Intellectual property rights and bookmakers

Sports administrators and governing bodies will no doubt still be smarting following the Court of Appeal's confirmation of the European Court of Justice's decision that William Hill had not infringed the BHB's Database Rights by publishing details of runners and riders on its website.

Similar court cases must now also confirm the position in relation to football data rights in the parallel proceedings occurring in Finland, Sweden and Greece, though in the face of the ECJ judgment it is difficult to see those domestic courts coming to a different conclusion.

The dust may have settled on the case against William Hill, but the BHB remains firmly in the frame as it continues to seek to enforce what rights it has. In this short article, I intend to try to make some sense of the current position. Although I would like to think that my opinions might be persuasive, I should of course point out that none of what I say should be treated as a substitute for proper legal advice.

Let us start with the William Hill case, an apparently simple infringement action which nevertheless took five years to resolve. The 1996 Database Directive provides a right for the maker of a database to prevent extraction or reutilisation of the whole or a substantial part of that database, in circumstances where there has been a substantial investment in the obtaining, verification or presentation of its contents.

This of course begs a number of questions, such as what is the meaning of "extraction", of "reutilisation", of "substantial part" and what level of investment is required. The thrust of the ECJ's conclusion was that the activity and resources used to draw up a list of horses for a race and to carry out subsequent checks, do not represent "investment in the obtaining and verification of the contents of the database".

Despite subsequent attempts by the BHB to persuade the Court of Appeal that the ECJ had misunderstood the primary facts, the Court of Appeal confirmed the decision. As the ECJ said, the expression "the investment in the obtaining of the contents of the database" must be understood to refer to the resources used to seek out existing independent materials and collect them in a database (this is what a database is) and not the resources used for the creation as such of independent materials.

What the BHB publishes and makes available from its database is the officially identified names of runners and riders. This is not a list of gathered-in information. The purpose of the protection of the database right provided for by the directive is to promote the establishment of storage and processing systems for existing information and not to promote the creation of the materials capable of being collected subsequently in a database.

It has been suggested that there is some absurdity in this conclusion. Why is it, for example, that the seemingly lesser activity of collecting existing information into a database receives the benefit of protection, whereas the more time-consuming and expensive exercise of creating the data and then compiling it into a database does not?

It may well of course have been a decision largely based on policy and aimed at preventing those who create a database for one purpose (for example, a football fixture list necessary to operate a successful league, or a database of horses to administer racing) from unfairly profiteering from the ingenuity of others.

Whatever the true rationale, unless the BHB is able to change the way it compiles its database, it cannot receive the benefit of database protection. The football authorities seem to be in the same position. However, there are other ways to protect information and to ensure remuneration for its supply, namely copyright and contract.

The copyright case is yet to be tested, although it is likely that any governing body seeking to enforce its rights in this way will face an uphill struggle.

Although there is some old legal authority conferring protection on football fixture lists, the creation of the database right does appear to have restricted the availability of copyright protection. No doubt, this issue will be resolved by the courts at some stage in the future, although the BHB, despite being a pupil of the school of hard knocks, may well not wish to take on this particular fight.
More relevant perhaps is the law of contract. The issue of binding contractual rights was recently brought into focus by Victor Chandler's dispute with the BHB, by injunction proceedings brought by Attheraces, and by the ongoing action in the Irish courts.

What the interim proceedings in these cases have shown is that even if there is no apparent need for a licence (i.e. there are no rights to be licensed), a licensee is likely to be bound by the terms of any existing licence or contract. Putting a licence in place and paying for it gives peace of mind and whether database rights exist or do not exist, it is always prudent to adhere to contractual obligations. The interim judgment in the Victor Chandler case supports this, and I suspect that Irish bookmakers may struggle to convince the Irish courts to take a different view.

The recent Attheraces judgment demonstrates to some extent the interplay between the laws of contract, intellectual property rights and competition law. The case arose when the BHB threatened to cause the Press Association to stop supplying pre-race data to Attheraces, unless it entered into a data licence (and indeed paid certain arrears allegedly due in respect of its use of such data in the past).

Attheraces brought proceedings arguing that the BHB's threat to force the PA to stop supplying pre-race data constituted an abuse of its dominant position (because by then the ECJ had already declared that the BHB had no rights to license) and that its prices were in any event excessive.

Perhaps because of its recent interim victory against Victor Chandler, where the judge rejected VC's competition law claim, the BHB applied for an order to strike out that part of the Attheraces claim which related to allegations of abuse.

To succeed, the BHB needed to show either that Attheraces had no reasonable grounds for bringing its claim or no real prospect of success. The judge concluded that the facts of the Victor Chandler case were sufficiently different, the allegations of abuse were more fully pleaded (and in particular it would be relevant when considering an allegation of excessive pricing to compare the price charged with the costs of compilation) and there was clearly an issue to be tried.

It was not disputed that the BHB had a contractual right to prevent supply to Attheraces. Under the relevant agreement the PA is not authorised to supply anyone with whom the BHB does not have direct agreement (a right's licence). The question was whether the BHB could exercise that right without abusing its dominant position and that depended on whether it was objectively justified in requiring further payment from Attheraces in circumstances where it had no database rights.

As a result, Attheraces sought an injunction to restrain the BHB from ordering the PA to discontinue the service. The judge concluded that there was a seriously arguable case and ordered an interim injunction. In short, the judge concluded that if no interim injunction were granted, then the supply of pre-race data by the PA to Attheraces would be stopped and the loss of business as a result could not properly be compensated in money. At trial later in the year, the court must determine whether the BHB's attempt to charge for a licence for intellectual property rights which do not exist is itself an abuse of a dominant position.

Given that the Attheraces case and the Irish and the VC cases are now awaiting full trial, a considerable degree of uncertainty remains. It is, however, possible to extract a few key messages, in particular the crucial differences between the Attheraces and Victor Chandler cases - that Victor Chandler had entered into an agreement to pay a fee and Attheraces had not.

The BHB, unless it drastically changes the way it complies its database, may not rely on database right protection. The football authorities are likely to be in the same position. Any attempt to exert a claim in copyright might in theory be supported by case law, but in practice may be very difficult to substantiate.

If a contract is entered into (and this would include existing licences for football data), then it is prudent to comply with the obligations under that contract, including payment obligations, until the contract is legitimately terminated or otherwise expires. Case law suggests that the fact that a contract happens to be a licence for rights which turn out not to exist is unlikely to be a good reason to challenge it.

However, the proposal of any new contracts or licences based on database or other IP protection should be treated with considerable scepticism. Certainly, pay for a supply of information, for formatting and for updates, and pay a reasonable amount if you need the information to be supplied to you in that form. If the information is available from another source, then that amount might be quite low. However, as a general rule, you should not enter into an agreement, unless you expect to abide by its terms.

28 March 2007

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