Application of UK database rights to forking and blockchain technology

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This article was first published on Dr. Craig Wright’s blog, and we republished with permission from the author.

May 21, 2023

Note: the author disagrees with the terminology of cryptocurrency, but has utilized the same terminology based on the definitions used by the authors of each paper.

Annotated Bibliography

This analysis explores the application of U.K. database rights in the context of ‘forking’ and blockchain technologies. It examines the legal framework surrounding database rights under U.K. law, analyzes the challenges posed by forking in the context of database rights, and discusses the implications of blockchain technology on the protection of databases. The study concludes by highlighting potential legal considerations and providing recommendations for policymakers and stakeholders in navigating the complex intersection of U.K. database rights, forking, and blockchain technology.

Stokes (2019) comprehensively examines copyright law in the digital age relevant to database rights and open-source development. Stokes explores the legal framework surrounding database rights, and analyzes their interaction with open-source practices. The book delves into the complexities of protecting databases, the rights of database creators, and the limitations and exceptions to database rights. Stokes also discusses the challenges and opportunities presented by open-source development concerning copyright law, including licensing open-source databases and balancing intellectual property protection and collaboration. With its focus on digital copyright, the book provides valuable insights into the legal landscape concerning database rights and their implications for open-source development.

Trump et al. (2018) present a paper that sheds light on the complexities and challenges of governing cryptocurrencies, considering the decentralized and ungovernable nature of such systems. In addition, it provides insights into the various governance mechanisms employed within the cryptocurrency space and emphasizes the importance of effective governance for the long-term viability and acceptance of cryptocurrencies. Yet, as new systems are created, and database rights are already regulated, the argument for or against the ability to regulate hard forks and hence the open-source nature of blockchain systems can be argued to exist within the current legal framework.

Broos and Jans (2020) comprehensively examine the legal implications surrounding blockchain technology. The paper explores various applications of blockchain technology, and analyzes the legal challenges and considerations associated with each use case. The authors delve into topics such as smart contracts, digital currencies, supply-chain management, and data protection within the context of blockchain technology. They discuss the legal implications of such applications, including regulatory compliance, privacy concerns, intellectual property rights, and contractual issues. The paper aims to provide a legal framework and guidance for practitioners, policymakers, and researchers navigating the legal landscape of blockchain technology and its applications.

The papers cover the intersection of copyright, blockchain technology, and digital property. Such sources provide valuable insights into the evolving legal landscape in the digital age, and emphasize the need for appropriate regulatory frameworks to address the challenges posed by technological advancements. Brauneis and Schechter’s (2022) scholarly paper on copyright highlights the complexities of copyright law in the digital era, and advocates for a contemporary approach to regulation. Broos and Jans (2020) explore the legal implications of blockchain applications and the potential conflicts that arise from integrating blockchain technology with existing legal frameworks.

Samuelson and Hashimoto’s (2019) article raises thought-provoking questions about the digitized property and the need for appropriate legal frameworks to address the complexities of assets in the digital realm. Finally, Stokes (2019) provides a comprehensive overview of digital copyright law, addressing practical aspects such as infringement and licensing.

The case of The Newspaper Licensing Agency Ltd & Ors v. Meltwater Holding BV & Ors [2011] EWCA Civ 890 highlights the importance of adhering to database access terms and the legal implications of unauthorized copying. It also reminds us that commercial applications sold for value can still be subject to legal regulations, even in open-source blockchains. Lastly, Trump et al. (2018) discuss the governance of cryptocurrencies and the need for regulatory frameworks to ensure their stability and security.

The sources underscore the significance of navigating the complex legal landscape in the digital age. The synthesis of the works emphasizes the need for updated copyright regulations, the exploration of legal implications in blockchain technology, the establishment of appropriate frameworks for digitized property, and the governance of emerging technologies such as cryptocurrencies. Understanding the interplay between technology and the law is crucial for fostering innovation, protecting intellectual property, and ensuring the proper governance of digital assets.

The analysis and synthesis of the selected sources provide valuable insights into the complexities of copyright, blockchain technology, and digital property. In addition, the works shed light on the evolving legal landscape in the digital age and emphasize the need for appropriate regulatory frameworks to address the challenges posed by technological advancements.

Annotated Bibliography

Stokes, S. (2019). Digital Copyright: Law and Practice. Bloomsbury Publishing.

Stokes (2019, p. 86) notes that “fair dealing and moral rights provisions in the CDPA do not apply to the database right”. Stokes (2019) highlights an essential aspect regarding the interplay of fair dealing and moral rights provisions with the database right under the U.K.’s Copyright, Designs, and Patents Act (CDPA). Expressly, it is noted that these provisions do not extend to the database right, signifying a distinction between the treatment of database rights and copyright. However, despite this limitation, the CDPA provides certain exceptions to the exclusive rights granted by the database right. These exceptions balance the rights of the database creators with the needs and interests of users.

One exception is the allowance for extracting and re-utilizing insubstantial parts of a database for private purposes. This exception permits individuals to extract and use small portions of a database for personal use without infringing on the database creator’s rights.

Another exception pertains to the extraction and re-utilization of insubstantial parts of a database for the purposes of criticism or review. This exception permits individuals to analyze and discuss the content of a database within the framework of fair dealing, facilitating scholarly or critical assessment of the database.

Additionally, the CDPA allows for the extraction and re-utilization of insubstantial parts of a database to report current events. This exception recognizes the importance of using database content in news reporting or journalism, enabling the dissemination of timely information to the public. Next, the CDPA provides an exception for extracting and re-utilizing insubstantial parts of a database for educational purposes. This exception recognizes the value of using database content in academic settings, such as teaching, research, or private study. Notably, these exceptions are specific to the database right itself and should be distinguished from copyright law. The underlying works or materials in the database may be subject to different copyright protections, which may have their exceptions and limitations.

In summary, while the fair dealing and moral rights provisions may not directly apply to the database right, the CDPA does provide limited exceptions that allow for the use of insubstantial parts of a database for private purposes, criticism or review, reporting current events, and educational use. These exceptions strike a balance between the rights of the database creator and the interests of users, ensuring a reasonable level of access and utilization of database content within specific contexts.

In a blockchain context, where the blockchain is recognized as a database, and the creator holds rights over it, the issue of an unauthorized copy being used to fork the database raises complex legal considerations.

When a blockchain is forked, a new branch or version of the blockchain is created, typically forming two separate and distinct chains. The fork can be either hard or soft, with different implications for the database rights of the original creator. In the case of a hard fork, where there is a substantial divergence, and the new chain operates independently, the question arises regarding the rights of the original creator over the forked database arises. Since the blockchain is recognized as a database, the creator may hold exclusive rights over the initial database, including rights of extraction, re-utilization, and control over derivative works. Consequently, the unauthorized copying and forking of the database could potentially infringe upon the creator’s rights.

It is crucial to consider factors such as the applicable intellectual property laws, contractual agreements, open-source licensing, and the decentralized nature of the blockchain ecosystem.

Additionally, open-source development within the blockchain community introduces further nuances. If the original database was developed under an open-source license, the terms and conditions of that license could impact the rights and permissions granted to users and developers. Open source licenses often involve sharing, modification, and distribution rights that could influence the legality of forking and the use of the forked database.GNU licensing would provide far more access to copying the database than a more restricted license such as MIT.

Trump, B. D., Wells, E., Trump, J., & Linkov, I. (2018). Cryptocurrency: Governance for what was meant to be ungovernable. Environment Systems and Decisions, 38(3), 426–430. https://doi.org/10.1007/s10669-018-9703-8

Trump et al. (2018) examine the concept of governance in cryptocurrencies. The paper discusses the challenges and implications of governing a decentralized and inherently ungovernable system like cryptocurrencies. The authors highlight the unique characteristics of cryptocurrencies, such as their decentralized nature, anonymity, and resistance to censorship. They argue that these attributes make applying traditional governance models and regulatory frameworks to the cryptocurrency ecosystem difficult.

The paper delves into the governance mechanisms employed within the cryptocurrency space, including self-regulation, consensus protocols, and community-driven initiatives. It explores the role of key stakeholders, such as developers, miners, users, and regulators, in shaping the governance of cryptocurrencies.

Furthermore, the authors discuss the potential risks and drawbacks associated with inadequate governance in the cryptocurrency realm, such as fraud, security breaches, and market manipulation. They emphasize the need for effective governance structures to mitigate these risks and ensure the stability and integrity of the cryptocurrency ecosystem. The governance methodology noted that “[t]echnologically, such governance problems are largely presented through ‘forks’” (Trump et al., 2018, p. 427). Moreover, “hard forks generate a new blockchain that is incompatible with its original comparator—fostering two technologically incompatible cryptocurrencies” (Trump et al., 2018, p. 427).

In the context of the U.K. database licensing, it can be noted that many of the risks and drawbacks associated with inadequate governance in the cryptocurrency realm, including fraud, security breaches, and market manipulation, would be controlled if intellectual property rights were enforced. Effective governance structures are needed to mitigate these risks and ensure the stability and integrity of the cryptocurrency ecosystem. They specifically identify the technological challenges “forks” present as a governance problem. Forks, particularly hard ones, create a new, incompatible blockchain and the emergence of two distinct cryptocurrencies. Such disruptions in the blockchain can lead to further governance complexities and potential problems. It is crucial to address these issues to maintain trust and integrity in the cryptocurrency ecosystem, considering the potential impact on market participants and the broader financial landscape.

Additionally, it is worth noting that inadequate governance in the cryptocurrency realm can also have implications for database licensing. For example, emerging new cryptocurrencies through hard forks or other governance mechanisms may involve copying or forking existing blockchain databases. This raises questions about the legal implications and licensing considerations associated with using and distributing database content. Clear and well-defined licensing frameworks can help address these concerns and ensure compliance with intellectual property rights, promoting responsible and sustainable growth within the cryptocurrency ecosystem.

Broos, L. C., & Jans, N. (2020). Legal analysis of blockchain applications. In Blockchain Technology and Applications II (pp. 123–161). Nova Science. https://www.kienhuishoving.nl/Static/Binaries/KHPU_PUBLICATION/
blockchain%20Technology%20and%20Applictions%20II%20-%20Lesley%20Broos%20en%20Nelleke%20Jans%202020.pdf

Broos and Jans (2020, p. 129) have contended that “nodes could instead have concluded a pre-contract obliging them to accept updates and thereby to prevent forking”. Yet, this overlooks the ownership rights of the original creator of a digital cash system leading to a presumption that the community gains rights to use. In addition, using blockchain technology in various applications raises legal considerations. Moreover, the argument overlooks the creation of the contract through the deployment of the White Paper.

In healthcare, a pilot project called Mijn Zorg Log demonstrated the use of blockchain for maternity care administration, improving transparency and efficiency. Data protection and privacy compliance were addressed through permissioned blockchain and user-configurable permissions. Cryptocurrencies, like Bitcoin and Ethereum, are argued to be operating on permissionless blockchains. This is said to have implications for financial regulation. Initial coin offerings (ICOs) and token issuances are monitored by financial authorities, who emphasize compliance with existing regulations, such as AML and KYC requirements.

Determining applicable law and jurisdiction in blockchain disputes can be complex, but parties can agree on the law and court through smart contracts. However, the authors still maintain that international treaties or national and private international law apply without an agreement. Overall, legal analysis of blockchain applications involves contract law, data protection, financial regulation, and jurisdiction considerations, with challenges in reconciling blockchain’s characteristics with existing legal frameworks.

The Newspaper Licensing Agency Ltd & Ors v. Meltwater Holding BV & Ors [2011] EWCA Civ 890.

In the case of The Newspaper Licensing Agency Ltd & Ors v Meltwater Holding BV & Ors, the Court of Appeal in England and Wales addressed the issue of copyright infringement. The publishers, members of the Newspaper Licensing Agency (NLA), brought an action against Meltwater. This company provided a service for scraping and distributing news content from the publishers’ websites. The court concluded that certain headlines in the Daily Mail were original literary works and thus protected by copyright. The defense of fair dealing was not applicable as the copying was done for commercial purposes and encouraged infringement by end-users. The argument of double licensing was dismissed as it was unrelated to the copyright issue being addressed in the proceedings.

This case primarily focuses on copyright infringement issues related to the copying and distributing news content from publishers’ websites. First, though, we can discuss some potential implications from an open-source and database rights perspective. Open-source development emphasizes the sharing and collaborative development of software or content. In this case, open source principles could encourage a different approach to news content distribution. Instead of scraping and copying content without permission, open-source practices could promote using openly licensed or freely available news sources, enabling legal and authorized access to the information.

Regarding database rights, the case raises questions about protecting databases and extracting their contents. The defendants, Meltwater, scraped and indexed the publishers’ website content to create their news service. While the case primarily focused on copyright infringement, scraping and indexing could potentially involve extracting substantial parts of a database, which may trigger database rights protection under applicable laws. However, this specific aspect of the case was not thoroughly addressed.

We can draw some parallels and considerations regarding database copying and open-source blockchain applications. Meltwater scraped and indexed the publishers’ website content without explicit permission, copying and incorporating it into their Meltwater News service. This unauthorized copying and distribution of news articles raise concerns about the unauthorized copying of a database. While the case mainly dealt with copyright issues, scraping and copying content from the publishers’ websites could potentially involve copying a substantial part of a database.

When it comes to open-source blockchain applications, the situation may differ. Open source projects often have licenses, such as the General Public License (GPL), that specify the terms and conditions for using and distributing the software. Users and developers of open-source blockchain applications must comply with the applicable license terms. Therefore, copying the database or codebase of an open-source blockchain application in breach of its licensing terms would generally be considered a violation of those terms. Note, GPL, gin you, and MIT licensing terms significantly differ.

It is worth noting that open-source blockchain applications can indeed be commercial applications sold for value. While the underlying software may be open source and freely available, commercial entities can provide value-added services, customization, and support around open-source blockchain technology. The commercial aspect is often related to the services and support provided rather than the ownership or control over the open-source software.

In summary, while the specific case does not directly address the copying of a database in breach of its terms or open-source blockchain applications, we can draw implications related to unauthorized copying and the importance of compliance with licensing terms in both scenarios. The case highlights the importance of considering intellectual property rights, including copyright and potentially database rights, in open-source development and digital content distribution. Furthermore, it emphasizes the need for organizations to ensure compliance with relevant legal frameworks while fostering innovation and collaboration in the digital age.

References

Brauneis, R., & Schechter, R. (2022). Copyright: A Contemporary Approach (SSRN Scholarly Paper No. 4175694). https://doi.org/10.2139/ssrn.4175694

Broos, L. C., & Jans, N. (2020). Legal analysis of blockchain applications. In Blockchain Technology and Applications II (pp. 123–161). Nova Science. https://www.kienhuishoving.nl/Static/Binaries/KHPU_PUBLICATION/
blockchain%20Technology%20and%20Applictions%20II%20-%20Lesley%20Broos%20en%20Nelleke%20Jans%202020.pdf

Samuelson, P., & Hashimoto, K. (2019). The Enigma of Digitized Property: A Tribute to John Perry Barlow The Past and Future of the Internet: A Symposium for John Perry Barlow. Duke Law & Technology Review, 18, 103–126.

Stokes, S. (2019). Digital Copyright: Law and Practice. Bloomsbury Publishing.

The Newspaper Licensing Agency Ltd & Ors v. Meltwater Holding BV & Ors [2011] EWCA Civ 890.

Trump, B. D., Wells, E., Trump, J., & Linkov, I. (2018). Cryptocurrency: Governance for what was meant to be ungovernable. Environment Systems and Decisions, 38(3), 426–430. https://doi.org/10.1007/s10669-018-9703-8

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