FEATURES
LEGAL RIGHTS AND
DUTIES IN DATA
In our May/June contribution to Chartech on data
law and the ‘data-centric world’, we wrote that we’d
be returning in this autumn issue to the question
of the sorts of intellectual property (IP) rights and
competition law duties that arise in relation to data,
as businesses continue to seek to find new and
better ways of getting competitive advantage from
their information.
As we mentioned back in the spring, data is
increasingly central to many, if not most, sectors;
businesses are focusing as never before on protecting
and exploiting their own data, and getting access to
others’ data that they need on the best terms. This
increases pressure in the market place between the
data customer/buyer and the data vendor, and these
pressures are starting to play themselves out in more
open legal confrontation.
What is data in legal terms?
When we talk about legal rights in data what exactly do
we mean? Data is funny stuff in legal terms: inert in and
of itself – there’s an old case1 involving a sneak preview
of an exam question which shows that data can’t be
stolen in a criminal law sense – it’s helpful to speak of
rights arising ‘in relation’ to data, as this shows the type
of rights there are in particular types of information.
Data and IP rights – copyright, database right and
confidentiality
So data/information may be a literary work and
attract copyright protection; may have the attributes
of a database to attract database right (and also,
confusingly, database copyright); and/or may have the
CHARTECH ISSUE 175 | SEPT / OCT 2011
quality of confidentiality to enable enforcement as a
confidence.
Each right – copyright, database right and
confidentiality – is enforceable as an IP right against
the world (as a right in rem2) in accordance with its
own rules and requirements. This makes the data legal
analysis multi-layered from the outset, as requirements
differ widely from right to right. So copyright is a formal
right protecting a particular expression: it does what
it says on the tin, protecting against copying without
permission, although of course the devil’s in the detail.
Database right – the newest right dating from 1998
– has its own requirements, but in a series of cases
about football fixture lists in the mid-2000s3 has seen
its importance sharply diminished. The UK rules on
protection of confidentiality, oddly, emerge as one of
the best sources of legal protection, as they are likely to
operate to provide a remedy in circumstances that are
relevant to data and – unlike copyright and database
right, which are formal remedies protecting how
information is displayed – the law of confidence can
protect the substance of the information itself.
The analytical complexity is compounded against
the backdrop of increasingly global data businesses as
IP rights are primarily national rights, so the rules and
requirements will vary not only from right to right but,
for each right, from country to country.
Contract is king in the data-centric world
The layered nature of the IP rights analysis in relation to
data, together with the current unsettled and uncertain
state of the law in the UK, means that data remains an
area where ‘contract is king’ in the business world;
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and contracts of course confer enforceable rights
(rights in personam) on the parties to them (subject
to competition law and other statute and public
policy rules that cannot be excluded) but not against
the whole world (rights in rem). In a 2005 followon UK case from the football fixtures cases referred
to above, the judge, Etherton J, made a powerful
statement to the effect that a data supplier ‘has in the
data a valuable commodity for which it is entitled to
charge … irrespective of the extent of any [intellectual
property] rights.’4
Generally in relation to data therefore, for IP rights
(as rights in rem), the good news is that they can be
enforced against the whole world, but the bad news
is that they confer rights of uncertain scope which are
expensive to enforce; while for contract rights (as rights
Glossary
Abuse of dominant position
Unlawful conduct (contrary to Article 102 EU Treaty or Chapter II of the UK Competition Act 1998) by an
organisation that is dominant (ie, able to behave substantially without regard to the competition) in a particular
relevant market. Such conduct may be either unilateral or contractual.
Anti-competitive agreement
Non-exempt agreements which restrict competition in material way are unenforceable, may ground third-party
legal actions and may be subject to investigation by the regulator, who may impose substantial fines (Article 101
EU Treaty/Chapter I UK Competition Act 1998).
Confidentiality
The law will ‘intervene to protect a confidence’ for information that is secret (‘possesses the quality of confidence’),
substantial (non-trivial) and identified. The normal remedy for breach of confidence is an injunction, a court order
restraining the disclosure, sanctionable as contempt of court. Confidentiality obligations may also be established
by contract (for example as a Non-Disclosure Agreement or NDA), and are enforceable against other contracting
parties (see also rights in rem and rights in personam).
Copyright
Rather in the nature of ‘lego law’, copyright has been extended over time in line with technology development
to reward creative effort. It arises automatically in relation to different types of works – including literary, artistic,
musical and dramatic works; and public performances, broadcasts, films, computer software and communication
to the public. In essence copyright does what it says on the tin – and protects against copying without the right
holder’s consent – but the devil is in the detail.
Database right
A database – a searchable, systematically arranged collection of works or data – benefits from a copyright-type right,
called database right (introduced in 1998) where there has been a substantial investment in obtaining, verifying
or presenting the database. Following a series of cases in the mid 2000s, the scope of the right has been heavily
circumscribed.
Intellectual property rights (or IPR)
A portmanteau term for a group of intangible rights of which the main (but not the only) ones are copyright,
database right, patents and trade marks.
Patents
A patent may be applied for an invention that is novel, involves an inventive step and inherently patentable (ie, is
not excluded as, for example, being scientific theory or a mathematical method). When the patent is granted, the
holder has the exclusive right to make, use, exercise and sell the invention or process for which the patent
was granted.
Rights in rem
Intellectual property rights are ‘real’ rights, in the sense that they are enforceable against the whole world; for example,
if I infringe your copyright by copying your article, you may sue me for copyright infringement even though I have no
connection with you, and may not even know of your existence. See also rights in personam.
Rights in personam
Rights arising under contract are ‘personal’ rights, in the sense that they are only enforceable by and against parties
to the contract. So, unless I have bound myself contractually to you, you may not sue me for breach of contract.
See also rights in rem.
Trade marks
Trade marks are legally enforceable rights that perform the legal function of a guarantee of origin and underpin the
value of brands. They arise by registration (where you can show effectively that your mark is distinctive) and also
separately by operation of law (if I pass my goods or services off as yours where you have goodwill in your mark and
there is no connection between us).
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FEATURES
in personam) the good news is that they confer strong
rights, with the downside that this is only against the
contracting parties themselves, and not against the
whole world.
Competition law and the limits on exercising IP and
contract rights
Competition law protects against the abuse of a
dominant position by a market powerful organisation
(at EU level, by Article 102 of the EU Treaty and at
UK level, by Chapter II of the Competition Act 1998)
and can also make anti-competitive agreements
unlawful (by Article 101 and Chapter I). The way the
legislation works can be complicated, but essentially
it gives wide statutory powers to the regulators – DG
Comp in Brussels and the Office of Fair Trading and
Competition Commission in London – to gather
evidence, conduct enquiries and impose fines for anticompetitive behaviour; and in certain circumstances
can give directly enforceable rights to individuals
and organisations who can prove they have suffered
recoverable loss.
The extent to which competition law duties can
circumscribe the exercise of IP and contractual data
rights is a bit like the dilemma of ‘unstoppable force
meets immovable object’: IP rights in particular confer
rights which, to a certain extent, have characteristics
of a monopoly, while competition law will intervene to
stop a monopolist or a person who is market dominant
from abusing that position.
The data world, particularly the financial market data
space, is an increasingly intense battleground between
competition and IP law, reflecting market place pressures
between data buyers and vendors. In particular, debate
rages about the extent to which the owner of an IP right
can be compelled to grant a licence of it to a third party
under Article 102. It is not the holding of the right that
is at issue, the key question is at what point the exercise
of an IP right is so harmful to consumer welfare that
competition law should override it.
The Standard & Poor’s data licensing case is a topical
example of what’s at stake. It’s one of the latest in a
series of competition challenges in recent years which
have tested the ability of rights holders to refuse
access to ‘essential’ data, and the terms (especially
price) on which data should be licensed. Standard &
Poor’s (S&P), the ratings, research, index, data and
risk advisory services business of The McGraw-Hill
Companies, Inc., was accused in 2008 of breaching
its monopoly position as the US National Numbering
Agency in how it licensed the use of numbers (called
ISINs) that identify US securities to financial institutions
(such as banks and investment funds) in order to
facilitate clearing and settlement of trades in those
securities.
The investigation was prompted by complaints
filed in July 2008 by associations of financial market
data users, alleging that S&P had abused its dominant
position under Article 102 by demanding a ‘double dip’
licence fee, both from financial data vendors and also
directly from financial institutions which used ISINs.
In May 2011, DG Comp confirmed that S&P had
offered to change its EU pricing policy by (i) charging
direct users (information service providers and financial
institutions) a maximum of US$15,000 per annum
(adjustable annually in line with inflation) and (ii)
abolishing charges to indirect users that source ISINs via
information service providers to avoid the Article 102
breach allegations.
In today’s more straitened economic times, the
tougher behaviours being shown by data buyers and
vendors in the market place mean we’re likely to see
more contractual, IP and competition law-related
disputes in our data-centric world.
So, what are the key conclusions to take away?
s 4HELAWON)0RIGHTSINDATAISEVOLVINGQUICKLYATTHE
moment, and is in an unstable state. Make sure you/
your clients are protected by appropriate written
contacts and/or policies.
s )NTHECONTRACT
– make sure you and your clients have identified the
information/data you are concerned with;
– (where you are the user) set out in sufficient detail
the rights you have over it – what you can do with it;
– (where you are the data owner or service provider)
set out the limitations on use and what the user’s
obligations are; and
– don’t forget the basics – price, service quality, time
of delivery, etc and duration and exit.
s )FYOUYOURCLIENTHASADEGREEOFMARKETPOWERYOU
may need to consider whether competition law will
operate to put legal constraints on what you might
otherwise be free to do.
Richard Kemp
Senior and Commercial Technology Partner at Kemp
Little, a leading technical law firm.
1 Oxford v Moss (1979) Crim LR 119
2 Technically, the IP rights of copyright, database right and registered trade mark rights are creatures of statute while passing off is a creature of common law. The right to enforce a
confidence, historically a creature of equity, bears similarities to these IP rights in that it can be enforced outside a contractual relationship against anyone to whom the duty to
respect that confidence extends.
3 Case C-203/02, The British Horseracing Board Ltd and Others v The William Hill Organization Ltd; Case C-338/02, upheld by the UK CoA by judgment of 13 July 2005: see www.bailii
org/ew/cases/EWCA/Civ/2005/863.html. For further reading, see ‘Database right and the ECJ Judgments in BHB v William Hill and the Fixtures Marketing Cases’, Kemp Little, March
2005 (www.kemplittle.com/html/stay-posted/events/corporate-counsel-forum/datalaw-1006.html) and ‘Database right after BHB c William Hill: enact and repent at leisure’, Kemp
Little, July 2006 (www.kemplittle.com/PDFs/CCF_1006_DatabaseRight_DevelopmentsAfterBHBvWmHill%20_KL.pdf)
4 Attheraces v The British Horse Racing Board (2005) EWHC 3015 (Ch): see http://tinyurl.com/jkpd8. Attheraces won at first instance on the related competition law point about
dominance and excessive pricing, but lost on this aspect in the CoA in February 2007: www.bailii.org/ew/cases/EWCA/Civ/2007/38.html#para252
CHARTECH ISSUE 175 | SEPT / OCT 2011
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