Toronto Real Estate Board Dispute Shows Awkwardness of Copyright Protection for Databases

Legal protection for databases in Canada is, perhaps surprisingly, a little convoluted.  In some jurisdictions, unique database rights have been legislated (e.g. the EU). This is not yet the case in Canada where protection instead comes from a patchwork of rights provided by different regimes.

Traditional intellectual property (“IP”) rights provide some protection, but with sufficient gaps to make exclusive reliance on IP inadvisable. Generally speaking, patent and trademark rights are both inapplicable to databases. Copyright, as will be clear from the following, may provide protection, but the protection’s extent depends on the makeup of the database, and regardless is less exhaustive than might reasonably be desired.

To complement any IP rights in order to achieve satisfactory protection, contractual safeguards and technological barriers can be implemented. Specifically contract law, through outbound licensing and suitable agreements with employees and contractors, can help impose restrictions on those who might inappropriately copy or share a database. See the US case ProCD v. Matthew Zeidenberg and Silken Mountain Web Services, Inc. for a review of the risks of reliance on copyright for database protection (particularly those comprising factual information), and the corresponding importance of applying contractual safeguards through an End User License Agreement (“EULA”). Technological barriers such as encryption, choice of delivery model (e.g. SaaS), and obfuscation can also be of assistance to hide the information in a database.

This article will focus on a discussion of protection of databases through copyright law, such as it is.

Copyright Concepts Review

Most databases exist at the nebulous fringe of what can be protected by copyright, such that providing meaningful discussion of the rights offered necessarily requires a review of basic concepts for context.

First, it should be noted that like other IP rights copyright protection varies by jurisdiction. This article focuses on the Canadian concepts, though some US concepts are touched on.

Copyright is a creature of statute. Copyright furnishes a bundle of rights to the owner of any “work”, as defined in the Copyright Act, RSC, 1985, c C-42 [“the Act”].  Various types of work are set out; notably, “literary works” include computer programs.  For copyright to subsist, a work must be original, which means that it must be more than a mere copy and its creation must have required the exercise of the author’s skill and judgement, such skill and judgement not being so trivial that it could be characterized as a purely mechanical exercise. For an overview of basic concepts see CCH Canadian Ltd v Law Society of Upper Canada, 2004 SCC 13 (CanLII) [“CCH”].

When discussing protection of databases it’s worth considering whether the database as a whole attracts protection and whether any of the data within the database separately attracts protection.

Whether or not any of the data within a database separately attracts copyright protection depends on the type of data. There is no protection for mere facts, which are part of the public domain, though a particular expression of a fact may attract rights, e.g. a particular description of the fact. Many technology companies have databases that comprise primarily facts collected automatically, e.g. datasets consisting of geographical tags, addresses, financial numbers. This type of information, on its own, is unlikely to attract protection through copyright. Meanwhile, any substantive data items, such as original documents and photographs, maintain separate copyright protection.

Copyright can attatch to the overall database as a compilation if the selection and arrangement of the data required at least a minimal degree of skill and judgement on the part of the author, resulting in an intellectual creation. If the selection and arrangement was merely mechanical, protection is unlikely to attract; examples include alphabetical sorting and correction of typos. Conversely, selection of entries for inclusion in a database according to a specific categorization, arrangement according to such categories, and/or the addition of header summaries, would indicate that the database will attract at least thin copyright protection as a compilation.

However, even if copyright protection attaches to a database as a compilation, the rights afforded are still somewhat limited because the protection of a compilation relates to its structure not its contents. To infringe such copyright an infringer would have to copy a “substantial part” of whatever enabled the database to attract its protection, i.e. of the intellectual creation resulting from the author’s skill and judgement applied to the selection and arrangement of the data. De minimis copying of database entries would be unlikely to attract a remedy, unless the data items separately attract copyright protection as described above. For discussion of copyright in compilations see Tele-Direct (Publications) Inc. v. American Business Information, Inc., [1998] 2 FCR 22, 1997 CanLII 6378 (FCA) [“Tele-direct”], where, though the YellowPages directory taken as a whole and including visual elements was admitted to attract thin copyright protection as a compilation, sub-compilations taken therefrom – such as  organized subscriber information which had been received in disorganized form – didn’t themselves attract protection; see also  Robertson v. Thomson Corp., [2006] 2 SCR 363 and CCH.

Other data structures (e.g. schemas) relating to a database may also attract some protection as computer programs, but the decisions vary somewhat by jurisdiction. See e.g. GEAC J&E Systems Ltd. v. Craig Erickson Systems Inc. (1992), 46 C.P.R. (3d) 25, 33-37 (Ont. G.D.) finding the protection of “software” includes not only “programs” but also “data files”, at least “to the extent of their design and structure.”

Recent Review of Database Copyrightability

As case law directly on point is still relatively sparse, each new decision that considers copyright protection for databases is informative.

In a court battle that has been making headlines in Canadian media since 2011 relating to the Multiple Listing Service (“MLS”) real estate database, the Competition Tribunal recently considered database copyrightability. See: Commissioner of Competition v The Toronto Real Estate Board, 2016 Comp Trib 7.

The facts are complex and frankly not that important for our purposes, but are summarized as follows at paragraph 2:

In brief, the Commissioner contends that, by restricting access to certain Multiple Listing Service (“MLS”) information on the password-protected virtual office websites (“VOW”) of its real estate brokers and salesperson members (the “Members”), and by restricting the manner in which its Members may display and use that information, TREB’s conduct constitutes an abuse of dominant position under section 79 [of the Competition Act]. The Commissioner asks the Tribunal to remedy TREB’s alleged substantial prevention of competition in two general ways: First, by prohibiting TREB from enforcing its current restrictions on the display and use of MLS data, and second, by requiring TREB to include certain data in an electronic data feed to its Members who use it for display on their password-protected VOWs. TREB responds that it opted to exclude the disputed information from its VOW data feed after careful consideration of privacy and copyright issues, and that its VOW policy does not substantially lessen or prevent competition. Among other things, it maintains that any incremental impact that its VOW policy may have on competition is not substantial.

The salient part is that the MLS database (owned by the Toronto Real Estate Board “TREB”) includes information relating to home sales. The information is apparently submitted through a form by brokers after a deal closes. Access to some of the information in the MLS database has been restricted by TREB for posting to brokers’ special websites (VOWs) though such restrictions are not in place for other more traditional real estate marketing delivery models. The Commissioner of Competition thus argued that the restriction was anticompetitive because it stifled use of the online technologies. The disputed information included a subset of the MLS database, specifically “sold and “pending sold” homes; withdrawn, expired, suspended or terminated listings (the “WEST” listings); and offers of commission to brokers who represent the successful home purchaser, known as “cooperating brokers”. Copyrightability of the information mattered because there is an exception under the Competition Act for use and enjoyment of IP rights, which are inherently monopolistic and thereby anticompetitive. Basically, acts engaged in pursuant only to the exercise or enjoyment of an IP right are not anticompetitive for the purposes of the Competition Act, however, if no copyright attracts, the exemption can’t be relied on.

In the decision, the Competition Tribunal found that the information in the MLS database does not attract copyright protection. The decision sets out the Tribunal’s attempt to apply the relevant copyright case law to determine whether copyright subsists in the overall arrangement of information in the MLS database.

In its pleadings, TREB had relied on US cases where analogous US MLS databases were found to attract copyright protection in light of the efforts made by the relevant MLS operators to oversee and control the quality and accuracy of the content of the database. In the case at bar, as stated above, the process of inputting listings to the MLS system involved the listing broker directly inputting the listing information into the database through a fill-in-the-blank Data Information Form.

The Tribunal found that: “Simply capturing and compiling data supplied by real estate agents into the MLS Database does not suffice to produce a copyrighted work. To attract copyright protection, a work must add some non-trivial intellectual substance to the raw data.” The Tribunal further found that: “like the YellowPages in Tele-Direct ABI, TREB’s MLS Database is little more than information (the vast majority of which is not subject to copyright) arranged according to accepted, commonplace standards of selection in the real estate industry. Copyright cannot exist in these circumstances, neither in the manner in which TREB has compiled the MLS Database nor in the manner of presenting or organizing the data on its website or on VOWs.” The Tribunal seemed to be unconvinced that creating the database required much skill and judgement with respect to its arrangement, beyond mechanically capturing the data with a set of rules and forms. It thus found at paragraph 731 that copyright did not subsist in the MLS database.

The decision has since been appealed to the Federal Court of Appeal.  The appeal might well succeed with respect to the issue of subsistence of copyright in the database. The Tribunal’s finding with respect to the arrangement complying with industry standards (and thereby being unoriginal) seems to improperly import a creativity standard for copyrightability not found in the case law. Further, the Tribunal’s application of the Tele-direct case is problematic. The Tribunal neglects to consider, for example, that in Tele-direct the overall YellowPages directory had been admitted to attract copyright and that what was at issue was a sub-compilation; the Tribunal seems to incorrectly rely on Tele-direct as a statement that the overall YellowPages compilation didn’t attract protection.

We eagerly await the outcome of the appeal to see the Federal Court of Appeal’s take on database protection