Notes

Introduction on Data, Information and Technology

What do we mean, when we talk about data?

• Facts: whatever happens and exists, that is, events, things ... or human behaviors.
• Fa­cts' records: Tracks, whatever results from the fact that someone or something is observing those facts.

What do we mean, when we talk about information? Information is data in context, data with meaning.

What are the technologies to which we refer while we talk about data and information? The many and varied technologies that record, collect, store, process, and elaborate data and information, not by chance, we call them information technologies.

Some of these technologies are also digital when they record data via the binary code and/or collect, store, process, or elaborate digital data, that are records encoded via the binary code.

What is the relationship among data, information and information technologies? From the antitrust perspective... Consider that antitrust scholars turn everything into a process in which they can distinguish an input, an output, and the means whereby inputs turn into outputs. Thus, when it comes to antitrust law, broadly speaking we believe that:

• Technologies to generate, collect, store, and organize data.
• Data as inputs
• Technologies to elaborate data and infer...
• Information as a first output that... can be sold or used as input for further processes.

What is the relationship among data, information, and information technologies? From the IP law perspective...Consider that the IP world is divided into:

• What is protected and what is not, certain information, technologies and data.
• What is allows and what is not, certain uses free-ride, others are necessary to generate further data, technologies and information.

Therefore:

• IP law and competition law have different categories and purposes.
• Data information and technologies may have different meaning depending on the context.

The basics of Antitrust Law

A preliminary definition. Antitrust law is a set of legal rules aimed at preventing some firms' practices that may worsen market well-functioning, as it results from consumer welfare variations. These are the 3 Pillars of Antitrust Law:

• Arrangements or Agreements (prohibition, the rules prevent companies entering anti-competitive agreements).
• Monopolization or Abuses of Dominance (prohibition, sanctions are taken not when a company is dominant in the market, but when the company try to impose unreasonable conditions to do business with them).
• Mergers (control of, the mergers between big companies are to be evaluated by a commission).

The U.S. Sherman Act of 1890 Section 1. Anticompetitive Agreements. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof , shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.

Section 2. Monopolization Conduct. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.

The Treaty of the Functioning of the EU. Article 101

• The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States, and which have as their object or effect the prevention, restriction or distortion of competition within the internal market ....
• Any agreements or decisions prohibited pursuant to this Article shall be automatically void
• The provisions of paragraph 1 may, however, be declared inapplicable in the case [... the agreement ...] contributes to:
  • Improving the production or distribution of goods or [...] promoting technical or economic progress.
  • while allowing consumers a fair share of the resulting benefit, and
  • which does not impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
  • [... and which does not ...] afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

Article 102. Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in:

• directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
• limiting production, markets or technical development to the prejudice of consumers;
• applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
• making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Mergers in the U.S. The Sherman Act covered price fixing, other anticompetitive agreements, and monopolization, not mergers and acquisitions of competitors. Thus, corporations wishing to coordinate price had the option of merging into a single firm to «eliminate» any form of competition ... forever.\ Indeed, after the enactment of the Sherman Act, a sharp increase in the number of mergers was registered. Therefore, Section 7 of the Clayton Act of 1914 extended antitrust to cover mergers reducing competition (many amendments and other acts to fill many loopholes in the legislation). It says:"No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly".

Mergers in EU, Reg. 139/2004 The Treaty did not contain any rules on mergers (concentrations) [...] and the introduction of a merger control regime was delayed until 1989 because of a series of conflicts and deep differences between the Member States about the scope, objectives and procedures for assessing when a merger should considered unlawful (Reg. n. 4064/89, now Reg. 139/2004).

Thus, nowadays, Article 2, Reg. 139/2004 states that "a concentration which would significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the common market".

Why do we care about U.S. and EU antitrust laws?

• Since antitrust law was born in the U.S., the main principles and notions of antitrust law come from the U.S. experience and, by tradition, had been affecting the antitrust experiences of many other jurisdictions around the world.
• Still nowadays, the legal decisions of the U.S. antitrust institutions are landmarks.
• Yet, in the last 20-25 years, the jurisdictions of many countries in South America, Africa and Asia have been reproducing the EU competition law approach, mainly because it is easier to copy and implement than the U.S. one.
• Since the U.S. and EU markets are rich, advanced and innovative, the U.S. and EU antitrust institutions:
  • focus on very important cases.
  • deal in advance with many competitive problems that other jurisdictions will face only afterwards.

In the U.S. 95% of the Antitrust cases are moved by class-actions. While in EU the 90% of Antitrust cases are moved by authorities. In the U.S. courts, antitrust law can determine criminal sanctions towards individuals, while this is not possible in EU.

Firms' Practices Antitrust rules about agreements, monopolistic practices, and merger and acquisitions address only firms' conduct, and not what governments may decide. In other words, both US and EU antitrust laws are concerned with privately initiated restraints of competition and not with those restraints compelled by, or effectively controlled by, the government and its branches. Therefore, firms are liable as long as they have room to decide their own behavior: firms are not liable for antitrust violations when their infringing practices strictly result from statutes, laws, regulations, or when their infringing practices are ratified by governments.

Market Structure and its legal "Sovra-Structure" You can imagine a market as a circle where undertakings are free to adopt their business strategies and different behaviors. The area of the circle can be restricted by the State through laws & regulations. They can set the playground, by limiting access conditions, exit conditions, and more in general fixing the rules of the game.

In regulated markets, the very same regulation may prevent firms from behaving competitively. In this case, firms do not have to bear the responsibility for a behaviour which is prescribed by the law. Then, it is true that antitrust people can do something against anticompetitive laws:

• Advocacy. In many countries, competition authorities can (ex-ante) act as consultants of governments and parliaments and (ex post) recommend to modify, repeal, revise laws that unduly restrict competition on the market (where unduly means that the restriction of competition is not justified by the pursuit of different goals, like for example health, national security, media pluralism).
• Infringing procedure. In Europe, the Commission can start infringing procedures against Member States that enact or maintain laws which are not in line with the principles laid down by the Treaties.
• Disapplication. National judges may avoid applying rules which conflicts with EU competition law

The main goal of Antitrust Law The main aim of competition law is to protect competition in the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. A market performs well if it awards market power to the firms that are performing the best.

Antitrust law protects the well-functioning of the market:

• When does the market work well?
• It works well if it awards market power to the best firms.
• Who are the best?

The best firms are those that:

• Increase their efficiency, so to reduce their costs and prices and increase their output (the demand of the product in the market is increased, but the prices and costs are not);
• Increase the quality and variety of their products/services;
• Are more innovative, that is the innovation they generate on the market.

Short Run Effects Antitrust institutions know that firms are worsening market well-functioning when their practices limit output and increase market price! (These are called the "short run effects"). Thus, antitrust law forbids the practices that may reduce market output and increase market price, just because these practices (are assumed to) drive the market away from a better state of the world.

Long Run Effects Antitrust institutions endorse those economic theories showing that, over the long run:

• Consumers benefit from varied and good products, that is, from increasingly larger ranges of products of better and better quality and
• Innovation increases consumer welfare much more than any policy aimed at pushing prices down to marginal costs.

Therefore, antitrust law forbids the practices that reduce product quality, consumers' choice (that is, product variety), and that reduce innovation! (These are called "long run effects").

Pay attention: In practice, many cases are decided on the basis of short run effect. Yet, sometimes (for example, when inventions are involved) long run effects are taken into consideration.

In cases of conflicts, often (not always) the effects on innovation are deemed more important than effects n market output and price. For example, the practices promoting innovation are deemed lawful even when they make market price increase.

In Summary, the practices that may worsen market well-functioning are the practices that may harm consumer welfare over the short and long run, that is, the practices that may:

• Increase market price
• Reduce market output
• Worsen product quality
• Worsen product variety
• Lower innovation rate

Antitrust law aims at preventing these practices. But are (and have always been) the goals the same? We do not have time to examine in depth, but:

• History of Antitrust is very long (much longer that 120 years...)
• Goals of Antitrust legislations were (and still are, at a certain extent) manifold.
• The Antitrust enforcement is influenced by the goals of antitrust legislations, but also by many different "socio-political" issues (favor for innovation, crisis, views about the role of the State, confidence in the redeeming virtues of the market, economic structure of a certain country...)

For Example... The Sherman Act served:

• To control the (excessive) economic power of big companies and group of companies - holding companies and trusts in order to assure economic and political freedom (political antitrust, something we again hear of, when we read about the need to stop or at least better control the internet giants such as Google, Facebook, Apple, Amazon).
• To protect small business and. Every entrepreneur "right" or "freedom" to enter (and stay in) the market (SME, freedom to act, fairness, etc.)
• To protect categories that also represented the majority of voters at that time (costumer-consumer protection).

The TFEU not only was supposed to protect those other values/interests, but also to pursue the creation of the single common market.

Competent Authorities in the EU

• The European Commission, where an infringement has effects on competition in multiple Member States (cross-border markets).
• A single National Competition Authority ("NCA"), where an infringement has effects on competition mainly within its territory.
• Parallel action by two or three NCAs, where an infringement has effects on competition mainly in their respective territories, but the action of only one NCA would not be s sufficient to bring the entire infringement to an end and/or to sanction it adequately.

Powers of Competition Authorities

• How do they get involved?
  • Following a complaint from a competitor/customer/supplier/consumer association
  • Following the report of an individual through the anonymous whistleblower tool, introduced in March 2017
  • Through an application for leniency by another party involved (used to share to the authorities that you're part of an anti-competitive agreement without receiving sanctions).
  • On their own initiative (ex officio).
• They have investigative powers, that is, they can:
  • Request information
  • Order the submission of documents
  • Carry out unannounced inspections of company premises.
• Power to impose fines and sanctions
  • Monetary fines of up to 10% of the worldwide turnover of the whole group.
  • In certain countries (e.g. U.K.):
    • Jail time + reputational damage + compensation for damages to competitors and customers + legal costs.
• Examples of Fines
  • EU Commission has fined Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google's search engine (2018).
  • EU Commission has fined Google €1.49 billion for abusive practices in online advertising (2019).
  • EU Commission has fined Qualcomm €242 million for abusing its market dominance in 3G baseband chipsets (2019).
  • EU Commission has fined Qualcomm €997 million for paying Apple to use only its chips in iPhones (2017).

The Antitrust Offences (What Matters to Us)

• What are agreements?
  • Any meeting of minds/concurrence of wills between two or more firms... Irrespective of its form, of its execution and of its effects.
  • Therefore, agreements can take distance from the traditional notion of contact!

    (They do not need to be formal, express, or explicit. They may result not only in any exchange of words, but also from a course of dealings, or from other circumstances.)

• Yet, mere parallel business actions cannot constitute an agreements, because

  Firms may adopt the same practices and still be independent one from the other just because they are similar economic agents answering to the same set of economic facts; we will discuss this more.

• When are agreements forbidden?

  They are forbidden when they harm the well functioning of the market as it results from CW variations. Therefore, when they produce more anticompetitive than procompetitive effects. As a matter of facts, price fixing/ output limitation/ market division are always forbidden ... they are Cartels! Other types of agreements are judged on a case-by-case basis, taking into account the market shares of the companies, the nature and content of the agreement, market structure, etc.

• What are abuses of dominance or anticompetitive monopolistic practices?

  They are unilateral practices that:

• Strengthen/prolong dominance, by excluding rivals, that is, by:
  • Either preventing potential rivals from entering into the market,
  • Or pushing actual rivals out of the market;
  • Or forcing actual rivals to work into a niche of the market.
• Harm CW
• When are mergers forbidden?

  They are forbidden when they change the market structure so to produce a scenario that resembles either a monopoly or an oligopoly What about the efficiencies that they produce? In order to be taken into account as countervailing virtues against the above structural effects, efficiencies must fulfil strict conditions:

• They must be verifiable (such as that the agencies and authorities can be reasonably certain that they will materialize and be substantial enough).
• The efficiencies must be merger specific (i.e. they cannot be achieved by other means than by a merger).
• The efficiencies must be likely passed-on to consumers, and not only recapped by the merging companies alone.
• Vertical Behaviors

  Consider that vertical behaviors are the practices that involve firms acting at different levels of the production-distribution chain... These vertical behaviors - whether they take the form of agreements, monopolistic conduct or mergers - are forbidden when they:

• Exclude rivals from getting access to a resource which does not have good substitutes.
• Because of that, the behavior harms the well-functioning of the market, as it results from CW variations.

The basics of IP Law

We need a bit of intro on IP Law to understand:

• What Intellectual Property (IP) and IP Law are.
• What IPRs are.
• The reasons why IP is protected.
• What is happening in the IP landscape.
• What is public domain.

Intellectual Property, its Law and IPRs IP Law is the law concerning rights (IPRs) associated with creative effort, innovation, commercial reputation and goodwill. IP is the subject matter of IP Law (and of course of IPRs).

• Copyright
• Trademarks
• Patents

Way to study IPRs

• What do IPRs protect? Subject matters (the "IP")
• How do I get the IP Protection? Requirements
• What does the protection consist in? Rights granted and their scope. (Exclusively rented to the creator of IP).
• What does fall beyond the scope of IPRSs? The notion of "Public Domain". You already have the copyright on the invention you make without and scrutiny required.

The scrutiny is always ex-post, meaning that a case should take place and a judge has to declare that there are no infringements.

The reasons why IP is protected

• IPRs as "natural right" (e.g. Kant, Hegel, German Constitution, Droit d'Auteur), (Civil Law Countries).

  Personhood-right approach. Work as expression of author's personality and a "natural obligation".

• IPRs as for a "reward someone's own labor" (e.g. Locke), (U.K.).

  Labour theory of property. Universal right to "own oneself" and the consequential universal right to "own the fruits of one's labor", such as intellectual goods (Locke).

• IPRs as "contractual right" (e.g. Thomas Jefferson, Statute of Anne, U.S. Constitution), (Common Law Countries)

  Work as a means to achieve progress of society (from the utilitarian approach to the welfare theory).

The most established theory is that of IPRs as an incentive and as tools to avoid free riding.

Source of Intellectual Property Law

• National (Italy, U.S., Germany, etc.)
• Regional (European Union Law)
• International (International Treaties).

What is happening in the IP Landscape?

• There is a Database right that protects the data within a database.
• For integrated circuits a shorter special version of patents was created to enhance the chips market.
• Software since 1991 is protected under copyright law.

Expansions in Nature and Scope of IP

• Legal Hybrids
• Sui Generis Rights
• New Subject Matter
• Enforcement, Duration, ...

What does not fall within the realm of Intellectual Property? The Notion of Public Domain.

Public Domain "The public domain is the law's primary safeguard of the raw material that makes authorship [and inventorship] possible." - J. Litman

The three main elements of the public domain are:

• Aspects of protected inventions, marks, and creations that IP Law does not protect (Fair Uses, Exceptions and Limitations to protection).
• Non-Protectable material (Ideas, Facts and Similia).
• Inventions, Marks, and Creations for which IP Law protection has expired (Out-Of-IP-Works).

The Basics of Copyright Law

Overview

• What is Copyright?
• Why is it granted? ("Rationale")
• Who does grant it? ("Source of Law")
• What is protected ("Subject Matter")
• What is really protected? (Idea/expression dichotomy)
• When is a work protected? (Requirements)
• Who is it granted to? ("Beneficiaries")
• What right does it encompass? ("Economic Rights")
• Does copyright prevent all use by third parties ("Fair Use and Exceptions")?
• What other rights does it encompass? ("Moral Rights")
• How long is the term of protection? ("Duration")

Before getting into the rules of copyright, ask yourself:

• What do we really mean when we say: this book is copyrighted?
• If we mean protection, protection from what?

What is Copyright? "Bunch of rights" granted to the "author" of an "original" "work" for a "period of time" starting from "creation" in order to "avoid free-riding".

Why is copyright granted? - Copyright Traditional Rationale(s)

• In Civil Law because the work is expression of author's personality ("Natural rights")
• In Common Law in order to increase progress and culture ("Incentives").

Who does grant copyright? - Legislative Sources

• National Copyright Laws

• International Conventions

  • In 1886: Berne Convention (last revised in 1971) was signed and agreement was reached on. (Probably most important international treaty that we have)
  • In 1994: TRIPs. (Adopted to annex developing countries to the Berne Convention).
  • In 1996: WIPO Treaties were signed to extend copyright protection to the web. (Made to address the challenges posed by the Internet, extending the rules of the analog world to the digital world).

• Regional Directives

  • European Directives.

As a matter of fact, copyright is not universal though works covered by copyright are intangibles and ubiquitous. That meant that historically there were states granting protection to their nationals for certain works but as soon as those works were abroad or the nationals created abroad, protection was not granted anymore. Similarly, if you weren't nationals of a country, your creations weren't protected in that country. Bilateral agreements were than signed in order to grant protection on reciprocity bases: state A was granting protection to works of state B's nationals as long as (and to the extent that) state A's nationals' works were protected in state B: Principle of Material Reciprocity.

International Set of Minimum Rights are the set of rules aimed at ensuring a minimum level of protection worldwide.

What can be protected under copyright law? - Subject Matters or Protected Works

• Traditional categories of subject matter (Berne Convention art.2): "literary and artistic works".

  • Literary works
  • Dramatic or dramatic-musical works
  • Musical works
  • Cinematographic works.
  • Works of drawing, painting, architecture, sculpture, engraving and lithography.
  • Photographic works
  • Works of applied arts.
  • Derivative works and translations.

• New categories of subject matter: (TRIPs Art. 10)

  • "Computer Programs".
  • "Databases".

What is really protected?

• Idea/Expression Dichotomy
• Under TRIPs, art 9(2): "Copyright protection shall extend to expressions and not to ideas, procedures, methods or mathematical concept as such".

What does this mean? Think about a literary work, it involves disposition of words Artistic work involves disposition of lines, colours, shapes. Musical works involve disposition of sounds. Dramatic works involve disposition of words and scenes (scenic presentation). Now, all these dispositions aim at communicating an idea. The idea itself is not protected whereas the disposition that expresses the underlying idea is protected.

When does a work get copyright protection? - Criteria for Protection or Requirements

• A work must be Original.
• Creativity
  • Different originality thresholds in different countries.
  • In EU: no legal provision until the software directive in 1991.
  • Judicial harmonization in EU and across countries.
• Novelty

Sweat of the Brow in Common Law countries. While in Civil Law Countries, the creation has to express the personality of the author. (example of the alphabetical order).

For all subject matters in all European countries, the thresholds of originality there must be a certain degree of intellectual contribution from the author.

"Intellectual contribution" is a matter of creative choices, if the author has made some choices.

Who is the beneficiary of Copyright?

• The Author:
  • In Civil Law it's a natural person.
  • In Common Law it's natural and legal entities.

Joint authorship - Problems:

• How is the term of protection to be calculated?
• Is both authors' permission necessary to exploit it?
• Are the authors' contributions separable?
• What if A feels his reputation injured and B does not?
• What if a new work results from A's elaboration/
• interpolation of B's work?
• What if A's work is the result of B's material activity?
• What if A develops B's activity?
• Who are the authors of films?

Dividing line of authorship: originality of both contributions. Collective work (newspapers): author is the co-ordinator. Joint work (comics): co-authorship. Manipulation/interpolation: when the result is original, protection is granted but first author's consent is necessary to economic exploitation.

Economic Rights The entity who is authorized to enforce the rights is called the "Rightsholder", which initially is the author, but these rights can be sold. In EU:

• Right of Reproduction, is very broad
  • Literal Reproduction
    • From a medium to the same medium.
    • From one medium to another medium.
  • Non-Literal Reproduction (e.g., you cannot made a movie out of a book of which you don't possess the rights.
  • Reproduction of a two-dimensional work into a three-dimensional work and vice versa (photo to statue).
  • Digital Reproduction, from one medium to another medium.
• Right of Distribution, it relates to tangible copies. (e.g., you make copies and then you enter the market with them).
• Right of Communication to the Public, it relates to intangible uses of the work. It encompasses the "making available right".
  • Infosoc Directive, "Member States shall provide authors with the exclusive right to authorize or prohibit any communication to the public of their works... including the making available to the public of their works in a such a way that members of the public may access them from a place and at a time individually chosen by them."
  • The Evolving concept of "Public"
    • From the communication of live performances to the "public" to the communication of a recorded work ("cinemas") to the "public".
    • To the communication of a broadcasting or of a radio program to the "public" to the right of making available to the public where "members of the public" may access these works from a place and at a time individually chosen by them.

In the US:

• Right of Reproduction
• Right to Perform

Fair Use and Exceptions

• 17 U.S. Code 107 -- Limitations on exclusive rights: "Fair Use".
• Article 5 Information Society Directive: "Exceptions and Limitations"
• Sections 29-30 UK CDPA 1988: "Fair Dealing Doctrine".

Fair Use "Notwithstanding the provisions of sections 106 ad 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include:

• The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
• The Nature of the copyrighted work;
• The amount and substantiality of the portion used in relation to the copyrighted work as a whole;
• The Effect of the Use upon the potential market for or value of the copyrighted work".

Exceptions and Limitations in EU (Directive 29/2001 current version) Compulsory exception (Article 5(1)):

• Temporary acts of reproduction referred to in Article 2, which are transient or incidental [and] an integral and essential part of a technological process and whose sole purpose is to enable:
  • A transmission in a network between third parties by an intermediary, or
  • A lawful use of a work or other subject-matter to be made, and which have no independent economic significance, shall be exempted from the reproduction right provided in Article 2.

Optional Exceptions (Article 5(2))

• Exception to Reproduction Right
  • Photocopy.
  • Private Copy.
  • Libraries.
  • Ephemeral broadcasting.
  • Broadcasting by public institutes.
• Exception to Reproduction & Communication Right
  • Teaching/Research.
  • Disables.
  • News Reporting.
  • Quotation/Critic.
  • Security/Administration.
  • Speech/lectures.
  • Religious Celebrations.
  • Freedom of Panorama.
  • Incidental Inclusion.
  • Advertising.
  • Parody.
  • Demonstration of Equipment.
  • Building/Drawing.
  • Dedicated Terminals.
  • Others (Cases of minor importance where exceptions or limitations already exist under national law-analogue uses).

Main Moral Rights

• Purposes:
  • Protection of Author's personality
  • Protection of Author's work
• Strong moral rights in civil law countries v. weak moral rights in common law countries (where protection was traditionally granted under contract, defamation, torts).
• Very little harmonization.

Moral rights: The first two rights are those imposed as "Minimum Standard" by the Berne Convention.

• Right of Paternity (Attribution - Identification)

  • Right to have the name on the work or to have the work published anonymously or pseudonymously.
  • Right to impede false attribution of the work.
  • Very important when all economic rights have been assigned.

• Right of Integrity

  • Right to impede an exploitation of the work derogatory to the author's artistic reputation and honour. (e.g. Snow v Eaton Center (ribbons on "flying geese", Canada)).
  • Right to prevent the destruction of the work? In this regard, there is a clash between the right of property and moral rights.
    • Countries specifically including this right under moral rights (US for visual art works).
    • Countries having cases asserting that destruction affects the author's reputation. (France).
    • Countries having cases asserting that the absence of the work (deriving from the destruction) can not affect the author's reputation. (Germany and France).

• Right of Divulgation

• Right of Withdrawal (Retraction)

How long is the term of Protection?

• Extension of terms from the initial short terms to:
  • 50 year p.m.a. under Berne Convention
  • 1993 Term Directive in EU
    • 70 years p.m.a
    • 50 for related right
  • 1998 US Copyright Term Extension Act
    • 70 years p.m.a
    • 50 years for related rights
    • 95 years for "corporate authorship" works.
  • Directive 2011/77 amending the term directive
    • From 50 to 70 for some related rights (performers and phonogram producers).

Patent Law Basics

Patent Law Basics - Overview

• Historical Background
• What a patent is - definition and examples
• Justification/Rationale for patent rights
• Subject Matter
• Requirements for Patentability
• Ownership
• Term(s) of Protection
• Rights conferred by a patent (e.g.: scope of patent protection)
• Limitations to patent protection
• Institutional players and national/regional/international patents
• News from Europe: The "Unitary Patent" Package.

First Known Patent Open letter of Privilege issued by the Florence City Council in 1412

• Inventor: Filippo Brunelleschi.
• Invention: Boat for loading and transporting marble blocks.
• Privilege: Exclusive right to manufacture and use the invention for 3 years.

Galileo's Water Pump (Venetian's Senate: 1593/1594)

What is a Patent?

• Patent = title (document) issued by an administrative authority, conferring the exclusive right of commercial exploitation of an innovation for a limited period of time (generally, 20 years starting from the filing of the application).
• The rights are conferred after substantial and formal examination and evaluation of the patent requirements.

Patent applications can be filed by the inventor or the inventor's employer (see later slide on ownership!) as inventions are usually the property of the company that employs the inventor. This is also the case for university researchers in many countries. A European patent application contains a full and detailed description of the invention so that others can understand and replicate it, one or more claims which define the technical features of the invention for which protection is sought - this is called the "scope of protection" - and optional drawings which help with understanding and interpreting the claims and description. The cover sheet contains bibliographic information about the applicant and the inventor. It also contains an abstract, one of the drawings, and details of the technical class. The abstract and the technical class are useful when it comes to searching for patents.

What does the description contain?

• Prior Art, it shows the situation at the moment of registration, demonstrating that the invention is yours and has not been invented before by anyone else.
• Problem to be Solved.
• Solution.
• Advantage of the Invention.

Why granting a Patent? Patents as a social contract (contract theory).

[The inventor is granted the exclusive right on the invention as long as he discloses the invention through the patent application, for the period of duration of the patent. Granting the patent means stimulating inventions, most of the ideas would otherwise remain secret or never exploited.] As we have already seen, patents are sometimes considered as a kind of contract between the applicant and society. Applicants and patent owners are interested in benefiting from their inventions. Owning a patent gives them the right to prevent others from making, using, offering for sale, selling or importing a product that infringes the patent, for a limited amount of time and the country for which the patent has been granted. The exceptions to this are use of the patent for non-commercial purposes, including private use and academic research. Society is interested in:

• Encouraging innovation so that better products can be made and better production methods can be used for the benefit of all;
• Protecting new and innovative companies so that they can compete with larger established companies, in order to maintain a competitive economy;
• Finding out the details of new inventions so that other engineers and scientists can further improve them; and
• Promoting technology transfer, that is from universities to industry.

In return for this protection, applicants must reveal their inventions to the public, so others can build on them. This takes the form of publication of the application by the relevant patent office. This social contract is institutionalised in the form of patent law.

The role of the patent system

• To encourage technological innovation.
• To promote competition and investment.
• To provide information on the latest technical developments.
• To promote technology transfer.

The patent system encourages technological innovation by rewarding intellectual creativity. In providing patent owners with protection for their inventions, patents offer them recognition for their creativity. and the possibility of obtaining financial reward if they commercialise or exploit their inventions. The patent system can also promote competition and investment in developing new or improved products or processes by encouraging research and development. Investors are more likely to provide financial backing if there is the potential for a return on their investment from inventions that can be patented. Because the information disclosed in patents is published, the patent system encourages the dissemination of information that may be of benefit to society.

It can promote technology transfer by way of the publicly available information in patent databases.

What is an invention?

• There is no formal definition of "invention" (anywhere)
• In the EPC: "European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application".
• Scholars: new and original solution to a technical problem, that is suitable for industrial application.
• As long as it meets the mandatory requirements + subject-matter not excluded from patentability = patentable invention.

Main "types" of invention

• Product Invention, Old way of producing something new.
• Process Invention, New way of producing something old.
• Invention of USE, New use of an old product or process.

Patentable Subject Matter EPC gives twofold "negative" definition of patentable subject matter, in terms of:

• Intellectual creations that shall NOT be regarded as inventions (art. 52(b,c,d)).
• Inventions that shall NOT be regarded as patentable (art. 53).

Two different grounds:

• Excluding from patentability creations that are subject matter of different IPRs (copyright, sui generis right, etc.)
• Excluding from patentability intellectual creation that must be left in the public domain.

Patentable Subject Matter (EPC)

Negative definition of patentable subject matter (art. 52 and 53 EPC)

• Ideas.
• Laws of Nature, Physical Phenomena.
• Living Organism (but within BioTech limitations).
• Methods of Doing Business.
• Surgery or Therapy Methods.
• Computer Programs.

Patentability Requirements

Three "substantive requirements"

• EU:
  • Novelty
  • Inventiveness
  • Industrial Applicability
• US:
  • Novelty
  • Non Obviousness
  • Usefulness

+ Sufficient Disclosure ("Formal" requirement)

Patents can be granted only if the invention matches All the requirements:

• Patentable Subject Matter
• Novelty
• Inventiveness/Non-Obviousness
• Industrial Applicability/Utility
• Sufficient Disclosure

Patent offices can reject applications failing ONE of these requirements. Courts can invalidate a patent for lacking ONE of these requirements.

Novelty

• An invention shall be considered to be new if it does not form part of the state of the art.
• The state of the art shall be held to comprise everything made available to the public by means of a written or oral description, by use, or in any other wat, before the date of filing of the European patent application.
• Including from the patent applicant itself (prior disclosure!)

State of the art (Prior Art)

• Prior Art is any evidence that your invention is already known.
• It is enough that someone, somewhere, sometime previously had described or shown or made something that contains a use of technology that is very similar to the invention.
• A prehistoric cave painting can be prior art. A piece of technology that is centuries old can be prior art. A previously described idea that cannot possibly work can be prior art. Anything can be prior art.
• Novelty requirement entails ABSOLUTE novelty, that is, the invention must be non-anticipated anywhere (worldwide) and anyway (in any form).

Do's and Don'ts for safeguarding novelty Don'ts

• Do not publish any articles, press releases, conference presentations/posters/proceedings, lectures or blog posts, etc. before you file.
• Do not sell any products incorporating the invention before you file.

Do's

• Sign a non-disclosure agreement (NDA).
• Seek professional advice at an early stage.
• File before anyone else does!

If you disclose your invention before the filing date you risk invalidating your patent application. Remember the social contract? If you have already revealed your invention to the public, you will have nothing to "trade", so you won't get a patent, even if it was you who made the invention public! Under the EPC, the first to file the patent application will be entitled to the grant of a patent on a particular invention. If you disclose your invention before filing, it will no longer be considered "new", regardless of the form the disclosure took, including written form (even in a publication that no-one might have read), oral disclosure (such as in a presentation or lecture), actual use or sale, and regardless of the place. In other words, all material made available to the public anywhere in the world forms part of the state of the art. So, the key message is keep it confidential! Do not disclose your invention to anyone, not even orally, until you have filed your patent application. If you need to talk to potential customers or investors before you file, make sure you sign a non-disclosure agreement with them first. Once you have filed your application, you are free to present, publish or sell your invention as you wish.

Inventive Step/Non-Obviousness Invention must not only be "new" with respect to the state of the art, but must make a step forward from the prior art. An invention shall be considered as involving an inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the art.

Person skilled in the art:

• Abstract model that is only aware of the state of the art in the technical field of the invention (not "medicine", but "oncology", or - if applicable - "Pediatric oncology") + common general knowledge (text books).
• May be a team, and thus be aware of multiple technical fields ("chemistry"+ "oncology").
• May know other fields, if neighboring or even remote (respectively, if common to know or if prompted to do so).

The Problem-Solution Approach (EPO) In order to assess inventive step in an objective and predictable manner, the so-called "problem-solution approach". In the problem-solution approach, there are three main stages:

• Determining the "closest prior art".
• Establishing the "objective technical problem" to be solved.
• Considering whether or not the claimed invention, starting from the closest prior art and the objective technical problem, would have been obvious to the skilled person.

Secondary Considerations in Inventive Step

• Long-felt but unsolved need.
• Commercial Success
• Failed efforts of others
• Copying by others
• Unexpected results

Increases in speed, accuracy or definition do not generally result from an inventive step.

Industrial Application (EPO Utility US) EPC art. 57, Invention must be susceptible of industrial application:

• Something which can be made industrially or related to an industrial process.
• Something which can be made or used in any kind of industry (including agriculture).

35 U.S.C. 101, Industrial application implies that the invention is useful (some identifiable benefit and is capable of use), that is, it must produce (at least some) tangible and physical effect.

Sufficient Disclosure EPC 138 (1 b)/ 35 U.S.C. 112 The patent must disclose the invention in a manner sufficiently clear ad complete for it to be carried out by a person skilled in the art. Sufficiently clear and complete:

• The invention must be entirely disclosed in all detail.
• The disclosure shall not merely describe the new product or process, but must enable others to carry it out.

Rationale for patent grant (the "contract") is contribution to human knowledge: therefore the inventor must inform the public what he or she believes is the best way to practice the invention.

Ownership Any natural (human beings) or legal (legal entities such associations, corporations, estates, NGO, etc.) person is entitled to apply for both individually and jointly.

Term(s) of Patent Protection International harmonization of patent term across national laws under TRIPs Agreement (Art. 33):

• The term of protection available [for patents] shall not end before the expiration of a period of twenty years counted from the filing date".

Rights conferred by a patent (e.g. Scope of Patent Protection) The scope of patent protection is determined by the terms of the claim. The patent document confers a temporary right to exclude others from making, using or selling the invention described and claimed in the document. It's a NEGATIVE RIGHT.

Limitations of the Exclusive Right

• Private and/or non commercial use;
• Experimental use and/or scientific research;
• Extemporaneous preparation of medicines;
• Prior use;
• Use of articles on foreign vessels, aircrafts and land vehicles;
• Acts for obtaining regulatory approval from authorities;
• Exhaustion of patent rights;
• Compulsory licensing and/or government use; and
• Certain use of patented inventions by farmers and breeders.

The above list has been elaborate by the Standing Committee on the Law of Patents (SCP) The SCP was created in 1998 to serve as a forum to discuss issues, facilitate coordination and provide guidance concerning the progressive international development of patent law. By dealing with clusters of interlocking issues rather than working in isolation on single issues, it is intended to provide member states with an effective mechanism for setting priorities and allocating resources, and ensure the coordination and continuity of interrelated, on-going work.

Institutional Players Patent (and Trademark) Offices:

• National Offices, National patent
• Regional Office (European Patent office), European patent
• WIPO (through national POs), International patent.

European Patent System European Patent Convention (EPC) = International agreement in 1973 that has nothing to do with the European Union (now: 38 member states, but protection can be extended to up to 42 states). Allows for a centralized procedure to file and have the patent examined before the European Patent Office (EPO). Through ONE application you can get patents in all the countries unless you opt out from some countries. Once granted, the patent actually becomes a "bundle" of patents, one for each territory where it was requested (and paid for). Many states then require the owner to file a translation in their national language to become effective in the country (e.g. Italy). Therefore, the "European patent" does not mean a unitary title across Europe. Validation requirements differ between countries and can lead to high direct and indirect costs, including translation costs, validation fees (i.e. fees due in some member states for publication of the translations) and associated representation costs, such as the attorney fees charged for the administration of the patent (i.e. payment of national renewal fees).

How to obtain patent protection in Europe The national route:

• Separate procedure for each state
• Procedures differ according to national law

The regional route: European Patent Convention:

• One application filed at one office for up to 42 states.
• One procedure.
• Applicant selects the desired states.
• Results in a bundle of national patents.

At the international level: PCT System The Patent Cooperation Treaty (PCT) is an international convention that was signed in 1970. One single application for up to 152 countries (as of June 2019). The PCT established a system that makes it possible to seek patent protection for an invention simultaneously in a large number of countries by filing a single "international" patent application instead of filing several separate national or regional patent applications. However, the granting of patents remains under the control of the national or regional patent Offices in what is called the "national phase". It is a matter of a centralized procedure, but still very relevant due to the strict novelty/inventive step rules we have seen (secure timing, once and for all).

European "Unitary Patent" Package Regulations 1257/2012 and 1260/2012. A European patent with unitary effect. Further option in addition to European patents and national patents. Protection in a single step for 26 participating EU member states Unitary character for said 25 states: limitation, transfer, revocation, lapse (only in respect of all states). One-stop shop with centralized post-grant administration by the EPO (single renewal fee, register entries). This will be a very big change in the EU as, like in the case of the community trademark, through one application you have ONE patent that is valid within the internal market, skipping the validation phase and the maintenance costs of the European Patent System. Moreover, there will be European courts specialized in addressing patent issues.

European "Unitary Patent" package

• European patent with unitary effect
• Unified Patent Court

This would be a very big change as, like in the case of the community trademark, through one application you have a patent that is valid within the internal market, skipping the validation phase and the maintenance costs of the European patent system. The law of the Unitary Patent would be in a Regulation (see slide) that directly applies within all Member States. The patent would be litigated at European level, in front of the Unified Patent Court, instead of being litigated at national level as in the case of international and European patents.

• A European patent with unitary effect. Further option in addition to European patents and national patents. Protection in a single step for 26 participating EU member states. Unitary character for said 25 states: limitation, transfer, revocation, lapse (only in respect of all states). One-stop shop with centralized post-grant administration by the EPO (single renewal fee, register entries). This will be a very big change in the EU as, like in the case of the community trademark, through one application you have ONE patent that is valid within the internal market, skipping the validation phase and the maintenance costs of the European patent system. Moreover, there will be European courts specialized in addressing patent issues.
• The process:
  • The "European Unitary Package" was meant to be launched in February 2017
  • But delayed due to Brexit and due to a constitutional complaint filed in Germany on the Unified Patent Court (on sovereignty issues).
  • The new "date" is currently expected for the beginning in 2022.

Antitrust and Market Power

Antitrust offences and market power Firms affect CW when they hold market power. Therefore, Antitrust Law focuses on:

• Monopolistic Conduct, it presupposes the existence of a significant amount of market power.
• Agreements, entails the aggregation of market power.
• Mergers, entails the aggregation of market power.

What is market power?

• A firm holds market power when it is able to increase its price above the market price (=marginal cost) in a profitable way over a period of time. This happens when the profit lost due to the loss of sales is lower than the profit gain due to the price increase.
• Thus, the notion of market power is very technical and must be distinguished from that power, which is much broader.

Market Shares Antitrust authorities use a proxy to appreciate market power ... Market Shares ... Because there is a positive correlation between market power and market shares, and to calculate market shares, we need to define the relevant market.

The Notion of Relevant Market Market definition is a tool to establish who competes against whom. In other words, it aims at identifying the actual competitors of the undertakings under scrutiny to understand whether the behaviour of the latter are actually constrained by the conduct of the former.

Antitrust enforcers are used to distinguishing:

• The product market, which comprises all those products and/or services that can be regarded as substitutable. Antitrust enforcers assess interchangeability looking at what economists call "substitution of demand" and "substitution of supply".
• The geographical market, which comprises the area where the firms in question act under sufficiently homogeneous conditions (e.g., understand if geography limits some customers' willingness or ability to substitute to some products, or some suppliers' willingness or ability to serve some customers).

Thus, Antitrust authorities firstly define the relevant market and then:

• Calculate the market share of the firm(s) under scrutiny
• Calculate the market share of its rivals
• Assess the bargaining power of its clients and suppliers
• Consider the barriers to entry (natural, legal and strategic).

Barriers to Entry

• Natural, barriers inherent to the structure of the market, such as sunk costs and network effects.
• Legal - Administrative, barriers coming from the public order, such as legal requirements or exclusive rights.
• Strategic, barriers resulting from previous firms' behaviors, such as advertising campaigns creating reputation, or range strategies pre-empting rivals.

Dominant Position Market Shares and Market Power

• In Hilti (1994) and Tetra Pak II (1996) citing Hoffmann La Roche, the ECJ held that market shares respectively of 70-80% and 90% were themselves evidence of a dominant position. But barrier to entry were very high.
• In AKZO (1991) a 50% share of the market was considered giving dominance: with the 50% of the market there is a presumption of dominance.
• Further factors to assess market power: - Indications from the undertaking itself (i.e.: AKZO regarded itslef as the world leader in the peroxides market); profits (if the undertaking is earning monopoly profits); overall size and strenght of range of products (portfolio power).

Remember, if a market presents natural barriers (i.e., networks effects, sunk costs) or legal barriers (IPRs), antitrust law cannot intervene on those barriers. Antitrust law can intervene against strategic barrier if those practices harm the well-functioning of the market without producing any redeeming virtue, that is: without producing efficiencies.

Antitrust: key-points to remember until now

• Antitrust Rationale.
• Market Definition.
• Agreements.
• Dominance and Abuse.
• Mergers.

Antitrust has not to be confused with:

• Consumer Protection.
• Unfair Commercial Practices.
• Regulation (in general).

The goal of antitrust (or competition law) is to protect competition in the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources. While:

• Consumer Protection, Consumer policy of the European Union aims to maximize consumer participation and trust in the market. Example: the Directive 2011/83/EU extends the withdrawal period for consumers to 14 calendar days.
• Unfair Commercial Practices, Regulation on unfair business practices, part of European consumer law. Example: Rules on misleading advertising and aggressive sales practices.
• Regulation:
  • Antitrust law does not intervene on the competition conditions.
  • Antitrust law takes the market as it is.
  • The one that changes market conditions is the 'regulator'.

As we already said, antitrust law focus on firms' practices harming the well-functioning of the market. Thus, Antitrust law protects actual/real competition: it does not work to recreate perfect competition. It does not have to reproduce the hypothesis of the perfect competition model by remedying to the many imperfections (such as scale economies, externalities, barriers to entry, information asymmetries) that characterize actual/real markets. This last is a job for economic regulators.

On the one hand, if for any reason the initial state of the market is E', antitrust law is not supposed to drive the market back, toward E*.

Antitrust and the Data Economy: Introduction

Antitrust and the Data Economy:

• Framing the data economy in the EU dimension. (The EU is pursuing a strategy to improve a data economy within the member states).
• Data and Market Power.
• Anticompetitive behaviors within the data economy (abuse and data, mergers in the data market, anticompetitive agreements and data).
• Data access (can competition law make data access compulsory?) / open data.

Now, the Data Economy Dimension Data is not a new phenomenon Since ancient times, the observations of human beings and the recordings of such observations have been named DATA.

The "New" Phenomenon is DIGITAL DATA Digital data are nothing other than data encoded in binary code, that is, in strings of 1s and 0s. Digital Data is what enables data powered technologies to work!

Huge Amount of Data!

• "Big data are high-volume, high-velocity and high-variety information assets that demand cost-effective, innovative forms of information processing for enhanced insight and decision making" (Gartner IT Glossary, n.d.)
• "Big data is a term that describes large volumes of high velocity, complex and variable data that require advanced techniques and technologies to enable the capture, storage, distribution, management, and analysis of the information". (TechAmerica Foundation's Federal Big Data Commission, 2012).

Size is only one dimension of big data. Other dimensions, such as velocity and variety are equally important. The amount of data just beyond technology's capability to store, manage, and process efficiently." Big data is a term utilized to refer to the increase in the volume of data that are difficult to store, process, and analyze through traditional database technologies. The nature of big data is indistinct and involves considerable processes to identify and translate the data into new insights. The term "big data" is relatively new in IT and business.

Big Data Tracking, collecting, storage and analysis of large quantities of different types of data, produced at high speed from multiple sources, whose handling and analysis require new and more powerful processors and algorithms. Big Data are frequently described by using four "Vs":

• Volume, the huge size of the data determines their value and potential.
• Velocity, the data are generated and processed to meet the demands and the challenges that lie in the path of growth and development at a very high speed.
• Variety, many types of content + potential inconsistencies that the data can show at times.
• Veracity, the quality of captured data, which can vary greatly. Accurate analysis depends on the veracity of source data. Veracity is crucial also for political and social reasons.

Relevance of Big Data

• (New) source of high economic and social value.
• Big data is relevant for the goal they pursue, that is, the production of information...
• Pieces of information that, once further elaborated via diverse techniques, can lead to the production of new products and processes...
• The last two points describe the Data-Driven Innovation.

Data-Driven Innovation Have a bigger data "reservoir" available for economic actors. Have more data available to foster data-based innovations.

Data Economy is a global digital ecosystem in which data is gathered, organized, and exchanged by a network of stakeholders for the purpose of deriving value from the accumulated information.

In 2016, Data Economy was mainly referring to the ability of enterprises to leverage big data and analytics as a corporate asset to make strategic business decisions, improve operational efficiencies and drive revenue growth as well as create new and innovative business models. Nowadays, it more of a digital ecosystem.

Do you think the EU has/is a leading Data Economy? Not the biggest in the world, probably the most regulated.

Why is the Data Economy so important? The legal solutions are considered as a key-element to make the Data Economy evolve. The harmonization of rules and legal standards is required to reach a smoother and uniform market within the EU.

The Data economy within the EU Digital Single Market Strategy

• Building a European Data Economy is a priority for EU and it is part of the Digital Single Market Strategy.
• The DSM strategy through its three pillars touches upon all areas of laws, for the achievement of a digital space where goods, capital, people, data can freely move and everyone can access more or less everything at any moment from anywhere.

The DSM strategy is articulated in three pillars:

• Access refers to the need of ensuring "Better access for consumers and business to online goods", in other words establishing trust towards cross-border e-commerce.
• Environment refers to the need of creating the "Right environment for digital networks and services", in other words having networks and digital services to flourish thank to a level playing field environment.
• Economy and Society refers to the need of taking "full advantages of the digital economy in terms of growth and societal development".

How to build a Data Economy? To build the data economy, the EU needs a policy framework that enables data to be used throughout the value chain for scientific, societal and industrial purposes. (EU Commission Communication on building a European Data Economy, January 2017).

Building a European Data Economy (January 2017) Possible policy and legal solutions for a data economy in relation to:

• Free Flow of Data
  • Objective: Removing data localization restrictions except if they are required for national security and similar objectives.
  • Free Flow of (non-personal) data: New Regulation (EU) 2018/1807 which removes obstacles to the free movement of non-personal data.
• It ensures free movement of non-personal data across borders.
• It establishes the same principle of free movement within the Union (27 member states) for non-personal data.
• Only exception: restriction or prohibition justified by public security reasons.
• GDPR
  • Bans restriction to the free flow of personal data justified on the abuse of the protection of personal data.
  • Allows restrictions to the free flow of personal data that are based on other reasons other than personal data protection (public safety).
• "Emerging issues", for example relating to data: access, portability and liability.

The EU needs a policy framework that enables data to be used (...) A framework including, an increase of:

• Flow of Data (Regulation 2018/1807 + GDPR)
• Data Access and Transfer (guidance on data sharing, debate on data ownership).
• Data interoperability (improving tech interoperability, recommended contract terms to facilitate switching).

Antitrust and the Data Economy: Data and Market Power

How to build a European Data Economy?

• The EU needs a policy framework that enables data to be used (...)
• A framework including, an increase of:
  • Flow of Data (Regulation 2018/1807 + GDPR)
  • Data Access and Transfer (guidance on data sharing, debate on data ownership).
  • Data Interoperability (improving tech interoperability, recommended contract terms to facilitate switching).

Now, Data and Market Power

• Does it exist an automatic relationship between big data and dominance? No, there is not
• Can you argue that a firm holding big data holds a dominant position as well?

  No, it's not automatic, however many times, holding big data is a barrier to entry for new competitors. Indeed, often the companies with the richest datasets are the ones in a dominant position in the market.

To assess dominance:

• Define the relevant market
• The market shares of the firm under scrutiny
• The market shares of its rivals
• The barriers to entry

Dominance is not sanctioned, only the abuse of dominance is sanctioned, for this reason, when in a dominant position it needs to have more attention in its decisions.

Example

• Suppose that a food-player (e.g. JUST EAT) wants to make and market a new flavour of pizza. It needs to know about consumers' tastes. The relevant market to consider is "pizza production" not the market of data on consumers' tastes.
• Where does JUST EAT look for data? The market of data on consumers' tastes is the market of inputs that JUST EAT will use to make and market pizzas.

The fact that JUST EAT holds a huge amount of data regarding consumers' tastes and preferences doesn't put it in a dominant position in the pizza production market. Also in the case JUST EAT wants to enter that market, which can be considered as secondary for him.

The relevant market of the firm is the market of the product/service that the firm is going to realize by using the data (extracting information). Therefore, not only, the mere fact that a firm controls big data does not tell you anything about the markets from where the data come. Also, it does not tell you anything about the markets where the firm works. But this second market is where the firm could hold a dominant position.

This is the reason why there is no automatism between big data and dominance! Indeed, many firms hold big data and are not dominant. Then, it may always happen that:

• A firm controls a very specific set of data
• Those data identify a specific market
• The firm is dominant in that market

Or, it may happen that a firm is dominant in the production of a good that use some data. However, this has nothing to do with the automatism between big data and dominance.

However, we cannot neglect that a company is dominant in the production/offer of a product/service also because of the data that it keeps collecting/generating/producing and that it holds.

Indeed, there is no dominant company that does not hold a huge amount of data.

Does holding data confer dominance? No Can we argue that holding data should count is assessing dominance in a product/service relevant market? Yes Big data can work as barriers to entry protecting markets for products or services.

Data do reinforce the platforms positions in offering services and products on both sides.

Therefore, Big data may work as barriers to entry! Other factors to consider:

• Availability of Data
  • A same information can be found using different data (e.g. search engines requests, social media analysis, purchasing data on online platforms, etc.)
  • This is liable to mitigate market power linked to the holding of vast amount of data.
  • However: need to assess whether data are really substitutable -> do they allow exactly for the same use? Case by Case analysis.
• Volume and Variety of Data
  • Volume and variety are not always a necessity; there can be a level beyond which the usefulness of data remains constant.

Joint German - French report on Competition and Big Data (May 2016)

• Abusive conduct can arise from firm's capacity to derive market power from data that its competitors cannot match (case-by-case analysis needed).
• Mere possession of data does not equate to dominance, depends on how difficult to replicate/usefulness, which depends on the specific market features.

There is a massive debate on the need of slightly changing the way we assess and define the relevant market.

Conclusions on Market Power from Data

• A case-by-case analysis is needed.
• Data usually reinforce dominant positions: they may work as barriers to entry the market of a product/service and these barriers should be considered to assess dominance.

Antitrust and the Data Economy: Data Economy and Anticompetitive Conducts

Anticompetitive behaviors within the data economy (abuse and data, mergers in the data market, anticompetitive agreements and data). Now, anticompetitive behaviour within the data economy.

• The aim of the following slides is to show you the challenges brought about by the datafication to the traditional competition/antitrust analysis.
• As you know, to date, the debate as to whether the assessment of anticompetitive practices should change because of the datafication is quite lively.

The three pillars

1. Big Data and Abuse of Dominance

2. Big Data and Mergers

3. Big Data and Collusion (Cartels)

4. Big Data and Abuse of Dominance An abuse of dominant position takes place when:

• A company is in a dominant position
• Uses that dominant position to restrict competition in the market
• And competition/consumer's welfare/market efficiency is harmed
• To understand if an abuse of dominant position occurred we then have to:
  • Determine whether the company is in a dominant position
  • Determine whether its behaviour is anticompetitive, e.g. exclusionary (it excludes competitors from the market).
  • Determine that harm to competition/consumers' welfare/efficiency occurred.
• We know how to assess "dominance":
  • Step 1: identifying the Relevant Market (RM), where firms operate in terms of product/services and geographically.
  • Step 2: determining the Market Power (MP), a firm's share in the relevant market.

(In an exam you would have to firstly check whether a company is dominant, then verifying the conduct and also the effects on the market).

A case of abuse of a dominant position by a data company in a data market: the Cegedim case (2014) Cegedim was the main provider of medical information databases. Its clients used its databases through different software**.** Cegedim refused to license the data depending on the software a client used, mainly because behind this idea there was an agreement between Cegedim and the software producer. This was held to be an abuse of dominant position**.** Cegedim held 78% of the medical information database market, its refusal was exclusionary (i.e. they were excluding from the market those who were not accepting their conditions), i.e. it could restrict competition in the market of medical information DBs and market efficiency could be reduced. Therefore,

• Data companies that are in a dominant position in (their own data) relevant market
• And abuse of their dominant position
• Commit an "abuse of dominant position" or a "monopolization" according to Article 102 EU Treaty or Sherman Act Section 1.

2. Big Data and Mergers: Key Cases in Europe "The potential combination of DoubleClick's and Google data collections [...] would be unlikely to give the merged entity a competitive advantage that could not be matched by competitors, given that several competitors both run a search engine and offer ad serving ..." (2008) Reasoning behind

• Are the companies competitors? i.e.:
• Do the companies operate in the same relevant market?
  • Google's relevant market: search engine (makes money by selling ad)
  • Double click's relevant market: technology for online advertising (makes money selling their technology)
• No, they do not, therefore the merger should be authorized.

"There will continue to be a sufficient number of alternative providers to Facebook for the supply of targeted advertising [...] and a large amount of internet user data that are valuable for advertising purposes are not within Facebook's exclusive control".

"In this market [apps] any leading market position even if assisted by network effects is unlikely to be incontestable".

Data privacy concerns "do not fall within the scope of EU competition law" (2014). Reasoning behind

• Are the companies competitors? i.e.:
• Do the companies operate in the same relevant market?
  • FB messenger's relevant market: applications for smartphones
  • Whatsapp's relevant market: applications for smartphones
• Yes, they are, then: would the merge reduce competition in the market?
  • No, it would not, their combined market share is not wide enough.

"The combination of their respective databases does not appear to result in raising the barriers to entry/expansion for other players in this space, as there will continue to be a large amount of internet user data that are valuable for advertising purposes and that are not within Microsoft's exclusive control" - 2016.

Reasoning behind

• Are the companies competitors? i.e.:
• Do the companies operate in the same relevant market?
  • Microsoft's Relevant Market: primarily software solutions for CRM
  • Linkedin's Relevant Market: primarily professional social network services
• Yes, as there is a partial overlap in the secondary online ad-market.
• The overlap though is not of concern as the combined market share is not elevate.

While

• Acquiring a dominant position because of competition on quality/price (on merits) is good (procompetitive), what is bad is abusing it.
• Acquiring a dominant position through a merger or acquisition is bad (anticompetitive).

3. Big Data and Collusion (Cartels) Anticompetitive Agreements and Data: Examples

• Two companies agree on sharing the data that they use to feed the algorithms that they use to determine their products or services prices. (Illegal, this is a cartel, they cannot share the information regarding how the price is calculated.)
• A company develops and algorithm that reacts to its competitors prices on the market. (Legal, there is no agreement, it's just a reaction to others change in price).
• A company decides to make transparent the algorithm that it uses to determine its prices. (Legal, in order to be illegal, the authorities have to find an agreement)

In the end, it's only related to an agreement, if authorities can find two or more companies had a "meeting of minds" then they can be accused of Anticompetitive agreements.

An anticompetitive agreement takes place when:

• Two or more companies "agree" (explicitly or tacitly), i.e. "Meeting of Minds".
• The "agreement" has the object or the effect to restrict competition in the relevant market (agreement on price, quantity or quality).

Terms in place**, agreement** is a broad word: it goes from "expressed agreement" to "parallel practice".

An example: the Topkins case (2015), an anticompetitive agreement implemented through an algorithm:

• Topkins and his co-conspirators agreed to fix the prices of certain posters sold in the United States through Amazon Marketplace
• To implement their agreement, they adopted specific pricing algorithms for the sale of their posters with the goal of coordinating changes to their respective prices.
• In other words: they wrote computer code that instructed algorithm-based software to set prices in conformity with the agreement.
• They were found guilty of violating Sherman Act section 1.

There is more:

• "Classic" cartel, monitored digitally: like in the Topkins Case
• Digital Cartels
  • Companies code and train autonomously learning algorithms to adjust to competitor's prices and strategies.
  • Companies know that these algorithms are adopted.
• Meeting of minds is replaced by meeting of algorithms
• Tacit Algorithmic Collusion
  • A company designs and trains an autonomously learning algorithm to maximize profits.
  • In order to that, the algorithm learn to react to competitors' prices.
  • According to antitrust rules, this is not an agreement, therefore there is no violation.

"What business need to know is that when they decide to use an automated system, they will be held responsible for what it does. So, they had better know how that system works" - Margrethe Vestager.

Antitrust and the Data Economy: The Google Case + Data Access & Antitrust

Google's comparison-shopping service is one of Google's specialised search services. In response to queries, it returns product offers from merchant websites, enabling users to compare them.

Specialised search results in a particular category are positioned within sets referred to by Google as "Universals" or "OneBoxes". They are in most instances positioned above generic search results, or among the first of them. In addition to the results returned in "Universals" or "OneBoxes", Google's specialised search services can also be accessed through menu-type links displayed at the top of Google's search results pages. Certain of Google's specialised search services are based on paid inclusion. Third party websites have to enter into an agreement with Google in order to be listed in the search results of such a specialised search service. In most instances, such an agreement provides for a payment based on a pay per click system. This is the case for instance for Google Shopping.

The practice

• The practice: "the more favorable positioning and display by Google, in its general search results pages, of its own comparison-shopping service compared to competing comparison-shopping services... infringes Article 102".
• Commission's decision: "The Commission concludes that the Conduct constitutes an abuse of Google's dominant position [...] because it constitutes a practice falling outside the scope of competition on the merits".

The Panda Algorithm Google Search favored Google shopping by applying the "PANDA" algorithm only to rivals -- "comparison-shopping services are prone to being demoted by the Panda algorithm due to the characteristics inherent to those services"; "Google's own comparison-shopping service is not subject to the same ranking mechanisms as competing comparison-shopping services, including adjustment algorithms such as [...] Panda. This is despite the fact that Google's own comparison-shopping service exhibits several of the characteristic that make competing comparison-shopping services prone to being demoted by the [...] and Panda algorithms".

Google shopping benefits from a better display - "Competing comparison-shopping services can be displayed only as generic search results in Google's general search results pages. They cannot therefore be displayed in rich format, with pictures and additional information on the product and prices. The stated behaviors are considered Manipulation as:

• Website cannot survive if they lose traffic.
• Given the dominant position of Google Search, the rivals of Google Shopping must work with Google Search.

Thus, Google's behaviour is exclusionary because:

• It increases the costs that Google Shopping rivals incur to access the market for comparison sites.
• It makes the dominant position of Google Search stronger.

And, Google's behaviour is anticompetitive; it reduces consumer welfare by:

• Increasing the fees due to merchants who conclude contracts with Google Shopping
• Increasing consumer prices in the market for comparison site
• Reducing the incentives to innovate for competing comparison sites and Google Shopping itself.

Now - the U.S. Experience

• Since 2002 sponsored links must be make recognizable by consumers.
• In 2013 the FTC charged Google with monopolization because of the Universal Box. Yet, it found that this innovation increased CW, by offering consumers direct answers in a faster way. Thus, Google won the case, regardless the exclusionary effects of its practice.

Thus...

No favoritism as to the order of results - "Google would demote its own content to a less prominent location when a higher ranking adversely affected the user experience". No favoritism as to their display - "other competing general search engines adopted many similar design changes, suggesting that these changes are a quality improvement with no necessary connection to the anticompetitive exclusion of rivals".

Hence, no manipulation occurred. In addition,

Consumers go a better service - "user benefited from these changes to Google's search results ... these changes to Google's search algorithm could reasonably be viewed as improving the overall quality of Google's search results because the first search page now presented the user with a greater diversity of websites".

Exclusion resulted from merits - "[demoting some competing comparison-shopping services] resulted in significant traffic loss to the demoted comparison-shopping properties, arguably weakening those websites as rivals to Google's own shopping vertical".

Furthermore,

We cannot chill innovation - "Product design is an important dimension of competition and condemning legitimate product improvements risks harming consumers".

There is no single way to order results - "Reasonable minds may differ as to the best way to design a search results page and the best way to allocate space among organic links, paid advertisements, and other features. And reasonable search algorithms may differ as to how best rank any given website".

Antitrust authorities cannot forbid unilateral practices as long as they admit redeeming virtues - "Challenging Google's product design decisions in this case would require the Commission - or a court - to second-guess a firm's product design decisions where plausible procompetitive justifications have been offered, and where those justifications are supported by ample evidence".

Data Access

Now, the Data Value Chain, to enable firms to hold and exploit data we need to:

• Make Data Access be easier (Can competition law make data access be compulsory?).
  • Unlawful refusal to deal, an EU institution can oblige a dominant firm to share its proprietary resources in two alternative scenarios:
    • When the refusal terminates an existing business relationship, if:
      • The refusal is likely to have a negative effect on competition
      • The conduct does not have any objective justification
    • When the refusal prevents a new business relationship from starting, if:
      • The refusal is likely to have a negative effect on competition
      • The conduct does not have any objective justification
      • The claimed resource is indispensable.
  • Essential facility

Input foreclosure: Can we apply the Essential Facility Doctrine to Big Data? We should have:

• A dominant firm that refuses to share its data without proffering any objective justification.
• Without the data the firm cannot design a new product/ enter a new market/ foster technical progress without the dominant firm's big data, which indeed are essential! (How can a rival know what she is going to design, if she does not know the data ... and the information that can be inferred from them? And what if that information could be inferred from other sets of data?)
• Incentivize Data Production (Classes on Data&IP).
• Support Data Trade (Classes on Data&IP).

Antitrust and the Data Economy: Data Sharing and Open Data

Open Data: Regulatory Tools Regulations which applies ex-ante to guide Member States in certain aspects of Data Management, such as Protection and Opening.

Open Data Directive - PSI (2019/1024) The directive on open data and the re-use of public sector information provides a common legal framework for a European market for government-held data(public sector information). It is built around two key pillars of the internal market: transparency and fair competition.

It encourages the Member States to make as much information available for re-use as possible. It addresses material held by public sector bodies in the Member States, at national, regional and local levels, such as ministries, state agencies and municipalities, as well as organizations funded mostly by or under the control of public authorities (e.g. meteorological institutes).

The new rules:

• Stimulate the publishing of dynamic data and the uptake of Application Programme Interfaces (APIs).
• Limit the exceptions which currently allow public bodies to charge more than the marginal costs of dissemination for the re-use of their data.
• Enlarge the scope of the Directive to:
  • Data held by public undertakings, under a specific set of rules. In principle, the Directive will only apply to data which the undertakings make available for re-use. Charges for the re-use of such data can be above marginal costs for dissemination.
  • Research data resulting from public funding - Member States will be asked to develop policies for open access to publicly funded research data. New rules will also facilitate the re-usability of research data that is already contained in open repositories.
• Strengthen the transparency requirements for public-private agreements involving public sector information, avoiding exclusive arrangements.

French Solution Loi n° 2016-1321, 7 October 2016, pour une République numérique, JO République Française n°0235, 7 October 2016 It put in place provisions that oblige commercial companies to open up - under certain conditions - data they hold for re-use, namely data generated in the context of procurement (article 17), commercial data for the establishment of official statistics (article 19), certain electricity and gas production and consumption data held by transmission and distribution systems operators for re-use by any other party (article 23), and certain data relating to changes in real estate ownership for re-use by certain third parties (article 24). Such data are defined as "public interest data".

PSD2 (2015/2366) (Private Data the respective in Competition Law is EFD) The European Payment Service Directive (PSD2) requires banks to provide access to their customers' accounts in order to enable third parties (Fintech companies) to build financial services on top of banks' data and infrastructure. In this way, banks will not act anymore as gatekeepers of their clients' data: clients will be free to decide to link new Fintech's services to their own traditional bank accounts.

In order to comply with such obligation, in the UK the Open Banking Working Group (OBGW) - set up at the request of HM Treasur and gathering industry experts from the banking sector and Fintechs, business and consumer communities - have developed the first Open Banking Standard Framework, which guides how open banking data should be created and used.

The key word in private data sharing is Voluntary

Models to make Voluntary Data Sharing be easier, because Legal obligations to share private data have significant political implications.

B2B Data Sharing: A Definition The process by which a company makes data available to another company that is interested in these data for its own business purposes (Everis, 2018: iii).

In concrete terms, B2B data sharing consists of the sum of three actions: (i) the making available of data by a company; (ii) the access to said data by other companies; (iii) the re-use of data by a company different from the original data holder (Blackman and Forge, 2017: 9-10). In this scenario, thus, when we deal with data sharing, we consider data not only as an output - i.e. as a product generated through a process - but also as an input, capable of generating and/or improving processes, products and services (Maggiolino, 2018: 20).

The theoretical premise of B2B Data Sharing The non-rivalrous nature of data, making it possible for the same data to support a range of new products or services or new methods of production, suggests that it can become efficient for companies to share more data they hold with other companies so that the value resulting from the data can be exploited to the maximum.

This suggests that questions of data supply and (re-)use ("Data Sharing") need to be addressed in business-to-business (B2B) scenarios... and not only in B2G scenarios.

The 2^nd^ company that re-uses the data can put in place an innovation activity different from the 1^st^ one (additional value from the same data).

The EU Strategy The EU Commission is moving toward incentivizing voluntary B2B data sharing. No Plan for regulations (see public consultation, 2017). Guidance on private sector data sharing - April 2018. The Guidance - Key Principles, as mentioned, the European Union is not considering adopting binding measures in the field public consultation on 'Building a European Data Economy'.

Main raison d'être: levelling the playground among stakeholders, by framing the key principles and providing a toolbox on legal, business and technical aspects of data sharing:

• Transparency, the relevant contractual agreements should identify in a transparent and understandable manner (i) the persons or entities that will have access to the data that the product or service generates, the type of such data, and at which level of detail; and (ii) the purposes for using such data.
• Shared value creation, the relevant contractual agreements should recognize that, where data is generated as a by-product of using a product or service, several parties have contributed to creating the data.
• Respect for each other's commercial interests, the relevant contractual agreement should address the need to protect both the commercial interests and secrets of data holders and data users.
• Ensure undistorted competition when exchanging commercially sensitive data, the relevant contractual agreements should address the need to ensure undistorted competition when exchanging commercially sensitive data.
• Minimised data lock-in, companies offering a product or service that generates data as a by-product should allow and enable data portability as much as possible. They should also consider, where possible and in line with the characteristics of the market they operate on, offering the same product or service without or with only limited data transfers alongside products or services that include such data transfers.

Models of B2B Data Sharing The supply and the re-use of data in B2B relations can take many forms or combinations thereof:

• An Open Data approach: whereby the data in question are made available by the data supplier to an open range of (re-)users with as few restrictions as possible and against either no or very limited remuneration. This model is chosen when the data supplier has a strong interest in the data re-use. Examples are providers of services that would like to make use of an ecosystem of third-party application developers in order to reach the final customers.
• The data monetization approach: It can take place through a data marketplace as an intermediary on the basis of bilateral contracts against remuneration. This can be interesting for companies that do not know potential re-users for their data and aim at engaging in one-off data monetisation efforts. This mechanism appears suitable when either (1) there are limited risks of illicit use of the data in question, (2) the data supplier has grounds to trusts the (re-)user, or (3) the data supplier has technical mechanisms to prevent or identify illicit use. Model contract terms can lower the costs of drawing up data usage agreements.
• The data exchange approach in a closed platform: a closed platform can be either set up by one core player in a data sharing environment or by an independent intermediary. The data in this case may be supplied against monetary remuneration or against added-value services, provided e.g. inside the platform. This solution allows offering added-value services and thus provides for a more comprehensive solution for more stable data partnerships and allows for more mechanisms of control on the usage made of the data; model contract terms can lower the costs of drawing up data usage agreements. Where the data sharing is exclusive, it would need to comply with the competition rules.

The legal issues: Data Licensing Contracts B2B data sharing is typically implemented on the basis of contracts. In data usage or licensing agreements parties agree on the subject and value of the contract as well as on all other modalities put down in contract terms. The design of the relevant contract terms for data usage or licensing agreements requires special attention so as to both comply with existing legislation. Specific attention:

• What data shall be made available.
• Who can access and (re-)use the data in question.
• What can the re-user do with data.

What data shall be made available. Describe data which you wish to share as concretely and precisely as possible (e.g. R&D data, customer data, diagnostic data), including the levels of updates to be expected in the future. What quality levels can be assured for the data, also over time? Shared data needs to be of good quality, i.e., accurate, reliable and when necessary up-to-date. Ensure that data are not missing, duplicate, unstructured. Specify the source/origin of data and how it was collected/constructed. A mechanism for reporting error in the data should be set up. Is the data sharing about a data set or a data stream? Ensure respect of rights that others may have on the data. Verify rights on content represented by the data (intellectual and industrial property rights). Ensure respect of data protection legislation. Among others verify that there is a legal basis for the processing of personal data in line with the GDPR.

Who can access and (re-)use the data in question. Ensure that the contract defines in a transparent, clear and understandable way who has a right to access, right to (re-)use, and right to distribute data and under which conditions. Specify if and how data may be licensed for re-use and distribution. Sublicensing needs also to be considered: either it should be specifically excluded or the conditions under which it is allowed and for what types of data should be specified. The right to access and (re-)use of data does not need to be unlimited. The agreement may for instance limit the right to access, i.e., only to members of specific professional groups (e.g., farmers) or link it to certain purposes of use of data (e.g., for a limited commercial use).

What can the (re-)user do with the data. In the contract negotiations, the (re-)user should be as open and as clear as possible about how the data is going to be used, including by parties downstream. This will ensure transparency and increase the trust of the supplier of the data. Specify the exact usage that can be made of the data, including rights on derivatives of the data (analytics). Define non-disclosure rules regarding downstream parties.

The Technical Mechanism/Aspects for Data Sharing The data holder makes available selected data directly to a larger number of re-users, e.g., via an Application Programming Interface.

• TomTom is a Dutch company that produces traffic, navigation and mapping products. Most revenue from the company's activities comes from the data (maps and online services) licensed to other companies. TomTom offers Application Programming Interfaces for developers as a means of data access. According to TomTom this has the following advantages compared to other technical means to share data:
  • Easy and swift access to data.
  • Monitoring the use of data.
  • Verification of breaches of contract.
  • Rapid action on cases of data misuse (i.e., terminate or suspend access to data).

The data holder makes available selected data via an intermediary (a data marketplace) to one or several re-users with limited control over the subsequent use. The term "data marketplace" is employed to designate a specific type of intermediary that may have three essential functions: match-making between potential data supplier and data buyer; the actual transfer of the data (and the agreed compensation); a certification function that the transaction has actually happened.

• Dawex does not purchase or sell data. It brings together companies interested in monetizing and re-using data and fosters transparency between data suppliers and users by ensuring that they communicate and conduct the transaction directly on the platform. Dawex developed a series of tools to help both data suppliers: data visualization tools sampling tools; messaging tool embedded in the platform; contractual model terms.

The data holder makes available selected data via an intermediary (a data space or platform) to one or several re-users in an environment that allows stronger control and traceability of the subsequent use. Different from data marketplaces, such technical enablers have a strong focus on providing additional features allowing the data supplier to control the use made of the data, in particular the respect of the provisions of the data transfer agreement (this can include forms of track-and-trace of data usage made; self-regulation within the community of users of the data space or platform, possibly including a set of sanctions for data users in violation of individual data transfer agreements).

• Nallian has developed a cloud-based platform that enables real-time data sharing and supports process synchronization. The platform allows data suppliers to maintain a granular control over who has access to which data and for what purpose. This control is enabled by a rights-granting engine embedded in the platform that allows data suppliers to define roles and sharing rules for the different community members down to field-level, including for app providers. In addition, the platform facilitates data anonymization and aggregation to meet the necessary privacy requirements.

Software Protection: Copyright and Patent Law - Copyright Protection

How it Started - US

• 1974 - The US Congress established the National Commission on New Technological Uses of Copyrighted Works (so-called CONTU).
• 1980 - Software Copyright Act amending US Copyright Act
  • Introduced definition of computer program, protection and exceptions to copyright for utilization.

How it Started - EU

• Directive n. 250/1991 of 14 May 1991
• Directive n. 24/2009 of 23 April 2009 (EU Software Directive)
  • Main focus of the class will be on EU Software Directive.

Importance of Copyright Protection on Software Recitals 2 and 3 of EU Software Directive:

• "The development of computer programs requires the investment of considerable human, technical and financial resources while computer programs can be copied at a fraction of the cost needed to develop them independently. Computer program are playing an increasingly important role in a broad range of industries and computer program technology can accordingly be considered as being of fundamental importance for the Community's industrial development".

Legal Definition of Computer Program

No definition in the EU Software Directive

In the US: "A computer program is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result" (Tittle 17, Paragraph 101, USC).

A computer program, or software, is a set of instruction capable, when incorporated in a machine-readable medium, of causing a machine having information-processing capabilities to indicate, perform or achieve a particular function, task or result (WIPO Model Provisions on the Protection of Computer Programs, 1978).

• Source Code, programming language used by the programmer.
• Object Code, the program as stored in the computer, the one and zero (binary code) that tell the computer precisely what is supposed to do.
• Compiler, a computer program to convert source code into object code.

Object of Protection Article (1) EU Software Directive Member States shall protect computer programs, by copyright, as literary works within the meaning of the Berne Convention for the Protection of Literary and Artistic Works. For the purposes of this Directive, the term "Computer Programs" shall include their preparatory design material.

Accepted fictio iuris: computer programs' language and coding = literary works (literature).

Idea/Expression Dichotomy, Article 1(2) EU Software Directive Protection in accordance with this Directive shall apply to the expression in any form of a computer program. Ideas and principles which underlie any element of a computer program, including those which underlie its interfaces, are not protect by copyright under this Directive.

Protection "in any form"? Subject matter of protection is the expression in any form of a computer program which permits reproduction in different computer languages.

Software functionality cannot be protected as such. To accept that the functionality of a computer program can be protected by copyright would amount to making it possible to monopolize ideas to the detriment of technological progress and industrial development" (CJEU decision of 2 May 2012)

Protection "in any form" CJEU case law (BSA and SAS decisions)

• Subject matter of protection is the expression in any form of a computer program which permits reproduction in different computer languages.
• The source code and the object code are entitled to copyright protection.
• The functionality of a computer program, the programming language and the format of data files used in a computer program are not a form of expression of that program (SAS decision).

GUIs Graphic User Interfaces (GUIs), which do not enable the reproduction of the software, are not considered in CJEU case law as computer programs (CJEU decision of 22 December 2010).

Anyhow, GUIs are not protected under EU Software Directive, but they can be protected by copyright as such, or by different IPRs (e.g. design or trademarks). In particular, the graphic user interface is an interaction interface which enables communication between the computer program and the user. In those circumstances, the graphic user interface does not enable the reproduction of that computer program, but merely constitutes one element of that program by means of which users make use of the features of that program.

It follows that that interface does not constitute a form of expression of a computer program within the meaning of Article 1(2) of Directive 91/250 and that, consequently, it cannot be protected specifically by copyright in computer programs by virtue of that directive.

However, the graphic user interface can, as a work, be protected by copyright if it is its author's own intellectual creation. It is for the national court to ascertain whether that is the case in the dispute before it. When making that assessment, the national court must take account, inter alia, of the specific arrangement or configuration of all the components which form part of the graphic user interface in order to determine which meet the criterion of originality. In that regard, that criterion cannot be met by components of the graphic user interface which are differentiated only by their technical function. (CJEU decision of 22 December 2010, case C‑393/09, BSA)

Preparatory Design Materials

• Preparatory Design Materials of computer programs are protected by copyright, insofar they are such that a computer program can result from them at a later stage (CJEU decision of 22 December 2010).
• PDM = As long as they are sufficiently complete in terms of organization and communication of the information, they provide for the subsequent creation of the computer program.
• PDM = Can be compared to the screenplay of a film.

Italian case law:

• Preparatory materials which include only a broad analysis of the users' needs and of the functions that the computer program mut have from a commercial standpoint are not protected by copyright (Court of Rome, 6 May 2009 in DeJure).
• Flowcharts, as long as they simply describe how the different modules of the software interact with each other are also not protected by copyright (Court of Bologna, 17 January 2006, in Dejure).

Basic View on Steps of Computer Programming Computer Associated International v. Altai, Inc.

• Identify ultimate function or purpose of the program
• Break it down into "subtasks": subroutines or modules
• Arrange subroutines or modules into organizational or flow chart
• Parameter list design for each subroutine (the form in which information is passed between modules)
• Refining structure (for speed, efficiency, user experience, externalities such as memory)
• Translating the program structure into written language = coding (source code).
• Compiling source code into object code.

Downside of Copyright Law Protection is Secrecy, keeping software secret increases also the number of problems relating to interconnection of software and you are not incentivizing innovation.

Originality Article 1(3) EU Software Directive

• A computer program shall be protected if it is original in the sense that it is the authors' own intellectual creation. No other criteria shall be applied to determine its eligibility for protection.

Recital 8 EU Software Directive

• In respect of the criteria to be applied in determining whether or not a computer program is an original work, no tests as to the qualitative or aesthetic merits of the program should be applied.

Copyright originates with the creation (and in some jurisdictions, also fixation) of the work: registration is not mandatory. It's a matter of... creative choices: "author's (programmers's) fingerprints". Not original if the features of the work are dictated by technical considerations, rules or constraints which leave no room for creative freedom (CJEU, Football Dataco). It will be though rare that any program which is not a slavish copy of another program will not be the result of an intellectual creation of the programmer (Tritton).

Even the coding of very simple scripts can be done in enough differing ways so that the choices is still an intellectual task requiring creativity and choice (not merely labour and effort) (Tritton).

Who is the author of software?

Exclusive Rights Article 4 EU Software Directive The exclusive rights of the rightsholder shall include the right to do or to authorize:

• The permanent or temporary reproduction that includes if necessary, for the reproduction: loading, displaying, running, transmission or storage.
• The translation, adaptation, arrangement and any other alteration of a computer program and the reproduction of the results thereof, without prejudice to the rights of the person who alters the program.
• Any form of distribution to the public, including the rental, of the original computer program or of copies thereof.

Exceptions

• Article 5 EU Software Directive - Lawful User

  • A lawful acquirer can reproduce and alter - if needed for loading, displaying, running, transmission or storage and error corrections - in the absence of specific contractual provisions to the contrary. The exclusive rights are so broadly worded that it was necessary to clarify that the lawful acquirer could USE the software!
  • A person having a right to use the computer program can make a back-up copy and this cannot be prevented by contract in so far as it is necessary for that use (which is inevitably met because programs break down and degrade occasionally).

• Article 5(3) EU Software Directive - Research

  The person having a right to use a copy of a computer program shall be entitled, without the authorization of the rightsholder, to: observe, study or test the functioning (loading, displaying, running, transmitting or storing) of the program in order to determine the ideas and principles which underlie any element of the program. Meaning? If the acts of loading, running, reproduction etc. have been permitted for a licensed purpose (using the software), a party is entitled under this provision to observe, study or test the functioning of the program.

• Article 6(1) EU Software Directive - Decompilation

  The authorization of the right holder shall not be required where reproduction of the code and translation of its form are indispensable to obtain the information necessary to achieve the interoperability of an independently created computer program with other programs, provided that the following conditions are met:

• Those acts are performed by the licensee or by another person having a right to use a copy of a program, or on their behalf by a person authorized to do so.

• The information necessary to achieve interoperability has not previously been readily available to the persons referred to in the previous point.

• Those acts are confined to the parts of the original program which are necessary in order to achieve interoperability.

Software Protection: Copyright and Patent Law - Patent Protection for Software

Art. 52 European Patent Convention (EPC) - 1973 European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. The following in particular shall not be regarded as inventions withing the meaning of Paragraph 1:

• Discoveries, scientific theories and mathematical methods;
• Aesthetic creations;
• Schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers;
• Presentations of information.

Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-atter or activities as such.

So, can software be patented? In the law, Computer programs as such are not patentable, however we have Computer-Implemented Inventions (CIIs).

Importance of CII

Requirements for Patentability of CIIs CIIs can be granted a patent if there is an incentive technical contribution to the prior art.

Computer Implemented Inventions (CIIs) EPO Guidelines, Part F, Chapter IV. The expression "computer-implemented inventions" (CIIs) covers claims which involve:

• Computer, Computer Networks or other programmable apparatus.
• Whereby at least one feature is realized by means of a program.

Methodology at the EPO Two hurdles for patentability:

• Is there an invention? "patent-eligibility"
• Does it have required qualities? Novelty, Inventive-Step ("non obviousness").

Patent Eligibility - Hardware & Software Claim The claimed subject-matter uses technical means (e.g., computer). Very low hurdle: essentially it is sufficient that any kind of hardware is mentioned in the claim (a single technical feature in the claim is enough). As soon as you have a computer in the claim you overcome this (and this is always the case!)

Patent Eligibility - Software Claim

• A computer programs can also be claimed by itself if it is capable of bringing a "further technical effect" when run on a computer.
• A "further technical effect" is a technical effect going beyond the "normal" physical interactions between the program (software) and the computer (hardware) on which it is run.
• The normal physical effects of the execution of a program, e.g. the circulation of electrical currents in the computer, are not in themselves sufficient to confer technical character to a computer program, something more is needed!
• Examples of further technical effects which confer technical character to a computer program are:
  • The control of a technical process (manufacturing plant)
  • The control of the internal functioning of a computer.

Patent Eligibility - First Hurdle = Low Threshold A method of encouraging costumers to be loyal buyers by giving a discount on future purchases (Business Method, so Excluded). A computer with a database of customers who have preciously purchase and applying a discount to any subsequent purchase (Not Excluded) (Hardware + Software Claim). A computer-implemented method of encouraging costumers to be loyal buyers by giving a discount on future purchases (Not Excluded) (Software Claim). A program to do the method of encouraging costumers to be loyal buyers by giving a discount on future purchases (Excluded).

Inventive Step and Novelty Is the technical effect:

• New, prior art research.
• Inventive, a solution to a problem not provided by an averagely skilled person.

Examples: Patentable or Not?

• An anti-lock braking system (ABS) configured for:
  • Detecting lateral strain on each wheel.
  • Monitoring if a threshold is exceeded.
  • Selectively adjusting brake fluid pressure to each wheel
• A method of sorting a list of numbers, comprising:
  • Finding the smallest number
  • Swapping the smallest number to the top of the list.
  • Repeating the above steps for the remainder of the list.

It is Patent-Eligible: Breaking System:

• Technical feature of braking system.
• All of the features contribute to the technical effect.

Sorting Method:

• Not Patent-Eligible (no technical feature) - can be fully done by the human brain.
• A computer-implemented version of the sorting method would be patentable (because of the presence of the computer).

Multi-layered Protection on Software

Software Protection: OCS Licensing Agenda:

• All Right Reserved regime and the need for a new licensing model
• Proprietary Distribution vs Open Distribution
• Copyleft
• OSS and its relationship with Copyright Law
• From OSS to CC

Historical Background: before copyright protection for software

• At the very beginning of software industry, software was freely shared (in its source code version)
  • Hardware was the Source of Revenue
  • Software was easily understandable and modifiable (by developers in universities, research centers) and typically shared with other to find bugs, improve it, customize it.
• When the software industry became independent from the hardware one software started to be protected (as it is today) by a combination of copyright and trade secret (on the source code, distributing only the unintelligible object/binary code)
• Software started been distributed under an ARR regime
  • Proprietary licensing, that is EULA (End-User License Agreement).

Proprietary Distribution & "All Rights Reserved" Regime The current © "default rule" is characterized by:

• Full protection ("all rights reserved")
• For the maximum duration allowed by the law
• No formality is required to enjoy protection
  • Rule generalized by the Berne Convention
• Rules designed for professional authors of traditional works.
• The "full © default" imposes significant costs
  • Negotiation costs
• Today, not everybody "publishing" needs this protection as an incentive
  • E.g. some websites, blogs, wikis, etc.
  • Yet, full protection is automatically granted and opting out of it is also complex and costly

A new © Licensing Regime for new authors

• Informatics and networks triggered sociological and cultural changes
  • Intellectual creation and platform for interaction
  • Innovation is collective & incremental
  • Development of technical tools to favor collective creation
• Cost of creating and publishing dropped
  • Intermediaries are no more strictly needed to "publish"
  • Users are encouraged to become authors themselves.

Open Licensing - Copyleft Copyleft is the practice of using copyright law to remove restrictions on distributing copies and modified versions of a work for others and requiring that the same freedoms be preserved in modified versions.

• Is a form of (copyright) licensing, so copyleft may be the opposite of copyright in a practical or ideological sense, but it is legally strictly related and based on copyright.
• May be applied to copyrighted works of various kind: computer software, documents, music and any others.

Copyleft licenses are also known as viral, reciprocal or persistent licenses.** The copyleft license "by definition" is widely used GNU General Public License:

• Linux operating systems and several other open source software are released using (also) this license.
• It is in the software field that the copyleft idea historically originated and still produces its more impressive effects (also in terms of feedback for business activities).

Proprietary Distribution, All rights reserved, that is, all rights are with the author unless they are licensed (sometimes one by one). Open Distribution, Some rights reserved, that is, some rights are reserved to the author and the others are free for third parties to be used according to the license adopted.

Open Source Software (SW) - Historical Background At the very beginning of software industry, software was freely shared (in its source code version):

• Hardware was the source of revenue.
• Software was easily understandable and modifiable (by developers in universities, research centers) and typically shared with others to find bugs, improve it, customize it.

When the software industry became independent from the hardware one software started to be protected (as it is today) by a combination of copyright and trade secret (on the source code, distributing only the unintelligible object/binary code). Software started been distributed under an ARR regime with Proprietary Licensing.

Open Source is based on Copyright FLOSS is not synonym of public domain

• Stallman and others saw how it was to "appropriate" open software.
• "The GNU General Public License is intended to guarantee your freedom to share and change all versions of a program" - to make sure it remains free software for all its users"

Legally speaking, open-source licenses are based on copyright

• Developers that use the GNU GPL protect your rights with two steps:
  • Assert copyright on the software, and
  • Offer you this License giving you legal permission to copy, distribute and/or modify it
• Open-Source developers can impede the "privatization of new versions (derivative works) of their creations.

The term "free software" refers to the freedom of modifying it, but distributors and developers are free to charge for their work.

The first OSS License and Its principles 1986, Richard Stallman (free software foundation) SW license is free if it carries the following 4 freedoms:

• 0, the freedom to run the program for any purpose
• 1, the freedom to study and modify the program
• 2, the freedom to copy the program so you can help your neighbor
• 3, the freedom to improve the program, and release your improvements to the public, so that the whole community benefits.

The Source Code must be Open. The Viral Clause, prohibiting the privatization of the code.

• BSD-like licenses as the most eminent example of non-viral free software.

*Making Money with Copyleft Indirect Advantages:

• Reciprocity, receive modifications, comments, etc.
• Reputation and career incentives.
• Save on entry costs (and have to share in exchange).
• Fight against powerful incumbents with the help of a community.

Definitely possible with FLOSS:

• Self-Services
  • Developers have a competitive advantage in consultancy and support.
  • Free to keep "in-house" customization secret.
• Self-Proprietary improved versions
  • You can do so only if the license is not viral or you are the only copyright holder in the copyleft world. (You cannot make proprietary the community's improvements unless you get permission).

Open Source Distribution like RedHat. Were among the first oppositions to the patentability of Software. From Open Source we arrived to Creative Common Licenses.

CC License A CC license is a copyright license that authors can associate to their creative works, stating that "some rights [are] reserved". In order to create a CC License there are several modules that can be combined (detailing which rights are reserved):

• Attribution, users "must attribute the work in the manner specified by the author or licensor", so that they can receive credit for their work.
• [Non] Commercial, authors can choose if other parties may or not "use the work for commercial purposes".
• [No] Derivative Works, authors can choose whether licensees may or not "alter, transform, or build upon the work".

CC's communication Effort

The Creative Common License is Machine-Readable because when you request one, you obtain a digital code. You can include this code in your project to show how it is protected and which are the things that limits and possibilities of your production.

Trade Secrets

The Trade Secrets Directive (TSD)

• Law: Directive (EU) 2016/943 on the protection of undisclosed know-how and business information (so called Trade Secrets) against their unlawful acquisition, use and disclosure.
• Purpose: Harmonization of EU legal landscape on trade secrets, which was very varied amongst EU member states.
• Relevance: Trade Secrets are a valuable asset for companies, often greater than registered IPRs.
• Before: Some degree of harmonization with Art. 39 TRIPS.

Knowledge Economy With TSD Directive we give value to Knowledge that is kept secret.

Recital 1 TSD: Non-commercial companies and research institutions invest in the acquisition, development and application of know-how and information, which is the currency of the knowledge economy and provides a competitive advantage. Investment in the production and exploitation of intellectual capital is a key factor for the competitiveness and innovative capacity of companies in the market and therefore the return on their investment, which is the motivation behind the research and development activities of companies. The latter use various means to appropriate the results of their innovative activities, when market opening does not allow full exploitation of the investments made in research and innovation. One of these is the use of intellectual property rights, such as patents, design rights or copyright. Another means of appropriating the results of innovative activities is to protect access to and use of knowledge that is valuable to the entity that owns it and is not disseminated. This precious patrimony of know-how and commercial information, which is not disclosed and is destined to remain confidential, is defined as a commercial secret.

What are Trade Secrets?

• Types of Information
  • Undisclosed Know-How, Technical Knowledge useful or necessary for conducting a manufacturing process, resolving problems in industry (patentable and non-patentable knowledge): know-how in strict sense.
  • Business Information, knowledge or rules of conduct derived from experience in business management, including customer data (with sufficient degree of specification) or market analysis.
  • No specific level of originality, novelty or individual character is required.
  • The format in which the information is accessible is irrelevant.
• Protection Requirements - Article 1 TSD

  "Trade Secret" means information which meets all of the following requirements:

• It is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question.
• It has commercial value because it is secret.
• It has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.
• Objective Secrecy: Is the information Generally known or Readily Accessible to the relevant public? Examples for "Generally known":
  • Reports in Media
  • Public Registers (e.g. patents)
  • Public presentations on trade fairs, events.
  • Information that is totally inaccessible.
  • Information that is difficult to know as it cannot be accessed by competitors within a reasonable time and at reasonable cost (considerable effort and/or investment).
  • For example: trade secrets may consist in information that can be theoretically accessed by third parties with revers engineering activities of considerable complexity (but see below on reverse engineering)
• Economic Value
  • Business secrets must be of value to the undertaking which holds them: an economically significant competitive advantage over competitors.
  • They must be of some practical use to the business, in the context of an economic activity (but a potential advantage is sufficient).
  • By disclosing these secrets, the company would lose a competitive advantage position (e.g. cost savings).
  • E.g. more efficient manufacturing, better product quality, targeting of offers to customers.
• Reasonable steps to keep them secret
  • Reasonable measures, not too burdensome in terms of implementation costs
  • No overly intrusive controls of employees' activities.
  • Updated to technological development.
  • Ex ante judgment (even if a third party was able, in practice, to violate the secret, the measures can be adequate per se).
  • Contractual measures are considered (secrecy clauses in employment contracts, other confidentiality agreements, e.g. non-disclosure agreements).
• Conflicting decisions on "reasonable steps" (Italian Case Law)
  • Use of passwords to access computer files (Court of Bologna, 4-7-2008).
  • Use of passwords may be adequate, but in practice insufficient because the information could freely circulate by mail, fax and telephone (Court of Bologna, 16-5-2006).
  • Use of passwords on an employee's personal computer (which then leaves the company) instead of being uploaded on a company database.

Bottom Line Efficient protection of trade secrets and secret know-how depends on the protection measures the companies take themselves. Practical approach: a continuous series of steps, measures and arrangements that keep the economically valuable information secret. Remember: Potentially perpetual form of Protection. Who can benefit from TSD? Trade Secret Holder

• Companies
• Irrespective of their organization form, size, market share, area of activity, etc.
• "Start-Ups", SME (Small-Medium Enterprise)
• Non-Commercial Research Facilities

How wide is TSD Protection? Scope of Protection and Trade Secrets - Article 3 and 4 TSD

• 3(1) Member States shall ensure that trade secret holders are entitled to apply for the measures, procedures and remedies provided for in this Directive in order to prevent, or obtain redress for, the unlawful acquisition, use or disclosure of their trade secret.
• Lawful acquisition, use and disclosure is allowed, limitations to TDS Scope of Protection.
• Seems obvious, but enormous difference with other IPRs, e.g. patents, for which the protection is absolute.

Lawful Acquisition, Use and Disclosure of Trade Secrets

• Article 3 Trade Secrets Directive

  The acquisition of a trade secret shall be considered lawful when the trade secret is obtained by any of the following means:

• Independent discovery or creation.
• Observation, study, disassembly or testing of a product or subject that has been made available to the public or that is lawfully in the possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret.
• Exercise of the right of workers or workers' representatives to information and consultation in accordance with Union Law and National Law and practices.
• Any other practice which, under the circumstances, is in conformity with honest commercial practices.
• If I create something, that is exactly what others are keeping secret, they can't do anything. Because if I haven't copied I am not infringing any law.
• Reverse Engineering
  • Trade secrets can be protected even if information is theoretically accessible through reverse engineering (as long as not "readily accessible").
  • "Readily Accessible" means only information that can be learned from the simple explanation of products (NO: easy reverse engineering), without "observing, studying, disassembling or testing a product or object".
  • On the other hand: if you get information through reverse engineering, it is obtained independently and it is allowed (even if complex reverse engineering was necessary).
  • If the information to be protected can be obtained through reverse engineering, the behavior of the third party is lawful only to the extent that reverse engineering is the actual source of its knowledge.
  • The abstract possibility of tracing information back from the product is not sufficient to bypass protection (e.g. if you have stolen it).
  • The option of contractually excluding the eligibility of reverse engineering should be considered.

Unlawful Acts - Article 4 TSD

• Direct Infringement, Art. 4 (2) and (3) TSD:
  • Unlawful acquisition, Art. 4(2)
  • Use and disclosure, Art. 4(3)
  • Without the consent of a trade secret holder
  • No intent or negligence necessary.
• Indirect Infringement, Art. 4 (4) and (5) TSD:
  • Unlawful acquisition, use and disclosure if trade secret had been obtained from person who was using or disclosing the trade secret unlawfully in the meaning of Art. 4 (3), Art. 4 (4).
  • Same applies to: Production, Offering or Placing on the market of infringing goods, or the importation, export or storage of infringing goods for those purposes, Art. 4 (5).
  • Intent or negligence necessary

Infringing Goods - Art. 4 (5) TSD Art. 4 (5) TSD - The production, offering or placing on the market of infringing goods, or the importation, export or storage of infringing goods for those purposes, shall also be considered an unlawful use of a trade secret where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was used unlawfully within the meaning of paragraph 3. Art. 1 (4) - "infringing goods" means goods, the design, characteristics, functioning, production process or marketing of which significantly benefits from trade secrets unlawfully acquired, used or disclosed.

TSD Protection and Employee Mobility Explicit protection of employees: "Nothing shall be understood to offer any ground for restricting the mobility of employees" (Art. 1(3) TSD). Employees may use information that is not trade secret as well as their experiences and skills honestly acquired in the normal course of their employment. Distinction: Know-How of the company >< Experience Employee.

Trade Secrets & Patent Protection - Comparison Trade Secrets

• Exclusive right to relative secrecy vs. Unlawful acquisition, disclosure and use.
• The scope of the protection is defined by the secrecy of the information and not by its objective content.
• No dissemination of technical knowledge.
• No time limitation (potentially perpetual protection)
• A different and less intense form of protection than that of patents.

Patent Protection

• Exclusive right to use the invention erga omnes.
• Assessment of the merits of the existence of the protection requirements in relation to the objective content of the technical solution (novelty, inventive step, industrial application, etc.)
• Publication of the text and dissemination of technical knowledge.
• Time limit (20 years from application).
• Presumption of validity of the granted patent.

Trade Secrets & Software Copyright

• Invention or source code is (usually) kept a secret (unless in Open Source Software cases).
• Monopoly to use source code for unlimited period of time until becomes public knowledge.
• The exception for decompilation for the purposes of interoperability, which stems from copyright law, "trumps" the reverse engineering (lawful acts) provisions on trade secrets.
• Copyright + Trade Secrets on source code vs patent protection.

Trade Secrets & IP Rights

• Alternative to Patent: confidential information meets the requirements of patent ability; the inventor decides to "take the risk" of independent creation or disclosure against potentially perpetual protection which lasts as long as the knowledge base is secret (e.g. production processes; final products more difficult to produce).
• On Top of Patent: in addition to a core of patented information, other information is kept as a secret, in order to obtain a broader overall protection.
• On Top of Copyright: for software, where the secret is added on to on the protection offered by copyright.
• Accessory: to obtain patent protection (to allow the application) and possibly protect the information between the filing of the patent application and its publication.
• Sole Protection: for information which does not meet the requirements for patentability or which, even in the abstract, could not be patentable because not technical or, as such, does not deserve copyright protection (is not original).

IPRs on Data

Which data are we considering?

• Non personal data
• Machine-Generated data
• Navigation Data
• Search Engine Data
• Stock Market Data
• Energy Consumption Data
• Climate Control Data
• Audio/Video Usage Data
• Biomedical or pharmaceutical Test Data

IPRS on Data

• Copyright on Data
• Copyright on Database
• Database Producer's Right (Sui Generis Right)

Copyright Protection

Can we say that data is an original work? Because in that case we could assure that copyright is granted. However, as we'll see, the answer is NO.

Copyright Protection for Data as such?

• The answer is No.
• Copyright protects original works of authorship.
• Copyright protects original expression (the 'form') of a work, but not underlying ideas, theories, methods, facts (the 'idea') because of the idea/expression dichotomy principle.
• Example: scientific work (article) is protected by copyright, but not new theory, idea, discovery, facts.

Copyright does not protect data as such, yet it protects Compilations. Copyright in Compilations of Data?

• Compilations are protected as long as they are "original".
• Remember: "Originality" can mean different things in different jurisdictions:
  • EU: from personal stamp/character to "intellectual contribution".
  • British: from "skill & labour", "sweat of the brow" to "intellectual contribution".
  • US: modicum of creativity (similar to "intellectual creation").
• Can data be protected as an original compilation of data?
  • The answer is Yes, as long as compilations are original and not just arrangements of information in alphabetical order (Feist 1991 - US).

Compilations as Precursors of Databases What is a Database? A new Copyright Subject Matter Databases are organized collection of independent data.

Copyright Protection of Databases at International Level

• 10.2 TRIPs Agreement (1994): "Compilations of data or other material, whether in machine readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations shall be protected as such. Such protection, which shall not extend to the data or material itself, shall be without prejudice to any copyright subsisting in the data or material itself."
• 5 WCT (1996): almost identical provision.

A EU Definition of Database "A collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means" (EU Database Directive 96/9/EC).

A US Definition of Database "A work formed by the collection and assembling of preexisting material or of data" (Title 17 US Code).

But then What really is the Subject Matter? The structure of the Database in relation to a specific selection or arrangements of the content of the database.

What about the Databases' content? The copyright protection of Databases shall not extend to their contents and shall be without prejudice to any rights subsisting in those contents themselves.

Does Copyright on Database structure grant an exclusive right on Data? The answer is No.

The Sui Generis or Database Right in the EU

• Two premises for introducing the Database (sui generis) right:
  • Copyright might be not sufficient to protect databases around the EU.
  • A protection for copyright-free databases might be needed.
• The EU Database Directive - 96/9/EC

  Two-Tier System:

• Database "sui generis" right (for databases, including those that fail to meet originality).
• Copyright Protection (only for "original" databases).
• What does the Database Right protect?
  • It protects the investment, in terms of skills, labor, financial means, that is substantial, of the Database producer.
• Substantial Investment:
  • Qualitative
    • Expertise of a Professional.
    • Acquisition of a/the key content.
  • Quantitative
    • Expense of time, effort and energy.
    • Deployment of financial resources.
• Investment in what exactly?
  • Obtaining, gathering and collecting data.
  • Verification, checking and updating data.
  • Presentation, Digitizing, thesaurus, designing interfaces.

The activity that is missing is the generation of data, indeed ...

• How about Investment in Data Production? NO!

  The CJEU justified this exclusion:

• Investment in creation of contents irrelevant.
• Database right does not protect data as such.
• "Created" data are protected only after subsequent substantial investment.
• Rights

  Right to "prevent extraction and/or reutilization of the whole or of a substantial part, evaluated qualitatively or quantitatively, of the contents of the database" (Art. 7.1, Database Directive).

• Limitations to Database Right
  • No room for many exemptions traditionally found in copyright, such as quotation, news reporting freedoms, library privileges or reuse of government information.
  • Only few statutory limitations of the sui generis right.
  • Member States may permit private copying (from non-electronic databases only), and allow certain scientific and educational uses.
• Duration of Database Right
  • 15 Years from the date of completion of the making of the database.
  • However
  • Article 10(3): any substantial change, evaluated qualitatively or quantitatively, to the contents of the database that can be considered to be a substantial new investment shall qualify the database resulting room that investment for its own terms of protection.
• In the end: SGR/Database Right grant Protection for Data?

  The answer is Yes and No.

• Database right protects a "Database", but only structured data collections, not "raw data".
• Database must result from "substantial investment", but investment in "created data" is not protected.
• Database right does not protect data as such.
• Database right does not protect machine-generated data as such.
• But further investments can always be made.

Data Protection

Antitrust, Consumer or Privacy Policy? ... Or all of them? Separate EU rules converge around the creation of a thriving internal market and the protection of the individual

• Competition Law strives to ensure the efficiency of the internal market and the welfare of and choice available to consumer.
• Consumer Protection Law aims to ensure truthful and accurate information when making choices.
• Data Protection Law seek to ensure that individuals can control their own personal data.

What is Privacy?

• The right to be "let alone" (Warren and Brandeis, 1890).
• The right to protect oneself against unwanted information or advertising, appropriation of name or image, or any other kind of unwanted intrusion (Prosser, 1960).
• A human/fundamental right (Bloustein, 1964).

What is Data Protection?

• A set of rules granting individuals the "rights to control their personal data"(Westin, 1967); the way in which their personal data are collected and used (Stigler, 1980) and ... in summary, the right to control their analogical and digital identities entirely (Sweeney, 2002).
• Also, a human/fundamental right.

What is Personal Data?

Personal Data: An Evolving Category Personal Data are the data that identify or are able to identify natural persons, and that can provide details on, for example:

• Their features and characteristics;
• Their habits;
• Their lifestyle;
• Their personal relationship;
• Their states of health;
• Their economic conditions.

Some traditional examples of personal data By tradition, we consider:

• Identification Data, those data that allow direct documentation, such as names and surnames, or personal images;
• Sensitive Data, those data that can reveal racial and ethnic origins, religious beliefs, the state of health, sexual life, philosophical or political opinions, membership in parties, trade unions, associations or other organizations of religious, philosophical, or political nature;
• Judicial Data, those data that can reveal the existence of certain judicial measures subject to registration in the judicial register or the status of defendant or suspect.

Most recent examples of personal data With the evolution of new technologies, other personal data have taken on a significant role, such as;

• Localization Data, those data that provide information on frequented places and travel;
• Biometric Data, such as fingerprints, topography of the hand or the characteristics of the handwritten signature;
• Online Data, such as IP address and cookies or email addresses. For example, think that who, without the consent of the addressees involved, uses email addresses for sending general/advertising emails (so-called spamming) violates their privacy and violates data protection rules, even if the spammer found the emails addresses on the web.

Why we need to discuss Data Protection

• The privacy issue is not new.
• What is new is the ability to collect, store, and analyze a mass of personal data in real time without human intervention (e.g. the profiling of Google and Facebook).

Thus,

• Today the collection and analysis of personal data can affect individuals in their identities and effective freedom to express their thoughts, their personality, their choices.
• Why and How?
  • Because individuals may be associated with profiles that condition their behaviors;
  • Because those profiles could be wrong;
  • Because those profiles may reveal some details that individuals would prefer to hide ... Or that individuals do not even know.

Focus: Data Protection in the EU

• From Directive 95/46 to Regulation 2016/279
• GDPR, General Data Protection Regulation - from the 25^th^ May 2018 is directly applied in every Member State of the EU.

Technical words to better understand the GDPR

• The Data Subject is the individual whose data are processed.
• The Data Controller is who determines the purposes and means of the processing of personal data.
• The Data Processor is who processes personal data on behalf of the controller.
• The Processing means any operation or set of operations which is performed on personal data by both automated and non-automated means. For example, the collection of data, their recording, organization, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction ...

GDPR: Main Rules Personal data shall be:

• processed lawfully, fairly and in a transparent manner in relation to the data subject ('lawfulness, fairness and transparency');
• collected for specified, explicit and legitimate purposes and not further processed in a manner that is incompatible with those purposes ('purpose limitation');
• adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed ('data minimization');
• accurate and, where necessary, kept up to date ('accuracy');
• kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed ('time limitation');
• processed in a manner that ensures appropriate security of the personal data, including protection against unauthorized or unlawful processing and against accidental loss, destruction or damage ('integrity and confidentiality').

In particular, according to Article 7, Processing is Lawful if the Data Subject has given consent to the processing of his or her personal data for specific purposes.

The key factor: Consent Consent is any freely given, specific, informed and unambiguous indication of the data subject's wishes by which he or she - by a statement or by a clear affirmative action - signifies agreement to the processing of personal data relating to him or her.

Which means:

• Free, Specific, Informed
  • A service cannot be conditioned to consent (this is not considered freely given).
  • Tacit or presumed consent (e.g. to pre-checked boxes on a form) is not allowed.
• Revocable, with the same ease with which it was provided.
• Unequivocable, inaction cannot constitute consensus.
• Explicit for sensitive data.
• Demonstrable (the written form is not required, even if this is a way to configure the unequivocal consent and its being explicit").
• Minors' Consent only from 16 years onward; before: consent of the parents or of those who take their place.

Exception to the Consent Principle

• When processing is necessary for the performance of a contract to which the data subject is party or in order to take steps at the request of the data subject prior to entering into a contract.
  • The contract is sufficient (and no consent is required) when the processing of data is linked to an activity essential for its fulfillment (e.g. to manage the user in a contract for the supply of gas or electricity).
  • The contract (and consensus) is not sufficient if the collected data are used for other purposes (e.g. the company offering the supply wants to advertise its other services).

Further Exceptions to the Principle of Consent

• Processing is necessary for compliance with a legal obligation to which the controller is subject;
• Processing is necessary in order to protect the vital interests of the data subject or of another natural person;
• Processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller;
• Processing is necessary for the purposes of the legitimate interests pursued by the controller or by a third party, except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection of personal data, in particular where the data subject is a child.

(Some) of the rights of data subjects

• Right of Access. The data subject shall have the right to obtain from the controller confirmation as to whether or not personal data concerning him or her are being processed and, where that is the case, access to the personal data and the following information: Why? What? Where? For how long? How?
• Rights of Rectification and Erasure. The data subject has the right to request the controller to modify, correct or update, the data concerning him/her.
• Right to be Forgotten. The data subject has the right to obtain from the controller the cancellation of the PD that concern him without unjustified delay in some cases, including:
  • Personal data are no longer necessary with respect to the purposes for which they were collected or otherwise processed.
  • The data subject revokes the consent on which the treatment is based.
  • The data subject opposes the processing and there is no further legitimate reason to proceed with the processing.
  • Personal data have been processed unlawfully.

Before the right there was the case: Garcia vs Google Spain

"This right is born as an evolution of the principle established in Google Spain, a ruling of the European Court of Justice whereby the Court affirmed that the right of a person to obtain the de-indicization of a link related to a piece of news concerning that person when that piece of news no longer had public interest."

• Data Portability. This right to receive from the controller, the personal data concerning him/her so that they can be transmitted to another data controller. This right serves to guarantee the transfer of data from one online service to another:
  • Individuals' greater control over their data.
  • Greater competition between companies and therefore promoting innovation and the development of new services.

There are restrictions on the exercise of these rights (e.g. national security, defense, prevention and repression of crimes, public security).

When does the GDPR apply?

• Processing of PD is carried out by a controller/processor established within the EU, that is, by a controller/processor who performs an economic activity through a permanent organization which is established within the EU.
• Processing of PD is carried out by a controller/processor established outside the EU, but the processing activities are related to:
  • The offering of goods or services to data subjects living in EU; or
  • The monitoring of data subjects' behaviour taking place within EU. Indeed, GDPR applies outside the EU.

Data transfer to non-EU countries The expansions of international trade and the spread of online platforms has made data flows to non-EU countries increasingly common and frequent. Therefore, to ensure an adequate level of safety: conditions for a data transfer to third countries to be carried out. In particular, there are three ways whereby data can be transferred outside the EU in a safe way ... companies can rely on:

• Standard Contractual Clauses (SCC).
  • The European Commission has developed standard contractual clauses to allow the safe transfer of personal data to non-EU countries.
  • In everyday life, the exporter of data, incorporating the text of these SCC in the contract used for the transfer, ensures that the data will be processed in accordance with the principles established in European legislation also in the third country of destination.
  • The Data Controllers can prepare further and diverse ad hoc contractual clauses to be submitted to the Supervisory Authorities. An essential element is, however, the possibility for the interested parties to exercise their rights.
• Binding Corporate Rules (BCR).
  • These rules allow transfers to non-EU countries only among companies belonging to the same group.
  • They consist of a series of contractual clauses that dictate binding principles for all the companies belonging to the group, in line with the GDPR and which ensure an adequate level of protection.
  • Before being implemented, the BCR must be examined and approved by the supervisory authority.
• Ad hoc decisions.
  • In the absence of SCC and BCR, the data transfer to non-EU countries is eligible if it established that the third country guarantees a data protection level appropriate to the EU one.
  • To assess such adequacy, it is necessary to examine different aspects of the would-be processing: i.e. the nature of the data, the purpose of the processing, the possibility that such data will pass into other countries before reaching the destination country, the security measures adopted ... and so on.
  • The requirement of adequacy, rather than that of strict equivalence, gives more leeway to ensure a comparable level of data protection... Think, for example, to international agreements, such as that between the US and the EU.

The EU - US International Agreements for Data Transfer

• In 2000, EU and US concluded an initial agreement (so-called Safe Harbor) to allow and regulate the transfer of data of European citizens to the United States.
• In October 2015, the EU Court of Justice in the Schrems case declared Safe Harbor invalid.
• In July 2016, the European Commission created the so-called Privacy Shield, which is the new agreement regulating the transfer of. Data between the EU and the US.
• In July 2020, the EU Court of Justice in the Schrems II case declared the Privacy Shield invalid.

The Schrems Case The facts

• On 25 June 2013, Mr. Schrems - a user of the Facebook - asked the Ireland Privacy Commissioner to exercise its statutory powers by prohibiting Facebook Ireland from transferring his personal data to the United States.
• He contended that in the US the privacy law and practice did not ensure adequate protection of personal data against the surveillance activities that were engaged in US by the public authorities (after Snowden).
• The Commissioner rejected the complaint as unfounded.
• Mr. Schrems brought an appeal before the High Court challenging the decision of the Commissioner.
• The High Court found that the electronic surveillance and interception of personal data transferred from the EU to the US serve necessary and indispensable objectives in the US public interest.
• However, Snowden case showed a "significant over-reach" on the part of the NSA.
• Specifically, the right to respect for private life would be rendered meaningless if the State authorities were authorized to access electronic communications on a casual and generalized basis without any objective justification based on considerations of national security or the prevention of crime that are specific to the individual concerned and without those practices being accompanied by appropriate and verifiable safeguards.
• Therefore, the High Court referred to the Court of Justice of the EU (CJEU).

The Holding of the CJEU

• The Commission may adopt a decision - such as the so called Safe Harbour with the US - that said that a third country ensures an adequate level of protection.
• And until such decision is declared invalid by the Court of Justice, the Member States and their independent supervisory authorities cannot adopt measures contrary to that decision.
• However, such decision cannot prevent persons whose personal data has been or could be transferred to a third country from lodging with the national supervisory authorities a claim.
• And in such a case the national supervisory authorities must be able to examine, with complete independence, whether the transfer of that data complies with the requirements laid down by the directive.
• Thus, National privacy authorities can intervene!
• Furthermore, the Safe-Harbor is Invalid.
• In EU, any law affecting privacy for national security reasons must lay down clear and precise rules governing the scope and application of a measure and imposing minimum safeguards, so that the persons whose personal data is concerned have sufficient guarantees enabling their data to be effectively protected against the risk of abuse and against any unlawful access and use of that data.
• On the contrary, in the US the legislation permit the public authorities to have access on a generalized basis to the content of electronic communications and does not provide for any possibility for an individual to pursue legal remedies in order to have access to personal data relating to him, or obtain the rectification or erasure of such data.
• Thus, the US practice does not ensure an adequate level of protection by reason of its domestic law.

After the Schrems I Case The US and EU achieved another agreement, the so-called Privacy Shield which set forth:

• Stricter obligations for companies operating in the United States and processing personal data of European citizens.
• Controls and sanctions by the FTC (the Federal Trade Commission) for the US companies violating the conditions of the agreement.
• A clear prohibition of indiscriminate mass surveillance by public authorities on personal data transferred to the United States!

But this is not the end The Schrems II Case (2020) The EU Court of Justice:

• Invalidates the EU - US Privacy Shield Framework, as it does not satisfy the requirements that are required under EU law and it does not grant subjects actionable rights before the courts against the US authorities.
• But concludes that the standard contractual clauses issued by the European Commission for the transfer of personal data to data processors established outside of the EU are valid.

The recap on the EU - US scenario

• 2010 Safe Harbor
  • In 2016 declared invalid in Schrems I by the CJEU.
• 2016 Privacy Shield
  • In 2020 Privacy Shield is declared invalid by the CJEU in Schrems II.
• SCC are still valid.

To conclude: what has changed with the GDPR? Main Novelties:

• New conditions for lawful processing.
• Greater rights for data subjects.
• Exacerbation of pecuniary sanctions (now: up to 20.000.000 euros; for companies, up to 4% of their yearly sales).
• Extension of the territorial scope of EU privacy legislation.

Text and Data Mining (TDM): Copyright Issues

Starting Point:

• Commission's Communication, towards a thriving data - driven economy, COM(2014) 442 Final.
• Data - Driven Economy (DDE), i.e., "capacity of businesses and public sector bodies to make use of information from improved data analytics to develop improved services and goods that facilitate everyday life of individuals and of organizations, including SMEs".

The importance of text and data mining for the DDE

• 2.5 quintillion bytes of data every day and 90% of the data in today's world has been created in the last two years.
• The volume of data is doubling every three years (Big Data at the Speed of Business, New York, IBM, 2014).
• Facebook users alone share over 30 million pieces of content per month, and Twitter has 350 million tweets per day.
• The global academic and research community generates over 1.5 million new scholarly articles annually; and there are an estimated 50 million academic articles in circulation since 2010.

What is Text and Data Mining? Can you give me a definition? "Text and Data Mining (TDM) is the process of deriving information from machine-read material. It works by copying large quantities of material, extracting the data, and recombining it to identify patterns [trends and correlations]".

Where is the problem? It is not clear whether TDM infringes copyright! In particular, in most jurisdictions the law is unclear about whether:

• TDM is a copyright relevant act.
• Permission is required from rights owners. Meanwhile, publishers and other content providers limit TDM through contracts.

Within the EU instead

• We adopted a very narrow exception for TDM.
• Before getting to the TDM exception, let's have a look at the interplay between copyright and TDM.

Let's unpack TDM

• Input Selection (Dataset Creation).
  • Creative vs Non-Creative Works, i.e. out of copyright works vs in-copyright works.
• Pre-Processing: adapting the format to operational needs.
• Applying the mining tools.
• Output presentation.

What infringes what?

How about exceptions? Do they help?

• Temporary copy is unlikely applicable.
• Research exception is applicable on condition that:
  • Research Purpose.
  • Citation of Sources (Impossible).

The introduction of a new exception under Directive 2019/790 Article 3 - Text and Data Mining for the purposes of scientific research

• Member States shall provide for an exception to the rights provided for in Article 6(a) and Article 7(1) of Directive 96/9/EC, Article 2 of Directive 2001/29/EC, and Article 15(1) of this Directive for reproductions and extractions made by research organizations and cultural heritage institutions in order to carry out, for the purposes of scientific research, text and data mining of works or other subject matter to which they have lawful access.

Beneficiaries of the TDM Exception

• Cultural Institutions
• "Research Organizations":
  • University, including its libraries.
  • A research institute or any other entity, the primary goal of which is to conduct scientific research or to carry out educational activities involving also the conduct of scientific research:
    • On a not-for-profit basis or by reinvesting all the profits in its scientific research.
    • Pursuant to a public interest mission recognized by a Member State; in such a way that the access to the results generated by such scientific research cannot be enjoyed on a preferential basis by an undertaking that exercises a decisive influence upon such organization.

On condition that

• They are lawful users.
• They use it for scientific research. Now a question: What sort of TDM is cut off from this exception?

The debate on TDM Exception

Wrapping Up

• TDM is the research method of the future.
• TDM contributes to innovation and dissemination of knowledge.
• TDM contributes to the DDE.

  However as to now:

• TDM is infringing copyright unless it falls within the exception introduced by the Copyright in the DSM directive:
  • Which is narrow and unclear.
  • Where the category of beneficiaries is not well-defined.
  • The commercial purpose is excluded although not explicitly.

Artificial Intelligence and Creativity

A more honest title... Copyright Authorship and Machine Learning Behind the AI veil - What is Artificial Intelligence? Turing test - evaluate a machine's ability to appear human (Alan Turing, 1950). "Machines that are capable of performing tasks that, if performed by a human, would be said to require intelligence" (Scherer, 2016). "Systems that display intelligent behaviour by analysing their environment and taking actions -- with some degree of autonomy -- to achieve specific goals." (EU Commission, 2018). (Preferred definition).

Artificial Intelligence - Machine Learning Autonomous machines? Machine learning - not new, yet...

• Growth in computing power
• Data availability
• Progress in algorithms

Supervised vs Unsupervised learning Neural networking - learn from example

Machine Learning

• Large Datasets, accuracy
• Large computational power, speed
• Advanced Algorithms, precision

It is the ability to extremely fast make sense of input data with high accuracy without being explicitly programmed to do so.

What is Artificial Intelligence? From an IP perspective it is useful to distinguish:

• Assisted
• Augmented
• Autonomous (= "Computational")

Recent literature on artificial intelligence distinguishes three different forms, namely assisted, augmented and autonomous artificial intelligence. The difference between these forms comes from the allocation of decision rights between man and machine. In the assisted artificial intelligence stage, machines execute certain specific tasks, but decision rights remain solely with human beings; in the second stage, augmented artificial intelligence, humans and machines share decision rights and learn from each other; and in the third and final stage, autonomous artificial intelligence, machines ultimately take over all decision rights, either because humans increasingly trust the machines' abilities to decide, or because decisions have to be taken so quickly or require so many data that humans are simply unable to decide.

EU Copyright Law Implications Re-cap - Basics of Copyright Law

• A bundle of rights granted to the author of an original work for a limited period of time starting from the expression of the work.
• Legislation framework - very little harmonization in Europe - 11 Directives and 2 Regulations.
• Duration - 70 years PMA.
• Subsistence - Originality
• Rights - Economic and Moral
• Remedies - Injunction, damages, account of profits, etc.

Authorship - a two-fold analysis

• Designation issue - who is the author and, in the context of machine learning, can authorship of copyright be ascribed to a non-living person?
• Originality issue - can an AI-generated work be protected as original under EU law?

Designation - Can authorship of copyright be ascribed to a non-living person? No definition of an "author" in the law, however Human authorship implied - anthropocentric view

• Within copyright law framework
• Traditional justificatory theories:
  • Utilitarian theory
  • Locke Labor theory
  • Personality/Natural rights theory
• According both to Copyright Law Framework and Traditional Justificatory theories, the human is at the center, so Human Authorship.

Authorship in the Law

• Art. 6bis Berne Convention

  "Independently of the author's economic rights [...] the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honor or reputation. The [moral] rights [...] shall, after his death, be maintained, at least until the expiry of the economic rights, and shall be exercisable by the persons or institutions authorized by the legislation of the country where protection is claimed.

• Art. 1 Term of Protection Directive

  The rights of an author of a literary or artistic work within the meaning of Article 2 of the Berne Convention shall run for the life of the author and for 70 years after his death, irrespective of the date when the work is lawfully made available to the public.

Work protected by Copyright Originality - Can an AI-generated work be protected as original under EU law? For long no uniform understanding of originality - classical common law vs civil law opposition. Infopaq[2009], "Author's own intellectual creation". Yet, no definition of "creation". Circular definition.

Originality - In the Law

• Art. 1(3) Software Directive, Art. 3(1) Database Directive, Art. 6 Term of Protection Directive

  Computer programs, databases and photographs shall be protected if they are original in the sense that they are the author's own intellectual creation. No other criteria shall be applied to determine their eligibility for protection.

• Recital 16 of Term of Protection Directive

  A photograph work [...] is to be considered original if it I the author's own intellectual creation reflecting his personality.

Originality - In the Case Law

• CJEU -- Infopaq decision

  Extension the notion of originality as author's own intellectual creation to subject-matter falling within InfoSoc Directive.

• CJEU - Football Dataco decision

  *[T]he notion of the author's own intellectual creation refers to the criterion of originality. [T]hat criterion of originality is satisfied when [...] its author expresses his creative ability in an original manner by making free and creative choices [...] and thus stamps his "personal touch". By contrast, that criterion is not satisfied when the setting up of the database is dictated by technical considerations, rules or constraints which leave no room for creative freedom.*

US approach to Authorship A discusses in Section 306, the Copyright Act protects "original works of authorship". To qualify as a work of authorship" a work must be created by a human being... The Office will not register works produced by nature, animals, or plants. Likewise, the Office cannot register a work purportedly created by divine or supernatural beings, although the Office may register a work where the application or the deposit copy(ies) state that the work was inspired by a divine spirit. Examples:

• A photograph taken by a monkey.
• A mural painted by an elephant.
• A claim based on driftwood that has been shaped and smoothed by the ocean.
• A claim based on cut marks, defects, and other qualities found in natural stone.

Similarly, the Office will not register works produced by a machine or mere mechanical process that operates randomly or automatically without any creative input or intervention from a human author.

US approach is less anthropocentric than EU.

Practical Problems

• Certain interests to be incentivized
• Producing AI-generated works benefits society generally.
• Undermining human authorship - impact negatively the market for low creativity works.

There is the necessity to adopt a practical solution that "makes sense in terms of doctrine, but also in terms of realities".

Some of the potential authorship claims

• The user of the device, can someone who clicks a single button without determining any of the creative output and as such without employing intellectual creation be considered an author (patterns established by ML algorithm determine the creative output)?
• The programmer
  • It's for the programmer's creativity in the first place that the final output comes into existence.
  • However, no longer coded rules to follow, but examples to learn from...
  • The programmer creates the potentiality for the creation of the output, but not its actuality".
• The device (AI)
  • Human Authorship!
  • No need to be incentivized.
  • Absence of personality.
  • Lacks ability to exercise intellectual labour.
• Joint authorship
  • Absence of intention to be joint authors.
  • Fractioning the authorship claim.
  • Little harmony of interests between programmer and user.

In search for a pragmatic solution - Common Law Concepts - legal fictions

• UK - Copyright Designs and Patents Act (CDPA) 1988.

  Section 178: "computer-generated work means that a work is generated by computer in circumstances such that there is no human author". Section 9(3): "In the case of a literary, dramatic, musical or artistic work which is computer-generated, the author shall be taken to be the person by whom the arrangements necessary for the creation of the work are undertaken".

• A Straightforward Case

  In a British case concerning the frame images generated when the user plays the game, the person by whom arrangements were undertaken was considered to be the person who programmed and designed the game. The Court expressly refused to confer that status to the user, as the latter's input was not artistic in nature, nor had he undertaken the arrangements necessary to create the frame images.

• Less Straightforward Cases and the Issue of Legal Uncertainty

  In short, the uncertainty regarding the person by whom arrangements are undertaken, who will have to be identified on a case-by-case basis, does not favor legal certainty and constitutes a reason to not extend the applicability of this legal fiction.

• US - Works Made For Hire Doctrine.
  • Section 201 US Copyright Act 1976

    "In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author or purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright."

• A mismatch between the author-in-fact (employee or contractor) and the author-in-law (the employer or another person who has paid for the work).
• "Deemed" authorship through a contract/payment.
• And Ai generated works? The relationship between the creator of the AIs and the Ais does not fit the characterization as commissioner-creator or employer-employee (not least because the employee or agent has legal rights and duties by agreement with the employer/commissioner).

Some conclusions

• Many creative works as a result of machine learning.
• EU Copyright System (as well as US) - the human author is central.
• Practical problems if public domain solution adopted - low creative works.
• Potential authorship claims not working.

Other solutions...

• Sui generis regime?
  • Drawing parallels with the database producer's right, the most suitable rationale for protection of AI generated works would be investment protection.
• Public domain solution with publication/dissemination rights for a limited amount of time.
• Short term copyright protection with no moral rights.
• The right solution to be adopted needs economic justification -need to understand whether market failure exists: this should be assessed together with economists.
• Solution will have to be coordinated with liability for AI actions.

AI and Innovation

Outline of the Class

• Recap on basic concepts of patent law
• AI-generated prior art (Can AI "destroy" the patent system?)
• Implications of AI for patentability requirements (Can AI qualify as a "tool"?)
• Implications of AI for patent inventorship and ownership (Can AI invent"?)

Recap on Patent Law - Patent Law Basics Patent

• Patent, title issued by an administrative authority, conferring the exclusive right of commercial exploitation of an invention for 20-years starting from the filing of the application.
• The rights are conferred only with the grant (following substantial/formal examination)
• Claims? Description?

Invention - 45 IPC / 52 EPC

• No general definition of invention in European Patent Convention (EPC) or Italian Industrial Property Code (IPC)

  European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application.

• Scholars: new and original solution to a technical problem, that is suitable for industrial application (functional definition).

• As long as it meets the mandatory requirements + subject-matter not excluded from patentability = patentable invention.

• Dynamic concept, to adapt to technological development.

• In the patentability requirements, the notion of "inventor" does not come up!

Novelty - 46-47 IPC / 54 EPC

• An invention shall be considered to be new if it does not form part of the state of the art (check the prior art!).
• The state of the art shall be held to comprise everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing of the application.

Prior Art

• Priori art is any evidence that your invention is already known.
• It is enough that someone, somewhere, sometime previously has described or shown or made something that contains a use of technology that is very similar to the invention.
• A prehistoric cave painting can be prior art. A piece of technology that is centuries old can be prior art. A previously described idea that cannot possibly work can be prior art. Anything can be prior art.

Inventive Step - 48 IPC / 56 EPC An invention shall be considered as involving an inventive step if, having regard to the state of the art, it is not obvious to a person skilled in the art.

Person skilled in the art:

• Abstract mode that is only aware of the state of the art in the technical field of the invention (not "medicine", but "oncology", or - if applicable - "pediatric oncology) + common general knowledge (textbooks).
• May be a team, and thus be aware of multiple technical fields ("chemistry" + "oncology")
• May know other fields, if neighboring or even remote (respectively, if common to know or if prompted to do so).

Beware of the distinction! AI - Inventor vs AI - Invention

• Fundamental distinction between:
  • Invention/patent developed by an AI system (AI is the Inventor).
  • Invention/patent having an AI system as its subject matter (AI is the Invention).
• EPO new examination guidelines (into force on 1 November 2018). Essentially confirm the framework for computer-implemented inventions (CII).
• AI is a mathematical methods (MM). MM per se are devoid of "technical character" and thus not patentable. AI constitutes patenable subject-matter if it provides a technical solution to a technical problem:
  • An AI classifying text documents in respect of their textual. It is not an invention.
  • The use of a neural network in a heart-monitoring apparatus for the purpose of identifying irregular heartbeats makes a technical contribution. It is an invention.
• However, an AI system may invent a patentable AI system.

And now... to the real stuff Three hypothesis

Can AI "destroy" the patent system? AI-generated prior art

Can these texts constitute "prior art"?

• Remember: "Anything can be prior art". Potentially also automatically generated texts.
• Online content accessible through a specific URL is made publicly available if:
  • Can be found through a web search engine using keywords;
  • Accessible for a period of time adequate for direct and unambiguous access of the public.
• Cloem and the "All" project are both:
  • Published online in a non-confidential manner (potentially: "made available to the public") or filed at patent offices.
  • Time-stamped (established priority date).

Enablement, Technical Fields, Policy Risks

• On the side of the patent filing: Enabling Requirement: subject-matter described in a filing should provide information given to the skilled person which is sufficient to enable him to reproduce it.
• On the side of prior art: Machine-generated documents combining documents from remote technical fields could be disregarded (the reference could be considered not pertinent or analogous).
• Policy risks: monopoly in the hands of the automated-drafters, overburdening patent offices' workload, uncertainty for patent system.

For the time being very low likelihood of "destruction".

Can AI qualify as a "tool"? - AI as a tool in the invention process

• Super-tool?

  Dominant approach: AI cannot "invent" but is - at best - a sophisticated tool used by the inventors to reach the invention. Humans, not the machine, define the problem to be solved, set the parameters to solve it, identify the best solution (e.g. Oral-B CrossAction: selection of designs provided). "Human "ingenuity" is still necessary to define targets, parameters and success criteria" (Fraser, 2016). Different from Copyright? AI does not create the "full" output (but really?)

• Patentability

  The fact that an invention was made with the id of AI does not exclude its patentability. The way an invention has been realized is irrelevant to patentability. It is the result that counts, provided that it meets the patentability requirements.

• Novelty, there may be texts that are understandable/accessible by the AI and not by humans (e.g. coded, encrypted, mutated information). This could extend the universe of prior art to be considered when assessing novelty.

• Inventive Step

  • Relevant Prior Art, the skilled person as we know it:

    Will not consult prior art in remote technical fields (except if prompted to do so). Will consult prior art in a neighboring/broader general field only if the same/similar problem occurs (incentive to search in that field). AI is not biased to other technological fields, and may be able to factor in an enormous volume of technical data from remote fields. Need to broaden the scope of prior art? The broader the prior art, the more likely it is to find the invention lacking incentive step.

• Person Skilled in the Art

  AI may also affect the level of skill of the person skilled in the art. EPO: "the skilled person has at his disposal the means and the capacity for routine work and experimentation", which are normal in the field of technology. Is the use of AI a "routine" tool in the relevant field?

• NO, patent inventive If not obvious to the skilled person without use of AI (even if AI has done most of the work).

• YES, the skilled person is improved" with the AI. No inventive step if obvious to skilled person + AI (even if you didn't use AI).

  Yet, very complex to assess the capabilities of "normal" AI tool. How can patent examiners, patent attorneys and Judges assess this?

• Not disclosed in the application.

• Output difficult to predict (and may be different if the same input is fed to the system twice).

• Training data (standard/ not standard).

• Examined datasets.

• Self-learning and improving mechanisms.

  If the invention results from a large number of calculations, or brute force trial-and-error testing may seem non-obvious, but the result is inevitable?

• Industrial Application - Person skilled in the art

Can AI "invent"? - AI as an inventor

• Does AI invent?

  • Position 1: Some argue that autonomous AI inventions are still far away, but address the possibility (cf. antenna in deep space example).
  • Position 2: Others are convinced that, due to the minimal or exceedingly fragmented role of natural persons, inventions are already being developed (essentially/primarily) by AI systems autonomously.
  • Position 3: More reasonably, even if we were to accept that AI invents, the AI is a "joint" inventor, within a skilled research team (still designed, developed, prompted and assessed by humans, but play along like a member of the team), does not invent in a vacuum (yet).

• Patentability: is an AI-invention actually an invention?

  Not anthropocentric view of invention (although hints of "inventor's creativity" in case law and scholarly approaches in EPO Member States).

• Different from US: patentable subject-matter "anything under the sun made by man" (Diamond v Chakrabarty).

• But: recent position of the UKIPO would not allow to list an AI Inventor.

• Different from Copyright: "originality" is defined as "author's own intellectual creation" (IT, also: "expression of the author's personality..."); "author" is the foundation of copyright law.

• Preliminary Distinction

  • Inventorship vs. Ownership

    The following applies both for AI as a "tool" and AI as an "inventor".

• Inventor

  No definition of inventor in the EPC or IPC. However, the inventor is generally framed as a human being.

• Art. 60(2) EPC: "If two or more persons have made an invention independently of each other..."

• Art. 185 IPC: the patent application must include first and last name of the inventor.

• Art. 62 IPC: the moral right to inventorship may be enforced by the inventor itself and - after its death - by its spouse, its descendants, its ascendants or, in lack thereof, by other relatives up to the fourth degree.

  So? It is not possible to claim an AI as the inventor in the current framework.

• What happens if the applicant omits the inventor?

  Art. 81(1) EPC: "The European patent application shall designate the inventor". If the designation of the inventor is absent or deficient and the inventor does not provide the name within 16 months from the filing/priority date the application is refused (Art. 60 + 90(5) EPC). However, if the missing/incorrect designation goes unnoticed: this is not a cause of revocation of the patent (numerus clausus rule) (Banterle 2018).

• Potential solutions to inventorship issues?

  • No patent protection for AI inventions.
  • AI as "tool" - need to find a "peripheral" human inventor.
  • Amendment to encompass AI as the inventor.

• No Protection

  • Ravid-Liu (2018), When Artificial Intelligence Systems Produce Inventions: An Alternative Model For Patent Law At The 3A Era:

    "We argue that [...] these inventions should not be patentable at all, and that other tools can achieve the same eds while promoting innovation and public disclosure. These other, non-patent incentives include commercial tools such as electronic and cyber controls over inventions, first-mover market advantages, and license agreements. [...] In maintaining the traditional patents system by hunting for a "real" human inventor, policy makers exhibit a misunderstanding of advanced technology and AI system features".

• Peripheral natural inventors "behind" the AI

  • The AI user.
  • The AI programmer (trainer, provider of data, software developer, ...).
  • The AI owner.
  • The person that recognizes that the AI's output is a patentable invention.
  • And potentially others... possibly too fragmented? AI is now being developed by very large research groups.
  • Who do you think is best placed to be named as the inventor?

• AI recognized as the inventor

  The Ai (in this scenario) contributes and communicates all the elements of the inventive concept, it can be seen as the inventor. Most likely, Ai inventions are developed within a team anyhow, so the AI would be one of the members of the team. However, this requires a human-neutral interpretation of patent concepts.

• Ownership

  Following the discussion on inventorship -> ownership of the patent. The general rule is that the inventor is the initial owner of the right to paten, the right "originates" upon him (Art. 63 IPC - 60 EPC).

• Ownership - Employed-to-Invent

  • Art. 64 IPC: Inventions made by employees (EPC leaves this matter to Member States).
  • The right to patent belongs to the employer when the invention is developed in performance of an employment contract.
  • Rationale: the relevance of economic investments in R&D is bigger than that of the inventor's role in developing the invention.
  • The same applies to commissioned inventions (no employment relationship).

• Employed-to-Invent and Commissioned Inventions

  • Position 1: the right to patent inventions developed within employed (or commissioned) work "originates" directly upon the employer/contracting party.
  • Position 2: the right to patent developed within employed (or commissioned) work "originates" upon the inventor and then is automatically transferred to the employer/contracting party.

• AI as Employed-to-Invent

  • The employed-to-invent principles could be adapted to the scenario where AI is indicated as the/amongst inventor(s).
  • If one were to consider the AI as an employee/contractor there would be no issue of assignment of rights, of any kind, as the rights to patent would "originate" directly upon the owner/customer, while the recognition of moral rights is inherently excluded.
  • This requires two interpretative" hops (AI as inventor and AI as employee) but would seem to generate the maximum benefits in policy objectives and legal certainty for third parties, so we shall wait to see what happens next.

• Policy Considerations

  • Cons of not allowing AI inventions
    • The AI's role in the invention may be omitted in the patent application (see Thaler's patent); undermines certainty in the system and causes a fracture from reality in the assessment of the patentability requirements (e.g. factor the use of AI, or not, in a technical field).
    • May discourage innovators from pursuing AI inventions (which still require humans to create and maintain AI systems), thus stifling tech-progress.
    • AI-inventions may be kept as trade secrets (non-disclosure instead of disclosure; risk of a perpetual monopoly): again, risk of stifling innovation.
  • Pros of not allowing AI inventions

    Would prevent a number of risks:

• Impact on future human innovation since supplanting human intelligence may result in atrophy of human intelligence and obsolescence of the scientific method;

• R&D job market (innovation is more accessible);

• Risk of monopolies in small fields (with innovation at very quick rates).

• Dominant Approach

  IP protection for AI-Innovations is justified (utilitarian approach: as long as the inventions meet the patentability requirements, i.e. the contribute to progress).