The EU-Directive on the Legal Protection of Databases and the Incentives to Update: An Economic Analysis

The database directive, initiated by the European Commission in 1992 and due to be finalised in the near future, establishes a two-tiered system of protection, amending copyright with a sui generis rule that grants protection against unfair extraction. The terms of protection are extended if the producter makes "substantial changes" to update the database. This paper analyses the incentive to update created by the database directive. In contrast to the usual findings of the literature on the incentive effects of intellectual property rights, we find that, although in most cases the incentives to update a database are insufficient from society's point of view, the possibility of extending the term of protection by making 'substantial changes' in the database may create an incentive for excessive updating. This leads to conclusions about what should be considered a substantial change