Tuesday 28 August 2012

Darren Olivier

RSA: Discovery extraction held to infringe copyright

Recently, the Board of Healthcare Funders ("BHF") succesfully took on Discovery Health over their use of the Practice Code Numbering System (PCNS) claiming copyright infringement under the RSA Copyright Act.

The facts are, briefly, that in 2010 Discovery Health resigned it membership of the BHF which had been consitituted as a representative association of medical aid schemes. According to the BHF press release, Discovery was attempting to develop an in-house system of its own by using the PCNS without authorisation.

The PCNS is a set of numbers or codes which identify all of the medical practitioners and medical service providers in RSA together with associated data. The PCNS is a tool for facilitating payment under the medical aid schemes and assists in preventing fraud by, for example, verifying that a claimant is claiming an amount from the scheme within his or her scope of practice and discipline. More information is contained at paras 6-26 of the judgement.
In South Africa, this type of data can protected by way of copyright. In the UK, this may also fall under legislation protected database rights.

BHF claimed for an interdict/injunction against the use of the PCNS, delivery up of the infringing material, costs as well as damages in the form of a reasonable royalty. The damages claim was worded to cover both a set royalty in the form of a standard rate or a separate enquiry into damages. There was no claim for so-called additional damages, presumably because the alleged infringement was not considered that dishonest...which brings us to the defences raised by Discovery. These are that:

Just a number - symptoms of PCNS?

1. No copyright exists in the work ie not original because it is simply a compilation of numbers and data;
2. If it does exist, BHF is not the author of the work;
3. If it does exist, the State is the true owner of the work;
4. If it does exist, Discovery are entitled to use the work via a licence, either implied or continued; and/or
5. No infringement

The Court held that:

1. The work is a compilation which, in its totality is original being the subject of work, energy, skill and judgement;
2. That BHF are the authors of the work either directly through its employees or through the exercise of control and supervision over the work;
3. The State is not the owner of the copyright - "at best it was incidental to governmental licensing and monitoring power";
4. The facts requiring payment of a user fee which Discovery had paid did not sit well with a defence that there was an perpetual implied or continued licence to use, copy and reproduce the data;
5. The Court inferred from an admission by Discovery that they had extracted and imported a portion of the data into its own database, that it had used a substantial part of the information and therefore infringed copyright. Afro Leo read "use" to mean "reproduce" which would be an infringement.

As a result, the injunction, costs and delivery-up were granted by the Court. On the question of damages in the form of a reasonable royalty, the Court held that since the royalty rate had been fixed with specific reference to an agreement it appeared to be reasonable and determined by a manner that is fair, transparent and equitable and therefore no separate enquiry need be held.

Darren Olivier

Darren Olivier

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30 August 2012 at 17:44 delete

Hi Darren,

Interesting case. Although the judge appears to have reached the right conclusion in law, I wonder whether the originality threshold ought to be slightly higher especially for databases. I've discussed this issue here: http://bit.ly/QDMAXN