Reconciling the Non-Personal Data framework with Database Protection in India – Part II

In Part I, we examined the implications of the recommendations regarding mandatory sharing of databases in the report in relation to the database protection regime in India-specifically, the Copyright Act and the Information Technology Act. In this part we explore the mandatory database sharing regime espoused by the report with regard to India’s obligations under the TRIPS. We argue that the report must be reconsidered in light of the inconsistencies with the TRIPS obligations. Lastly, we make a case for the introduction of a sui-generis database protection regime in India to balance economic incentives and growth that can be achieved through database sharing. This we argue, will better allow the realization of the goals of the NPD Recommendations.

 

Compliance of Mandatory Sharing of Copyrightable Databases under TRIPS

 

As explained previously, the draft report recognizes three different classes of private non-personal data to be shared in different ways:

  1. In case of raw and factual databases, pertaining to community data, it would need to be shared mandatorily without any remuneration.
  2. Mandatory database sharing is proposed at FRAND Terms, if the value added due to processing of data is non-trivial compared to the collective contribution of the community data and community resources or for reasons of over-riding public interest. 
  3. At the stage of increasing value addition, it would be required that the database be brought to the market whose price would then be determined by market forces. (Chapter 7) 

 

In this part, we explore the interaction between the TRIPS and the classes and methods of data sharing. The Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) stipulates a minimum level of protection for copyright that must be provided by countries. Article 10 of the TRIPS lays down the minimum level of protection national laws must provide the authors of databases. However, on a closer reading of the provision, the protection seems to  only extend to “compilations of data which constitute intellectual property by virtue of their selection and arrangement”. This protection however does “not extend to the data or material itself”. Chandni Raina interprets this provision to conclude that effectively only processed data that is compiled in the form of a database can receive protection under this provision. The provision also negates any protection that needs to be provided for raw data itself. Thus, the raw and factual databases discussed in point 1 do not receive any protection from mandatory sharing under the TRIPS framework.

 

S.2(O) of the Copyright Act, 1957 is mirrored on this minimum requirement where it grants protection to “compilations including computer databases” but does not include raw data itself. This is also reflected in the report where it provides compensation on mandating sharing of “processed data” and does not extend the same benefit to “raw data”.

 

Art.13 of the TRIPS restricts the scope of limitations placed on legal rights conferred by intellectual property rights law. Thus, this section would only pertain to those classes of databases which can have/already have copyright falling under the third class as mentioned above. Our analysis of data protection in domestic legislation shows that only certain classes of databases with a minimum level of creativity are vested with intellectual property protection.  Therefore, there is no bar on the mandatory sharing of raw and factual databases under the first class of private non-personal data mentioned above. Some try to make a case for the protection of such raw databases itself under Art. 39(2) of the TRIPS agreement. Art.39(2) of the TRIPS agreement empowers natural and legal persons to prevent information within their control from being acquired without their consent. However, this acquisition to be made must be contrary to “honest commercial practices”. The Agreement does not define this.However, it provides an illustration which we take to mean breaches of contract and breaches of confidence. This largely seems to indicate protection to persons against some sort of bad faith in commercial transactions. It is unclear if this term can be read to include mandatory acquisitions of databases by the governments lawfully. Thus, it would be difficult to espouse a regime of protecting the bare raw data under the TRIPS Framework.

 

However, a question then arises as to whether the mandatory sharing mechanisms (relating to the third class of data) violate the intellectual property rights of original database creators under the TRIPS. In the next section we explore this question and the  limitations the TRIPS places on crafting exceptions to the Intellectual property rights of the holders, through mandatory sharing provisions such as these

 

Three Step Test and Expropriation of Databases 

 

Before beginning the analysis, it is important to note that there is no law governing the non-personal data framework and the report merely puts out recommendations. The recommendations might not provide us with sufficient information required to perform the analysis completely and this is factored into the analysis.

 

Article 13 of the TRIPS agreement restricts the scope of exceptions that can be granted by member states to the IP rights under the agreement. In US- Section 110 (5) Copyright Act (“US- Section 110”) the WTO panel examined whether the three-step test was satisfied to meet compliance of the national provision with Art.13. The restrictions to the exclusive rights granted must (1) be restricted to certain special cases, (2) not conflict with a normal exploitation of the work, and (3) not unreasonably prejudice the legitimate interests of the right holder. (Para 6.97) Analyzing the NPD Recommendations in the context of each of the steps of the test we find;

 

  • Restriction to certain special cases

 

The first step requires fulfillment of two essential prongs. First, the exception must be well defined and be precise (Para 6.103) and second, the exception must also be narrow in the qualitative and quantitative sense of its scope and reach. (Para 6.109) Applying the second prong, the panel in US- Section 110(5) noted that the business exception granted by the legislation covers close to “half of the retail establishments” and would not qualify as a special case. (Para 6.133)

 

The exception to the intellectual property rights conferred upon copyrighted databases in the form of mandatory sharing of data will be the relevant point for analysis. The recommendations do not clearly define or segregate the kinds of databases they seek to regulate. Since it will be difficult to comment upon the precision of the definition, we leave it out of our analysis. However, the NPD Recommendations clearly do not meet the second prong. The mandatory sharing, while accompanied with remuneration in some form is still very broad and not a “special case”. It applies to all the databases held by private corporations, processing private non-personal data. Thus, the scope of the “exception” is over broad and rather would amount to a “normal case” as the panel described it.

 

  • Non-conflict with normal exploitation of the work

 

An exception or limitation conflicts with the “normal exploitation of the work” if the usage of the exemption enters into economic competition with the ways that the right holder normally extract value from that right to the work. (Para 6.183) This would deprive them of significant or tangible economic gains. (Para 6.183) The effect on these gains can be actual or potential in the market. (Para 6.183)

 

To satisfy the second step in the analysis, the exception must not conflict with the normal exploitation of work. The Panel in US- Section 110(5) defined each of the terms in the step to mean the following:

 

  1. “Normal” refers to exploitation of the rights associated with the work. (Para 6.165) However, this is not a complete exploitation as there is some room for limitations on the rights. (Para 6.165)
  2. “Exploitation” refers to the activity of extracting economic value out of the exclusive rights attached to the works. (Para 6.165)
  3. “Work” refers to the exclusive rights relating to the Intellectual property in question. (Para 6.171)

 

The Recommendations in case of databases with certain levels of processing mandates sharing for remuneration in the market. Corporations- especially those whose business depend on these databases- may have their competitors and other firms benefit from their databases and affecting the competition. For the United States in US- Section 110(5), their law allowed using music in small establishments without the payment of any money. However, since the Recommendations allow for the payment of compensation, it is difficult to conclude at this stage before precise parameters are laid down by law whether there is a violation of the second step.

 

  • No unreasonable prejudice to the legitimate interests of the right holder

 

Under the third step the exception or limitation must be prevented from creating an unreasonable prejudice to the legitimate interests of the right holder. The language of the test seems to indicate that some degree of prejudice to the author’s rights are acceptable but unreasonable prejudices are unacceptable. (Para. 6.229) This step has not been elaborated upon in US- Section 110(5), and resultantly there is uncertainty as to its interpretation. However, some believe that this step grants national judicial organs the leeway to carry out a proportionality analysis to settle the conflict between the rights and exceptions. The panel in US- Section 110(5) found that the effective or potential loss of income caused unreasonable prejudice to the right holders’ interest.

 

It is difficult to comment upon the loss of revenue or potential revenue when the law has not taken a concrete form. This becomes even more difficult as the NPD report makes a commitment to providing fair compensation to the databases that must be shared. However, this step should  factor when the recommendations are made into legislation,  especially any guidelines elaborating upon the pricing of the databases.

 

Conclusion

 

Our analysis of the three-step test shows that the recommendations will not pass the muster of the first step. A clearer understanding to the second and third steps would emerge when the law and guidelines emerge. Although, since all three steps need to be satisfied for not violating Art.13 under the TRIPS agreement, prima facie one could argue that the report violates India’s obligations and the rights and protections that should be accorded to database creators.  Having established the conflict of intellectual property rights and the NPD Recommendations, we find that there are two issues that need to be addressed. First, creating a domestic database protection right and second, re-structuring the mandatory sharing mechanism under the NPD Recommendations.

 

The way forward: Creating sui generis right protection for databases in India and restructuring the mandatory sharing mechanism

 

We have shown that the mandatory sharing of original non-private databases under the NPD Recommendations is not a legitimate restriction to the copyright protection afforded to such databases under TRIPS. It indirectly takes away copyright protection afforded to database creators under Indian copyright law. Although raw and factual databases do not have protection under Indian law, it is important such protection is considered if the goals of economic growth, research, and development of the NPD Framework are to be realized. The mandatory sharing mechanism under the NPD Framework needs to be restructured, considering the rights of database creators. This has to be done keeping in mind not just the existing copyright on original databases, but also database rights in unoriginal databases. For this, India needs to develop sui-generis protection for databases.

 

A 2002 WIPO Standing Committee Report on Copyright and Related Rights studied the economic benefits of database protection rights for developing countries. The report found that there are several economic benefits to database protection rights. These rights will encourage the growth and production of databases. It further prevents misappropriation of databases and creates a market for both domestic and foreign trade of databases. The database protection rights are restricted to protecting the compilation of the data i.e. the database and not the data in it.

 

The members of European Union through European Council Directive 96/9/EC have a sui generis statutory protection for electronic databases. This allows database protection if “substantial investment” has been made in creating the database. The EU Database Directive has faced criticism for its fair use exceptions. Even though in Feist v. Rural the US Supreme Court denied copyright protection to databases, database protection was instituted in the United States of America through legislation. This has been done through creating a framework against misappropriation of databases instead of a direct right.

 

There has been significant discourse regarding the need for database protection law in India for a few years now.  Professor Anirban Mazumdar argues for database protection in India for reasons similar to those in the WIPO report, citing the dearth of private participation of databases in India. Professor Indranath Gupta argues that there is a lack of consensus in India regarding the need for sui-generis database protection. There is no evidence or data on whether the Indian industry requires database protection. Further, developing countries could be hurt more by database protection due to its effect on research and development. Apar Gupta has argued in favor of sui-generis database rights, with clearly defined safeguards and protections to ensure investment in and development of electronic commerce. There have been proposals for a middle ground between the EU and US model which recognizes database protection rights in limited commercial activities.

 

The threat of data monopolies if database protection rights are strengthened in India is very real-particularly since the technology industry has a few companies that dominate majority of the market share. However, without database protection rights, private players are not encouraged to make (and update) databases that can have the desired impact of development and public good, especially if there is mandatory sharing of databases as required under the NPD Framework. Although this is just restricted to non-personal databases, the value of such databases in not in question, especially given the creation of an extensive framework for its facilitation.

 

The NPD Framework has been created with a very one-dimensional view of the economy of databases. It’s concentration on creating competition and growth through sharing ignores the TRIPS and WIPO recognized and encouraged databases as intellectual property protected rights. In the spectrum, if the EU system of full protection to databases is on one side, the mandatory sharing of databases, in on the other extreme. This framework does not balance the competing interests in the creation of databases.  The recognition of a limited sui-generis database right, which is also applicable to the mandatory sharing mechanism will allow private players to encourage productive and useful databases, the mandatory sharing of which will be done after expiry of the term of protection or if they are useful for public and fall under well-defined exceptions.

 

The authors would like to express their gratitude to Professor Ishupal Singh Kang for his continued guidance and support for the respective piece. 

 

Muskan Tibrewala and Pavan Kalyan

Muskan Tibrewala is a 5th year law student at Jindal Global Law School. Their research interests are technology law, digital constitutionalism and queer theory. Pavan Kalyan is a 4th year law student at Jindal Global Law School. His research interests are technology law, international trade law and dispute resolution.

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