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Do Service Providers Have a Lien Over Data?

07 August 2014

Mason Hayes & Curran Technology Law Blog

In the case of Your Response Ltd v Datateam Business Media Ltd [2014] EWCA Civ 281 the English Court of Appeal tackled the rather technical legal question of whether a common law lien could be exercised over an electronic database.

In general terms, a lien permits someone to hold the property of another as security until an outstanding debt has been cleared. For instance, this might occur where someone drops a suit to a dry cleaner but has yet to pay the charge for cleaning. The courts have traditionally taken the view that a lien can only arise over tangible property (i.e. goods), but not over intangible property (i.e. data or intellectual property rights). In this case, the Court had to decide which of those categories best suited the contents of an electronic database.

Background

Data ProtectionDatateam Media Business Limited (“Datateam”) publishes a number of magazines which are distributed to subscribers. It engaged Your Response Limited (“Your Response”) for the purpose of managing its electronic databases to ensure that the information they contained was up to date.

The contract between the parties was made partly orally and partly in writing. A formal agreement was never executed. Of particular relevance was the fact that the contract was silent on what would happen to the data at the end of the contract. The parties had never reached an agreement as to the circumstances in which the contract could be terminated, or Datateam’s right of access to the database.

Over time, Datateam became dissatisfied with the service provided by Your Response and terminated the contract.  It did so, however, without paying the fees that Your Response believed were due. As a result, Your Response refused to release the data, or to allow Datateam access the database until the fees were paid in full. Datateam refused to pay until the database was made available to it. And so, deadlock ensued.

Your Response sued Datateam, claiming the fees alleged to be due and damages for abandoning the contract.

The Right to Withhold Data