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Digital Business Lawyer

Commission’s proposed licensing regime for non-personal machine generated data could stunt innovation

The European Commission launched a public consultation on 10 January 2017 on unleashing Europe’s data economy, as part of its Digital Single Market strategy, which aims to amongst other things collect information on the extent to which digital non-personal machine generated data are traded and exchanged; any barriers to accessing such data; emerging Internet of Things (‘IoT’) and robotics liability challenges; and practices and issues relating to data portability, interoperability and standards.

Alongside the consultation, the Commission adopted a ‘Building the European Data Economy’ package consisting of a Communication and Staff Working Document, which provide an overview of the issues at stake. The proposals set out by the Commission include the creation of a ‘property-like’ right over non-personal machine generated data and an obligation to license machine generated data based on fair, reasonable and non-discriminatory (‘FRAND’) terms.

“Although such a licensing regime based on universal principles such as FRAND terms is already established in other licensing contexts such as standard essential patents (‘SEPs’), it seems rather broad and might create issues in practice,” comments Ulrich Baumgartner, Partner at Osborne Clarke. “An ‘across-the-board access obligation’ will be a significant concern for many companies as their raw data will not benefit from IP rights nor qualify for other protection.” Baumgartner believes that the Commission is seeking to broaden the scope of the data protection law requirements to additional categories of non-personal data and service providers, which might hinder the development of IoT applications, which thus far have not been subject to consent or other requirements.

The Commission recognises that there is a big risk that imposing licensing terms on machine generated data may de-incentivise companies from being innovative. For instance, companies may seek to avoid being caught by the licensing regime despite the potential remuneration. “Any licensing regime would bring an additional burden to companies to enforce licensing terms and maintain an appropriate system through which to share data,” adds Dr Andreas Splittgerber, Partner at Olswang Germany LLP. “It is also very possible that a company may have to spend time and money defending claims from other companies trying to access data where it is disputed as to whether such data falls under the licensing regime, as is often the case with SEPs.”

Benoit Van Asbroeck, Partner at Bird & Bird, who leads a team involved in examining the legal aspects of big data as part of a research and innovation project funded by the Commission - the Toreador Project - has been examining issues relating to data access and ownership over the past six months. The results of the research were submitted to the Commission on 31 December 2016 and Benoit was happy to share excerpts from the executive summary to be published shortly in a report by Bird & Bird.

‘On the basis of [our] findings, it is established that the existing legal framework in the EU is not optimal and does not sufficiently facilitate operations on or including data. In the same vein, it is concluded that the cumulative implementation of the current maze of different possibly applicable legislations is a significant hurdle to the uptake of data analytics in the EU and is creating legal uncertainty in this fast-growing market. It results from this situation that those involved in the data value cycle may currently hold back on data sharing initiatives and presently have no choice but to rely on contractual arrangements to manage their rights in data.

While relying on contracts may seem to provide greater flexibility to the contracting parties, it was found that it nevertheless comes with various difficulties. In particular, the lack of harmonisation of contract law in the EU, but also the limits of contractual arrangements towards third parties and the issues related to the validity of data-related agreements, create a high legal uncertainty that affects the entire data value chain and the whole data flow. It is therefore concluded that such situation is not sustainable in a data-driven economy and with the fast-increasing development and adoption of data mining and analysis tools.

Against a background where the EU strives towards a data-driven environment in which both citizens and companies can reap the benefits of novel data technologies, but also against a background where the current legal framework does not sufficiently tackle all the issues related to data and where actors involved in the data value chain have no certainty as to the ownership of the data they have gathered, created, analysed, enriched or otherwise processed; we conclude that a more solid and legally secure solution is needed.

In such context, [we suggest] the creation of a non-exclusive, flexible and extensible ownership right in data(sets), with a data traceability obligation as a safeguard. […].’

The consultation is open for responses until 26 April 2017.

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