On 3 June 2021, the Fifth Chamber of the European Court of Justice (‘ECJ’) gave judgment in the important ‘database right‘ case, ‘CV-Online Latvia’ SIA v ‘Melons’ SIA Case C‑762/19.
TL;DR – the Court has made it potentially harder for EU database-makers to protect the contents of their databases from being extracted or re-used by meta-search engines and online content aggregators.
To avoid costly disputes, engines and aggregators would do well to obtain the consent of database makers prior to indexing and copying substantial parts of online databases, whether or not the end product or use of the data is innovative or adds value to users.
CV-Online is the largest job advertisement website in Latvia. It regularly updates its online database of job adverts published by employers. It used meta-tags to provide invisible cues to search engines that enable the search engines to efficiently identify the contents of each page of the website and to index it correctly. The meta-tags contained information on job title, name of employer, place of employment and date of publication.
Melons is a Latvian company which operated a search engine for job adverts. Its website enabled users to search several third-party websites for job adverts using criteria such as the type of job and location of the employment. Melons’ website provides users with hyperlinks to the websites hosting the original job adverts. One of the websites that Melons obtained this data from was CV-Online. Melons displayed the information in CV-Online’s meta-tags in a list of results in response to user enquiries on its search engine.
CV-Online brought a claim against Melons in Latvia alleging infringement of its database right under EU law. The first instance court upheld the claim. Melons appealed arguing, among other things that CV-Online’s meta-tags were not in fact part of the database and the reason for using them was because CV-Online wanted search engines to display the information contained in the meta-tags. The regional court referred two questions to the ECJ regarding the application of database right to the activities of Melons in this case.
What is ‘database right‘?
The EU Directive 96/9/EC on the legal protection of databases (‘the Database Directive’) modified copyright in a database and created a new ‘sui generis‘ database right, in accordance with the principles contained in international agreements of the World Trade Organisation and the World Intellectual Property Organization. The aims of the Database Directive include harmonising the protection of intellectual property rights in the contents of databases that have been invested in substantially, in order to promote the growing information market. However, conscious that the new database right could be abused by entities in a dominant market position, the Directive notes that:
…protection by the sui generis right must not be afforded in such a way as to facilitate abuses of a dominant position, in particular as regards the creation and distribution of new products and services which have an intellectual, documentary, technical, economic or commercial added value; …the provisions of this Directive are without prejudice to the application of Community or national competition rules;
Recital (47) of the Database Directive
The database right itself is found in Article 7. (It isn’t the lightest of prose).
1 . Member States shall provide for a right for the maker of a database which shows that there has been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or presentation of the contents to prevent extraction and/or re-utilization of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of that database.
2. For the purposes of this Chapter:
(a) ‘extraction’ shall mean the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form;
(b) ‘re-utilization’ shall mean any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by on-line or other forms of transmission…
So Article 7 creates a right that protects database makers from third parties conducting certain types of unauthorised substantial copying of the contents of a database that the database-maker has substantially invested in. The right is implemented via domestic laws enacted across the EU (in the UK, via the Copyright and Rights in Databases Regulations 1997 (SI 1997/3032), as amended, and changes made to the Copyright, Designs and Patents Act 1988. Following the end of the transition period in the UK-EU Withdrawal Agreement, UK databases created on or after 1 January 2021 do not benefit from EU database right protection but may benefit from a domestic UK database right which is in the same terms as the EU right.
While Article 7 defines both ‘extraction‘ and ‘re-utilisation‘, it does so in broad terms. As is often the case in EU law, the Directive leaves much undefined and open to interpretation in light of the purposes and objectives in its 60(!) recitals. There has been considerable litigation over the correct meaning of each component part of the database right, leading to some uncertainty over whether there has been infringement in any given scenario.
Until 3 June 2021, the main authority on meta-search engines and database right was Innoweb BV v Wegener ICT Media Case C-202/12.
In Innoweb, the ECJ found against a meta-search engine that translated user queries into searches of a third party online database in ‘real-time‘, enabling the user to access the entire contents of the target database without having to visit the original site. The database-maker in Innoweb complained of loss of income due to actual or potential loss of website traffic and corresponding advertising revenue. All this undermined its substantial investment in setting up and maintaining the database, even though the meta-engine provided users with ‘deep links‘ to the listings on the original website.
The Advocate General’s Opinion
On 14 January 2021, Advocate General (‘AG’) Szpunar gave an Opinion to the ECJ that came to the following conclusions:
- Meta-engines that copy and index the whole or a substantial part of online databases that are freely accessible online and allow users to search those databases by using criteria relevant to the contents of the original databses will have ‘extracted‘ and ‘re-utilised‘ the contents of those database (§ 37);
- However, that was the start rather than the end-point because the database-maker is entitled to the protections of the Directive only where the extraction or re-utilisation puts at risk the possibility of recouping the database-maker’s substantial investment in the contents of the database (§§ 3, 43, 45 to 49);
- As such, the interests of database-makers had to be balanced against the interests of meta-engines and aggregators who create innovative products that help users and improve the internet (§ 40).
- The AG clarified that ‘although that sui generis right takes the form of an intellectual property right, its origin lies in the law on unfair competition‘ and expressed concern that the database right should not be misused to abuse the dominant market position of a database-maker, contrary to national or EU competition laws. For this reason, database right ‘does not grant an exclusive right as broad as copyright‘ (§§ 52 to 59);
- Since CV-Online had a dominant market position, if Melons’ activities were found by the referring court not to seriously prejudice CV-Online’s investment in the contents of its database, there would be no objective justification for CV-Online refusing to grant Melons a licence to use the data. It did not object to general search engines like Google indexing its website and it used meta-tags to facilitate this, but it took objection to specialist meta-engines who might compete with CV-Online’s business. Refusal to grant a licence in these circumstances would be likely to impede competition unfairly, particularly as CV-Online operated another website that was active in the secondary market of job advert aggregation (§§ 55 to 57).
The ECJ’s judgment
Exercising its powers under Article 267 of the Treaty on the Functioning of the European Union, the ECJ reformulated the question referred by the Latvian regional court in the following way:
[i] whether Article 7(1) and (2) of Directive 96/9 must beinterpreted as meaning that an internet search engine specialising in searching the contents of databases, which copies and indexes the whole or a substantial part of a database freely accessible on the internetand then allows its users to search that database on its own website according to criteria relevant to its content, is ‘extracting’ and ‘re-utilising’ the content of that database within the meaning of that provision, and
[ii] that the maker of such a database is entitled to prohibit such extraction or re-utilisation of that same database.
Paragraph 20 of the judgment
The Court’s answer to the first issue (re: ‘extraction‘ or ‘re-utilisation‘) was that a meta-search engine that copies and indexes the whole or a substantial part of a free and publicly accessible online database and allows users to search the database on its own website by reference to criteria relevant to its content does amount to ‘extracting’ or ‘re-utilising’ the contents of the database under Article 7 of the Directive (see §§ 20 and 47).
On the second point, (re: whether the database-maker in this scenario can enforce a database right) Article 7 would only be infringed where the copying activity has the effect of ‘depriving the [database-maker] of income intended to enable him or her to redeem the cost of that investment’ (§ 37).
The Court contextualised and developed this finding as follows:
It should be borne in mind that the activities of content aggregators on the internet, such as the defendant in the main proceedings, also serve to achieve the objective, referred to in paragraph 23 of the present judgment, of stimulating the establishment of data storage and processing systems in order to contribute to the development of the information market. As the Advocate General observed, in essence, in point 41 of his Opinion, those aggregators contribute to the creation and distribution of products and services with added value in the information sector. By offering their users a unified interface enabling them to search several databases according to criteria relevant to their content, they allow the information on the internet to be better structured and to be searched more efficiently. They also contribute to the smooth functioning of competition and to the transparency of offers and prices.
Paragraph 42 of the judgment
The key guidance for national courts is that:
…the main criterion for balancing the legitimate interests at stake must be the potential risk to the substantial investment of the maker of the database concerned, namely the risk that that investment may not be redeemed.
Paragraph 44 of the judgment
As expected, the Court followed the substance of the AG’s Opinion but with two notable omissions. Firstly, the judgment steers clear of providing any detailed commentary on the interplay between the database right and EU or national competition law by reference to when a database-maker may be expected to grant a licence to a meta-search engine. The AG was more forthright about this aspect of the case.
Secondly, the ECJ avoids both consideration and criticism of CV-Online’s dominant market position and/or its selective approach to enforcing the claimed database right. The Court preferred a more generic outlook, emphasising that the purpose behind the Directive is to achieve a ‘fair balance‘ of the interests of both parties. This is the AG’s Opinion but with less punch.
Meta-search engines and content aggregators that index and copy publicly accessible databases in the EU are likely to seek to rely on this judgment as providing them with another layer of protection against database right infringement claims. While such disputes may give rise to a number of legal issues, the ultimate question for these engines or aggregators is likely to be the extent to which the evidence suggests that their activities risk the database-maker’s possible return on investment.