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With databases being a hot topic of debate (and the loss
of data by various organisations, it is well worth bearing in mind
the principles surrounding database rights. Here are some things to
remember.
1. What is protected?
Database rights are protectable under the
Copyright and Rights in Databases Regulations (1997 SI3032).
A database is defined as a collection of independent works, data
or other materials which are arranged in a systematic or methodical
way and are individually accessible by electronic or other means. A
property right (database right) will subsist in a database if there
has been substantial investment in the obtaining, verifying or
presenting of the contents of the database pursuant to regulation
13 of the Database Regulations. One important factor is to keep a
record of this "financial, human or technical resources" put into a
database as proof of substantial investment in the obtaining,
verifying or presenting of the contents of the database.
2. Who do database rights belong to?
Cureton -v- Mark Insulations Ltd [2006] EWHC 2279 (QB)
06/TLQ/0190
This case held that a company using independent consultants
would not automatically own any database produced by those
individuals, as would be the case if they were employees of the
company in question.
Here Mark Insulations Limited (Mark) supplied home insulation
and Mr Cureton and his employees operated under a verbal agreement
which allowed them to sell Mark's services to customers. Mr Cureton
built up a list of customers while promoting Mark and used it for
his other business purposes. Following a disagreement Mark
purported to terminate the verbal agreement and required Cureton to
deliver up all property belonging to Mark including all customer
details. Cureton brought proceedings for breach alleging Mark was
not entitled to terminate and Mark counter claimed for all rights
in the customer database. The Court was asked to decide the
question of ownership of the customer database.
If Cureton had been employed by Mark, then the database would
belong to Mark (subject to any agreement to the contrary)
[Regulation 14(2) of the Database Regulations]. However since there
was no express term as to ownership on the database, because of
Regulation 14(2) [where Cureton was not an employee of Mark] and
since the database in this case was made by Cureton, it belonged to
Cureton, in the same way a salesmen’s notebook would have done in a
pre-computer age.
The Court also held that the terms of Mr Cureton’s undertaking,
to give up “all of Mark's documents, whether written or electronic”
did not assist Mark; nor did the general law of agency.
3. What can be commercially exploited?
Attheraces Limited -v- The British Horseracing Board
[2007] EWCA Civ 38; 2 February 2007 (appeal of Attheraces Limited
-v- The British Horseracing Board [2005] EWHC 3015 (Ch), 21
December 2005)
The British Horseracing Board (BHB) submitted that it had
proprietary database rights (amongst others) in pre-race data.
BHB's belief, had it been correct, would have entitled BHB to
prevent unauthorised persons from infringing its rights, and to
enable BHB to use such database rights to require them to enter
into a licence for use of the pre-race data.
The European Court of Justice (ECJ) gave a ruling the effect of
which was that the use of pre-race data by the William Hill
Organisation Ltd did not infringe BHB's database rights. It was
held that BHB's investment in pre-race data was in materials which
made up the content of its database and the verification of such
creation. Its investment was not in seeking out existing
independent materials and collecting them in a database and
verifying the accuracy of the database on its creation and during
its operation (which is the subject of protection), thus the
pre-race data was not covered by the Database Directive.
Following the ruling of the ECJ, although it was no longer
possible for BHB to prevent copying of pre-race data using
proprietary rights under the Database Regulations and Directive,
BHB could still exert contractual control of the supply of pre-race
data provided directly or indirectly under contract by BHB. In
other words, the ruling did not mean that if someone wished to
obtain a reliable supply of pre-race data from BHB, that person
could do so without charge. Valid contractual arrangements could
instead be made relating to the supply of data by BHB and its
authorised suppliers. BHB was entitled to charge contractually for
access to its pre-race data product, even if the product itself was
not protected by database rights.
Note also that if a party owns and uses a database then it
should use copyright notices (© [Owner] [Year] All rights reserved)
and some text to the effect that the set of data is protected by
database rights.
4. Employees
Organisations often believe that procedures should be
implemented to protect their databases from misuse by parties
outside the organisation. However, it is sometimes the case that an
organisation's database will be used in unauthorised ways by its
own employees.
a) Pennwell Publishing (UK) Ltd -v- (1) Nicholas Patrick
Ornstien; (2) Daniel Stanley Noyau; (3) Junior Isles; and (4)
Energy Business Group Ltd [2007] EWHC 1570 (QB)
Here Mr Isles, an employee of Pennwell Publishing, listed his
contacts on Penwell's Outlook system. The contacts included
Mr Isles contacts from a previous job as well as contacts made
by Mr Isles whilst he was employed by Penwell.
Mr Isles then went on to set up a competing business and argued
that most of the contact list was personal to him. Here it was
decided that:
- because it was a single list it was not a personal list
maintained by the employee and was not separate from work
systems
- where a list of addresses was contained on an employer's email
program and backed up by the employer or by arrangement made with
the employer, it belonged to the employer and could not be copied
or removed by employees for use outside their employment or after
their employment came to an end
- the position would not change where the database was accessed
not from the employer's computer but from the employee's home
computer by remote access. In all those circumstances such lists
were the property of the employer and could not be copied or
removed in their entirety by employees for use outside their
employment or after their employment came to an end
- the employer was entitled to retain the database as delivered
up and to a permanent injunction preventing use of it, but the
employee was entitled to retain contacts made by him prior to his
employment with the employer
b) TML Financial Solutions Ltd -v- More Business Ltd
and others [2007] All ER (D) 341 (Jun)
The claimant company was one of the leading providers in the
United Kingdom of re-mortgage, loan and debt solutions for home
owners with unusual or difficult financial circumstances. Its most
valuable asset was its database which contained details of
individuals who were interested in or had purchased the financial
products that the claimant sold.
In October 2006, the claimant's managing director, T, agreed to
front a management buy out. Later, T came to suspect that former
employees of the claimant company (the third to seventh defendants)
had taken data belonging to the claimant company and were using it
for the benefit of the first and second defendants (two companies
set up around the time of the management buy out), in breach of
their duties to the claimant company. T later obtained a USB memory
stick, the contents of which provided evidence of the
misappropriation of such confidential information.
In the light of this evidence, the claimant company successfully
applied for an order: (i) requiring the defendants to disclose to
the claimant what documents or part thereof belonging to the
claimant they had in their possession, custody or control (the
confidential information), (ii) prohibiting the defendants from
using the confidential information, (iii) providing to the claimant
all hard copies of such confidential information as currently
existed, and (iv) preserving any confidential information as was or
had been stored on any computer, hard drive or other form of
electronic data storage medium in their possession, custody or
control.
c) Crowson Fabrics Ltd -v- Rider and others [2007] All
ER (D) 338 (Dec) (20 December 2007)
Here it was alleged by the employer (Crowson) that some
ex-employees had copied confidential information (including
customer contact details and sales figures). The ex-employees
contracts did not have restrictive covenants relating to
confidential information. Crowson argued that the ex-employees were
subject to an implied duty of confidentiality. However, it was held
that there was not a breach of confidentiality as the information
was already in the public domain or easily accessible or already
known to the employees.
However, Crowson was successful in arguing that the ex-employees
had infringed its database rights by substantial extraction of
information from its database of information onto their own
computer system.
This case illustrates the point that there is scope for claiming
infringement of a database right where an ex-employee has copied
and retained information without authorisation, in particular where
such information may not be protected by a general duty of
confidentiality.
Security procedures – because of the risk of
unauthorised use of databases by a party's own employees, an
organisation could consider the following:
- ensure that it has an email policy in place allowing it to
monitor email usage: many cases involve sales staff emailing data
to home email accounts
- ensure that the email policy identifies what information
belongs to the employer and what information belongs to the
employee and makes it clear that information belonging to the
employer should not be removed (or identifies circumstances in
which it can be removed)
- ensure its induction programme focuses on the issue of
protecting the company's proprietary information and that consent
for monitoring email usage is obtained from new joiners
- ensure that it is not too difficult to retrieve deleted
emails
- include the occasional 'false' lead on the database to see
whether there is any leakage or unauthorised use of the
database
- consider what access staff need to have to certain databases –
can an organisation introduce a system allowing them only to access
data relevant to their particular position?
- ensure that the intellectual property position regarding
contact lists, sales figures and profit margins is made clear
- consider using restrictive covenants and express
confidentiality obligations in employee contracts – if these are
used the organisation should ensure that these are in line with
current case-law
5. Summary
With the amount of money spent on databases, it is well worth
organisations looking into whether they in fact own the rights to
their databases, how they deal with their databases and how they
might protect their databases from unauthorised use.
Jimmy
Desai is a partner at Blake Lapthorn Tarlo Lyons, and
can be contacted at jimmy.desai@bllaw.co.uk.
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