Protecting Databases Located in Taiwan

Author: Jamie C. Yang and Tsai-Wen Yang

Taiwan has long been a hub for information technology and one of the favorite server locations in Asia-Pacific, because of its traditionally strong web hosting and IT industries and large ISPs. Many important data centers are hosted in Taiwan, and consequently, it is worth exploring what legal protections are available to databases in these data centers. Especially, Taiwan lacks a comprehensive regulation such as the European Union Database Protection Directive (Directive 96/9/EC), and database owners and operators must rely on claims under laws that are not specifically designed to protect databases against unwelcomed use.

Photo Courtesy Kreg Steppe CC BY-SA 2.0

The EU Database Protection Directive can provide for a point of comparison for those who are familiar with the Directive. The Directive created a new exclusive “sui generis” right for database makers. The EU Member States are required to provide for a right for a database maker who has made a substantial investment in the obtaining, verification or presentation of the contents of the database, and prevents unauthorized extraction or re-utilization of the entire or substantial part the database’s contents. Case law has thereafter provided finer points and separated investment in obtaining, verification of the contents versus investment in creating the contents.[1] Case law has also provided that the unauthorized use of a dedicated meta-search engine constitutes “making available” contents of a protected database thus infringe on the sui generis right.[2]

By contrast, because Taiwan law does not provide for such sui generis right for databases makers, they must rely on claims under other laws and contract to protect their investment.

A database generally refers to an aggregate of data and information, which is selected and organized according to a certain logic or method so that users may search and access to such data and information. We discuss legal protection which may be applicable to two main aspects of databases, (1) the data itself and (2) the design and logic of the database.

I. Protection of the data itself

The typical type of action a database maker seeks to prevent is the mass copying of data from the database by a competitor. This puts the competitor at an advantage because the competitor does not need to expend the resources to obtain, select and verify the contents as the database maker did.

A. Data that is confidential or constitutes creative expression

When the copied data (1) is unknown to those who are familiar with the field of knowledge, (2) has actual or potential economic benefit due to its secrecy and (3) the database owner has employed reasonable confidentiality measures, the data itself may be considered as trade secrets and thereby protected under the Trade Secrets Act. At the same time, if the database owner applies access control over the database, circumventing such access control by unjustified use of someone else’s account and password or hacking into the database constitute violations of the Offense Against Computer Security Section in the Criminal Code. Moreover, unjustified acquiring, deleting and revising electromagnetic records in the database are also acts which violate the same Section.

In addition, if the contents contained in the database are eligible for copyright protection, the Copyright Act can also be used against unwelcomed copying. Original works of authorship fixed in any tangible medium of expression and meet the minimal level of creativity are protected by the Copyright Act.

B. Other types of data

Trade Secrets Act, Offense Against Computer Security Section and Copyright Act are useful for addressing many but not all cases of unwelcomed copying of data contained in databases. If such data is publicly available facts, it is ineligible for copyright protection or trade secret protection. Moreover, many of the copiers do not hack into such databases but merely access the database with accounts and passwords obtained from the database or a client of the database. Henceforth, the Offense Against Computer Security Section does not apply. In these cases, database owners must find alternative causes of action against unwelcomed copying.

In the case of Taiwan Economic Journal v. CMoney Corporation, the plaintiff and defendant both operated databases of financial information. Taiwan Economic Journal (TEJ) was in the business of creating a database of information of securities in foreign markets. CMoney systematically retrieved and copied the contents of the TEJ database from an end user terminal, and combined such contents into its database for sale to customers. Because the TEJ database contained only facts which were not eligible for copyright protection, TEJ brought an unfair competition claim under the Fair Trade Act against CMoney. TEJ must prove that CMoney’s conduct violated the basic business morale to prevail in a Fair Trade Act claim. The court found supply and demand substitutability between TEJ’s and CMoney’s databases and determined that they were direct competitors. In addition, the court noted that TEJ expended significant manpower in collecting, organizing and creating contents in its database. Lastly, because the CMoney database contained the same typos that TEJ intentionally places in its database, TEJ successfully proved that CMoney copied a substantial part of its database. The court found that CMoney was liable to TEJ under the Fair Trade Act.[3]

Similar facts could be found in the litigation between 104.com and 1111.com, which separately maintain the two largest human resource websites in Taiwan. A manager at 1111.com cracked 104.com’s computer system and retried the accounts and passwords from several VIP users, logged onto 104.com website, searched, copied and exported more than 80,000 resumes entries. 1111.com then compared these resumes with those in its database, intending to send soliciting emails to 20,270 candidates who have not registered. The Fair Trade Commission found that 1111.com has violated the Fair Trade Act. 104.com then brought a civil lawsuit against 1111.com on the basis of unjust enrichment, and the court awarded damages to 104.com calculated upon the valuation of the copied data.

On the other hand, it is worth noting the Taiwan courts’ view on the use of meta-search engines (or aggregators). Realty Search operated a meta-search engine dedicated for realty listings, and it was capable of searching public listings across the websites of ten different Taiwan realtors. Users could search on Realty Search for listings by location, quote, and many other parameters, and the search results returned links which the users could then click through to view on the original web pages maintained by the realtors. Realty Search charged users an annual fee for the service.

One of the realtors whose listings were searched, Taiwan Realty, brought a lawsuit under the Fair Trade Act against Realty Search. The district court dismissed Taiwan Realty’s lawsuit, because (1) the listings were publicly accessible, (2) while the notice on Taiwan Realty’s website prohibited copying of information, the notice was only a disclaimer emphasizing that the information is provided “AS-IS” and without warranty, and (3) Realty Search provided a service different from that of Taiwan Realty and they are not competitors.[4] Nevertheless, this decision was overturned on appeal. The appellate court found that Taiwan Realty had expended much manual labor, expense and time to establish its brand and trust among homeowners, in order to gather the addresses, area, building age, price quote and ownership information for the listings. Renters and buyers were able to rent and buy realty through either Taiwan Realty or Realty Search, therefore some competition existed between them although they were in different markets. Finally, Realty Search displayed in its search results information from Taiwan Realty’s database without making any effort, and used this information to promote its services to potential clients, Realty Search has violated the Fair Trade Act by unjustly profiting upon Taiwan Realty’s efforts. The appellate court ordered Realty Search to remove all Taiwan Realty listings in its search results, enjoined Realty Search from including all Taiwan Realty listings in future search results and ordered Realty Search to pay damages to Taiwan Realty.[5]

II. The design and logic of the database

As noted above, database often contains data that are not copyrightable. Nonetheless, database owners sometimes still decide to bring copyright infringement claims for unauthorized mass copying of data from a competitor because it is possible to bring a criminal complaint under the Copyright Act. In these cases, because the data is not copyrightable, the database owners must argue that the “design and logic” of the database makes it a “compilation” that is protected by copyright law. A “compilation” is a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. Under Taiwan jurisprudence, as long as there is some level of evaluation, judgment, and the selection is not mechanical, expressing some creativity, the resulting work constitutes a compilation.

The case of Lex Data Information Inc. v. Angle Law Data builds upon facts similar to that of Taiwan Economic Journal v. CMoney Corporation, but the plaintiff Lex Data brought a criminal complaint under the Copyright Act instead of an unfair competition claim under the Fair Trade Act.

Lex Data and Angle were both in the business of creating and licensing law databases. Lex Data was the first comer and has already created a voluminous database containing decisions of the courts and administrative agencies. Angle found a contact who had subscription access to Lex Data’s database and hired college students to copy and paste data in that database.

Lex Data brought a copyright infringement claim against Angle. Because decisions of the courts and administrative agencies are by definition not eligible to copyright protection, Lex Data claimed that distinct sorting of such decisions constitutes a compilation in itself and Angle infringed upon the compilation.

In making its database, Lex Data had left out decisions that are merely procedural and with a low reference value. Lex Data had also categorized the decisions by court levels, case procedures (criminal, civil or administrative) and the practice categories (for example patent, employment, matrimonial). Lex Data also labeled the decisions as effective, distinguished or if there was negative treatment. The court found that sorting by court levels and case procedures are merely functional and contain no creative expression. By contrast, the court found Lex Data’s exclusion of procedural cases was a judgment call, and creation of the practice categories and tagging the cases constituted creative expression. Therefore, Angle is found to have infringed upon Lex Data’s copyright in the collective work because it excluded the same cases and applied the same practice categories.

Summary

Because Taiwan law does not provide a right similar to the sui generis right under the EU Database Directive, database owners had litigated against unwelcomed copiers on claims under other laws to protect their investment. For databases containing uncopyrightable data which are freely accessible to the public, database owners most frequently brought claims under the Fair Trade Act and Copyright Act. In cases concerning unwelcomed copying of data in databases, we observe that the courts tend to relax the standard of review in these statutes, in order to find that the copied data is protected by law and the copier is liable.

For instance, in the Lex Data Information Inc. v. Angle Law Data case, Lex Data created the practice categories and tagged the court cases for utility purpose and alternative ways of naming practice categories were very limited. The creation of practice categories should not have been found to be creative expression which is copyrightable. Moreover, in the Taiwan Realty v. Realty Search case, Realty Search provided a tool for users to search conveniently across different realtors’ platforms. Realty Search returned a link which direct users to the realtors’ listings. Taiwan Realty and Realty Search belonged to different market segments. Yet, the court found “some level of competition” existed between them and found Realty Search to have unjustly profited from Taiwan Realty’s efforts.

The broad interpretation by the courts of the Copyright Act and Fair Trade Act allow some legal protection of databases in the absence of the sui generis right. Database owners are advised to take into consideration the current legal framework and jurisprudence, in building their business models and designing their databases.

[1] Case C-46/02. Fixtures Marketing Ltd v. Oy Veikkaus AB., Case C-338/02. Fixtures Marketing Ltd. v. Svenska Spel AB. and Case C-444/02, Fixtures Marketing Ltd v Organismos prognostikon agonon podosfairou AE.
[2] Case C-202/12, Innoweb BV v. Wegener ICT Media BV.
[3] Case 2014 Tai-Shang-Zhi No. 739, Supreme Court.
[4] Case 2014 Min-Gong-Su-Zhi No. 4, Court of Intellectual Property.
[5] Case 2015 Min-Gong-Shang-Zhi No. 2, Court of Intellectual Property.

INFORMATION LAW JOURNAL (SUMMER 2017 VOLUME 8 ISSUE 3), Information Security and Internet of Things Committees ABA Section of Science & Technology Law.
Article available at: https://lnkd.in/eDniPM6

Jamie Yang Is a partner, Innovatus Law. J.D. 11’ & LL.M. 09’, Columbia University School of Law; LL.M. 08’, Institute of Law for Science and Technology, National Tsing Hua University; LL.B. 06’, National Taiwan University. Innovatus Law is a full service business law firm located in Taipei, Taiwan. Contact email: jamie.yang@innovatus.com.tw.

Tsai-Wen Yang Is senior associate, Guo Ju Law Firm. LL.M. 09’, Graduate Institute of National Development, National Taiwan University; LL.B. 06’, National Taiwan University. Guo Ju Law Firm is one of Legal 500 leading Law Firms in TMT and CorporateINTL leading Law Firms in E-commerce of 2017.