Does Europe need an industry data protection right?

19 Jun , 2016  | by:

On June 15, the Representation of the state North-Rhine Westphalia to the EU hosted a panel of renowned experts and high-level representatives from the European Commission and the industry, all gathered in Brussels to answer a daunting question: does the EU data economy need an industry data protection right?

It is a no-brainer that there is great potential in the data that is currently generated in the industry – just think about the Internet of things, platform economy and datafication of society more generally. The European Commission (EC), in particular its DG Connect, has been determined to capture the big data potential and use it to strengthen the EU digital market.

In May 2015, the EC set the stage with the communication Toward a thriving data-driven economy, in which it indicated a number of policy directions aimed at the creation of the digital single market. Free flow of data, data ownership and data access are some of the high-level topics mentioned in the communication, which all show a tendency towards more clearly defined proprietary entitlements in the big data sets.

Consider this example: a farmer owns a field that is being monitored via a satellite system. The satellite collects data and sends it to the storage system of the satellite system user. Who should own the longitudinal data about the growth of the crops – the satellite user system user or the farmer?

The example can get even more complicated. Take a networked car where we can identify a number of parties interested in the data ownership. The owner of the car and the car user could exploit data for personal reasons, the navigation system provider for improving the software, the insurance company for assessing the risk, the internet service providers for advertising and the government for surveillance. Can the car owner prohibit the car manufacturer from collecting the data? Who should be entitled to exclude others from using the data?

“No need to discuss” was the answer that came from the majority of the panelists. Existing EU law offers adequate tools to determine the ownership and to allocate the rights in the most efficient way.

In addition to copyright protection that safeguards creative databases, the EU law also recognizes a sui generis database right, which rewards substantial investment in databases. Trade secrets law, especially the new EU directive, could be useful to grant protection to valuable confidential information. Competition law is an ex post solution, but could be brought into discussion through the doctrine of essential facilities, which protects competitors from being blocked to access the data they need to equally compete on the market. Finally, contractual law was highlighted as the main tactics deployed by the companies. As there is scarcely any harmonization of contract law on the EU level, the multinational companies regulate their relationships through their own standards and terms. The situation is slightly different for SMEs, where the provisions on unfair contract terms could play a visible role in the future.

Professor Wiebe from the University of Goettingen listed a number of insightful arguments pro and contra the industrial data protection right. Among the pros he highlighted business incentives, an increased level of disclosure and last but not least an enhanced order on the market due to clear allocation of the ownership. As for the cons he mentioned two streams of problems: first, the industry data protection right would mean a paradigm shift in the information protection law, which would be difficult to delineate from other legal regimes, e.g. copyright and trademarks. Second, it is unclear who should decide to whom to allocate the data; if we return to the initial example of a networked car – would this be a producer, a car owner or a driver? The allocation of data has to be determined upfront, but the open question remains what criteria could be applied to determine the ownership: significant investment, efficiency, or some third factor?

At the end of the program, one of the speakers humbly noted that the conference has opened many questions whereas it only provided few answers. Nevertheless, the key takeaway was clear: lack of research and interdisciplinary discussion urge the European Commission to carefully reconsider the upcoming proposals and warn against rushing into an overregulated economy.

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