Following publication of the 'agreed' text of the draft Withdrawal Agreement (the "Draft Text") between the United Kingdom ("UK") and the remainder of the European Union ("EU") on 19 March 2018, our intellectual property ("IP") team has produced a suite of briefings on key aspects of the likely implications of Brexit for IP rights and systems across the EU, to inform our clients what changes they will need to consider making to their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe. The topic of this note is how Brexit will impact database rights. 

This note has also been updated following publication by the UK Government on 24 September 2018 of its guidance to businesses, organisations and individuals on the protection of databases in the event of a ‘No Deal’ Brexit ("No Deal Guidance").

What are database rights and why are they important?

In the modern internet and smart phone society in which we live, the value of data has never been higher and the collection, storage and accessibility of such data in databases is big business. Mobile applications and websites which track users' data can be used to help businesses profile and effectively target customers. The value of such data to third parties is obvious. 

In anticipation, the EU introduced the EU Database Directive (the "Directive")1, with the aim of providing greater recognition and protection of the investment involved in making a database than that given in many other jurisdictions, including the United States2. In addition to any protection given to a database as a literary copyright work, and protecting different elements of the database to copyright, the EU recognises an independent intellectual property right that protects databases ("Database Right"). Under the Directive, the legal definition of a 'database' is much broader than what might normally be conceived as a database. Accordingly, Database Right may subsist in collections of materials that would not otherwise fall within the 'everyday' concept of a database. 

Copyright runs parallel to Database Right and broadly the two regimes differ in the protection of databases:

  • The law of copyright protects the intellectual creation of the author with respect to the selection and arrangement of the database's contents
  • Database Right protects the substantial investment that the maker of a database has made in obtaining, verifying or presenting the contents of the database.

Database Right lasts for 15 years from the end of the calendar year in which the database was created and it protects against unauthorised extraction and/or reutilisation of the whole or a substantial part of the database. Further, to the extent that there is a substantial change and investment in the contents of the database, it may qualify for a new term of protection, meaning a database could be protected indefinitely with sufficient updating.

Summary of the Draft Text

The Draft Text is clear that UK and EU owners of Database Right, that has arisen before the end of the transition period3 , will continue to enjoy the same level of protection in the UK for at least the same period to which they would be otherwise entitled under the Directive. However, the Draft Text does not include provision for Database Right in databases created by UK nationals or residents before the end of the transition period to continue to enjoy protection in the remaining EU Member States after the end of the transition period.

Pre-Brexit Position in the UK

The Directive was implemented into UK law by the Database Regulations(the "Regulations"). In order for a database to qualify for Database Right under the Directive, the maker(s) or rights-holder(s) must be:  

  • a national or resident of a Member State of the EU
  • a company formed in a Member State with a registered office (providing that there is a genuine link to the Member State's economy), central administration or principal place of business within the Community.

These provisions were amended when implemented into UK law to allow databases made by nationals, residents and companies of the European Economic Area5 (the "EEA"), not just the EU, to qualify for Database Right. Accordingly, the Directive and the Regulations provide that databases, which otherwise qualify for Database Right, made by EU nationals (including UK nationals) are protected across the EU.

Post-Brexit Position in the UK

The European Union Withdrawal Act provides that both direct and indirect EU legislation in force when the UK leaves the EU will continue to apply in the UK to help facilitate a smooth withdrawal6. Accordingly, in the event no agreement is reached and the UK does not join the EEA, upon the UK's withdrawal from the EU, a 'reciprocity gap' may be created whereby:

  • the UK will continue to recognise Database Right of EU (and UK) qualifiers so they will not lose rights to which they were entitled in the UK on the date of withdrawal
  • the EU will cease to recognise Database Right of UK qualifiers in respect of databases created before the date of withdrawal. 

According to the No Deal Guidance, the UK Government will be permitted to make some adjustments to existing legislation under the powers of the European Union Withdrawal Act, to ensure the retained law can 'operate effectively', which may include addressing a reciprocity gap, at least from the UK's perspective.

As a qualifying database may be entitled to a new term of protection under Database Right, it is unclear whether this term will be determined as a 'new right' or merely an extension of an existing right. This is likely to cause confusion where, after the UK's withdrawal, a substantial change or investment is made to a database which was originally created before the end of the transition period. In that situation, it remains to be seen whether the Database Right remains eligible for protection in the UK or whether it will be deemed a new database and therefore not eligible for protection.

Practical tip: Where databases will cease to be protected by Database Right, database holders should review and, where appropriate, update (or implement) contracts relating to the use of such databases, as rights-holders will likely have to be rely on contractual obligations or restrictions to enforce any use (or misuse) of databases. 

Practical tip: Businesses should consider where geographically they conduct obtaining, presenting and verifying data, and whether 'databases' could be made (and/or updated) in a Member State of the EU by a qualifying entity.

[1]Directive 96/9EC

[2] Feist Publications, Inc. v  Rural Telephone Service Co., 499 U.S. 340 (1991)

[3] Expires on 31 December 2020

[4] The Copyright and Rights in Databases Regulations 1997

[5] Includes the EU's Member States plus Iceland, Norway and Liechtenstein

[6] Notwithstanding the final terms of the Withdrawal Agreement and any reciprocal arrangements (of the type the EEA has with the EU), consideration is required as to how and to what extent decisions of the Court of Justice of the European Union will be binding/persuasive in the UK. 

How did we arrive at Brexit?

A truly unprecedented process began on 29 March 2017, when the United Kingdom invoked Article 50 of the Treaty for the Functioning of the European Union ("TFEU"), in response to the referendum held in June 2016. 

Never before had a Member State left the European Union. 

Since it joined in January 1973, the UK has operated under the fundamental principle that European laws are supreme and have precedence over, if not direct effect on, national law. Brexit therefore presents, both for the UK and the EU, an enormous legislative challenge in that it is estimated that the accumulated body of European law and rules comprises over 12,000 regulations on top of other forms of legislation.

In few areas will Brexit be more disruptive than for IP rights. There has been considerable harmonisation of IP rights and remedies across the 28 Member States. Moreover, European wide trade mark and design registrations have been created, the first truly multinational unitary property rights. 

Brexit will change all of this. 

At the time of publication, many questions remain about the possible impact of Brexit whether in the sphere of IP or otherwise. Certainly, before the publication of the 'agreed' text of the Draft Text on 19 March 2018, it had not been realistic to provide much by way of constructive advice and detailed guidance. 

Following its release, the IP team of Womble Bond Dickinson analysed the published Draft Text in order to produce this suite of briefing notes on key aspects of the likely implications of Brexit for IP rights and systems across the European Union, to inform our clients on what they will need to consider changing in their existing IP strategies and protocols to continue dealing in post-Brexit UK and Europe. 

It should be noted the Draft Text confirms the intention of the signatories that, although the UK will leave the EU on 29 March 2019, there will be an extensive transition period lasting until 31 December 2020.