25 Database Protection and Competition Policy
Consideration on Protection of Databases without Creativity Requirement:
A Competition Policy Perspective
Research Fellow: Yoshikuni Sato
This research attempts to consider the legal protection of databases without the creativity requirement fromthe competition law standpoint.
Some lower court decisions regulated the piracy of an automobile information database and news article
headlines under tort law. On one hand, these decisions and the special law bill on database protection haveraised concerns that they will cause information monopoly. Or exclusive possession of information by certain
specific persons would hinder the business activities of other business entities or impede on the development of
culture. On the other hand, there is a view that suggests the application of the Anti-Monopoly Law for suchinformation monopoly while protecting the information.
This research refers to recent court decisions and academic theories in Europe, and states, for example, that
the Anti-Monopoly Law is not a proper remedy for information monopoly and that, while granting proper
protection, the problem of information monopoly can be avoided by limiting the scope of protection depending on
the nature of the database.

Ⅰ Introduction; Issues
Databases are widely used in manyindustries and by many people, and many
companies engage in producing or providing
databases. However databases especially digital
medium databases like CD-ROMs, are exposed tothe piracies by third parties. Piracy, in otherwords, a free-riding by third parties, damages theinventive of database producers and providers if
such act is not regulated.
In Japan, the Copyright Law provides theprotection of creative databases. However not allsocially useful databases have creativity and evencreative databases are not awarded sufficient
protection under the Law. Therefore somecommentators have been suggesting thatdatabases be protected under the general tort law
regardless of whether or not creativity and somelower court actually applied these suggestions,but many problems remain.
In these circumstances some propose thatdatabase should be protected, for example, under
the Unfair Competition Law(*1) or by the sui
generis type protection(*2).
In this report I will list the issues of tort law
protection of databases. Next I will review the sui
generis right that the European Communities –EC, hereinafter- adopted through the Database
Directive, and considering the discussion of EC, I
will make some suggestions to the Japanese law.

Ⅱ Status and Issues of Database
Protection in Japan
1

Limit of Copyright Law Protection

The Copyright Law defines databases as “anaggregate of information such as articles,
numericals or diagrams, which is systematicallyconstructed so that such information can besearched for with the aid of a computer” (Article
2 (1) (xter) of the Copyright Law), and prescribesthat “databases that, by reason of the selection orsystematic construction of information contained
therein, constitute intellectual creations shall beprotected as independent works” (Article 12bis(1) of the said law).
Although the framers of this Law thoughtthat this provision would protect most databases,
the protection under the Law is not sufficient.
One reason why it is not sufficient is that suchprotection is limited to the selection orsystematic construction of information and thus
does not cover the extraction of data themselves.
Suppose a case of a yellow page or a business(*1) Futoshi Nasuno, De-ta-be-su no hyousetsubutsu no jouto kinshi – fusei kyousou boushi hou ni yoru koui kisei gatahogo no kanousei –[Prohibition of Transferring Pirated Databases – Possibility of Property Rule Type Protection
under Unfair Competition Law], 3-35 CHIZAI PRISM 38 (2005)(*2) Intellectual Property Promotion Plan 2005 noted that as to the protection of databases a sui generis type protection
will be one option.

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telephone directory. Extracting and reproducing
all of the telephone numbers in the directory
seem to infringe the copyright of the directory,
but it does not if the person who copied themre-arranged the numbers in a common way, say,alphabetical order, because the systematicconstruction, that is the business category, is not
reproduced.
The other reason is that not all databases inthe society have creativity. In this regard it is said
that the more comprehensive you collectinformation, the less creative the database will bebecause the selection of information is not
original.
2

themselves are actually transacted with charge
and thus treated as having independent value, thecourt found that the news headlines in question
could be an interest that deserves legal protection.
Then, finding that the koso appellee made a deadcopy of the headlines and practically distributed
them “repetitively and continuously for profit
without permission of the creator of the news
headlines, and furthermore, at the time when theinformation is fairly new,” and that “it cannot also
be denied that the Line Topic Service competedin certain aspect with the koso appellant’sbusiness with regards to the headlines,” the court
ruled that the production or otherwise of news
headlines constituted a tort.

Actual Cases of Tort Law Protection
3

In these circumstances the protection by tort
law has been proposed and the Tokyo District
Court in Tsubasa System applied this proposal. In
Tsubasa System, the defendant copied and sold adatabase for automobile services. The court
denied the copyrightability of the database but
found the tort liability. The court stated that an
infringement of rights as a condition of the finding
in tort was not necessarily an infringement of astrict and concrete right under the law andinfringement of an interest worthy of legal
protection is enough, and granted tort law
protection on the grounds that (i) in the casewhere the other person produces a database bycollecting information or otherwise at his or her
expenses or labor and manufactured and sold suchdatabase and gained profits, (ii) the conduct tosell a database that was created by copying data ofsuch database and selling such secondary
database in a territory competing with such
person’s databases “may in some case constitutean unlawful act because such conduct infringes
another person’s business interest worthy oflegal protection.” Then the court ruled that thedefendant’s conduct constituted a tort.
Yomiuri Online is within this trend. In thiscase the koso appellee, the defendant in the first
instance, copied and utilized the headline ofonline news article provided by the koso appellant.
The Intellectual Property High Court stated that
information on the Internet would not be useful
without a series of daily activities of news medias
with great amounts of labor and money and, after
pointing out that the headlines of news articles
posted on the website (i) had received greatamounts of labor and money and (ii) created withreasonable effort and ingenuity to allow a roughunderstanding of the news, and (iii) the headlines

Problems of Tort Law Protection

What can we say about these above tow
decisions?
First these court decisions only granted
damage claims and rejected the claim for an
injunction. This proves that not all useful
databases are creative.
As to the absence of injunction claim,
database producers state that damage is not a
sufficient remedy for database piracy. Injunction
is important for them because the claimants need
not prove the existence of damage, and they canhave quick remedy.
Second, these court decisions, in finding atort liability, pointed out (i) the existence of aninvestment (money or effort) in creating a
database; (ii) a massive or repetitious andcontinuous reproduction activity; and (iii) acompetitive relationship between the plaintiff andthe defendant.
There have been questions or ambiguities on
how much investment is sufficient, what scale ofa reproduction is sufficient to find an unlawful act,
and whether a competitive relationship isnecessary between a plaintiff and a defendant.
Third we can point out that the balance
between the need to protect database and theneed to keep free distribution of information.
Some commentators noted that, recognizing theneed for protection of databases, an excessive
protection leads to information monopoly. Others
have proposed the active application of theAnti-Monopoly Law in order to solve a monopolyof information by “sole-source databases” whose
data is impossible to be independently created,collected, or acquired from another source.
In order to consider these problems I will review
EC Law.

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Ⅲ Review of EC Law
1

EC Database Directive

EC adopted its Database Protection
Directive in 1996(*3). The Directive tried touniform the copyright protection of databases andexpand the database protection by the newly
introduced sui generis right. The latter is much
important. The requirement for granting sui
generis right protection is that qualitatively or
quantitatively substantial investment was made to
the obtaining, verification, or presentation of thecontents of a database. No creativity is required.
Once a database maker passes this bar,they’ll have a right prevent the extraction or
re-utilization of the whole or of a substantial part,
evaluated qualitatively and/or quantitatively, ofthe contents of a database. In addition they canprohibit the extraction etc. of insubstantial part ofa database under some conditions.
2

ECJ Judgments

Terms for the sui generis right mentioned
above are far from clear and the interpretation by
the Courts was much expected. A series of recent
judgment by the European Court of Justice have
tried to clarify some of them(*4). We cansummarize the judgments as follows.
First, as to the meaning of investment that isa requirement for protection, the ECJ stated asfollows. The expression of the investment in
obtaining, verification or presentation of contentsmeans the investment directed to the creation of
the database. The “obtaining” of contents means
the “collection” of contents that already exist in
the public domain, not the “creation” of newcontents. Therefore, investments directed to thecreation of contents are not considered. This isbecause the purpose of the sui generis right is not
to promote the creation of contents. Because of
the same, the “verification” of contents means
investments used in assuring the accuracy ofcollected contents, thus the investments used inassuring the accuracy when creating the contents
are not considered. In case the database makeralso creates its contents, the investments for thecreation of contents are not considered but if
there are some investments in verification orpresentation of the contents after the creation,such investments are took into consideration.

However if the verification or presentation
activity is inseparable or closely related to thecreation activity, the investments will be out ofconsideration.
Second, as to the prohibited act under sui
generis right, the ECJ stated as follows. The
impact on investment should be taken into
account in considering whether there is an
infringement or not. Substantial part of contents
evaluated quantitatively will be considered incomparison with the entire volume of contents ina database, and substantial parts of contents
evaluated qualitatively will be considered intaking into account the investment directed to theobtaining or otherwise of the contents extracted
or otherwise. Thus a minimal part can constitutea qualitatively substantial part and the extraction
or otherwise of such part may constitute an
infringement. Furthermore, the intrinsic value ofcontents, for example, its market price, will not
be taken into account. The extraction etc. of
insubstantial part is prohibited only when suchact damages the investment of the databasemaker.
These are the summary of the judgments.
3

Evaluation of ECJ Judgments (1)In view of the fact that a sui generis rightintends to promote investment in the creation of
databases, the ECJ certainly pays attention to theimpact on investments in considering thecondition for protection or infringement. Such
attitude of the ECJ is generally supported bycommentators.
On one hand, criticisms exist. They argue
that by limiting the scope of sui generis rightprotection databases initially intended to becovered will not be protected. These include
telephone directories, timetables, and TV
program listings. One commentator said “the sui
generis right is dead.”
4

Evaluation of ECJ Judgments (2)On the other hand, some commentators
appreciate, from the viewpoint of preventing
information monopoly, ECJ judgments in that the
Court held that the investment in the creation ofcontents is not taken into account.
I’ve already stated that in Japan somecommentators have proposed that the Anti-(*3) Parliament and Council Directive No. 96/9/EC, O.J. L 77/20 (1996).
(*4) Fixtures Mktg. Ltd. v. Oy Veikkaus Ab, Case C-46/02, [2004] E.C.R. I-10365; British Horseracing Bd. Ltd. v.
William Hill Org. Ltd., Case C-203/02, [2004] E.C.R. I-10415.

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Monopoly Law should be used to solve
information monopoly, but the situation is almost
same in EC. Some argued that, while the EC
competition law, Article 82 of the EC Treaty,
prohibits undertakings in a dominant position
from abusing such a position, a refusal to license
the sui generis right can be abusive and acompulsory license can be ordered.
However, according to the EC caselaw about
the EC competition law and intellectual property,
the refusal to license IP will be an abuse only in
exceptional circumstances, i.e., the prevention of
new value-added products(*5). Concerns have beenraised about the decreasing of investment
incentives caused by an ex-post intervention andthe enforcement costs such as the determinationof terms of transaction in the case of compulsory
license. These are pointed out mainly byeconomists. Actually there are cases that ordered
compulsory license of the sui generis right inMember State level, but they are limited tounusual cases like governmental databases orwhere the establishment of a right wasquestionable in the first place. There is a casewhere term of license was disputed and finally
not agreed.
Commentators who support the ECJ
judgments, recognizing such inconveniences of
the Competition law, in sum, stated as follows. If
we protect the investments in creation of thecontents it follows to protect databases whose
contents are only available to the specificdatabase maker. The ECJ ignored the investments
for creation of data. This can avoid theinformation monopoly by sole-source databases.
In other words, the risk that the sui generis rightgives a business entity a market power will
become extremely low. Then it will be no longer
necessary to rely on the competition law to solve
the problem of information monopoly.
A famous commentator spoke positively of
the court decision in that it has cured, albeit only
partially, the weakness of the Database Directiveof the absence of a compulsory license provision.
Nevertheless, it is not deemed to completely
eliminate the need for a compulsory license
approach. First, even if the investment in thecreation of contents is not taken into account, asole-source database may be still eligible for the sui
generis right due to investments in the presentationor verification of contents. Furthermore, if sui

generis right protection is denied, databasemakers try to keep the content of the databaseconfident, by tightening the technologicalprotection. The report submitted by the EC
Committee at the end of the year 2005 also
concludes that, because of the court decision thatthe investment directed to the creation of
database will not protected, more and more online
databases will be controlled by means of access
control systems.(*6)
This may result in the decrease of theamount of information publicly made available,
and if such information is essential to businessactivities of other business entities, it will be stillnecessary to provide information under thecompetition law.
5

Evaluation of ECJ Judgments (3)Here I review the spin-off doctrine that has
been developed in the Netherlands. This doctrine
states that the sui generis right should notgranted when databases are generated as
by-products of main business activities of anenterprise. The ECJ judgment does not adopt this
doctrine, but it stated that when the creation ofcontents and the presentation or verification ofcontents are inseparable of closely related, theinvestments are not considered. Therefore, somecommentators state that, when a database isgenerated as a by-product, only the investment
directly relevant to the database should be taken
into account and that accounting records or others
may be used in actual consideration.
One of the problems of the sui generis rightis the ambiguity of the term “protection”.
The Directive stipulates that protection continues
for fifteen years from the date of creation.
However, if the content is substantially modified
with substantial investment, the fifteen-year
protection will commence from the modification
date. This will be the problem especially in a“dynamic database” in which the content orothers are constantly updated or modified. When
contents are substantially added to a database,does the new term of protection extend only to
newly added parts or to the entire database? The
construction, such as that provided by the
Advocate General of ECJ, extending only to newly
added parts seem to be appropriate, but ECJ did
not show its interpretation about this. In the case(*5) IMS Health GmbH & Co. OHG v. NDC Health GmbH & Co. KG, Case C-418/01, [2004] E.C.R. I-5039.
(*6) Commission of the European Communities, First Evaluation of Directive 96/9/EC on the Legal Protection of
Databases, DG Internal Market and Services Working Paper (Dec. 12, 2005).

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of a telephone directory, for example, it is easy tomake a distinction between the newly added partand the original part, but such distinction may bedifficult in certain types of database, for example,
a map database.
The next problem is the restriction on users.
ECJ stated that the restriction by the sui generis
right “concerns only acts of extraction and reutilization” and did not cover the “consultation”
and that, if the creator of a database made all orpart of his database accessible to the public, it
was not possible to prohibit a third party fromconsulting that database. The meaning of thisruling is still unclear, but commentators construe
this court decision as that in limited circumstances
the owner may be possibly considered to havegiven an implied consent to the reference by athird party.

investments.
Second, the market entry is difficult becauseof sunk costs for the creation of database.
Furthermore, a user has an incentive to continue
using a database of a specific manufacturer due tolearning effects or network effects. Last, a makerof a database can exclude rivals from the market
by refusing third parties to use its database,
thereby imposing high fees on customers. In
addition to the foreclosure within the same
market, enterprises intending to manufacture
value-added products using databases may be also
excluded. Such risk is especially high in casewhere the independent collection of raw data is
impossible or where the independent collection,although theoretically possible, is prohibitive.

6

What similarities and dissimilarities exist
between Japan’s tort law protection and EC’s sui
generis right? As to the similarities, we can pointout that both schemes focus on the investment increation of databases, no creativity is required,and scale of copying is examined in determining
infringement. As to the dissimilarities, thebiggest one is the existence and absence of an
injunction claim.
In Chapter I listed the issues of tort law
protection. Considering EC law and its discussion,
we can say the followings.
Firstly, court cases in Japan have recognized
the costs or labor used in producing a database
and this is consistent with that a sui generis rightin the EC protects investment. Judging from thefact that in EC very few criticisms exists for theprotection based on investments, it is favorable
that at present the court cases attempt to protect
databases focusing on costs or labor.
Next, I will discuss individual cases. The
database in the Tsubasa System case consists ofdata existing in the public domain and the court
found that an enormous amount of costs was
required for the collection and management
thereof. Therefore, the investment activities ofthe plaintiff will constitute a substantial
investment which is a condition for sui generis
right protection. Accordingly, it will be certainthat the database in Tsubasa System would be also
protected by the EC’s sui generis right.
What about the Yomiuri Online case? In thiscase, the koso appellant newspaper publisher
created the news article and the costs recognizedImpact on the Database Industry

What economic impact did the Directive giveto the database industry in EC? Until now weknow no empirical studied that showed it
contributes to the development of the industry.
On the contrary ann experimental study by
famous researchers is also skeptical about thepositive impact on the market by the Database
Directive(*7). In addition, the first evaluation
report published by the EC Commission
mentioned above states that the economic impactof the Database Directive on the databaseindustry in the EC is not clear and it will takemore time to draw policy conclusions. It says that
under such circumstances it will discuss the
future direction of the Database Directive,
including withdrawal or all or part of the Database
Directive or amendment thereof.

Ⅳ Conclusion; Suggestions
Japanese Law
1for

Economic Characteristics

Before discussing the suggestion forJapanese Law, I will point out several economic
characteristics of databases. First one is thevulnerability to the reproduction. Information
goods, including databases, have a public goodnature and are vulnerable to reproduction by third
parties. If it is allowed, makers’ incentive toinvest will be damaged. Thus we need a systemenabling the database maker to recoup its

2

Suggestion to the Tort Law Protection(*7) Stephen M. Maurer et al., Europe's Database Experiment, 294 SCIENCE 789 (2001).

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by the decision related to the creation of suchnews headline. Consequently, it is highly probablethat sui generis right protection will not be
granted to the headlines in question. The news
headlines can be further evaluated as mereby-products associated with the publishingbusiness or the business of distribution of articles
online of the koso appellant. Therefore, it is likelythat the news headlines in question were notprotected by sui generis right.
Furthermore, according to the IP High Court,
one of the grounds for its ruling that the article
headings could be an interest that deserves legal
protection is the fact that the headlines alone aretransacted with charge and thus have independent
value. This ruling considers the value itself of theinformation utilized by the koso appellee and it isclose to the view that is denied by the ECJ
decision and criticized by academic theories.
Considering the value of information underJapanese tort law may not be generally
undesirable, but it should be considered that it is
not a condition for the finding of unlawful act thatthe reproduced information has value in themarket.
It does not make much sense to discuss thescale of the reproduction of database. Supposingthat only a few percent of the total was copied,
the reproduction thereof should be restricted if alarge amount of money was invested in thecollection of such portion and if the incentives forinvestment would be prejudiced by the
reproduction. As the ECJ decision states, “aquantitatively negligible part of the contents of adatabase may in fact represent, in terms ofobtaining, verification or presentation, significant
human, technical or financial investment.”
Although the Tsubasa System case found that the
copying of the plaintiff’s database had beenmassive, such finding should not be considered to
be a condition of the finding of an unlawful act. It
just means that the copying of most part of adatabase to which large investment was madeoften has an impact on investment. Of course insuch case, a defendant will be able to escape theliability by arguing that the copied portion was
not generated from a large investment.
In the Yomiuri Online case, the court foundthat the koso appellee repeatedly reproduced theappellant’s news headlines. On the other hand,according to the EC cases, repetitious copying is
not prohibited by the sui generis right unless the
reproduced portion is a result of a substantial
investment.
A competitive relationship is not required bya sui generis right under the EC Directive. Evena user which is not in a competitive relationshipmay reproduce in such manner as to prejudice theinvestment. However, regulating all conduct ofusers would damage the free distribution of
information. Therefore, as the ECJ stated, it
seems to be necessary to allow the public tosolely use for private purposes a database that isopen to the public.
As far as tort law protection is awarded, it is
impossible to limit the term of protection as a sui
generis right, so it seems to be inevitable under
tort law that a defendant is liable as a plaintiff
found to be damaged by the reproduction, etc.
Furthermore, a dynamic database that isconstantly updated may be granted permanent
protection, but this is also unavoidable.
The data of the database in question in the
Tsubasa System case was such that other persons
may independently gather, and therefore granting
protection to such data will not cause excessive
monopoly. On the other hand, news headlines in
the Yomiuri Online case cannot be created onlyby the koso appellant, but the news articles
themselves can be written by anyone and theheadline thereof can also be created by anyone.
Therefore, there will be little possibility that
excessive information monopoly is caused byprotecting them. Generally, however, it should be
noted that the protection of “created” information
would prevent its free distribution, and theprotection of database by tort law may be denied
in a case where, balancing the interest of securing
the investment incentives and that of free
distribution of information, the latter interest
seems to be excessively prejudiced.
3

Suggestion to the Special Law Protection

Then, what aspect should be noted in
introducing a special law, such as a sui generis
right, to protect databases? With regards to therequirement for protection and conduct whichconstitutes infringement, the matters statedabove should be considered. Regarding an
injunction, in Europe, there are some articles thatcriticize the system of a sui generis right, butthere are no articles that criticize a right to claim
for an injunction. The database industry in Japan
also requests to introduce a right to claim for an
injunction. Accordingly, if Japan introduces a
special law to protect databases, a right to claim
for an injunction should be granted under such asystem.
If sole-source databases are protected by a

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special law that grants to a right holder thereof aright to claim for an injunction, such business
entity will gain an exclusive control over the
information, which may cause an anti-competitive
result as discussed in Section 1 of this chapter.
Furthermore, if the database that is used as aninterface becomes a de facto standard due to the
network effect, a right holder of such databasemay have a strong market power.
Under such circumstances, one option is toorder a compulsory license of rights for databases
under the Anti-Monopoly Law, but compulsory
license is strongly criticized because of the
difficulty in determining the license fee or otherreasons. It will be hard for a court to calculate alicense fee as remuneration for further activities.
Some propose to leave it to the Fair Trade
Commission as a “specialized agency,” but the Fair
Trade Commission specializes in the interpretation
and application of the Anti-Monopoly Law, not intechnology or industry.
Accordingly, considering that the ECJ court
decisions presented limited interpretations of sui
generis right and that they are positively
appreciated as reducing the necessity to refer tocompetition law procedures, Japan should
legislate and construe the scope of a right so as toprevent the problem of information monopoly inenacting a special law. In case of a sole-source
database, it will be also possible to include
provisions to restrict the enforcement of a rightin the special law.
Nonetheless, if a compulsory license is stillneeded, it seems to be more desirable to establish
procedures and requirement for compulsory
license in the special law than to refer to themeasures under the Anti-Monopoly Law. The
industrial policy judgment and the considerationof interests other than “competition” will be
desirably left to the administrative agencies thathave expertise, and the specified administrative
agencies are more likely to improve thetransparency and predictability in the procedure
in its judgment.
Needless to say, the provisions for proceduresfor compulsory license in the special law do noteliminate the necessity for remedy under the
Anti-Monopoly Law. As discussed in Chapter III,the content of a database may be maintained inconfidence by its producer. In such cases, thecompulsory license system is useless and remedy
under the Anti-Monopoly Law will be required.

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4

Concluding Comments

This report discussed database protection,
dealing with EC laws. In the future, turning to US
law too, I would like to continue to study the
relationship between database rights andcompetition law.

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