Last week there was a genuinely interesting but quite technical judgment handed down that deals with some of the complexities of data and databases in the sports data industries. It is interesting as it shows the potential difficulties in enforcing IP rights where there are complex, multi-party and multi-jurisdictional licensing arrangements, and highlights the impact of Brexit on database rights.
The judgment does not really set out what the claim is about, but in short it appears to relate to alleged scraping of data feeds provided by the claimants (various Genius Sports entities) by the defendants (which appear to be related to a business called Soft Construct).
Genius Sports gathers and processes live and non-live sports data in relation to various sports, including basketball, volleyball and football. It collates and organises those data together into certain databases, and claims that as a result of its investment it owns database rights in respect of those databases. It emerged, though, that Genius Sports was not the owner of all of the rights in the databases; some of the agreements under which it obtained the data provided that the providers of that data (mainly leagues and data collecting organisations, which I will refer to as “counterparties”) owned any intellectual property rights, which were provided to Genius Sports under an exclusive licence.
As Genius Sports was not the owner of all of the rights over which it claimed rights, it accepted that it needed to join the counterparties to the proceedings, either as claimants if they were willing or defendants if they were not. As there were over 200 of them, Genius Sports was understandably reluctant to have to join all of them to the proceedings, potentially separately represented (with the complexity and costs consequences that would entail), and therefore applied to bring them into the proceedings in quite a clever way. It decided to use rule 19.6 of the Civil Procedure Rules (of Lloyd v Google fame) to join only a selection of them as “representative and non-participating defendants”, i.e. a few counterparties were to be selected as representatives of the wider class of counterparties.
In short, the application was refused. One of the key reasons that it was refused was that aside from the common objective of preventing infringements of their data, the interests of the counterparties were not necessarily aligned with those of Genius Sports. The court also took issue with the counterparties selected as representatives being both representative and non-participating. The court found that such a status did not exist in UK litigation (a party to the proceedings must participate or face the consequences of not doing so, and the court does not have the power to bring a party into the proceedings and not give them the right to participate). The door was left ajar by the judge, however, for Genius Sports to propose a better solution.
The other interesting part of the judgment concerns the existence of database rights both pre-Brexit and now. For readers who do not know, the database right protects the investment undertaken in obtaining, verifying and presenting the contents of a database. Despite being called a ‘database right’ there is not necessarily only one database right in a database, and in fact, complex databases such as those used in the sports and gambling industries often contain several such rights reflecting the various inputs and investment made in them. Brexit has had some important ramifications for this:
- The person making the investment in the database had, pre-Brexit (i.e. before 31 December 2020), to have been based in the EEA for the right to arise. Where the database was made or owned by a non-EEA entity (e.g. in the US), no database right subsists. Database rights created in the EEA before Brexit remain in force in the UK.
- Post-Brexit, the person making the investment in the database has to be based in the UK. If it is based in the US, it has no EU or UK database rights. If it is based in the EEA, it will likely still have its EU database right, but not in the UK. The converse is also true, a person making a database in the UK will not have rights in that database in the EEA.
So what can we learn from this case? There are broadly two key takeaways: one concerns procedure for bringing complex claims based on database rights and by analogy other IP rights, and the other concerns the arrangements for licensing database rights.
- Procedure for bringing claims where the claimant is the licensee of numerous licences: It is not possible to join them on a representative basis. It may however be possible to streamline the procedure so as to manage costs and complexity. In particular, the representatives participating in the proceedings must be truly representative, and all of the owners will need to give disclosure.
- Licensing arrangements for data: While the commercial and legal reality of the provision of sports data is complex, it is fundamental that the parties to such arrangements consider the effect of the IP clauses on the subsistence of rights in different jurisdictions. An all encompassing assignment from the recipient of the data back to the provider of that data may, where the provider is not based in the UK, mean that the parties are extinguishing the database rights. That is unlikely to be the intention (as it is in neither party’s interests for the database rights that otherwise have existed not to exist), so businesses creating and developing databases in the UK should make sure that they are creating and maintaining the rights that protect the value of their investment.
This judgment only related to an interim hearing; there will (unless it settles) eventually be a full trial to assess the claims. It will be an interesting one for those involved in sports data and gambling to hear about. It does however highlight the complexity of rights in sports data, and the need for extreme care and determination to protect that investment.
I have given anxious consideration as to whether there is anything that I can do, at this stage, to “cure” the deficiencies in the Application, so as to enable the Interested Counterparties to be regularly and properly joined without further application. As I have indicated, I have some sympathy with the logistical difficulties that Genius Sports has in dealing with a large number of Interested Counterparties, many of whom will (for reasons that I will not go into, but which I accept) be disinclined to participate actively, particularly if that involves the expenditure of time and money.