NAFTA Intellectual Property Talks Should Be Wary of Big Data Impacts

Expanding intellectual property protection may stifle innovation and harm the public interest

Published: July 18, 2017

Author: Teresa Scassa

This article is part of a series about what the renegotiation of the North American Free Trade Agreement means for the knowledge economy in Canada and for the people who turn ideas into innovations within one of the world’s largest free trade zones.

As we move into the era of big data and pervasive algorithms that exert growing influence over our lives, ownership of data and associated algorithms takes on great importance for consumers, whose rights are at stake, and for businesses, whose futures are at stake.

Data has become essential to the business models of a broad range of businesses, both digital and analog. At the same time, data is the fuel of science, research and innovation, and it is crucial to the transparency of both government and corporate activity. In this context, while there are strong interests in controlling access to and use of commercial data, there are also strong public interest arguments for ensuring access to a broad range of data for the common good.

Our current intellectual property (IP) regimes do not provide for ownership rights in data — and for good reason. Nevertheless, it is quite common in contracts, licences or terms of service for companies (or government actors) to assert ownership rights in data. Such statements overreach, but they allude to a web of law that provides different types of protection for data.

Both software and compilations of data can be protected in the North American Free Trade Agreement (NAFTA) countries under copyright law, although the protection available for compilations of data is thin and the subsistence of such rights and their scope is a matter of case-by-case assessment. Algorithms may be protectable by either copyright law or patent law. In many cases, both algorithms and data are protected as trade secrets or confidential information. Contract law is also commonly used to govern relationships around data and algorithms, including rights of access and use. Companies operating in the big data environment rely on a combination of different types of protection for their data.

In Europe, discussion has arisen around the creation of a new data ownership right, although to date there are no concrete plans for such a right and the obstacles it presents may leave it permanently at the idea stage. Not only is “data” a difficult concept to define for the purpose of establishing a new ownership right, but attributing ownership would also be challenging. This is because it may be difficult to identify all those who play a role in the coming into being of any given data set. There will inevitably be conflicts with data protection law as well. In addition, creating new property rights in data would require serious consideration of both the adverse impacts on innovation such a right might have and of the users’ rights that will be necessary to ensure the protection of the public interest in access to and use of data. Given the rapidly changing data environment, it is also probably highly premature to consider a data ownership right. Doing so could very well create uncertainty, increase transaction costs and adversely impact both innovation and the broader public interest.

Those interested in rights — both in data itself and to access and use data — should also pay attention to the broader IP discussions in the NAFTA negotiations.

In North America, there has been little or no public discussion of a specific data ownership right, and it is unlikely that such a concept would (or should) arise in the context of new NAFTA negotiations. However, this does not mean that the negotiations will not address IP issues relevant to the evolving big data environment. For example, trade secret protection has become an important means of protecting both data and algorithms. In the United States, the recent passage of the Defend Trade Secrets Act of 2016 reflects the growing US interest in creating a more robust national framework for the protection of trade secrets, in particular against hacking and industrial espionage. The United States may well be interested in pushing its NAFTA partners to take similar steps in their domestic law, and signalled this week when it released negotiating objectives that its negotiators will be pushing for tougher IP provisions. 

For Canada, committing to enhanced trade secret protection will present interesting constitutional challenges. Trade secrets are currently protected under a web of legal principles that fall under provincial jurisdiction, including tort law, contract law and equity. The new US law does not depart significantly from the basic principles in this body of Canadian law, but it does provide considerably more structure for the protection of trade secrets. It creates a federal right of action for breach of trade secrets, enhances the protection of trade secrets that are the subject of litigation and provides recourse for anyone who suffers damage flowing from the wrongful seizure of materials in the course of such litigation. The statute also contains protection for whistle-blowers. It is not clear whether the Canadian government could overcome the jurisdictional issues around enacting similar legislation without significant cooperation from the provinces.

Those interested in rights — both in data itself and to access and use data — should also pay attention to the broader IP discussions in the NAFTA negotiations. As noted earlier, both patent and copyright law have roles to play in protecting aspects of the big data economy, including algorithms and compilations of data. Where IP issues have been on the table in international trade negotiations, this has reliably meant one thing: pressure to increase levels of protection (rather than to provide new exceptions or users’ rights). In the trade treaty context, issues of the nature and scope of protection as well as the extent and scope of users’ rights in copyright law are typically addressed from the perspective of rights holders in content industries (film, music and so on). Yet enhanced protection will have spillover effects into data-dependent industries, which may not be necessary or desirable. For example, while content industries might consider increased protection for technological protection measures — or “digital locks” — to be essential in the fight against unauthorized copying, the same protection, when applied to compilations of data, could have the effect of overriding the basic copyright principle that data is in the public domain. The 2012 digital locks amendments to the Canadian Copyright Act are already receiving an expansive interpretation that risks overriding the public interest in some cases. If the NAFTA negotiations pursue a further strengthening of rights without exceptions that will ensure access to and use of data where appropriate, this will have undesirable impacts on innovation and will have important negative effects on the broader public interest.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.