The Kennel Club Ltd v Micro-ID Ltd

A contractual obligation to maintain a database does not impose service levels which the contract does not specify. Where a contract requires each registration form to be entered within a stated period, compliance cannot be established by relying only on averages. A restriction permitting use of data for animal reunification is broad but does not authorise every business use of the data. Database-right infringement additionally requires proof of extraction or reutilisation of a substantial part. A contractual buyout fee is assessed by a hypothetical negotiation between the actual parties, taking account of commercial context, bargaining positions and non-infringing alternatives.

The claimant operated the Petlog microchip reunification database and claimed £123,843.03 from the defendant under the parties’ Reunification Database Management Agreement. The defendant admitted the debt but relied on set-off for alleged breaches of contractual obligations, database-right infringement and consequential losses.

The court considered the construction and performance of the database-maintenance and data-use clauses, ownership and infringement of database right, quantum, and whether statutory or contractual interest applied.

1. Contract construction. Applying the contextual approach identified in Lukoil Asia Pacific PTE Limited v Ocean Tankers (PTE) Limited [2018] EWHC 163 (Comm), “maintain” required Petlog to remain in operation, but imposed no unstated requirements concerning opening hours, staffing, service levels or a website. Clause 2.1.3 required each registration form to be entered within five working days; an average was insufficient. Periods of high volume could constitute events beyond the claimant’s reasonable control.
2. Breach. The defendant failed to establish breach of clause 2.1.1. The claimant did breach clause 2.1.3 on some occasions because monthly averages exceeding five working days showed that some forms must have taken longer. No specific loss was proved, so nominal damages of £1 were awarded.
3. Clause 6. The restriction to use of data for animal reunification was broad, but did not cover every activity capable of influencing reunification. Campaigns promoting Petlog Premium and dog tags were within the permitted purpose. Emails promoting third-party insurance were not, and breached clause 6.2, and potentially clause 6.1.
4. Database right. Under regulations 14–16 of the Copyright and Rights in Databases Regulations 1997, the claimant was initially the maker and first owner of the relevant database right. Clause 6.1 nevertheless made the claimant and defendant joint owners of the part deriving from the defendant’s data. The contractual permission covered the Iams and dog-tag uses. Although the Agria emails were unauthorised, substantial extraction or reutilisation was not proved, so the database-right claim failed.
5. Quantum and interest. Applying the hypothetical-negotiation principles in Henderson v All Around the World Recordings [2014] EWHC 3087 (IPEC), with the qualification noted in One Step (Support) v Morris Garner [2018] UKSC 20, the buyout fee for the Agria use was £400. The defendant’s other claimed losses were unproved or irrelevant. Following the approach in Yuanda (UK) Co Ltd v WW Gear Construction Ltd [2010] EWHC 720 (TCC), the contractual interest clause supplied a substantial remedy and displaced statutory interest.

The claim therefore succeeded for £123,843.03, subject to set-off of £1 nominal damages and £400. The claim for database-right infringement and statutory interest failed. The precise resulting figure was to be determined.