IP, Data and AI in the digital age – Part 3

Last week we discussed the function of property — both physical and intellectual — and concluded that it serves two main purposes.

Firstly, to protect the investment made in the work. Since the point of any investment is to earn a return on what you invested, property means securing for the owner the revenue streams that can be derived from exploiting the object.

Secondly, to allow the property to be more easily (and cheaply) traded on the market.

For these purposes, “investment” means not only investment in the normal sense, but also the money spent buying the object and the talent used in creating it.

Looking at the function of property is important because there are two fundamentally different approaches to propertisation: one for physical property, another for copyright/database rights.

For physical things, there is no test for propertisation. If it exists, it is property from day 1 (with a few exceptions, such as property in other human beings).

For copyright and database rights, there is a test that each must pass before it can become a form of property. For most forms of copyright the test is originality (which, in the EU, means that the work reflects the personality of its author, as an expression of his free and creative choices).

For the EU/UK database right, the test is substantial investment, whether that’s quantitative or qualitative.

But do these tests make any sense?

Let’s take a look at the database right. Under the Database Directive, a database must meet the requirement of a substantial investment if it is to qualify for the database right. A substantial investment is not defined, but let’s assume it’s €100,000.

Now, try out this thought experiment. Imagine two companies, Company A and Company B.

By chance, both companies develop exactly the same dataset, Dataset X. Company A spent €100,000 to develop Dataset X: it has met the substantial investment test and so its version of Dataset X is now a form of property.

Company B spent €50,000 to develop its version of Dataset X. However, the €50,000 it spent does not meet the substantial investment test, and so the Dataset X it created does not become property.

Which is the more efficient producer, Company A or Company B? Answer: Company B, because it used €50,000 to create what cost Company A €100,000. But Company A’s product was propertised whereas Company B’s product was not. The test means that the more efficient you are, the less likely it is that your dataset will be protected by the database right.

Does this test make sense?

Obviously not.

7th July 2026