Lien claimed over database fails - Court rules regarding intangible assets
In a recent case the Court of Appeal held that it was not possible for a service provider to exercise a common law lien over a database. The ruling will be welcome to many businesses that employ third parties to host and/or manage their databases. A cautionary note should be struck, however, to point out that the case relates to the exercise of a common law lien and not a contractual entitlement to withhold access to a database pending settlement of outstanding fees or a dispute.
In Your Response Ltd v Datateam Business Media Ltd  EWCA Civ 281, 14 March 2014 the Claimant service provider held and maintained the Defendant’s database of subscribers for it. The contract (partly written, partly oral) was silent about termination and what would happen to the database. Datateam gave 1 month’s notice to terminate the contract. Your Response claimed a common law lien over the database and commenced proceedings for payment of its outstanding fees and damages for repudiation of the contract.
The trial Judge held that Your Response was entitled to withhold the data until its outstanding fees were paid. The Court of Appeal overturned this decision holding that the essential nature of a common law lien was the right to retain possession of goods delivered for the purpose of doing work on them. There were no cases in which the right to exercise a lien over intangible property had been recognised. It was clear from the Copyright, Designs and Patents Act 1988 and the Copyright and Rights in Databases Regulations 1997 (SI 1997/3032) that databases did not represent tangible property of a kind that was capable of forming the subject matter of the torts that were concerned with an interference with possession. As such, it was not appropriate to extend the law of liens to cover databases.
Posted on 04/27/2014 by Ortolan