Woof! The Kennel Club v Micro-ID Ltd
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| Border Terrier
Author Biffo4tanks, Licence CC BY-SA 3,0 Source Wikipedia Border Terriers
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Jane Lambert
Intellectual Property Enterprise Court (Mr Recorder Campbell) The Kennel Club Ltd v Micro-ID Ltd [2019] EWHC 1639 (IPEC) (25 June 2019)
The Kennel Club is the UK authority for dog breeding, dog shows and other matters relating to dogs. One of its services is Petlog which indexes data held on chips that are implanted into dogs and other pets. Petlog helps police and other agencies restore lost or stray pets to their keepers. The defendant company, Micro-ID Ltd, is one of a number of businesses that implant chips into animals. The Kennel Club charges implanters such as Micro-ID a fee for entering chip data into Petlog pursuant to a contract known as the Reunification Database Management Agreement.
The Kennel Club sued Micro-ID for £123,843.03 for moneys due under that agreement or, alternatively, by way of damages for breach of contract. Micro-ID did not dispute that those moneys were due but contended that the claim was subject to a set-off for breach of contract and/or infringement of database right, The action came on for trial before Mr Recorder Campbell on 13 and 14 May 2019. The learned recorder delivered judgment on 25 June 2019. He found that the Kennel Club had breached two of the provisions of the agreement for which he awarded damages of £1 and £400 respectively. He found no infringement of database right. The claim therefore substantially succeeded.
The contract required the Kennel Club to:
- "maintain the Database throughout the period of this Agreement and thereafter in accordance with the provisions of clause 8.4.2" pursuant to clause 2.1.1., and "
- ensure that all registration forms are entered in date order of receipt within five working days of receipt, subject at all times to events beyond the reasonable control of the [Claimant], and that [the Defendant's] forms are treated with equal priority to those from Other Suppliers" in accordance with clause 2.1.3."
"6. OWNERSHIP OF THE DATABASE AND DATA
6.1 The Data on the Database in respect of animals' [sic] microchipped with a Microchip manufactured/supplied by the [Defendant] shall be jointly owned by the [Claimant] and the [Defendant]. The [Claimant] will not market this data without prior agreement from the [Defendant].
6.2 Upon the request of the [Defendant], and with reasonable notice, the [Claimant] will make available to the [Defendant], and at no additional cost (subject at all times to such costs being in the reasonable opinion of the [Claimant] insignificant), such information forming all or part of the Data relating to the [Defendant's] Microchips. The [Claimant] agrees only to use the Data for the purpose of reunification of animals."
Micro-ID complained that the Kennel Club had breached all three provisions.
Mr Recorder Campbell found that the "Defendant's evidence in support of its case on failure to maintain pursuant to clause 2.1.1 never got further than a limited selection of complaints which someone had found on the internet." By contrast, "the Claimant adduced a wealth of detailed evidence." This dealt with work on maintenance generally as well as preparation for compulsory microchipping of dogs. The recorder, therefore, found no breach of clause 2.1.1.
As to clause 2.1.3, Mr Recorder Campbell found that some registration forms had not been processed within 5 days. That breached clause 2.1.3. However, as Micro-ID provided no evidence of loss arising directly from that breach, the recorder awarded Micro-ID damages of £1.
With regard to clause 6, the recorder found that the Kennel Club had used data in respect of animals that had been implanted with chips by Micro-ID for marketing purposes. That was clearly not for the purpose of reunification of animals and it was done without that company's prior agreement. The recorder held that both 6 (1) and (2) had been breached. Referring to Judge Hacon's decision in Henderson v All Around the World Recordings [2015] IP&T 33, [2014] EWHC 3087 (IPEC) he assessed damages in accordance with the following principles which he set out at paragraph [87] of his judgment:
"1) I have to consider what sum would have been arrived at in hypothetical negotiations between the parties bearing in mind such matters as the commercial context: see Henderson at [18(ii)].
2) Where there has been nothing like an actual negotiation between the parties, it is reasonable for the court to look at the eventual outcome and to consider whether or not that is a useful guide to what the parties would have thought at the time of their hypothetical bargain: see [18(v)].
3) The negotiation is between the actual parties with their respective strengths and weaknesses, at least up to a point, and in the circumstances at the time of the hypothetical negotiation: see [19(vi)-(vii)].
4) Non-infringing alternatives can be taken into account, even if not as advantageous: see [19(ix)-(x)]."
At paragraph [95], the learned recorder took the following into account:
"a) Given the commercial context (as per [87(1)) I agree that the figure offered would be low for the reasons given by the Claimant generally. However I do not accept that the Defendant would have agreed to a figure as low as Ms Fox suggested. At a rate of £40 per 1000 names for 4 mail shots, the Claimant's approach would produce a figure of less than £80 (2325 names were used, but only in 1 mail shot rather than in 4).
b) Secondly I consider that the parties would have agreed on a combination of an upfront fee and a commission, rather than simply a commission. The Defendant would have had no incentive to agree to a commission only basis since it might end up with nothing if the campaign failed.
c) Having regard to the parties' respective positions, as per [87(3)], I conclude that the parties would have settled on an upfront fee of £400 and some sort of commission on successful sales. The fee of £400 is sufficiently low that the Claimant (which is, after all a substantial organisation) could afford to pay it to see if the test worked and it still gave the Defendant something if the campaign failed. It also reflects the higher value of the Petlog data used in this campaign as opposed to that which could be purchased, and the fact that if the campaign were successful it could open up a new and potentially profitable line of business for the Claimant.
d) Since there were no successful sales, I do not need to decide what level of commission would have been agreed on them. Hence the total buyout fee is £400."
The claim for copyright infringement could succeed only if Micro-ID owned the database right in the Petlog database. As the Kennel Club had been the person that took the initiative in obtaining, verifying or presenting the contents of the database and assumed the risk of investing in that obtaining, verification or presentation, it followed that it was the maker of the database in accordance with reg 14 (1) of the Copyright and Rights in Databases Regulations 1997. As such, it was the first owner of the database right pursuant to reg 15. In any case, there was no evidence that the data extracted and reutilized amounted to a substantial part of the database within the meaning of reg 16.
Anyone wishing to discuss this article or database right generally should call me on 020 7404 5252 during normal office hours or send me a message through my contact page.
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