Intellectual property in a data-driven world

October 2019

In the lead up to the 2019 meetings of the WIPO Assemblies, WIPO Director General Francis Gurry reflects on the implications of big data for intellectual property (IP) policy.

How is the digital transformation fueled by advanced technologies like artificial intelligence (AI) re-shaping the global IP landscape?

Our understanding of the impact of the digital transformation on the global IP landscape is very preliminary. However, we can observe that it is fast moving and profound and will have a significant bearing on the administration of IP systems and IP policy. Navigating the impact on IP administration is relatively straightforward. To a large extent, it involves evaluating the benefits of applying and using these technologies to improve the operational efficiency of IP offices. The harder part is working out how these technologies will affect IP policy. The IP rights we have today were mainly developed during the Industrial Revolution in response to mass production. One of the big questions we face today is whether these existing IP rights provide the incentives required to promote innovation in the digital age.

WIPO Director General Francis Gurry (Photo: WIPO/Berrod)

Is the classical IP system still relevant in the new data-driven economy?

For the moment, business tells us that the classical IP system is far from obsolete. Statistics show unprecedented use of the classical IP system, with growth rates far outstripping global economic performance. However, we do have to take note of the fact that advanced data-driven digital technology is clearly the dominant force in economic production and distribution within the digital economy. We also have to ask if the statistics reveal increasing use in relation to the industrial economy or if they also apply to the digital economy. How effective the classical IP system will be in addressing all of the issues arising from the data-driven technologies that dominate in the digital economy remains unclear. Undoubtedly, these will pose significant challenges for IP policymakers.

Is there any evidence that countries are starting to adapt their innovation policies to the digital economy?

Yes. A number of countries have adopted strategies that place AI at the heart of their economic strategy. Advanced digital technologies, including AI, are capable of developing new and beneficial products and services through the manipulation of data. Some of them, notably AI, improve their performance when they have access to greater quantities of data. At present, there is broad agreement that making data available is a good thing for the development of useful and beneficial products and services. However, governments cannot reasonably require companies to share their confidential data with competitors. What they can do is to make public service data, such as that gathered by the provision of public services, and data flowing from publicly-funded research, available to enterprises for whom it may have value. Certain private actors, including scientists, who believe in making data publicly available, are adopting similar practices. There are still many complex policy questions surrounding data in the digital economy.

There are still many complex policy questions surrounding data in the digital economy.
Francis Gurry, WIPO Director General

What are important next steps for policymakers in creating an effective IP policy framework around data?

We need to define appropriate and legitimate practices with respect to the collection, storage and use of data. In other words, we need to identify what restrictions are appropriate for the collection and subsequent use of data and we need to understand why these restrictions are necessary. Although exceptionally powerful means of collecting data of all types (e.g. voice, text, image, etc.) exist, we still need to identify appropriate means of collecting and using those data.

We need to define appropriate and legitimate practices with respect to the collection, storage and use of data.
Francis Gurry, WIPO Director General

What factors come into play when establishing possible restrictions on data use?

Privacy is perhaps the factor that has received the most attention to date. The European Union’s General Data Protection Regulation (GDPR) is a consequence of this. The Universal Declaration of Human Rights (Article 12) recognizes privacy as a human right. Interestingly, however, the current lack of policy clarity around privacy has resulted in some businesses using it as a competitive tool. Certain companies, for example, claim to offer better privacy safeguards than their competitors. One can imagine others entering the market with similar offerings, each potentially involving restrictions on the collection, storage and use of client data.

Security is another factor, in particular, where there is a desire to ensure that data are not publicly available, for example, to protect personal privacy or to maintain a competitive advantage. Security poses particular challenges because under normal circumstances, the State would not impose such a restriction. In general, the State approaches security in terms of an individual not being permitted to trespass – to use the words of the physical economy – on another’s property. Policymakers now have to decide how that applies to the digital economy. Their conclusion may result in further restriction on the collection and use of data.

Insofar as data are a fundamental input to production and distribution in the digital economy, the concentration of market power and its effect on competition will also give rise to a restriction on the collection, storage and use of data. Competition policy guards against any abuse of market power by economic agents with a dominant market position. While related policies are under development, policymakers do not yet fully understand the digital market, or what anti-competitive behavior looks like in that context.

Taxation in the digital economy is another big issue. In the physical economy, the source of goods, residency, and citizenship are generally the bases on which governments assert the right to tax. How can these concepts be applied to the digital economy where a platform operates in one part of the world and sells and makes goods available online for download elsewhere? How can tax authorities track such transactions? Should taxes be levied at the place of offer (where a platform’s headquarters are located, for example), or in the country in which the goods are purchased? Who has the right to tax the value created from that transaction? The Organization for Economic Co-operation and Development (OECD) is working to develop a better understanding of these questions.

And then of course, property and intellectual property, in particular, is a big factor. Under the classical IP system, any non-public data that an economic agent has taken reasonable steps to keep confidential, and which have perceived economic value, may constitute a trade secret. Within the digital economy, trade secrets have become a dominant means of protecting unpublished data of economic significance. But do trade secrets adequately protect such data? Trade secrets are not a property right in the classical sense, they are relational rights in the sense that individuals do not have the right to intrude on or abuse another’s trade secret. For example, if a company gives data to a sub-contractor for a specific purpose, the subcontractor cannot use them in any other way. Policymakers will need to examine whether trade secrets adequately address or regulate all of the issues that may arise in relation to data protection in the digital economy.

“At the policy level, we are encouraging a conversation among member states with a view to collectively formulating the questions that policymakers need to ask and then collectively discussing potential ways to ensure we create effective innovation policy settings for the new digital economy,” says WIPO Director General Francis Gurry (photo: WIPO / E. Berrod / Sheyda Navab).

Do you foresee the emergence of new property rights for data?

At this stage, I do not foresee a new registrable property right for data. If a new right emerges, it will result from society coming to a position on the illegitimate collection, storage and use of data, with anything outside that sphere being deemed legitimate. Once in place, restrictions may be perceived as the basis of the exclusionary rights that we normally consider to be property. By way of illustration, consider the Babylonian Code of Hammurabi dating from 1754 BC. That law does not confer a property right for sheep; it simply states that it is unlawful and punishable to steal a neighbor’s sheep. In this way, when we create restrictions on the free flow of data in its collection, storage and use, they may, at some stage, amount to a property right.

What are your views on whether a machine can acquire a property right?

This question is currently attracting a lot of attention. In addressing it, we should not forget that a starting point for developing IP policy, and indeed innovation policy, is to identify desired outcomes. What is it that we want to achieve? This is the fundamental question. If society considers innovation will be encouraged by giving a right to a machine, then such a proposition may gain traction. But how would such a right work in society? At some point, a human being has to derive revenue or otherwise benefit from that right. Moreover, inventors and scientists already use a whole range of technologies to develop inventions and achieve results that would not otherwise be possible.

A starting point for developing IP policy, and indeed innovation policy, is to identify desired outcomes.
Francis Gurry, WIPO Director General

Are there other more relevant questions that IP policymakers need to consider?

Yes. Far more important questions arise in relation to restrictions on the use of data with respect to AI-based algorithms. For example, is it an infringement of copyright to feed copyrighted data into an AI algorithm for learning? This is a difficult question because first, we are not sure what the impact of such a restriction will be, and second, it is not clear that we will ever know whether a work produced by a deep learning algorithm is created using copyrighted data. So we need to carefully examine the outcomes we want to achieve and the arrangements that need to be in place to achieve them.

How is WIPO gearing up for the digital economy?

At the policy level, we are encouraging a conversation among member states with a view to collectively formulating the questions that policymakers need to ask and then collectively discussing potential ways to ensure we create effective innovation policy settings for the new digital economy. Although we are light years away from any international position on these issues, the exercise is important and has a lot of value. It will improve our understanding of the IP policy implications of the dominance of data-driven technologies in the digital economy and will support the development of national positions on these questions.

At the operational level, as a multilateral organization, WIPO also has to address the question of distributional justice and the impact that the rapid evolution of the digital economy is having on the capacity of developing countries to participate and compete in the digital economy. Inevitably, this will inform the nature of WIPO’s development program.

In terms of the Organization’s services, the scale of WIPO’s digital transformation is significant. The Organization is continuing to invest in improving its online platforms and in developing new AI-based tools for them. Examples are WIPO Translate, WIPO’s image-search technology for the Global Brands Database and a suite of new tools, including speech-to-text technology to improve the quality and speed of the records of WIPO meetings. Various other tools are in the pipeline.

Subject to approval by member states, WIPO is also proposing to establish a digital time stamping service, a sort of digital notary service, that will help innovators and creators prove that a certain digital file was in their possession or under their control at a specific date and time. This is a small but significant step towards helping inventors and creators better protect their IP interests in the digital economy. It is also an important part of moving WIPO’s services to the reality of the digital economy.

It is so easy to represent these developments as a series of cool new products and services, but we must not lose sight of the need to find policy solutions to address these profound and transformative developments.