Crossfire

Matheson’s technology and IP law blog

UK Court of Appeal finds that information may not be subject to a common law lien

March, 2014

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Your Response Limited v Datateam Business Media Limited [2014] EWCA Civ 218

As an update to our previous post on this issue, on 14 March the UK Court of appeal decided that liens cannot be held over electronic data contained in a database. In this case, a data hosting service provider tried to exercise a lien over a database that it hosted for a customer when the customer failed to pay its fees under contract. While common law liens do not need the intervention of the courts in order to be exercised, the question that arose before the court was whether the database could be regarded something that could be the subject of a lien.

The court pointed out that the common law lien is a right to retain possession of goods delivered to, in this case the service provider, pending payment or other performance of contract by the customer. However, it was found that the information that makes up the database is intangible property which is not susceptible to possession. Furthermore, it stated that it would not be desirable to extend the common law lien to anything less than possession, such as a measure of “control” over the information that would exist when a cloud provider holds information on behalf of another.

As we mentioned in the previous post, and as the court noted in its judgment, this sort of situation is almost always covered by contract where the parties to, for instance, a cloud contract can expressly provide for a lien over the information or database as a means of enforcing contractual rights. This decision has essentially confirmed the previous bargaining positions of parties to these contracts.