Distribution Agreements - Part 4 : Databases and database works

Use cases

When distribution software, databases can also be submitted to customers - for example as standard applications or also versions developed specifically for the customer. In this fourth part of the series, I highlight the special features that arise when software is distributed in connection with databases or database works. While a database work within the meaning of Section 4 (2) UrhG requires a personal intellectual creation as a prerequisite for protection, the sui generis protection of Section 87 a UrhG applies to the database if there is a substantial investment.

A database within the meaning of Section 87 b UrhG is a collection of works, data and other independent elements ("information") which are arranged systematically and methodically and are accessible to individuals by electronic means or by other means. The "sui-generis right" of §§ 87 a ff UrhG does not depend on the copyrightability, i.e. the level of creation. The nature of the information contained in the database is initially irrelevant. What is decisive is that the information contained in a collection exists independently of one another. The information contained in a database must be arranged systematically and methodically and must be accessible to individuals.

In contrast, a database work within the meaning of Section 4 (2) UrhG is one that has the elements of a database, but in addition has an individual character in its arrangement, structure or selection and thus has the required level of creativity. The demarcation criterion between databases and database works consists solely in the fact that the selection of the elements and the arrangement of the selected elements must be creative in the case of database works.

Manufacturers of application programs frequently offer their customers not only the actual computer program with the functions required for a specific application area, but also preconfigured or pre-parameterized sample/standard use cases (frequently also referred to as "best practice - use cases"), which are intended to make it easier for the customer to implement the application program. Such sample use cases are made available to the customer as a "reference" in so-called "reference databases" and ideally lead to the customer adapting his previous way of working to the new application program and adopting the standardized use cases for implementing his business processes. The more sample use cases the manufacturer has, the more likely it is that a database, or in some cases a database work, will be distributed in addition to the application program.

In the case of (indirect) distribution, in addition to the typical questions of software distribution, special questions also arise regarding the database/database work as a supplementary component. Is this database/the database work an integral part of the application program or an independent work? The application program will usually not function without the database/database work. Conversely, sample use cases can be used abstractly - i.e. without the application program.

Copyright in databases and database works

For database works, as for other works within the meaning of Section 2 (1) UrhG, the exclusive right may be granted to offer the original or copies of the work to the public or to put it into circulation.

The contractual arrangement of the rights of use to databases is governed by the provisions of the German Copyright Act (UrhG). Pursuant to Section 87b UrhG, the reproduction, distribution and public communication of substantial parts of a database by the user or end customer is not permitted and is reserved for the database manufacturer or the authorized dealer.

For databases, the exclusive right to disseminate the entire database or a substantial part thereof is established in Section 87 b UrhG. Distribution is a form of "re-use" within the meaning of Art. 7(1)(b) Database Directive by means of making available to the public. Section 87 b UrhG also provides for the exhaustion of the distribution right, which requires the existence of a copy, i.e., a reproduction copy in physical form.

The right of dissemination under Section 87 b (1) UrhG is, however, restricted in contrast to the right to disseminate a database, in that insubstantial parts of the database may be disseminated independently of consent and independently of the occurrence of the exhaustion effect, provided that the dissemination is not repeated or, in any case, not systematic. However, independent of consent is also:
• the repeated, but not systematic, dissemination of insubstantial parts of the database;
• the repeated and systematic dissemination, provided that the normal exploitation of the database does not run counter to or unreasonably prejudice legitimate interests of the database producer.
Consequently, this means that the licensor of a database on a data carrier may further distribute non-essential parts under the above-mentioned conditions, irrespective of consent. Accordingly, a distributor may continue to use non-essential parts even after they have been transferred to the ecustomer.

Limits of the distribution right

The manufacturer's distribution right ends when a reproduction of a database is placed on the market with the manufacturer's consent. According to the ECJ's UsedSoft case law on the Computer Programs Directive No. 2009/24/EC, the distribution right is exhausted in the case of software acquired online. It remains to be seen whether this case law will also extend to the Database Directive and the ECJ will rule that databases transferred online can also be resold after exhaustion. However, the right to reproduce and lease is excluded from the exhaustion effect.

Customers are allowed to change databases

For databases, Section 87 UrhG does not provide for an (exclusive) right of database producers to grant corresponding editing and redesign rights to third parties: authorized users may freely modify and add to parts of the database. This also includes customers. In case of doubt, the so-called transfer of purpose doctrine applies to the granting and interpretation of rights of use. In the absence of contractual agreements, the contractual purpose alone determines the scope of the rights of use.

For database works, Sections 23, 55 a UrhG permit editing and other transformations by the rightholder if and to the extent that this is necessary for access to the elements of the database work and for its "customary use". Editing or other transformations that require consent may include adding to, changing or updating data records.

The manufacturers of database works presumably have less of an interest in preventing additions and updates than in ensuring that these additions and updates "flow back" to the manufacturer and are thus available to other end customers. Distributors and end customers of the manufacturer therefore do not need a right to edit in order to make additions and updates. Only structural changes require a separate grant of rights.

Stipulate rights and obligations

These special features of software sales in connection with databases make it clear which issues manufacturers, sales partners and end customers should consider. Therefore, the parties should clarify which contractual constellation best takes into account their intended use, which special features are relevant in this context, and which risks they are willing to bear. We advise suppliers and sales partners of software products on the drafting of contracts and help them to identify and contractually regulate the relevant issues.

The other parts of this series:

Part 1: Overview of Distribution Models
Part 2: Apps and their legal challenges
Part 3: Rights and obligations to be considered (do’s and don’ts)

Michaela Witzel, LL.M. (Fordham University School of Law), Certified Expert for IT Law