Can use of a database be protected via a contract or license?

Big Data: Legal Challenges (Full Report)

For databases which are securely controlled, a contract is the best method to restrict and control access and use of the data. Often the database owner will seek to form such a contract online, which gives rise to issues as to the way in which traditional contract law principles apply to online agreements.

Enforceability of contracts purported to be made online

'Clickwrap' agreements, which require the user to indicate assent by clicking 'ok' or a similar button, have been routinely upheld in US law⁵⁰ by application of orthodox principles of contract law in cases where it has been established that the terms of the contract have been drawn to the attention of the offeree and the offeree has manifested acceptance to those terms.

The position appears to be the same in Australia. In eBay International v Creative Festival Entertainment⁵¹, the Federal Court held that clickwrap agreements made on two websites were valid contracts. Similarly, in Smythe v Thomas ⁵², the Supreme Court of New South Wales held there was a binding contract where a purchaser bid in, and "won", an auction on eBay.

The position in relation to so called "browsewrap" agreements is less clear. In these cases a set of terms and conditions is available via a hyperlink on the website but the user is not forced to open the relevant web page, or click "I agree" after reading such terms. The information on the website is not protected for access to contracting parties only. In the United States, the position appears to be that browsewrap agreements are unenforceable unless the enforcing party can show that the other party had actual or constructive notice of the terms⁵³. Whether browsewrap agreements are enforceable in Australia remains to be seen.

The enforceability of such online contracts has come to the fore in the context of website "scraping". "Scraping" refers to wholesale copying of data or information from websites, usually through automatic software programs⁵⁴. The scraper can then use the data in competition with the website owner. The question arises as to whether a website owner which prohibits scraping in its website terms and conditions can claim breach of contract against a scraper.

The United States Court of Appeals for the Second Circuit in Register.com v Verio⁵⁵ considered a breach of contract claim against a scraper of domain name registration data ("WHOIS data"). The website owner, Register.com, claimed that Verio's scraping of WHOIS data breached its terms of use. Verio admitted that it was aware of Register.com's terms (which were shown together with the requested WHOIS data), but argued that it had never agreed to them. Based on Verio's actual knowledge of the terms, the Court held that Verio had agreed to them⁵⁶:

Across the Atlantic, the High Court of Ireland held in Ryanair v Billigfluege.de GmbH⁵⁷ that a data scraper was bound by Ryanair's terms of use, which were accessible by a hyperlink from Ryanair's website. Hanna J reasoned:

Because of the limitations of contract law, database owners (and their lawyers) have turned to other, more imaginative causes of action against data scrapers. In the United States, classifieds website operator Craigslist has sued 3Taps and other data scrapers citing no less than 17 different causes of action, including violation of Computer Fraud and Abuse Act⁵⁸. In Australia, UK domain registry operator Nominet successfully sued a WHOIS data scraper under copyright and misleading or deceptive conduct⁵⁹.

Licensing of data

In circumstances where a data controller can limit access to the data, the licence agreement becomes all important in restricting use of the data by authorised users. However the ability of data owners to license data has not been without doubt. In Attheraces v The British Horse Racing Board⁶⁰ it was argued that absent intellectual property rights in data, it cannot be licensed. The English High Court rejected the proposition⁶¹:

A similar conclusion was reached by the US Court of Appeals for the Seventh Circuit in ProCD v Zeidenberg⁶², in which the defendant argued that a claim for breach of contract for copying of electronic telephone directory data was "pre-empted" by copyright law. The Court rejected the defendant's argument, holding that "a simple two-party contract is not 'equivalent to any of the exclusive rights within the general scope of copyright' and therefore may be enforced."⁶³

There is no reason to expect that any court in Australia or New Zealand would take a different approach. It is our view that "mere information" in the form of a large unstructured or semi-structured data set can be licensed in the absence of IP rights in the data. This control over access, use and return of the data would be a condition of access to the "data owner's" servers and such contract would be enforceable. However, in the absence of IP rights in the data, the underlying information or insights derived from their use would be much more difficult to restrict.

Competition law

In many cases, owners of Big Data databases with commercial value may be dominant in the market for supply of data stored in the database. As such, they may become subject to the restraints of competition law.

Australian and New Zealand law prohibit a party with a substantial degree of power in a market taking advantage of that power for certain anti-competitive purposes⁶⁴. While the New Zealand legislation contains a general provision that enforcement of an intellectual property right does not amount to such taking advantage⁶⁵, the equivalent Australian provision is more limited in that it exempts only provisions in intellectual property licences and assignments and does not refer to the enforcement of intellectual property rights in general⁶⁶. In any event, as has been outlined above, it is not clear that such databases will be entitled to intellectual property protection so as to fall within any such exemptions.

Examples of action taken by relevant authorities to ensure access to data can be found in many jurisdictions. In Australia, as far as back as 1997 the Australian Competition and Consumer Commission initiated action against Telstra to ensure access (for a licence fee) for third parties to the name, address and telephone information it collects⁶⁷. The European Commission has also investigated various cases in which the provision of data has featured⁶⁸.

The British Horseracing Board ("BHB") database discussed above in relation to the European database right and copyright has also been the subject of a competition claim. In ATTHERACES Ltd v The British Horse Racing Board⁶⁹, the claimants ("ATR") ran a website and television channel including coverage of horse races and provided pre-race data to viewers and prospective betters which was derived from the BHB database. ATR alleged that BHB had abused its dominant position contrary to Article 82 of the EC Treaty by way of the terms it sought to impose for supply of pre-race data, including excessive, unfair and discriminatory pricing. The English High Court found these claims to be made out.

Anti-competition claims have also been made by defendants in the context of the 'scraping' cases in the United States. In eBay v Bidder's Edge⁷⁰, Bidder's Edge, an auction data aggregator used a 'crawler' to obtain data from the eBay website. eBay issued proceedings in respect of such 'scraping' on a number of grounds, which were met with a counterclaim from Bidder's Edge on anti-competition grounds. An application for a preliminary injunction was heard and having found that eBay had a likelihood of success in its claims, the Court was not required to consider the merits of the anti-trust claims. The case was subsequently settled so the anti-competition arguments were not tested.

Related links

• The data explosion
• Defining big data
• The application of traditional legal rights in a big data world
• Can a database be protected by copyright?
• A special case: The European database directive
• Does the law recognise the 'confidential information' contained in a database?
• Big data as a Privacy Concern
• Conclus·ons

Footnotes

⁵⁰Hancock v AT&T, 701 F 3d 1248, 1256 (2012, 10th Cir)
⁵¹(2006) 170 FCR 450
⁵²(2007) 71 NSWLR 537
⁵³Recent US cases include Roller v TV Guide Holdings, LLC, 2013 Ark 285, Ajemian v Yahoo!, Inc, 83 Mass App Ct 565 (2013), In Re Zappos.com, Inc, 893 F Supp 2d 1058 (2012) and Nguyen v Barnes & Noble, Inc, (USDC CD Cal, Case No. 8:12-cv-0812-JST (RNBx), 28 August 2012)
⁵⁴See Wikipedia, "Web scraping": http://en.wikipedia.org/wiki/Web_scraping
⁵⁵356 F.3d 393 (2004)
⁵⁶Ibid, 403
⁵⁷[2010] IEHC 47
⁵⁸Craigslist, Inc v 3Taps, Inc (USDC ND Cal, Case No CV 12-03816 CRB, 30 April 2012): "The FAC alleges claims for (1) trespass; (2) breach of contract; (3) misappropriation; (4) copyright infringement; (5) contributory copyright infringement; (6) federal trademark infringement; (7) federal false designation of origin; (8) federal dilution of a famous mark; (9) federal cyberpiracy prevention; (10) California trademark infringement; (11) common law trademark infringement; (12) California unfair competition; (13) violations of the Computer Fraud and Abuse Act (CFAA); (14) violations of the California Comprehensive Computer Data Access and Fraud Act; (15) aiding and abetting trespass; (16) aiding and abetting misappropriation; and (17) an accounting."
⁵⁹Nominet UK v Diverse Internet Pty Ltd (2004) 63 IPR 543
⁶⁰[2005] EWHC 3015
⁶¹Ibid [285]
⁶²ProCD, Inc v Zeidenberg, 86 F.3d 1447 (1996)
⁶³Ibid 1455
⁶⁴Section 46, Competition and Consumer Act 2010 (Australia); section 36, Commerce Act 1986 (New Zealand)
⁶⁵See section 36(3), Commerce Act 1986
⁶⁶Section 51(3), Competition and Consumer Act 2010
⁶⁷ See http://www.accc.gov.au/media-release/telephone-directory-data-now-accessible-to-all
⁶⁸See for example, proceedings initiated against Thomson Reuters in relation to restrictions on use of certain real-time market data which limited customers' ability to switch data providers: http://europa.eu/rapid/press-release_IP-12-1433_en.htm?locale=en; and two investigations in relation to the Credit Default Swaps market in particular examining privileged access to CDS transaction data by Markit, an information service provider: http://europa.eu/rapid/press-release_IP-11-509_en.htm?locale=en
⁶⁹[2005] EWHC 3015 (Ch)
⁷⁰100 F.Supp.2d 1058 (N.D. Cal. 2000)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.