Court of Appeal confirms that information is not property

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In a recent judgement, the Court of Appeal of England and Wales held that an electronic database was not a chose in possession or a chattel but a chose in action (see our earlier blog regarding the grant of leave to appeal in this case). In other words, a database is intangible property, not goods which can be possessed. This means that when the parties to a database hosting contract are silent about what happens to the database when the contract ends, the service provider cannot exercise a common law lien over the database so as to force full payment of its fees, and must return the database to its customer.

In giving the lead judgement in the Court of Appeal, Lord Justice Moore-Bick, quoted extensively from the judgment of Lord Justice Diplock in Tappenden v Artus (Tappenden v Artus [1964] 2 Q.B. 185). Tappenden is a case with which most first year law students in the UK will be familiar. In that case, a van owner allowed a customer to use the van pending the completion of a hire-purchase agreement. The van then broke down and was repaired by the defendant garage, but the price of the repairs was not paid. The question arose whether the garage could exercise a lien over the van against the owner. In finding that it could, Diplock L.J emphasised "actual possession of goods" as necessary for the self-help remedy of possessory lien to arise under the common law.

Referring to another leading case, Moore-Bick LJ went on to state that "[a]s OBG v Allan makes clear... the common law draws a sharp distinction between tangible and intangible property...", which leads to the conclusion that "it is [not] possible to have actual possession of an intangible thing... [and that] it is [not] open to this court to recognise the existence of a possessory lien over intangible property ..."

So, in sharp distinction to the common law as it applies to tangible property (such as the van in Tappenden) a database service provider has no common law right which can be used to stop a customer from accessing its database until the service provider's fees are paid. Of course, there is nothing to stop the parties including such right in the database hosting contract.

Topics:  Electronically Stored Information, Private Property Rights, UK

Published In: Civil Remedies Updates, General Business Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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