ELI submits a Response to the European Commission’s Public Consultation on the Data Act

07.09.2021

Lord John Thomas, Co-Chair of the ALI-ELI Principles for a Data Economy project, and Christiane Wendehorst, Co-Reporter of the project, together with Yannic Duller and Sebastian Schwamberger prepared a response to the European Commission’s public consultation on the Data Act which was submitted on behalf of ELI.

With the Data Act, the European Commission plans to put forward a horizontal legislative initiative, which aims to establish a legal framework for a fair data economy. In the Response, the Authors outline how the ‘Principles for a Data Economy’, recently approved by the ELI Council, can provide guidance on several of the policy questions the European legislators will need to address in the Data Act.

Regarding the need to ensure fairness in business to business (b2b) data sharing situations, the Authors have identified three different scenarios that need to be addressed:

  1. A holder of data is considering to share data with others but is discouraged by legal uncertainty or by lack of protection against particular risks (the ‘discouragement by risks and uncertainty’ scenario);
  2. Parties are in a contractual relationship with each other, or belong at least to the same economic ecosystem (such as by being links in a value chain), but data access and use occur under conditions that are unfair vis-à-vis weaker parties (the ‘unequal bargaining power’ scenario)
  3. The law mandates a data sharing obligation, or the parties agree in principle on data access, but everyone feels uneasy about it because there is a lack of clear guidance with regard to access modalities (the ‘guidance on horizontal access modalities’ scenario).

An appropriate response to the ‘discouragement by risks and uncertainty’ scenario may be to provide sets of purely optional model contract terms and other practical support (such as legal and technical information and advice or the provision of data sharing infrastructures) for parties in the data economy. To protect parties also from risks originating from outside their contractual relationship, the Authors recommend adopting mandatory rules that deal with third party aspects of data activities. Drawing inspiration from Part IV of the Principles, the Response outlines how such provisions could be drafted.

For the ‘unequal bargaining power’ scenario, the Authors recommend an unfairness test combined with a grey and/or black list for situations where data was co-generated by multiple Actors. Such an unfairness test should not restrict itself to unfair contractual clauses but would have to be extended to unfair practices in commercial dealings as the problem is often not so much the existence of a contract term, but rather its absence. The general factors to determine co-generation of data and factors to be taken into account for determining data rights in Part III, Chapter B of the Principles can provide guidance in that regard. The unfairness test should be horizontal and not limited to the IoT setting.

Regarding the modalities of statutory data access rights, in particular where not based on the notion of co-generation but on the public interest, the Response lists several general principles that should be adhered to in future sectoral legislation. These suggestions are inspired by Part III, Chapter C of the Principles.

The full Response, which also addresses the Commission’s questions concerning b2g data sharing, smart contracts, cloud service portability, the Trade Secrets Directive and the portability right under Article 20, is available here.

Source: https://bit.ly/2YtkVDv