Legal issues around employees taking information from former employers to set up rival businesses have been a perennial issue for the courts. Very often the former employer will rely on breach of confidence to restrict any further misconduct, however, information such as customer addresses which are in the public domain (or are readily discoverable) cannot be protected since they do not have the necessary 'quality of confidence'.
An alternative is to claim infringement of a database right where departing employees remove or copy non-confidential data from company systems (e.g. see recent Crowson Fabrics v Rider case). This database right is a unique IP right introduced into European law by the Database Directive (96/9), and enshrined into UK law by the Copyright and Rights in Databases Regulations 1997.
A 'database' is a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible. The key thing to note is that the database and its contents do not need to be original (a requirement for copyright protection) or contain confidential information.
What a database developer does need to show however is that it made a "substantial investment in the obtaining, verification or presentation" of the [database]. This then gives the developer the right to prevent unauthorised "extraction" and/or "re-utilisation" of all or substantial parts of that database.
The European Court of Justice (ECJ) has provided further guidance on the issue in the recent Apis-Hristovich EOOD v Lakorda AD decision.
The Apis case involved two Bulgarian organisations: A, who complied databases containing modules of Bulgarian legislation and case law and L, a rival company set up by two of A's former employees. A claimed that these former employees had unlawfully extracted substantial parts of A's modules to produce and market L's own rival case law and legislation modules, providing evidence of identical features in L's product to illustrate their point.
L denied any wrongdoing, claiming its modules - based on its own computer software - were the result of its own independent efforts using a range of publicly accessible sources. The ECJ looked at a number of questions regarding interpretation of the Directive although the main points to consider related to the meaning of "extraction" which includes permanent or temporary transfer of data to another form or medium. Some key issues to highlight from the ECJ's ruling include:
- In assessing whether or not there has been unlawful "extraction" from a database, the objective of the perpetrator; ownership of the computer software used to manage the database and any subsequent modification made to the contents or structure of that extracted data are not relevant;
- In looking at whether the extraction is of a 'substantial' part or not the size of the database from which the data is extracted is the relevant issue, not the database into which the data is being transferred;
- The fact that a database comprises material from public sources does not preclude protection, provided the requisite substantial investment has been made in obtaining, verifying or presenting its contents. L's argument that the material in A's system was from official public sources that did not enjoy copyright protection was not relevant when considering the existence of a database right.