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Thursday, 15 January 2015

BREAKING: CJEU says that owner of an online database not protected by copyright or sui generis right may restrict its use by contract

As Tom explained a few days ago, 2015 will be a busy copyright year at everybody's favourite court, ie the Court of Justice of the European Union (CJEU), with both a number of cases awaiting decision and new ones likely to be referred by national courts.

Well, today's the day of the first copyright judgment of the year. The CJEU has just issued its 46-paragraph decision in Case C-30/14 Ryanair, a reference for a preliminary ruling from The Netherlands seeking clarification as regards the ever-sexy Database Directive [Directive 96/9].

There are two peculiarities of this reference worth highlighting, one shocking and the other, well, not-so-shocking. Starting with the latter, this is yet another case that the CJEU decided without the need for the Opinion of an Advocate General (AG) first [on the seemingly fading role of AGs in the EU copyright landscape see here]. As regards the shocking feature of this reference, this is that this time the CJEU had to answer just one (1!) question, ie:

Does the operation of the [Database Directive] also extend to online databases which are not protected by copyright on the basis of Chapter II of the Directive, and also not by a sui generis right on the basis of Chapter III, in the sense that the freedom to use such databases through the (whether or not analogous) application of Articles 6(1) and 8 in conjunction with Article 15 [of the Database Directive], may not be limited contractually?

Incidentally Merpel notes that neither the lack of an AG Opinion nor the fact that the CJEU only had to address one question prevented the Court from taking almost one year to deliver its ruling.

But what was this case all about?

Unsurprisingly, the CJEU ruled that
a database owner 

is subject to fewer constraints
than a passenger on a Ryanair flight

Dutch company PR Aviation operates a website that allows [or rather: allowed?] customers in The Netherlands to compare the prices of low-cost airlines - including Ryanair - and, upon payment of a commission, book a flight. 

The problem is that the Terms of Use of the Ryanair website provide that this "is the only website authorised to sell Ryanair flights, whether on their own or as part of a package. Price comparison websites may apply to enter into a written Licence Agreement with Ryanair, which permits such websites to access Ryanair’s price, flight and timetable information for the sole purpose of price comparison."

It is not hard to imagine that Ryanair was not happy with the PR Aviation website, and indeed brought proceedings in The Netherlands for infringement of both Ryanair's contractual terms and rights - whether copyright or sui generis right - in its public database.

In 2010 the Local Court, Utrecht, partly dismissed Ryanair’s claims, notably those relating to the Database Directive and its Dutch transposition. In 2012 Court of Appeal, Amsterdam, completely ruled against Ryanair, holding that PR Aviation's conduct was a legitimate use of the Ryanair website. Ryanair appealed the decision before the Netherlands Supreme Court, which decided to stay the proceedings and refer the question mentioned above to the CJEU.

What the CJEU held

The CJEU ruled that the Database Directive only applies to databases protected by copyright or the sui generis right [it is left to the referring court to determine whether this is actually the case of Ryanair], and that the holder of a publicly accessible database is free to determine by contract and in compliance with the applicable national law the conditions of use of its database.

The same would not be true for a database protected by copyright or the sui generis right, because of a number of provisions, ie Articles 6(1), 8 and 15, in the Database Directive that - at certain conditions - prohibit contractual limitations in the use of a database.

In particular the CJEU held that: "it is clear from the purpose and structure of Directive 96/9 that Articles 6(1), 8 and 15 thereof, which establish mandatory rights for lawful users of databases, are not applicable to a database which is not protected either by copyright or by the sui generis right under that directive, so that it does not prevent the adoption of contractual clauses concerning the conditions of use of such a database." [para 39]

Why not booking your Fez hotel
through ?

This ruling does not look particularly shocking from a legal standpoint, yet it may have significant implications for the business model of those websites that, not only offer users the possibility to compare the prices of relevant goods or services, but also allow them to purchase such goods and services directly, without the need of going to the website of the actual provider of goods and services. 

But why could one possibly want to prevent customers from purchasing goods and services via third-party-operated websites

One reason may be to ensure the consistent quality of the services and goods provided, including with regard to post-sale assistance. For instance, in the string of recent cases against screenscraper websites, Ryanair has claimed that many of these third-party sites cause problems for Ryanair customers, as they fail to pass on vital information on issues such as flight changes, web check-in, and special needs assistance and contact details. 

Another, possibly more mundane, reason may have something to do with the revenues generated by the ads displayed on the actual provider's website, Ryanair itself probably being an example.

On a final note, it is perhaps worth observing how we are used to live in a world in which most people would be thrilled to be able to claim copyright or, at least, sui generis protection over their databases. Yet the decision in Ryanair shows that in some instances it is not that bad that this may not be the case, as at least one remains free to tailor the relevant contractual terms as they please.


guido said...

The rationale of this decisions escapes me. In essence, the author of a non-original and non-protectable database has more contractual freedom than the author of a fully-protected one? There is no logic. If a database is not protectable, then extraction and re-utilization is not an infringement in the first place. If you can re-construe by contract intangible properties at your wish, why do we need to have intellectual property laws?

Francis Davey said...

Guido: leaving aside whether we should have intellectual property laws, they clearly do a different job from contract because they create rights that are applicable against strangers to the contract.

That means that Ryanair may be able to restrict what users of its site are allowed to do (for example, by contract) but if its data is scraped and transferred to an unconnected third party, that third party does not have to worry about Ryanair's contractual relations with the website users, it only has to worry about Ryanair's property rights. If no property rights, then they are free to do that which the immediate website user may not be free to do.

If you like David Nimmer's style (I do, but not everyone does) there are some comments on this kind of issue in his article The Metamorphosis of Contract into Expand from 1999.

Anonymous said...

Perhaps a nuance is missing from the discussion...

It is not the data itself that is protected by contract, but rather the vehicle of the website access to that data that is protected.

Anyone at the airport or elsewhere where that data is publicly displayed is free of any contractual obligations.

Anonymous said...

The consequences of this judgment would appear to be quite far-reaching.

guido said...

The point is clear from a legal perspective (and thanks for the brilliant reference - I am a big fan of D. Nimmer too!), but still it makes no sense from a logical point of view: should Ryanair's database be original or otherwise eligible for protection under the sui generis right, then that particular contractual provision that limits "scraping" would be void. But since the database is not IP protectable, then the same contractual provision is enforceable... Clearly, the paradox is created by the restriction to freedom of contract imposed by the law in this circumstance. I would tend to think that the restriction should apply ALSO, by analogy, to all circumstances where someone is trying to impede a legitimate use of a databases - whether protected or not by IP. By the same token, contacts that exclude fair dealing with copyright works, where unenforceable by law, should be unenforceable ALSO when applied to works in the public domain. Or am I missing something?

Anonymous said...

Err yes you are. The Court took the point that to accept that argument means that you would not be able to enforce restrictions in contracts freely entered into in respect of databases which are unprotected. An owner of a database would have a good which he could not market when there was no rule which prevented that. The Directive excludes such restrictions as a trade off for getting, inter alia, a significant term of protection for protected databases. The IPR protection is an in rem right and a contract is an in personam right. Btw the entirely separate issue of rights being claimed for public domain works whether these be under contract of sale (cheap editions of classic novels which carry a no copying warning) or even a fresh copyright in the edition or typeface is not a new issue.

Anonymous said...

I agree with Guido.

@Anonymous 21:38
To accept the argument that copyright and neighbouring rights have to preempt contractual arrangements does not mean you would not be able to enforce restrictions freely entered to with respect to unprotected databases, it means only that you wouldn't be able to enforce those terms which fall squarely within the scope of IP rights. Those are a subset.

In US law (as illustrated brilliantly by Nimmer's article linked above), the distinction is expressed by the requirement that enforceable terms have to contain an "extra element", that will make them not cover the same scope as copyright.

Anonymous said...

Don't understand the last post. Could it be explained?

Anonymous said...

I also don't get Guido's point as to why this is a problem. Why should IPR law encroach on a prodcuct which is not protected by any IPR. There is no "author" of unprotected database . If a database is not protectable, then extraction and re-utilization are in fact acts which you can only prevent your contractual partners from carrying out. If someone else has access to your datatbase -then good luck trying to stop them except by contract. There will clearly be no infringement of anything and if you haven't managed to get them to submit to terms and conditions they are not bound either. Why is this outcome unacceptable? The outcome which would be based on IPR protection (life plus 70 years)being accorded to a database with a small derogation from that protection for excluded contractual restrictions appears far more unacceptable.

Anonymous said...

Please, could anyone tell me why Ryanair's database can not be protected???, why is it not covered by the Database directive nor the sui generis right?

guido said...

"Why should IPR law encroach on a product which is not protected by any IPR?" Because the product in question is not a cat or an apple, but a fully-fledged database - or, at least, what the Directive defines as “a database”. The question of whether it is IPR protectable or not, should not be relevant in this connection. If it is a database (and surely it is), then the Directive imposes that certain contractual restrictions with respect to its use are unenforceable. Here is where, in my opinion, the CJEU erred.
On the other note: I'm not clear either on how Ryanair managed to make a database which is not covered by the sui generis right (but apparently they were lucky enough to escape it!)

Anonymous said...


a set of guileless questions:

How much do you value Freedom to Contract?

Do you think that people are free to contract regardless of sets of rights on items?

Can a person relinquish rights otherwise available under law for real or perceived benefits?

Should the law intervene so as to not allow such contracts?

Under what authority?

Should that authority be defined and written, explicitly as to its own limits?

Anonymous said...

There is also the question of whether the terms and conditions on the Ryanair website even constitute a contract.

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