More Thoughts on Information as Property

There have been discussions on whether information can be ‘property’ for legal purposes (such as here and here), and the limits on that equivalence and the reasons for them. The English (and Welsh) Court of Appeal has recently addressed itself to that question again, in Your Response v Datateam Business Media [2014] EWCA Civ 281.

In that case, Your Response was working on a database of Datateam’s customers. In a dispute about payment, Your Response claimed a lien over the database and refused to return it to Datateam in the absence of payment.

The Court of Appeal held that there was not sufficient property interest in a database to support a lien. It rejected the argument of Your Response that the age of information technology had created something new to law in between physical personal property (clearly lienable) and intangible personal property like a chose in action (clearly not lienable). The new ‘thing’ was – said Your Response – sufficiently tangible to be subject to a lien.(para 27)

The Court did a learned analysis of the history of liens as they related to contract law. However, the main reason – it seems – for holding against Your Response was that finding that there was a lienable interest in a database would have broad consequences for other areas of the law, and the Court should not take such a step. Too many interests could be affected that were not represented in court.

A couple of these interests occur to me out of current concerns. The Court spoke of the difference between ‘possession’ and ‘control’ (para 23), saying that the former justified a lien but the latter did not. The working group of UNCITRAL on electronic transferable records is wrestling later this month with just that issue: how to express the concept of control in a way that makes comprehensible for electronic records notions that are governed by possession for paper records.

The work of the American Uniform Law Commission on fiduciary access to digital assets depends on a solid understanding of what digital assets are. Probably a database would be included as a digital asset to which the fiduciaries to which the draft Uniform Act applies would have access – but what is the importance of whether it is ‘property’?

A couple of notable quotes from the judgment:

Davis LJ (para 39): The law of unintended consequences is no part of the law of England and Wales. But it is worth paying attention to it, in an appropriate case, all the same.

Floyd LJ (para 42): When information is created and recorded there are sharp distinctions between the information itself, the physical medium on which the information is recorded and the rights to which the information gives rise. Whilst the physical medium and the rights are treated as property, the information itself has never been.

Do you agree with this decision, and its reasoning? How could a company in Your Response’s position (managing a database for a client) protect its interests? Presumably it could not take a security interest in the database either.

If ‘control’ is the electronic equivalent of ‘possession’, how does one define it, or recognize it, or enforce it, for legal purposes?