Creating and compiling data of any nature has long been regarded as the creation of a valuable asset. Whether the data is simply compiling consumer names and contact details for marketing purposes or creating unique financial data for investment, trading or analysis, all such data has value and can be readily licensed to end-user/subscribers as well as database owners and redistributors alike especially with today’s vastly improved means of technology.
In this Contract, the data supplier/owner is providing a data “feed” to add its data under license to a database owner’s database. A database owner may not itself create any original “raw” data, but rather, select and license data from several sources as well as keep such data continuously updated. Keeping data current is often the key to success for both the data supplier/owner and the database owner.
As mentioned above, data is a valuable asset and a data supplier/owner will, more often than not, wish to protect its copyright, database rights and other intellectual property right interests in the data by licensing (rather than selling) the data, hence the reason that most data supply agreements take the form of a licence. (See Contract 26 for a data purchase agreement.)
By its very nature, a licence will specify the terms of the grant and the conditions relating to use of the data which the data supplier/owner will permit, the most common of which are included in Clause 5 of this Contract.
One restriction which is most frequently argued in any data licence is the restriction on the database owner from permitting any of its own end-user/clients/subscribers from downloading (electronically transferring) significant amounts of data from the database to the end-user/client/subscriber’s own system. The principal reason for such a restriction is that, as soon as the data is downloaded, neither the data supplier/owner nor the database owner has any physical control over what the end-user/client/subscriber does with the data. For example, the end-user/client/subscriber’s own system may be connected to a network and that end-user/client/subscriber may allow the data to be used within its network by an unlimited number of other users without notice that the data is subject to copyright, database rights or other conditions of a licence, and without restriction as to the territory (if relevant) within which the data may be accessed or used. Territorial restrictions are imposed, usually by a data supplier/owner who does not want its data to “flow-back” into its own territory which may be the data supplier/owner’s principal market.
In such circumstances as the above example, the end-user may itself then be deemed to be a redistributor, rather than merely an end-user of the data and thus the ripple-effect of continuous redistribution of data will, on each occasion of redistribution, becoming one step further from the data supplier/owner’s control and thus protection of its IP rights. Thus these further exploitations of data must be contractually restricted or prohibited.
As important to the loss of control of the data in such unrestricted circumstances, is the financial loss to both the data supplier/owner and the database owner, since an end-user/client/subscriber who is not restricted from redistributing, may well be redistributing to potential additional end-users of both the data supplier/owner and the database owner.
However, having regard to the principal purpose of some end-user/client/subscriber’s own business (e.g. financial data for use by stockbrokers or for investment purposes), there are many degrees to which an absolute restriction on downloading can be relaxed.
For example, an end-user may be permitted to download only “insubstantial” amounts of data (the question of substantiality being, itself, an area of considerable debate). Alternatively, the end-user may be permitted to download any amount of data provided the data is for its own internal uses (provided such use is not one of redistribution) and if the end-user requires to reproduce or incorporate the data into the end-user’s own documents/material for redistribution, then only an “insubstantial” amount of “raw” data may be incorporated and only then with the acknowledgement of the data supplier/owner’s copyright. “Raw” data is the industry term for data which is still in the state in which it was supplied and not, for example, reformatted, recalculated or to which any value has been added by the recipient of the data.
Contractually, from the financial perspective, the sample charging structure proposed in Contract 25 recognises the nature of data distribution and suggests that not only does the data supplier/owner receive an annual charge for the data but also a fee per end-user/client/subscriber to whom the database owner distributes or allows access to the data. This charge structure may be elaborated further in line with technology, where end-user/client/subscribers have not only one but multiple accesses to the database and accordingly can be charged per access. In addition to charging by the number of end-user/client/subscribers or accesses, the data supplier/owner can also charge a different fee for varying rights, e.g. permission to download, permission to network, permission to redistribute or indeed charge a varying fee for the number of downloads (per bit/byte) or “views” (similar to “pay-per-click”).
Finally, on expiry or termination of the license agreement, it is also important for the data supplier/owner to ensure that database owner purges/expunges the data from its database so as to prevent potential continued access and use of the data.