That's my Dataset! - AG Szpunar Opines on Whether Search Engines' Indexing can Infringe Database Rights

In the age of big data databases can be worth their weight (or in reality, lack thereof) in gold, since the compilation of those databases can take years and cost tremendous amounts of money. As such, databases are afforded special protection through database rights (i.e sui generis rights). These rights don't always pop up in the courts, but when they do, it's worth taking note, since the infringement of these rights can be deceptively simple, at least on the face of things. As a part of the functioning of the Internet as we know it today, search engines like Google index the websites that allow for it to do so, which in effect adds them to the collective directory of that search engine (and accessible to those searching for it). This indexing will affect all websites and sub-pages that are allowed to be indexed, but could that indexing infringe database rights if done so? As luck would have it the CJEU is slated to decide this matter in the near future, but Advocate General Szpunar has given his opinion on the matter ahead of this decision. 

The case of SIA ‘CV-Online Latvia’ v SIA ‘Melons’ concerns the website 'CV.lv', operated by CV-Online, which includes a database containing notices of jobs published by employers. The website also uses meta tags, allowing for the easier identification of content on each of the site's pages for indexing purposes. The meta tags contain typical information like the name of the job being advertised, place of employment and the date when the ad was posted. 

SIA Melons operates a website called 'KurDarbs.lv', which is a search engine specialising in notices of employment, allowing for several websites posting these notices to be searched on it. The site then refers to the people searching to the websites where the information was found in via hyperlinks (including to the site operated by CV-Online). The meta tags inserted by CV-Online on its website are also displayed in the list of results obtained when SIA Melons’ website is used. 

CV-Online subsequently brought proceedings against SIA Melons for the breach of its sui generis database rights, alleging that it copies substantial parts of the contents of the database on the CV-Online website. Following decisions in the Latvian courts the case ultimately landed on the CJEU's desk, with the Advocate General giving its opinion before the decision.

The AG first discussed the basics of database rights set out in Article 1 of Directive 96/9. The article sets out databases as "...a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means". The 'independent works' discussed should be ones that are "...separable from one another without their informative, literary, artistic, musical or other value being affected", or in other words, they need to have autonomous informative value. The database itself has to include "...technical means such as electronic, electromagnetic or electro-optical processes... or other means... to allow the retrieval of any independent material contained within it". 

In addition to the above there has to have been "...qualitatively and/or qualitatively a substantial investment in either the obtaining, verification or presentation of the contents of that database".

Following on from this the AG quickly set out that the job ads contained in the database were indeed units of information which has autonomous informative value which are separable from the other ads in the same database. The only question that remained therefore was whether CV-Online had made a substantial investment in creating its database. 

Discussing the actual wording of the two questions referred to the court the AG considered that they should be reworded and considered together, namely whether "...under Article 7(1) and (2)... the maker of a database that is freely accessible on the internet is entitled to prevent the use of that database by an internet search engine that specialises in searching the contents of databases". 

According to the AG, after the reformulation of the questions the case at hand resembles the decision in Innoweb BV v Wegener ICT Media BV, in which the CJEU held that where the operator of a meta search engine reutilised the whole or a substantial part of the contents of a database constituted by the website on which that meta search engine allowed searches to be carried out. The use of a meta search engine allowed users to access the whole database through those searches other than intended by the marker (and breached the database rights as a result). 

Looking at whether Melons' website acts as a meta search engine, as in Innoweb, the AG concluded that this is irrelevant, as this is not a requirement for a potential infringement of database rights. He concluded that "...a search engine that copies and indexes the whole or a substantial part of databases which are freely accessible on the internet and then allows its users to carry out searches in those databases according to criteria that are relevant from the aspect of their contents effects an extraction and a reutilisation of those contents". 

However, even with this mind we have to have a balance of allowing for the indexing (and therefore searching) of the Internet, while protecting against 'parasitic' services utilizing databases they didn't create. Keeping this in mind the AG thought that national courts should verify not only whether the extraction or reutilization of the whole or a substantial part of the contents of a database and whether a substantial investment has been made into the database, but also whether the reutilization or extraction prevents the recouping of that investment. If the latter is the case, the database should be protected.  

Furthermore, national courts should consider the protection of competition within the marketplace. This is to prevent the use of database rights to prevent legitimate competition within the EU, essentially through the abuse of a dominant position through the ownership of key information through database rights. If the reutilization of that information, e.g. such as what Melons has done, does not negatively impact the business of the database rights owner, the courts should allow for the reutilization to allow for fair competition. Thinking about these issues will effectively limit the rights of the database maker, provided there is no or limited impact on the recouping of their investment. 

Ultimately the AG answered the two questions as follows, namely that Article 7(1) and (2) must be interpreted as meaning:

(i) a search engine which copies and indexes the whole or a substantial part of the contents of databases which are freely accessible on the internet and then allows its users to carry out searches in those databases according to criteria that are relevant from the aspect of their contents effects an extraction and a reutilisation of those contents within the meaning of that provision; and

(ii) the maker of a database is entitled to prevent the extraction or the reutilisation of the whole or a substantial part of the contents of that database only on condition that such extraction or reutilisation adversely affects its investment in obtaining, verifying or presenting those contents, that is to say, that it constitutes a risk for the possibilities of recouping that investment by the normal exploitation of the database in question, which it is for the referring court to ascertain.

But one must still keep in mind that this must not result in the abuse of a dominant position under Article 102 TFEU. 

The opinion is an important one in the light of how the Internet functions and sets clear guidelines on how the CJEU should answer the questions posed in this case. The ultimate decision by the CJEU could impact the operation of search engines tremendously if it creates very stringent requirements for the indexing of data, but this writer hopes that certain limits are put while respecting the functionality of the Internet. Provided no, or little, damage is done to the original website's recoupment of its investment, indexing should be rightfully allowed. 

It’s a Sword! It’s a Shield! It’s Res Judicata! - The dilemma of patent validity in South Africa

We're really grateful for the extremely comprehensive article below on a very important case in South Africa, which was brilliantly written by Sfiso Nxumalo. He is a South African lawyer, currently reading for the Bachelor of Civil Law degree at the University of Oxford. He worked at Bowmans as a candidate attorney, and also worked as a law clerk at the South African Constitutional Court before reading for the BCL. You can find his LinkedIn profile here. 

Introduction

On 9 May 2019, the South African Constitutional Court, the highest appellate court in South Africa, heard its first ever patent litigation case in Ascendis Animal Health (Pty) Limited v Merck Sharpe Dohme Corporation. The case required the Constitutional Court to interpret the South African Patent Act 57 of 1978 and decide the correct approach to proceedings concerning the (in)validity of patents. 

The legal issue before the Constitutional Court was significant, namely: are the different grounds of challenging the validity of a patent separate and distinct causes of action or are they one cause of action. In addressing this issue, the Court also had to consider whether the bifurcated nature of the patent litigation affected the main issue. More precisely, does it matter if the challenge of (in)validity of patents is raised in patent revocation proceedings (as a ‘sword’) or in patent infringement proceedings (as a ‘shield’)? 

Unfortunately, the Court was evenly split in its decision (usually 11 justices sit on the bench – but the Court had one justice missing due to other judicial commitments). Thus, the first patent case to be heard by the apex Court of South Africa is of very little jurisprudential value. However, the want of jurisprudential value should not stop us from engaging some of the key issues in the case. 

Facts

In June 2011, Ascendis Animal Health (Pty) Limited (the applicant) initiated revocation proceedings against Merck Sharp Dohme Corporation and Merial Limited (the respondents) for the annulment and repeal of the Patent 1998/10975 (the patent) in terms of section 61(1) of the Patents Act 57 of 1978 (the Act) because the invention was not patentable under section 25 of the Act as the invention was not new and it lacked an inventive step. These were the revocation proceedings. 

While the revocation proceedings were taking place, the respondents in October 2011 instituted proceedings against the applicant for infringing the patent. The respondents argued that, since August 2011, the applicant had made, sold, used, offered for sale and/or imported an anti-parasitic formulation under the trademark entitled Ivermax LA Platinum and had infringed the patent. This was the infringement action. 

The infringement action was stayed awaiting the conclusion of the revocation proceedings. The applicant challenged the patent exclusively on the ground of novelty. At first instance, the Commissioner of Patents found in favour of the applicant and revoked the patent for its lack of novelty. 

On appeal the Supreme Court of Appeal overturned the decision of the Commissioner of Patents and found in favour of the respondents. After this decision, the applicant sought to amend its plea in the infringement action, to remove the defence of novelty (since it lost this case in the revocation proceedings) and sought to include an additional defence – inutility. In response, the respondents sought to amend their pleadings in the same proceedings and argue that all the defences by the respondent were res judicata (already decided by a court) since the question of the validity of the patent had been definitively decided and upheld by the Supreme Court of Appeal.

In hearing the infringement action, the Commissioner of Patents granted the respondents’ amendment and held that the grounds on which an applicant may rely on to attack the validity of a patent are not separate causes of action. It held that the applicant had effectively abandoned the obviousness claim as a basis of invalidity in the revocation proceedings and that it had not formally elected to reserve the right to rely on a separate cause of action. This is the decision the applicants subsequently appealed to the highest court. 

The Constitutional Court’s decision

Five justices of the Court in a judgment penned by Justice Khampepe upheld the appeal and ordered that the parties’ pleadings should be allowed to be amended. The other five justices in a judgment penned by Justice Cameron, held that they would dismiss the appeal. The effect of this is that there is no majority decision and the decision of the Commissioner of Patents stands. The issues are discussed in more detail below.

(i) Are the grounds of challenging the validity of the patent single or distinct and separate causes of action

Justice Khampepe held that the grounds on which a patent may be challenged under section 61 of the Act (such as novelty, utility and obviousness) are concrete, distinct and separate causes of action. She opined that a cause of action comprises every fact that would be necessary for the plaintiff to prove in order to support his right to judgment of the Court. A cause of action, she emphasised, comprises facta probanda (the facts required to be proved) as opposed to the facta probantia (the facts by means of which they are proved, i.e. particulars or evidence). She then strongly reasoned that each ground of revocation are separate, distinct and independent causes of action because the facta probanda that need to be proven for each ground are markedly different. She then explained that although the legal conclusion that results from claims of either novelty, obviousness or inutility may be the same (i.e. the finding of a patent’s invalidity), it does not mean that they all represent a single cause of action. The facts required to prove a claim of novelty, inutility and obviousness are disparate as the elements constituting each ground are dissimilar. 

A compelling point is raised by Justice Khampepe when she reminds us that South Africa is a non-examination state, i.e. the state does not check whether an invention is novel before it is registered as a patent. As a result, South Africa relies on private parties to challenge the artificial monopolies created by way of registering a patent.

In the opposing judgment, Justice Cameron held that the default position should be that a previously unsuccessful patent validity claim should bar an applicant from raising the validity of the patent as a defence in an infringement action. He posited that the question is essentially the validity of the patent and this was definitively decided by the Supreme Court of Appeal and thus the matter was res judicata or is barred by issue estoppel. In his opinion, all the grounds constituted a single cause of action. 

While Justice Cameron’s argument that there is a need to stabilise our patent litigation system is attractive, it does not overcome Justice Khampepe’s reminder that South Africa relies on private parties to litigate the validity of patents. If the state relies on private parties to litigate, such parties should not be subjected to burdensome procedural requirements seeing that their litigation, while it may be driven by profit, benefits the public. Of greater consequence, allowing parties to challenge patents ensures competition in key industries and thus benefits the larger public. This does not mean that piecemeal litigation should be permitted and encouraged. In this author’s opinion the different grounds of validity claims are separate causes of actions and parties should bring as many claims known to them at the time of instituting proceedings. Should they later bring another ground, it should not be barred based on res judicata or issue estoppel. To my mind, this is a lesser evil, compared to a complete bar, which would mean that parties have one shot at challenging a patent, and should they fail, the patent holder gains a product monopoly. Justice Cameron’s conclusion is striking because it seems to go further than just bar the litigant party. He seems to suggest that res judicata could be relaxed even regarding different parties litigating over the same ‘issue’. 

(ii) Are the defences raised in the infringement action res judicata

On this issue, Justice Khampepe held that the defences were not res judicata. She described the scheme of the Act in great detail and she then distinguished between revocation proceedings and infringement actions. Justice Khampepe considered that, in revocation proceedings, evidence is provided by way of affidavit, whereas in an infringement action, evidence is given orally. In addition, the remedies available in these proceedings are different – revocation proceedings remove the patent from the register of patents, thus making it a remedy in rem (against a thing); whereas an invalidity defence in an infringement action does not remove the patent from the register but simply renders it unenforceable against the person challenging it, thus making it a remedy in personam (against a person). She then found that ‘the findings in the revocation proceedings have a final effect on the infringement action for causes which have not actually been adjudicated upon in revocation proceedings.’ In other words, in revocation proceedings the grounds of patent validity are a sword; and in infringement actions such grounds are a shield. And in her view this matters because it would lead to the dual proceedings being nugatory and of no effect because a finding on the revocation proceedings could be carried over to the infringement action.

In plain terms, Justice Cameron argued that the dispute is essentially about the validity of the patent. Once a court of appeal has ruled on the validity of a patent, the applicant is estopped from bringing the same issue of patent validity (regardless of the ground) in the infringement proceedings. He opined that same cause of action can be interpreted widely to include the same issue (the issue being the validity of the patent). 

Again, Justice Khampepe’s incisive approach is appealing. There seems to be stark differences between the two proceedings. In this author’s view, a statutory basis for the differences indicate that the legislature intended for them to be serve different functions (i.e. a sword and shield). The applicant of course will be barred from raising the same grounds that have been decided before in revocation proceedings. In my mind, requiring parties to bring all their claims at the in one suit might have adverse effects on the patent litigation going forward.

Conclusion

No patent litigation regime is without disadvantages, and the law should be applied with a purposive approach that serves the (national) objectives of patents. While there was no binding decision by the Constitutional Court, its importance lies in its detailed discussion of the South African patent system.