Monday, 10 June 2013

Liability of data providers and enablers for downloading infringing but undisplayed material

Authors: Rachel Montagnon and Joel Smith (Intellectual Property Group, Herbert Smith Freehills LLP, London)

Football Dataco Ltd and others v Stan James plc and others, Sportradar and others [2013] EWCA Civ 27, Court of Appeal, England and Wales

Journal of Intellectual Property Law & Practice (2013) doi: 10.1093/jiplp/jpt079, first published online: June 7, 201

The court has held that the provision of facilities to download infringing material on to a user's computer is inevitably a joint act of infringement of sui generis database right, even if the material is not displayed.

Legal context

Both the online betting company (based outside the UK) and the providers of the infringing database (from servers outside the UK) to which the betting site provided links were found by the Court of Appeal to be liable as joint tortfeasors with the betting site's customers in the UK who unknowingly downloaded the infringing data.

UK sui generis database right was created by the UK implementation of Article 7 of the Database Directive 96/9. The relevant provisions of the Directive in relation to subsistence of the right are:
Article 1.2. For the purposes of this Directive ‘database’ shall mean a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.

Article 7. 1. Member States shall provide for a right for the maker of a database which shows that there has been qualitatively or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilization of the whole or a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.
The sui generis right entitles its owner to prevent extraction and/or re-utilization of the whole or a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database (Article 7(1)). ‘Extraction’ is defined as ‘the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form’ (Article 7(2)).

There may be infringement even where the defendant extracts or re-utilizes insubstantial parts of the contents of the database in a repeated and systematic fashion, implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted (Article7(5)).

Facts

Football Dataco owns a database called ‘Football Live’ which consists of ‘live’ data on football matches in the English and Scottish Leagues, the Carling Cup and other English and Scottish matches. The data is obtained by Football Dataco through the use of ‘football analysts’ (FBA) who go to the matches and watch them, these usually being ex-professional footballers who report to a person called a ‘sports information processor’ (SIP) at the central information centre run by Football Dataco by mobile phone. The FBAs give a running commentary on the game, providing the SIPs with events as they happen, including factual matters such as goals and their times, the scorer, misses, assists, type of shot (for both goals and misses), cards given, fouls, saves, corners and substitutions, as well as more subjective commentaries such as opinions on who is the man of the match or the dominant player in the last 10 minutes, or the severity of a foul. The SIP also has to confirm back the details to the FBA, so the process is not all one-way. The cost of the operation was estimated at £600,000 per season—a substantial investment. Football Dataco licenses the data to customers which include the BBC.

Sportradar (based in Austria and German) maintained a large database called Betradar, which contained a section called Live Scores. Live Scores' data was acquired from viewing live broadcasts of matches but, where none were available (such as for many non-Premier League matches), they gathered information from Sky Sports News live TV broadcasts. Online, textual services were also used, some of which used data from the company which licenses Football Dataco's rights, while others were independent of this data service. Thus data from Football Live was used in Live Scores. After submission of the defence, Sportradar limited Live Scores to information on goals and timings. This case considered whether that data was taken directly or indirectly from Football Live and whether it was extraction of a substantial part (as required for database right infringement).

The other defendant at first instance, also appealing aspects of Floyd J's decision, was the betting website Stan James, hosted in Gibraltar but aimed at UK punters. The website has a ‘button’ labelled ‘Live Scores’. Clicking on this generates a pop-up box. The user's (punter's) web-browser communicates with the Live Scores section of Betradar (Sportradar's database hosted in Austria) and all the Live Scores data is downloaded into the punter's computer. This data is, however, only in machine-readable form; what the punter sees is a list of featured games and a magnifying glass icon against each match. By clicking on the icon the punter sees the detailed facts about that match.

Subsistence of sui generis database right

Sir Robin Jacob gave the leading judgment with which Lloyd and Lewison LJJ agreed. He confirmed that Football Live was a database which qualified for sui generis database right: there was nothing in the Directive to deny sui generis rights to a database which was also part of a copyright work, as the Court of Justice of the European Union (CJEU) had established in C-442/02 Fixtures Marketing v OPAP [2004] I-8961.

Sir Robin then considered whether it was a database which qualified for protection under Article 7 (there having been investment in obtaining, verification or presentation of the contents). He commented that the CJEU decision not to grant sui generis rights in British Horseracing board (BHB) v William Hill CBHB C-203/02, and Fixtures Marketing was based on the premise that ‘investment in creating data was not the right kind of investment’. As for the Football Live database, the defendants contended that there was no independent investment in the database, that the data was created and thus the investment was in the creation rather than in the required ‘obtaining, verification and presentation’. Counsel for Sportradar argued that, until the data was recorded, it did not exist, and that Article 7 was confined to pre-existing data collected together to form a database.

Sir Robin preferred to start with what he described as ‘the common sense position’, that the factual data provided by the FBA to the SIP in the Football Live database was pre-existing data: ‘only a metaphysicist would say a goal is not scored until the FBA tells the SIP that it has been scored’. Counsel for Sportradar has suggested that data about physical phenomena such as temperature or pressure at a particular time and place only come into existence when someone measures and records them. Sir Robin's view was that ‘the same metaphysicist would feel hot in a Turkish bath even without a thermometer’. A scientist taking a measurement ‘is recording data, not creating it’. If one followed the logic through, held Sir Robin,
there is never anything but creation of data when it is put in a database. For even if the make of the database seeks to use only ‘pre-exiting’ materials, all he can in fact use is his own perception of what those materials are. So always in making his database he is in a sense ‘creating’ information, using his own mind to judge what the ‘old’ material is to put into his database. It makes no difference whether he is trying to record it himself for the first time or trying to use what he perceived to be a pre-existing record: there is no reality, only an observer's perception of it. Always ultimately a database will be subjective in that sense'.
If this is right, following Sportradar's counsel's logic, there could never be any protected database, held Sir Robin. Neither was he impressed by attempts to distinguish between a database made up of data consisting of pre-existing items collected by the database make and one made up of items ascertained by the database maker himself. He gave as an example, the communication from the FBA being recorded and the SIP listening to that recording, rather than using the current direct communication. The former arrangement would benefit from database right, according to Sportradar's submission, whereas the latter would not: ‘The legislators cannot have intended anything as silly as that’, said Sir Robin.

Sir Robin looked at the policy behind the Directive, stating that there were understandable policy reasons behind excluding substantive data creation (such as football fixtures and lists of runners and riders) but not cases where people collect data by measurement or similar processes and assemble that data in a database (the latter being excluded if Sportradar's submissions were followed, he held): ‘The policy of the Directive is that databases which cost a lot of investment and can readily be copied should be protected. The right is created to protect the investment which goes into the creation of a database.’ The Directive is concerned with creation of a commercial right so as to encourage the creation of valuable databases.

There were submissions that only the investment in gathering the objective data elements of the database would gain a sui generis right (ie the goals scored, time of the goal and scorer, for example) and investment in subjective elements (ie who was the dominant player in the last 10 min or who should be the man of the match) would not count for sui generis right purposes. Sir Robin drew an analogy with a scholar creating a database of all Charles Dickens's references to law and lawyers. This would involve expenditure of significant resources and the database would qualify for protection. If the scholar then added commentary, he would not lose protection for the database (although the commentary was subjective), but these sui generis rights would not prevent extraction of information from the database which he himself had generated ‘because the rules as to what amounts to infringement focus on whether infringer is making undue use of the relevant resources which went into the database. The scholar's own commentaries would not be relevant resources’, although he might have copyright protection in these commentaries:
When a referee says the ball was over the line and signals a goal has been scored, it has. Any spectator who tells someone that it has been scored is not creating data. If he adds his opinion that it could be the goal of the month, that is his creation.
Sir Robin therefore agreed with Floyd J that the Football Live database had sui generis protection.

Infringement

Football Dataco contended that the UK-based users of the Stan James betting website were infringers pursuant to Article 7(1), (2) and (5).

Stan James submitted that, although all the Lives Scores data on Sportradar's database were uploaded onto its customers' computers, the user could not see it all at once because the data were encrypted (although by applying a magnifying glass decryption key the user could see any part of the data). Stan James claimed that data was only ‘extracted’ when it was read by the punter. Since punters only applied the magnifying glass to relatively few matches, this could not be a substantial part of the Sportradar database (Live Scores), let alone the Football Live database (from which elements of Live Scores were derived).

Sir Robin was unable to accept this argument. He held that the ‘temporary transfer of the contents’ of the Sportradar database to another medium (the punter's computer) and was of an ‘all or nothing’ sort. ‘The point is hopeless’ he said of the Stan James submission:
Moreover if right it would be quite subversive of the database right altogether. For no user of any database wants to see all of the data in it. Users want just the elements they are interested in—just as a purchaser of a dictionary never expects to consult more than a small proportion of the definitions in the dictionary never expects to consult more than a small proportion of the definitions in the dictionary. If you only count the data actually accessed as the part taken and not what is actually down loaded, there would seldom be a substantial part taken.
So does the punter infringe? Sir Robin held that, if Live Scores infringes Football Live, so does the punter.

What proportion of the matches did Live Scores get its data directly or indirectly from Football Live? Sir Robin held that there was ample material for Floyd J to hold that Sportradar's Live Scores data was taken directly or indirectly from Football Live. The appearance of seeded errors in Live Scores data which could only have come from the Football Live database (implanted so as to furnish evidence of unauthorized use) evidenced such copying.

Was a substantial part copied? Floyd J had held that infringement by extraction had occurred, since a qualitatively substantial part had been extracted from the pre-defence into the Live Scores database. Post-defence, where much more limited data was used in Live Scores (goals and times only), Floyd J had held that a substantial part had not been extracted. The test was one of substantiality, based on the investment in the data that is extracted. ‘Even if only a small part is taken, it can be qualitatively a substantial part if it represents significant investment’, stated Sir Robin, when discussing the test (as set out in BHB). He found that very significant investment had been made in the costs of the SIP and the FBA and the overall set-up and confirmed Floyd J's finding that that the pre-defence data extracted infringed the sui generis rights.

The post-defence data had been found at first instance not to infringe, since it was only goals and timings and required neither the running commentaries of the FBAs nor any significant investment. This sort of data that could be recorded ‘at virtually no additional cost’ (per Floyd J, para 76) was held by him not to be a substantial part. Sir Robin Jacob did not agree: it was irrelevant that the data could have been collected at virtually no additional cost, as what mattered was the investment which in fact went into collecting the data: ‘If you want universal and reliable coverage you would still have to have reliable people at every ground and a reliable method of reporting it.’ Further, Floyd J had ‘overlooked’ the fact that the punter's computer had all the data within it albeit in encrypted form.

Thus Sir Robin emphatically allowed the appeal against this aspect of Floyd J's decision:
Sportradar's business model in part relied on extraction for nothing of data from Football Live (and possibly other databases too) and selling it on as part of its own wider package. It could provide a lesser package by avoiding this extraction. But then it would not be comprehensive. I see no reason why it should not pay for the comprehensive coverage which, by extraction, it is able to sell on. It puts at risk the investment made by others. Joint tortfeasorship
The CJEU ruled that parties which upload data from a protected database and sends data to users' computers in a second Member of State (as Sportradar did) infringes the database right in both states (by re-utilisation). This would make Sportradar liable as a primary infringer if it targeted UK punters. Sportradar ‘admittedly does’ target UK consumers, stated Sir Robin, so the joint tortfeasorship appeal against Floyd J's finding that Sportradar was not a joint infringer with the punters (but that Stan James was) became academic.

Sir Robin reviewed the common law on joint torfeasorship under English law, contrasting L'Oréal v eBay [2009] RPC 21 (where eBay were not joint tortfeasors), with those who sold trade mark infringing goods via their online auction system. eBay merely provided the facility used by the infringers.

Sir Robin repeated the dictum of Lord Templeman in CBS v Amstrad [1988] AC 1013: joint infringers are two or more persons who act in concert with one another pursuant to a ‘common design in the infringement’; and per Peter Gibson LJ in Sabaf v Meneghetti [2002] EWCA Civ 976: ‘Unless he has made the infringing act his own, he has not himself committed the tort.’

Sir Robin found that Stan James had acted in concert with Sportradar and was thus a joint tortfeasor. The question on appeal was, however, whether Stan James was a joint tortfeasor with the UK punters who availed themselves of the pop-up Live Scores on Stan James's website. From the fact that Stan James and Sportradar ‘act together’, said Sir Robin, Stan James's pop-up Live Scores should be treated just as if it were Stan James's own link. Sir Robin said the question boiled down to this: ‘[I]f A has a website containing infringing material which will inevitably be copied into the computer of B if he enters that website, is A a joint tortfeasor with B?’. He was
‘conscious that this question is important’ and said that the answer ‘would seem to apply equally to copyright as to database rights. If the answer is yes, then the owner of any website anywhere in the world will be a joint tortfeasor with a UK user of that website if the inevitable consequence of access to that site by the user is infringement by that user.’ 
Sir Robin held the answer to be ‘yes’:
[T]he provider of such a website is causing each and every UK user who accesses his site to infringe. His very purpose in providing the website is to cause of procure acts which will amount in law to infringement by any UK user of it. The case is not one of a mere facilitator, such as eBay or Amstrad [as discussed above] where the choice to infringe or not ultimately law with the consumer. … Stan James is in reality responsible for the punter's infringement. 
Arguments based on it being the punter's option whether to click on the pop-up box, or that neither the punter nor Stan James knew that the whole of Sportradar's Live Scores was downloaded, encrypted, into the punter's computer, did not find favour with Sir Robin: no non-infringing choice was available to the user of the pop-up box, unlike the situation with eBay or Amstrad where the user of the facility could decide whether to infringe (to sell the trade mark-infringing goods or make infringing copies). In relation to the defence of innocence, Sir Robin rejected submissions on behalf of Stan James that, where the law created secondary liability by statute (as it has for patent and copyright infringement), there was a requirement of knowledge on the part of the alleged secondary infringer. Thus the common law should have the same approach. Sir Robin did not accept this:
Once a party has procured an act which amounts to infringement by another he has effectively made it his own act. Here the acts of infringement by the punters do not require knowledge. I see no reason why Stan James which causes those acts to happen by providing a link which makes infringement inevitable should have a defence not available to those whose acts it procures (the punters'). This is not a case of secondary liability but one of primary liability along with another.
He criticized what he called Stan James's Nelsonian blindness of the ‘obvious risks’ of using the Sportradar database. It used the Sportradar facility to enhance the attractiveness of its own site and chose not to inquire into the details of where Sportradar got its data from and how it was sent to the users. Stan James could have asked Sportradar to indemnify it; if it chose not to do so, it would be taking a risk if all was not well with what Sportradar were providing.

Practical significance

Off-shore companies providing access to infringing off-shore databases can now be sued in British courts with relative ease. The days of applying the rules of secondary liability seem long gone. The ability to target both the infringing database provider and those enabling access to it, whether from the UK or not, will be welcomed by those who have invested in databases in the UK.

The effect of this decision is to make parties that might otherwise avoid infringement as being merely an ‘intermediary’, liable as joint tortfeasors. In this case, a provider of a link to information, which was provided by a third party, was jointly liable with those accessing the link (its customer), even where the customers themselves do not realize they are infringing any rights and do not see the infringing material being downloaded onto their computers as it is not necessarily displayed.

This decision has implications for website operators as a whole. They must be vigilant in their provision of data and confident that it is not infringing, since lack of knowledge by the provider of the infringing material is not a defence to joint tortfeasorship, according to Sir Robin, as it is not for the customers.

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