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CJEU ruling narrows the scope of EU database rights

Posted on 5 July 2021

In a judgment handed down on 3 June 2021, the European Court of Justice (CJEU) has redefined the test that EEA courts must apply when establishing whether EU database rights have been infringed. In what appears to be a significant departure from existing case law, in addition to the defendant having extracted or re-utilised all or a substantial part of the contents of the database without the owner's permission, a claimant will now also need to show that the infringing acts caused “significant detriment” to the database maker’s investment.

Background

The facts of this case are relatively straightforward. The Claimant, a Latvian company called CV-Online, operates a website, which includes a database containing job advertisements published by employers. CV-Online regularly develops and updates its database.

The Defendant, Melons, also a Latvian company, operates a search engine specialising in job advertisements. Its search engine enables users to carry out a search of several websites containing job advertisements according to various criteria (including the type of job and place of employment).  Using hyperlinks, Melons' website refers users to the websites on which the information sought was initially published, including CV-Online's website. 

CV-Online bought an action against Melons before the Latvian courts for breach of its database right under Article 7 of the Database Directive, arguing that Melons was extracting and re-utilising a substantial part of the contents of the database.

The Latvian court found for CV-Online, but on appeal, the Latvian appellate court referred two questions for interpretation of the Database Directive to the CJEU: (1) whether the display of hyperlinks constitutes re-utilisation; and (2) whether the re-use of meta tags can qualify as extraction. The CJEU reformulated the questions on the basis that the "reproduction of the information in meta tags…are merely external manifestations, of secondary importance of that extraction and re-utilisation". 

CJEU decision

The CJEU redefined the test of database right infringement to require that the extraction or re-utilisation of a database only infringes EU database rights, where those actions have the effect of depriving the owner of the database of income intended to enable him or her to redeem the cost of that investment. The Latvian court must now apply the redefined test to the facts of this case in order to decide Melons' appeal.

The rationale behind the CJEU's approach was the need to protect the legitimate interests of database owners in being able to redeem their investment, whilst at the same time ensuring that users of the database have access to the information contained in those databases and are able to create innovative products based on that information. In this respect, the CJEU considered that the objective in introducing the database right was to stimulate data storage and processing systems, thereby contributing to the development of an information market. In other words, it was important to allow content aggregators (such as Melons) to be able to offer their users the ability to search several databases according to criteria relevant to their content, allowing the information on the internet to be better structured and searched more efficiently. This, the CJEU considered, improves the information market and contributes to the "smooth functioning of competition and to the transparency of prices".

Implications

Post-Brexit, database rights that existed in the UK or EEA at the end of the transition period continue to have protection in both the UK and EEA for the remainder of their term of protection. However, after 1 January 2021, new database rights in the EEA are limited to EEA nationals, residents and businesses; and new database rights in the UK are limited to UK nationals, residents and businesses. The CJEU's ruling in this case, redefining the infringement test, does not bind the UK courts, though they may take it into account.

For those relying on database rights in the EEA, it will be necessary to show that the extraction/re-utilisation has the effect of depriving the database owner of income intended to enable the owner to redeem the cost of the investment. 

It remains to be seen how database owners, particularly those who make their databases publicly available, will respond to the ruling. The additional (and potentially difficult) enforcement burden introduced by the CJEU may encourage EU database right owners to place their databases behind firewalls or apply other protective measures, which in itself will have implications for meeting the objectives of the Database Directive.

The European Commission recently published a consultation on the EU's Data Act initiative, including a review of the Database Directive. The initiative aims to increase access to and use of data in order to allow the public and private sectors to benefit from the data economy. As part of its assessment of whether there is fair data access and use in a business-to-business context, the Commission is considering whether to adapt the Database Directive to better facilitate data access and use, particularly looking at the database right.

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