Are all bets off for BHB?

Against the odds, and its Advocate General, the European Court of Justice (ECJ) has applied an unexpectedly restrictive interpretation to the scope of the rights created by the Database Rights Directive (96/9/EC). The decision, on a reference by the Court of Appeal in the longstanding dispute between British Horseracing Board (BHB) and William Hill Organisation Ltd over alleged infringement of BHB’s database rights, and parallel decisions in actions brought by Fixtures Marketing Ltd, the company representing the English and Scottish Leagues, regarding the use of football fixture lists, have sent shock waves through the UK’s horseracing and football governing bodies.

The Database Rights Directive was implemented in the UK by the Copyright and Rights in Databases Regulations 1997. These introduced a new database right (the “sui generis right”, characterised in article 7 of the Directive) which in the recitals to the Directive is said to promote and protect investment in data storage and processing systems which “contribute to the development of an information market against a background of exponential growth in the amount of information generated and processed annually”. A “database” for this purpose is “a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means”.

Caught in the home straight

BHB, British horseracing’s governing body, compiles a vast database including details of registered horses, jockeys, fixture lists containing racing conditions, entries and runners, at a cost of £4 million. It is made available to subscribers and the public through two separate data feeds. William Hill subscribed to both data feeds and published information extracted from the database on its website.

In 2002 BHB became the first party to raise an action under the Regulations when it sued William Hill over Hill’s use of BHB’s data. The English High Court found for BHB, in what many considered a straightforward application of the Regulations. On Hill’s appeal the Court of Appeal appeared to concur with the principles expressed in the lower court, but as the database right was of recent provenance it referred a number of questions to the ECJ.

Earlier this year, Advocate General Stix-Hackl issued her opinion which broadly mirrored the High Court’s findings and favoured a wide interpretation of the right. The ECJ’s decision has ignored that opinion. After reviewing the background and recitals to the Directive it held: (1) For the purpose of article 7.1 the phrase “substantial investment in… the obtaining of the contents” of a database only related to the resources applied to seeking out and collecting existing materials to include within the database.

Crucially for BHB, it does not include the costs (or “investment”) associated with the creation of the materials. (2) The term “verification”, also used in article 7.1, does not refer to any “resources used for verification during the stage of the creation of materials which are subsequently collected in a database”. (3) The function of article 7.5 was to prevent a series of acts of unauthorised extraction and/or re-utilisation where the cumulative effect was to reconstitute the whole or a substantial part of the database to the public without the consent of the owner of the database right. (4) Perhaps less surprisingly, the ECJ ruled that the term “substantial part, evaluated quantitatively” of a database refers to volume of data extracted or re-utilised relative to size of the database, while the term “substantial part, evaluated qualitatively” refers to the scale of the investment associated with the obtaining, verification or presentation of that part of the database extracted and/or re-utilised.

Playing for high stakes

The ECJ found that BHB had not made a substantial investment in obtaining, verifying or presenting its database. Instead it had invested substantially in the creation of the materials (or data) to be incorporated in the database. In relation to the amount of data extracted and re-utilised by William Hill the ECJ indicated that this was neither qualitatively nor quantitatively substantial. Reports abound that BHB could lose £100 million annual revenue from exploitation of its data, in addition to some £14 million from overseas bookmakers, presenting a substantial challenge to replace these “lost” funds. This presupposes that the Court of Appeal follows the ECJ’s ruling, which is thought likely.

If applied, the ECJ’s ruling will signify an unexpected and amongst UK sports regulators unwelcome removal of a lucrative intellectual property right. Although the logic applied by the ECJ is apparent, it does appear unwilling to recognise broader commercial benefits, as promoted by the Advocate General’s opinion. In that respect it must be seen as an opportunity lost for sport – unless the more established form of intellectual property, copyright, can rescue the proprietors of database rights.

Tom Thomas, Partner, Sports Practice Group, Harper Macleod LLP