same result. The Finnish and Danish versions also suggest a narrow interpretation. The wide interpretation of the English and German versions advocated by many parties to the proceedings is therefore based on an error.
In addition, did Weatherby’s careful vetting of horse data constitute “verification” under Article 7?

Unlike “obtaining”, “verification” applies to data which already form the contents of the database. That suggests, prima facie, that the time at which the verification under Article 7(1) takes place is after the registration which is to be verified. The provision thus appears not to cover those verifications which concern materials which have yet to be registered as they do not constitute the existing contents of the database.

It is essentially a matter of “monitoring the materials” of a database in respect of completeness and accuracy, which includes checking whether a database is up to date. However, the outcome of such verification could also require the obtaining of data and their entry in the database.
The Court also noted that other provisions in the Directive were ambiguously translated between versions, leading to confusion about what they actually meant. For example, the prohibition on “extraction and/or reutilisation” was formulated somewhat differently across versions.

...Article 7(5) of the Directive lays down a prohibition on the extraction and/or re-utilisation of insubstantial parts of the contents of a database... [N]ot every extraction or re-utilisation is prohibited but only defined instances. Repeated and systematic acts are required... Article 7(5) requires unauthorised acts to have a specific effect. In that regard, Article 7(5) provides for two alternatives: the unauthorised acts must either conflict with a normal exploitation of that database or unreasonably prejudice the legitimate interests of the maker of the database... However, the interpretation of Article 7 generally raises a problem in that the German language final version of the Directive was formulated rather more weakly than the Common Position. It is now sufficient for the act to “imply” (“hinausläuft”) rather than “have the result of” (“gleichkommt”) one of the effects described. The other language versions are formulated more directly and essentially concern extraction and/or re-utilisation which conflicts with a normal exploitation of that database or which unreasonably prejudices the legitimate interests of the maker of the database.

[I]t is unclear whether Article 7(5) lays down two alternative or two cumulative requirements. Any interpretation should begin with the wording of the provision. However, that does not yield any unequivocal result. Some language versions link the two requirements with “and” [German, English, Greek, and most Romance Language versions], others with “or” [Spanish, Swedish, and Finnish translations]. Most of the language versions and the objective of the Directive, however, indicate that the two characteristics are to be understood as cumulative requirements. A repeated but not systematic extraction of an insubstantial part of the contents of a database is therefore not covered.
In addition, the term “normal exploitation” was also inconsistently handled.

Finally, “conflict with a normal exploitation” must not be interpreted so narrowly that only a total ban on exploitation would be prohibited. According to all the language versions other than the German the prohibition is applicable as soon as there is any conflict with exploitation, that is to say, even in the case of negative effects on a limited scale. That is also where the threshold lies above which detriment to the maker of the database can be assumed, thus triggering the prohibition.

Round 3: Questions answered(?)

On November 9, 2004, the European Court of Justice resolved these questions - but not in BHB’s favor. Specifically, the Court ruled that while Article 7(1) of the Directive will protect a database maker’s investment in obtaining the contents of a database, it will not protect an investment in creating those same contents.

Article 7(1) of the directive reserves the protection of the sui generis right to databases which meet a specific criterion, namely to those which show that there has been qualitatively and/or quantitatively a substantial investment in the obtaining, verification or presentation of their contents.

[The Directive’s] purpose, as William Hill points out, is to promote and protect investment in data “storage” and “processing” systems which contribute to the development of an information market against a background of exponential growth in the amount of information generated and processed annually in all sectors of activity. It follows that the expression investment in ... the obtaining, verification or presentation of the contents’ of a database must be understood, generally, to refer to investment in the creation of that database as such.

Against that background, the expression investment in ... the obtaining ... of the contents’ of a database must, as William Hill and the Belgian, German and Portuguese Governments point out, be understood to refer to the resources used to seek out existing independent materials and collect them in the database, and not to the resources used for the creation as such of independent materials. The purpose of the protection by the sui generis right provided for by the directive is to promote the establishment of storage and processing systems for existing information and not the creation of materials capable of being collected subsequently in a database.
The Court did note that simply being linked to the creation rather than the obtaining of data will not by itself preclude sui generis protection under the Article; but that the investment in obtaining must be distinct from the investment in creating, and in the case of BHB, the investment went into creating the data, rather than obtaining it.

[T]he fact that the creation of a database is linked to the exercise of a principal activity in which the person creating the database is also the creator of the materials contained in the database does not, as such, preclude that person from claiming the protection of the sui generis right, provided that he establishes that the obtaining of those materials, their verification or their presentation... required substantial investment in quantitative or qualitative terms, which was independent of the resources used to create those materials.

[I]nvestment in the selection, for the purpose of organising horse racing, of the horses admitted to run in the race concerned relates to the creation of the data which make up the lists for those races which appear in the BHB database. It does not constitute investment in obtaining the contents of the database. It cannot, therefore, be taken into account in assessing whether the investment in the creation of the database was substantial.

In the light of the foregoing, the second and third questions referred should be answered as follows:

- The expression “investment in ... the obtaining ... of the contents” of a database in Article 7(1) of the directive must be understood to refer to the resources used to seek out existing independent materials and collect them in the database. It does not cover the resources used for the creation of materials which make up the contents of a database.

- The expression “investment in ... the ... verification ... of the contents” of a database in Article 7(1) of the directive must be understood to refer to the resources used, with a view to ensuring the reliability of the information contained in that database, to monitor the accuracy of the materials collected when the database was created and during its operation. The resources used for verification during the stage of creation of materials which are subsequently collected in a database do not fall within that definition.

- The resources used to draw up a list of horses in a race and to carry out checks in that connection do not constitute investment in the obtaining and verification of the contents of the database in which that list appears.
This result seems to imply that if William Hill created a database of this data after obtaining it from BHB, the investment in that database would be protected, while BHB’s investment in generating the data in the first place would not.

The Court went on to declare that while a database maker’s sui generis rights could be violated by third-party (that is, second-hand) unauthorized use of the contents of a database, simple “consultation” of a database is not a violation of the Directive. In addition, where a database owner chooses to make the data available to the public, he does not forfeit his sui generis rights but he also cannot prevent third parties from “consulting” the database.

[C]ontrary to the argument put forward by William Hill and the Belgian and Portuguese Governments, the concepts of extraction and re-utilisation cannot be exhaustively defined as instances of extraction and re-utilisation directly from the original database...

Since acts of unauthorised extraction and/or re-utilisation by a third party from a source other than the database concerned are liable, just as much as such acts carried out directly from that database are, to prejudice the investment of the maker of the database, it must be held that the concepts of extraction and re-utilisation do not imply direct access to the database concerned.

However, it must be stressed that the protection of the sui generis right concerns only acts of extraction and re-utilisation as defined in Article 7(2) of the directive. That protection does not, on the other hand, cover consultation of a database.

Of course, the maker of a database can reserve exclusive access to his database to himself or reserve access to specific people. However, if he himself makes the contents of his database or a part of it accessible to the public, his sui generis right does not allow him to prevent third parties from consulting that base.

In the light of the foregoing, the seventh, eighth and ninth questions should be answered as follows:

- The terms extraction’ and re-utilisation’ in Article 7 of the directive must be interpreted as referring to any unauthorised act of appropriation and distribution to the public of the whole or a part of the contents of a database. Those terms do not imply direct access to the database concerned.

- The fact that the contents of a database were made accessible to the public by its maker or with his consent does not affect the right of the maker to prevent acts of extraction and/or re-utilisation of the whole or a substantial part of the contents of a database.
The Court next examined “qualitative” and “quantitative” in terms of the Directive, concluding that “qualitative” referred to the investment put forth in obtaining, verifying or presenting the data; and also, that data that was not both “qualitative” and “quantitative” was presumptively an “insubstantial part” of a database.

The expression substantial part, evaluated qualitatively, of the contents of a database refers to the scale of the investment in the obtaining, verification or presentation of the contents of the subject of the act of extraction and/or re-utilisation, regardless of whether that subject represents a quantitatively substantial part of the general contents of the protected database. A quantitatively negligible part of the contents of a database may in fact represent, in terms of obtaining, verification or presentation, significant human, technical or financial investment.

It must be held that any part which does not fulfil the definition of a substantial part, evaluated both quantitatively and qualitatively, falls within the definition of an insubstantial part of the contents of a database.
Since the portions of the BHB database used by William Hill were only a small portion of the entire database, they thus constituted only an “insubstantial part” within the meaning of the Directive. In addition, the actual value of key pieces of data, now that they had been created, was irrelevant; only the investment which had gone into “obtaining” the data could be considered.

In that regard, it appears from the order for reference that the materials displayed on William Hill’s internet sites, which derive from the BHB database, represent only a very small proportion of the whole of that database, as stated in paragraph 19 of this judgment. It must therefore be held that those materials do not constitute a substantial part, evaluated quantitatively, of the contents of that database.

According to the order for reference, the information published by William Hill concerns only the following aspects of the BHB database: the names of all the horses running in the race concerned, the date, the time and/or the name of the race and the name of the racecourse, as also stated in paragraph 19 of this judgment.

In order to assess whether those materials represent a substantial part, evaluated qualitatively, of the contents of the BHB database, it must be considered whether the human, technical and financial efforts put in by the maker of the database in obtaining, verifying and presenting those data constitute a substantial investment.

BHB and Others submit, in that connection, that the data extracted and re-utilised by William Hill are of crucial importance because, without lists of runners, the horse races could not take place. They add that those data represent a significant investment, as demonstrated by the role played by a call centre employing more than 30 operators.

However, it must be observed, first, that the intrinsic value of the data affected by the act of extraction and/or re-utilisation does not constitute a relevant criterion for assessing whether the part in question is substantial, evaluated qualitatively. The fact that the data extracted and re-utilised by William Hill are vital to the organisation of the horse races which BHB and Others are responsible for organising is thus irrelevant to the assessment whether the acts of William Hill concern a substantial part of the contents of the BHB database.

Next, it must be observed that the resources used for the creation as such of the materials included in a database cannot be taken into account in assessing whether the investment in the creation of that database was substantial, as stated in paragraphs 31 to 33 of this judgment.
Finally, the Court held that Article 7(5), prohibiting “repeated and systematic” extraction and reutilization of of insubstantial parts of the database, was meant to prohibit circumvention of Article 7(1), which prohibits extraction and reutilization of a substantial part of a database. William Hill had indeed performed repeated and systematic extraction, but not in attempted contravention of Article 7(1); thus, William Hill’s use did not fall under the Directive’s prohibitions.

It follows that the purpose of Article 7(5) of the directive is to prevent circumvention of the prohibition in Article 7(1) of the directive. Its objective is to prevent repeated and systematic extractions and/or re-utilisations of insubstantial parts of the contents of a database, the cumulative effect of which would be to seriously prejudice the investment made by the maker of the database just as the extractions and/or re-utilisations referred to in Article 7(1) of the directive would.

The provision therefore prohibits acts of extraction made by users of the database which, because of their repeated and systematic character, would lead to the reconstitution of the database as a whole or, at the very least, of a substantial part of it, without the authorisation of the maker of the database, whether those acts were carried out with a view to the creation of another database or in the exercise of an activity other than the creation of a database.

In the case in the main proceedings, it is clear, in the light of the information given in the order for reference, that the acts of extraction and re-utilisation carried out by William Hill concern insubstantial parts of the BHB database... According to the order for reference, they are carried out on the occasion of each race held. They are thus of a repeated and systematic nature.

However, such acts are not intended to circumvent the prohibition laid down in Article 7(1) of the directive. There is no possibility that, through the cumulative effect of its acts, William Hill might reconstitute and make available to the public the whole or a substantial part of the contents of the BHB database and thereby seriously prejudice the investment made by BHB in the creation of that database.

As explained in paragraph 80 of this judgment, it appears from the order for reference that the presence, in the database of the claimants, of the materials affected by William Hill’s actions did not require investment by BHB and Others independent of the resources used for their creation.

It must therefore be held that the prohibition in Article 7(5) of the directive does not cover acts such as those of William Hill.

Final Round: BHB loses

In the final judgment, Lord Justice Jacob, writing for the British Court of Appeals, noted that the European Court of Justice’s interpretational directions had done little to clear things up.

Each side says that, properly understood, the ruling means that they have won. Or, rather than the other side winning, there is some doubt about what the ECJ meant and there should be another reference.
However, BHB made a shift in their argument, now claiming that rather than “creating” the horse racing data, they had in fact merely been “gathering” it all along.

Mr Prescott [for BHB] submits that the ECJ in saying this was acting under a “misunderstanding” of the facts and that when its reasoning is applied to the actual facts, what his clients do is to create and maintain a database within the meaning of Art.7(1). Hence it is the subject of the right.

[A]ll that the BHB were doing was gathering and verifying existing independent materials, namely the intentions of the owners, provisional and declared. Consider he said, the list at the moment before it is published. It merely consists of gathered in and verified material. So under the main ruling there was a relevant seeking out of existing information. He submitted it made no difference that the owners contacted the BHB with the information rather than the BHB phoning the owners to find out. The list would be the same either way: it is a list of pre-existing information collected and verified by the BHB.
Ultimately, however, the Court accepted the interpretations provided by the European Court of Justice, and rejecting BHB’s claim that their database was protected by Article 7 of the Directive.

I am unable to accept these submissions, elegant though they are. There are two reasons why. First I do not accept that the ECJ misunderstood the primary facts or itself indulged in an illegitimate fact-finding exercise. Secondly, and more fundamentally, I think they involve a process of deconstruction of the nature of the ultimate database which has been rejected by the ECJ.

So if one asks whether the BHB published database is one consisting of “existing independent materials” the answer is no. The database contains unique information the official list of riders and runners. The nature of the information changes with the stamp of official approval. It becomes something different from a mere database of existing material.

It follows that despite all Mr Prescott’s ingenuity, the answer from the Court is clear. So far as BHB’s database consists of the officially identified names of riders and runners, it is not within the sui generis right of Art.7(1) of the Directive. And I think the same reasoning applies in those cases (big races) where the BHB publishes a list of provisional runners prior to final declarations. Again what is published is different in character from a mere list of gathered in information. It is a list of the horses BHB have accepted as qualifying to race as properly and actually entered.

And so the appeal must be allowed.

Lessons

So what, if anything, does the Directive actually protect? Although the Directive’s stated purpose is to provide protection for investments in databases, it appears to provide very little such protection. A provider of valuable data in particular cannot look to the Directive for protection of that data. The copyright protections do not extend to the contents of a database; the sui generis protection will not apply to data that is “created” rather than “gathered”; and where independent existing data is gathered but subsequently takes on some official nature due to marketing or “stamps of official approval”, it ceases to be independent existing data and becomes something else, also losing sui generis protection in the process. It is somewhat difficult to see how BHB could have packaged its database product differently, in order to qualify for protection under the Directive.