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Response from the European Publishers Council to the communication from the Commission draft evaluation of Directive 96/9/EC on the legal protection of databases (9.8.2005)

30th September 2005

The European Publishers Council (EPC) is a high level group of leading European media corporations whose interests span newspapers, magazines, books, journals, online database and internet publishing as well as in many cases significant interests in private television and radio. A list of our members is attached.

EPC welcomes this opportunity to provide views on the Commission's draft Communication dated 9.8.2005 on the Evaluation of Directive 96/9/EC on the Legal Protection of Databases ("the Directive").

Databases are the heart of the Information Society within the Community. They play a vital role in its continuing cultural and economic development and, as such, members of the EPC have derived continuing benefit from their legal protection through the sui generis right.

The Directive was the result of extensive and prolonged work from 1988 to 1996 by all interested parties to strike an appropriate balance between protection of the creativity and investment in database production on the one hand and the interests of legitimate users on the other.

EPC considers that the Evaluation's analysis of the Directive's impact is incomplete as it is based on limited data only. EPC considers that it would therefore be inappropriate for the Commission to develop any policy options for follow-up based on the Evaluation as it stands. In particular, it places insufficient weight on the main objective of the Directive i.e. to create a uniform protection for databases, without which there will be no, or insufficient, investment in modern information storing and processing systems.

According to the recital 39 of the Directive it "seeks to safeguard the position of makers of databases against misappropriation of the results of the financial and professional investment made in obtaining and collection the contents by protecting the whole or substantial parts of a database against certain acts by a user or competitor". On page 7 of the draft report reference is made to "a need to protect investments in the creation of databases against parasitic behaviour of "free-riders" and dishonest competitors who seek to misappropriate the results of the collection of data and information undertaken by the database maker". EPC wishes to underline that this need is today even more important than it was in 1996 due to ever increasing competition in the internet market.

EPC recognises that the Evaluation follows the NAUTADUTILH Final Report published in September 2002 which was based on only 44 answers to a questionnaire - a very limited sampling on database producers and users. Also, in their Report (p.549) NAUTADUTILH noted that of the then 15 authorities in charge of the Directive's implementation, only two - the UK Patent Office and the Italian Ministry of Culture - responded with their views.

Whilst the Commission is dependent on the responses it receives, it is quite clear that much wider and more extensive analysis and data is needed before an accurate picture can be formed about the success - or shortcomings - of the Directive.

Having said that, EPC considers that although there are aspects of the Directive which are worthy of review, it considers that, overall, the Directive has successfully achieved its core objective of striking that balance of interests.

Accordingly, EPC would oppose strongly any steps being taken which would lead to:

• the removal of the sui generis/database right, whether or not replaced by some other form of right or by reversion to the status quo under copyright law prior to the Directive; or
• any reduction in the scope of protection of the sui generis/database right.

On the contrary, the right way forward is to improve the sui generis/database right by addressing in an appropriate manner its proven weaknesses.

Part 1 - Preliminary comments

1. The Directive's overriding objective was to create a "stable and uniform legal protection regime" for databases (Recital (12). Without that, as that Recital correctly observed, "...investment in modern information storage and processing systems will not take place." The draft Evaluation focuses almost exclusively on a market analysis. By doing so, it places insufficient weight on that overriding harmonising objective. Subject to EPC's comments below on the recent ECJ decisions, EPC considers that the Directive achieved its core objective. Accordingly, EPC opposes any changes to the Directive that would undermine, rather than strengthen, that core objective.

2. The Evaluation's market analysis is based on only one measure - numbers of database entries as shown in the Gale Directory of Databases. This analysis is incomplete and therefore misleading. As noted below, other measures show that, in fact, the Community's database market has continued to grow since the Directive was adopted in 1996.

3. The Evaluation contains no data to support the assertions made by the academic and scientific community and libraries that the sui generis right has not proved "sustainable" and that the balance between the legitimate interests of manufacturers and users has been achieved at unnecessary costs. EPC considers that neither assertion is true. In fact, the reverse is the case. There is growing competition amongst providers of paid-for data as well as an ever increasing wealth of free data available via the Internet.

4. Any reduction in the scope of protection of the sui generis/database right risks the Community 'shooting itself in the foot' in terms of the strength of the Community's database industry against its US competitors. The proper protection of databases will facilitate European publishers' database production. Any undermining of the sui generis/database right leads easily to an increase of unfair competition and commercial exploitation of databases by "free-riders" against the objectives of the Directive.

5. Furthermore, the Evaluation does not deal with the uncertainty surrounding newspapers as databases and the vital need to protect the investment in newspaper databases against parasitic behaviour by commercial organisations which build their businesses - and generate substantial advertising revenues - through activities such as deeplinking to newspaper content .The exploitation of publishers' news and classified advertising databases is technically easy for "free-riders". Sui generis/database right is an essential tool for publishers when they provide good quality data to the public/users especially in an electronic form. Without an appropriate sui generis/database right, reasonable protection for investments by the publishers would be absent. Existing case law is unclear on this and EPC calls on the Commission to ensure that the Directive fully protects newspaper database investment against such parasitic behaviour.

Part 2 - Specific comments on the conclusions stated in the evaluation

4.1 Has the Directive eliminated the differences in protection in Member States that hamper the functioning of the Internal Market?

The Evaluation appears to conclude that it has failed in one of its operational objectives - to eliminate all such differences. EPC does not agree for the following reasons:

• Few - if any - Directives achieve a standard of "100%" elimination of differences in national laws in the applicable field. If that was the criterion for evaluation, virtually every Directive would be judged a failure.
• It is inevitable that during the first few years following the adoption of a measure, the judgments of national courts will diverge in their interpretation of the measure in question. However, this divergence tends to narrow over time.
• The sui generis right has the advantage that it is a 'legal innovation' of the Community. As such, is more likely than other measures in this field to move close to the ideal of elimination of differences in national law.

EPC agrees with the observations made at p.12 regarding the direct (and adverse) economic consequences of the ECJ judgments in the British Horse Racing Board and Fixtures Marketing cases.

As already noted, the Directive's core objective was to protect the substantial investment made by database makers. Recital (40) of the Directive expressed that objective in the following way "the object of this sui generis right is to ensure protection of any investment in obtaining, verifying or presenting the contents of a database for the limited duration of the right; whereas such investment may consist in the deployment of financial resources and/or the expending of time, effort and energy;"

EPC considers that the distinction drawn by the ECJ between the (unprotected) investment in the creation of data and the (protected) investment in the obtaining data is inconsistent with the Directive's core objective.

Many databases consist of a mix of obtained data and data which is created by the database maker to enhance and add value to the scope, breadth and usefulness of the database. In EPC's view it is inconsistent with the Directive's core objective that the added value data is outside the scope of the protection under the Directive.

• EPC urges the Commission to examine this inconsistency in its review of the Directive.
• EPC maintains that the sui generis right should protect substantial investment in the creation of added value data.

4.2 "Has the provision of uniform protection in all Member States initiated more investment in the creation of databases?"

Size of the market
EPC does not agree with the conclusion contained in the Evaluation that "However, the European database sector has not improved in a sustainable manner." On the contrary, the sector continues to grow.

A survey of the UK B2B information industry due to be published next month will show that the total size of the UK B2B is estimated at £15.5 billion (2004). This compares with £13.7 billion figure for 2000. The B2B market comprises a wide range of "databases", including business directories/databases (print and online), other electronic services, catalogues, business newspapers, magazines and business conferences.

The continuing shift from print circulation to electronic delivery and migration to web based publishing means that databases' share of the overall UK B2B sector continues to increase.

As regards elsewhere in the Community, EPC understands that similar trends are taking place. We suggest that the Commission collects new data on this basis across the EU which will complement the data already assessed in order to give a more accurate validation of the size of the market.

Even if the size of the European database market was judged solely on the criterion of database entries as shown in the Gale Directory of Databases - an approach which EPC rejects - it is likely that the reason for any decline is economic recession in a particular market.

Of course, it does not follow that merely because such a regime exists that investment will follow. Such decisions depend on market factors. However it is indisputable that a sine qua non for database producers in the Community is the continued existence of a strong and uniform legal protection for databases.

UK database industry
The Evaluation notes that "the UK has maintained its primacy as the first producer among all EU Member States." EPC makes the following comments on that observation:

• It seems to imply that the UK's continuing leading role proves that the Directive has not achieved one of its overall objectives. That is not so. If anything, it shows that the Directive has been successful in substituting the sui generis right for 'old style, sweat of the brow' UK copyright protection for databases without damaging legal protection for databases.
• There are other reasons, unconnected with the legal protection of databases, which contribute to the continuing primacy of the UK database market, including the relative maturity of that industry and the role of the English language.
• The sui generis right has a vital role to play in providing a sound legal framework within which the database industries within other Member States can continue to grow.

4.3 Has the balance between the legitimate interests of manufacturers and lawful users of databases been safeguarded?

The EPC remains of the view that the correct answer to this question is "yes".

The Evaluation contains no empirical evidence which supports the claim that the sui generis right has not proved "sustainable" or that "the balance between the legitimate interests of manufacturers and users of databases has been achieved at too unnecessary costs."

It is important to bear in mind that the Directive does not extend to the contents of the database. To the extent that a database contains material protected by copyright, then Member States' copyright/author's right regimes govern the use of that material, including the application of all relevant exceptions and limitations.

As regards the sui generis right itself, Articles 8 and 9 contain significant rights for lawful users and exceptions to that right which, in EPC's view, strike an entirely appropriate balance. In particular, it should be remembered that the Directive contains the following safeguards for users:

• The right to prevent unauthorised extraction or re-utilization only applies to the whole or a substantial part of the database (Article 7.1).
• The maker of a database available to the public may not prevent a lawful user from extracting and/or re-utilizing insubstantial parts of the database (Article 8.1).
• The extraction and/or re-utilization of substantial parts are subject to exceptions under various circumstances specified in Article 9, including for illustration for teaching or scientific research.

4.4 Has the EU database production increased as compared to the US?

The Evaluation concludes that "In the long term, the Directive has not increased the global competitiveness of the EU information market. In particular, the economic gap with the US has not been reduced. The share of EU database production registered in 2004 has fallen back to pre-Directive levels."

EPC rejects those conclusions for the following reasons:

• As noted above, EPC disputes the validity of the conclusions drawn in the Evaluation about the size of the EU database market, both in absolute terms and relative to the UK market, based on the data drawn from the Gale Directory of Databases.
• The size and growth of the EU database market has been measured on one criterion only. As shown above, other statistics which measure the value of the market demonstrate growth.
• Any diminution in the scope of the sui generis right will weaken the ability of the European database market to increase its share of the global market.

Part 3 - Conclusions

In summary, EPC makes the following observations and recommendations to the Commission which it urges the Commission to reflect in its evaluation of the Directive:

1. EPC wishes to emphasise that the sui generis right is an indispensable tool for publishers who make high quality data electronically available; without this right, investments would no longer be reasonably protected. In saying that, EPC reminds the Commission that the users' interests are sufficiently safeguarded by the exceptions specified in the directive.

2. The economic and statistical analysis contained in the draft Evaluation is incomplete and misleading. The Commission should ensure that database producers are consulted more widely and invited to provide economic and statistical data regarding the growth of different sectors of the database industry within the Community. This evidence will demonstrate the vitality of this sector and its importance to the Community.

3. EPC urges the Commission to recognise that the sui generis right needs to be strengthened, not weakened. Any weakening of the right would jeopardise the prospects of the European database market to grow effectively and to compete against its major competitors.

4. EPC considers it essential that the sui generis right should not be limited to protection of the data obtained to make the database. It should - and was always intended to - apply to the investment in the creation of data intended to enhance and give added value to the objective, scope and utility of databases. Accordingly, the anomaly which the William Hill etc decisions appear to have created in the distinction between substantial investment in created/added value data versus 'obtained' data should be removed by protecting the former under the database right.

5. The position of newspaper databases needs to be clarified and adequately protected in the manner set out in paragraph 5 of Part 1 above. For that reason, and in view of the uncertainty under existing case law, clarification is required to the Directive to ensure that producers of newspaper databases are protected against the type of parasitic activity described in that paragraph falls within the object of the Database Directive's protection in Article 7.

European Publishers Council
30th September 2005