Enterprise data protection and balance of interests

There is great controversy in the practical community over the institutional design of data property rights, and there are also large differences in the existing adjudication rules and logic in judicial practice. The reason for this lies in the lack of a relatively unified understanding of the attributes, types, and ownership of data property rights, as well as the corresponding protection modes and balance of interests, both in academia and in practice, especially in enterprise data, including e-commerce platform data.

Author | Lawyer

Edit | Bruce

INTRODUCTION

In July 2020, data property right was included in the first batch of 108 big data new words collected and approved by the research base of the National Science and Technology Terminology Examination and Approval Committee of the Key Laboratory of Big Data Strategy, and was submitted to the National Science and Technology Terminology Examination and Approval Committee for approval, and was approved to be released to the public for trial.

In September 2021, the Central Committee of the Communist Party of China and the State Council issued the Outline for Building an Intellectual Property Power (2021-2035), which proposes to "study and construct rules for the protection of data intellectual property rights".

In July 2022, Fa Fa [2022] No. 22 issued the Opinions of the Supreme People's Court on Providing Judicial Services and Safeguards for Accelerating the Construction of a National Unified Market (hereinafter referred to as the Opinions), which made corresponding statements on data property rights from the perspective of judicial policy guiding opinions, proposing that "...... Lawfully protect the lawful rights and interests of data rights holders in data control, processing, and profits, as well as the property rights and interests of data element market entities in data products developed on the basis of lawfully collected and self-generated data, and properly hear all kinds of cases arising from data transactions, unfair competition in the data market, and so forth, to provide judicial safeguards for cultivating a data-driven, cross-border integration, co-creation and sharing, and fair competition data element market. Strengthen research on legal issues such as the attributes, forms, ownership, and public data sharing mechanisms of data property rights, and accelerate the improvement of rules for the judicial protection of data property rights. ”

In December 2022, the Central Committee of the Communist Party of China and the State Council issued the "Opinions on Building a Data Basic System to Better Play the Role of Data Elements" (hereinafter referred to as the "Data 20 Articles") promulgated, as a decision-making opinion for top-level design, formally proposing to explore the establishment of a data property rights system, and establish an institutional plan for the operation mechanism of separate property rights such as the right to hold data resources, the right to process and use data, and the right to operate data products.

Since the release of the "20 Data Articles", the whole society has paid unprecedented attention to data as a novel factor of production, and has even been promoted to the height of new quality productivity. The State Intellectual Property Office (CNIPA) has actively explored rules for the protection of data intellectual property rights, and has successively carried out pilot work on data intellectual property rights in Beijing, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, Shenzhen and other provinces and cities, and launched a data intellectual property registration platform. This year, the Beijing Municipal Government introduced an incentive policy for the inclusion of enterprise data assets in the balance sheet (balance sheet).

However, at the same time, there is also great controversy in the practical community over the institutional design of data property rights, and there are also large differences in the existing adjudication rules and logic in judicial practice. The reason for this lies in the lack of a relatively unified understanding of the attributes, types, and ownership of data property rights, as well as the corresponding protection modes and balance of interests, both in academia and in practice, especially in enterprise data, including e-commerce platform data.

01

Analysis of the property rights of enterprise data under the existing legal framework

The definition of the property rights of enterprise data directly affects the final choice of data protection mode and remedy path.

First of all, Article 127 of the Civil Code provides; "Where the law has provisions on the protection of data and network virtual assets, follow those provisions." This provision leaves legislative space for the legal protection of data property rights. In accordance with the principle of statutory rights, in the absence of a clear legislative definition of enterprise data property rights in the existing laws, the benefits provided by other laws should be attributed to the interests stipulated by other laws based on the provisions of the Civil Code, that is, the "legal interests" that have not been elevated to legal rights.

Second, as a "legal interest" that has not been elevated to a statutory right, there is no legal space or basis for enjoying absolute exclusivity.

Third, as a "legal interest" that has not been elevated to a statutory right, the legal effect of the corresponding object of protection is not the same as that of a legal right protected by special intellectual property laws, including the Copyright Law, the Trademark Law, the Patent Law, etc.

Fourth, according to the existing legal framework, the judicial protection of enterprises' data rights and interests mainly relies on the protection model of the Anti-Unfair Competition Law, and provides remedies for competition legal interests through the exercise of discretion by judges in judicial cases.

It is of great significance to clarify the positioning of enterprise data property rights and interests for the protection of data rights and interests. Since enterprise data, especially e-commerce platform data, is extremely complex based on the source of the data, the type of data and the content of the information recorded, the absolute exclusivity of data property rights is not given, which can effectively restrain the abuse of rights and data monopoly behaviors such as data "enclosure" and other data monopoly behaviors that curb market competition by data element market entities, including data resource holders, data processing users, and data product operators, out of maximizing their own interests.

In addition, data property rights have not yet been elevated to a legal concept, and there are distinct expressions of "data property rights" and "data intellectual property rights" in the above-mentioned official expressions. Data and intellectual property are both intangible intellectual property, and the internal legal mechanism of data and intellectual property protection is to give individual benefits for the purpose of social public interest. As far as generalized data property rights are concerned, there are situations where data intellectual property rights are cross-covered with data intellectual property rights, including copyrights. Taking the "data products developed on the basis of lawfully collected and self-generated data" mentioned in the Opinions of the Supreme Court, most of the data products meet the constitutive requirements of works protected by the Copyright Law. In practice, in order to expand their expectations of rights protection, rights holders often seek the dual protection of the Copyright Law and the Anti-Unfair Competition Law, or seek the relief of the Anti-Unfair Competition Law instead of the remedies of the Copyright Law. The reason for this is that, on the one hand, although the existing judicial interpretations and policies have a negative attitude towards the repeated protection based on the same alleged infringement, there are differences in the understanding of judicial policies in judicial practice regarding the supplementary (catch-all) protection relationship between the anti-law and the special intellectual property law. On the other hand, the claimant has long had a relatively low expectation of copyright protection, including damages, and there is more room to persuade the judge to exercise his discretion to expand the effect of rights protection by seeking relief under the Anti-Unfair Competition Law. On the one hand, such phenomena seriously weaken the function of the copyright law as a special intellectual property law on data protection, and on the other hand, it will directly undermine the uniformity of judicial adjudication standards for data protection. Specialized intellectual property laws have their own competition law attributes. Under the circumstance that the legal concept of data property rights has not yet been clarified, it is of practical significance to appropriately limit the space for "choice litigation", strengthen the principle of priority application of the special intellectual property law, and establish the orientation of rights protection litigation that only data rights and interests that are not protected by the special intellectual property law can be subject to the remedies of the anti-unfair competition law, so as to strengthen the data protection function of the special intellectual property law and unify the adjudication standards for the protection of data property rights.

02

The impact of the enterprise data type review on the final determination of unfair competition acts

The most representative and valuable research value in the typological analysis of enterprise data is the e-commerce platform data.

E-commerce refers to business activities that sell goods or provide services through the Internet and other information networks. Based on the different needs of data management, application and protection, the dimensions of e-commerce data types are diversified. The most straightforward classifications include:

According to the content of the information recorded, it can be divided into user data, goods or services data, and transaction data; Among them, user data mainly includes user identification and contact information, user individual behavioral preferences and habits, as well as user group classification, activity, and closeness of connection between groups. Goods or services data specifically refers to the source, distribution, quantity, classification, price and marketing information of goods or services; Transaction data reflects specific information about how a transaction was realized in the course of a trade in a good or service transaction.

According to the most common data classification of computer systems, it can be divided into front-end data and back-end data; Among them, the foreground data refers to the real-time data of the visualization and actionable data of the user interface, such as the information directly entered by the user, the content displayed in the user interface, and the corresponding data generated by the interaction between the user and the interface; Background data refers to the data that is processed, stored, and managed in the background for system operation and business logic processing, and is not directly displayed to the user's application or internal processing of the system.

According to the general perception of the Internet industry, the main data of the data collection and information exchange system of the e-commerce platform comes from user-generated content, server logs, mobile device data, transaction data, etc. Combined with the Opinions [2022] No. 22, e-commerce platform data can be divided into legally collected and self-generated data, and data products developed on the basis of legally collected and self-generated data.

According to the data classification method proposed in Article 20 of the Data Section, which distinguishes individuals, enterprises and public entities, the content of the data of e-commerce platforms that is understood mechanically as enterprise data should be excluded from the remaining data of personal data and public data. But the problem is far from simple. The basic data that maintains the normal operation of the e-commerce platform itself includes user data, goods and services data, and transaction data, which contains a large amount of personal data and public data, and completely stripping these data from the data protection of the e-commerce platform will fundamentally shake the basic resources of the platform's operation. However, it is precisely because of this that the protection of data property rights on electronic platforms has become extremely complex, and data type analysis is particularly important for the final determination of data unfair competition and the identification of harmful consequences.

For example, foreground data and backend data are data that is open to users, while backend data is non-public data. The database backend also plays a role in ensuring the security, reliability and high performance of the database, and is the core part of the system program implementation. Whether it is based on the openness of the data, or the corresponding role and function, there are substantial differences. For example, there are substantial differences between the data collected by the platform, the service data generated by the platform, and the platform data products processed on the basis of the first two, both from the subject of the data source and the corresponding rights and interests of the platform. Another example is to classify the content of data records, compared with user data and transaction data, simply obtaining the data that refers to the source, distribution, quantity, classification, price and other elements of commodity circulation of goods or services, which is obviously different from other user data and transaction data. The above-mentioned differences are bound to have a substantial impact on the evaluation of whether a specific act constitutes unfair competition and the harmful consequences.

In the case where the actor obtains the data type, source and content of the platform without any distinction, the impact of the typological analysis of the data on the final determination of the act of unfair competition is quite limited, such as the unfair competition dispute case between Beijing Wei Network Technology Co., Ltd. and Guangzhou Jian Information Technology Co., Ltd., which was selected as one of the top 10 intellectual property cases in Chinese courts in 2023 [Guangdong Provincial High People's Court (2022) Yue Min Zhong No. 4541 Civil Judgment]. However, when the actor obtains a single or specific type, source and content of the data, the evaluation of the data type will undoubtedly have a decisive impact on the final legal evaluation of whether the act of unfair competition constitutes and the harmful consequences.

03

The protection of enterprise data property rights competition law should take into account the balance of interests

Achieving the dual goals of the data property rights system to encourage data innovation and promoting data dissemination and utilization, and balancing the interests of all parties are the proper meanings that must be followed in the judicial practice of the anti-unfair competition law on enterprise data property rights.

Take, for example, data protection for goods and services on e-commerce platforms. A review of the existing judicial practice precedents shows that in the trial of a large number of cases involving only the data information of platform goods and services, there are the following common adjudication tendencies to varying degrees:

1. The core of a case involving unfair competition in enterprise data is not whether the object of knowledge is a protectable right and interests, but the judgment of the legitimacy of the alleged infringement.

2. The protection of data competition law involving enterprises often focuses on the legitimacy of data generation, the investment of operational data, and the competitive interests of the data involved in the case.

3. The commodity data on the e-commerce platform comes from the operators on the platform, carrying a large amount of investment and the rights and interests of the operators on the platform, such as management rights, intellectual property rights, and goodwill;

4. The e-commerce platform has a contractual and legal basis for collecting, processing, controlling and processing the data of goods and services uploaded by the operators on the platform, and has invested a lot in capital, technology and manpower, which can bring competitive advantages to the operation of the platform;

5. Under the circumstance that the e-commerce platform has clear restrictions on the acquisition and use of platform data by third parties, the unauthorized use of the e-commerce platform's commodity data to engage in business activities is to reduce its own costs in a "unearned manner", violates good faith and public morality, and disrupts the order of fair and orderly online transaction competition;

6. On the one hand, the unauthorized use of e-commerce platform commodity data to engage in business activities harms the legitimate rights and interests of platform operators, and on the other hand, it will lead to other platforms and operators on the platform constituting substantial substitution due to the acquisition of such commodity data, causing damage to the comparative competitive advantage of platforms enjoying data rights and interests.

Under the framework of existing legal norms, based on the original legislative intent of the Civil Code of the Mainland, the special law on intellectual property rights and the Anti-Unfair Competition Law, there are still many debatable points for the above adjudication path.

(1) The review of the necessity of the protection of the object of knowledge as a legal interest and the judgment of the legitimacy of the alleged infringement are both the core contents of the competition law review

Whether it is a civil legal right or an interest under other laws, that is, a legal interest, its superordinate concept is interest; However, interests that have not been elevated to other laws are not included in the protection of the Anti-Unfair Competition Law.

From the basic legal theory of civil law, it can be seen that compared with statutory rights, which have a clear right boundary, legal interests are relatively unclear in terms of both their connotation and extension, and need to be screened by adjudicators in individual cases. From the point of view of remedies, the remedies and protections provided are relatively weaker than the statutory rights. It can be seen that based on the legal interest attribute of enterprise data property rights, the judicial review should not only review the necessity of protecting the data interests, but also further determine the appropriateness of protection.

As the basic data of the platform's operation, the goods and services data of the e-commerce platform can certainly bring certain benefits to the platform, but it is obvious that the data interests cannot be indiscriminately presumed to be legal interests for anti-unfair competition protection on the grounds that "the core of the case of unfair competition involving enterprise data is not whether the object of knowledge is a protectable right and interest", but should be based on a comprehensive review of the facts and the law.

(2) The data on goods and services of e-commerce platforms, as an information element of commodity circulation, has a high degree of market public attributes

The so-called e-commerce platform goods and services data usually comes from the platform store sellers, and they prepare relevant data information before listing the products. Including product name, price, main image, detailed display image, inventory, weight, brand, model, color, size and other information. After logging in to the store account, the seller can publish the product through the channel designated by the platform (for example, "Seller Center") according to the set process. Some platforms also provide sellers with tools such as setting "product attributes" and adding "product association information" to increase product exposure to attract consumers.

As an information element of market commodity circulation, the commodity and service data of e-commerce platforms has a high degree of market public attributes.

First of all, the content of the data information of goods and services on e-commerce platforms is derived from the original data information of the producers and sellers of goods without exception. In the process of forming the product and service data, the role of the platform is limited to providing digital infrastructure services such as upload channels and storage and publishing space to store sellers, and reviewing them in accordance with the rules of the platform, and the platform does not make any substantial contribution to the content of the product and service data.

Secondly, the realization of the circulation of goods in the market depends on the "trinity" of business flow, information flow and logistics. The overall commodity service data of the e-commerce platform comes from the original data released by the producers and sellers of goods, and as the basic market elements of commodity circulation, it has strong market public product attributes. Although objectively the e-commerce platform is in a relative "holding" position for such data and information, and has the rights and interests to collect, use, process and operate such data in compliance according to its agreement with the original information publisher or corresponding laws and policies, it cannot be inferred that the goods and services data belong to the private rights and interests of the platform and have the right to prevent or hinder the free access and compliant use of the data by third parties in the market.

(3) Once the data protection of an e-commerce platform is separated from the corresponding information content, it will inevitably be contrary to the internal mechanism of data protection

The data legal interests protected by competition law essentially refer to the information content of the data carrying records. As mentioned above, the intrinsic legal mechanism of data and intellectual property protection is to confer benefits on individuals for the purpose of social public interest. In the field of knowledge innovation, investment does not necessarily generate a return on rights or interests. Even patents, copyrights, trademarks, etc., which have risen to the level of statutory rights, have set corresponding exclusive restrictions to prevent the right holder from including information resources in the public domain into the scope of protection of private rights, so as to safeguard the public interest. Detaching from the content attributes of data records, including the original data of goods and services that are social elements of commodity circulation into the private rights and interests of the platform will inevitably lead to an imbalance in social and public interests.

(4) The excessive protection of commodity data into the exclusive rights and interests of enterprise data is also inconsistent with the policy orientation of building a unified national market

The value of e-commerce platform goods and services data can only be realized through circulation. The wider the audience to obtain information, the greater the amount of information disseminated, and the more information circulation channels, which will undoubtedly help to further promote the increase of commodity circulation, which is in line with the interests of commodity manufacturers, market traders and consumers.

On June 5, 2023, at the regular briefing on the State Council's policy on building a unified national market held by the Information Office of the State Council, the relevant person in charge of the State Administration for Market Regulation made it clear that it would strengthen the supervision and law enforcement of market intervention. Carry out special clean-up of policies and measures that hinder the construction of a unified national market, and resolutely investigate and deal with acts such as restricting transactions and obstructing the free circulation of commodity factor resources. The commodity and service data of e-commerce platforms includes the original information of product name, price, main image, detailed display map, inventory, weight, brand, model, color, size, etc., which is essentially a commodity circulation element resource, and its inclusion in the private rights and interests of enterprise data of flat e-commerce platforms is obviously contrary to the current market policy orientation.

(5) There is a serious imbalance between the inclusion of commodity data in the exclusive rights and interests of enterprise data on e-commerce platforms and the design of the "safe harbor principle" system

As an e-commerce online service platform service provider, e-commerce platforms enjoy the "safe harbor principle" for the infringement of the rights of third parties caused by the original product and service data published by store sellers; It would be obvious that the platform will be highly unbalanced in its liability rights and interests while claiming the exclusive rights and interests of competition law in respect of such original disclosed commodity data.

(6) The judiciary should adopt a prudent and tolerant attitude in judging the legality of third parties' access to market public data information

At present, most domestic e-commerce industry platforms do not approve of data crawling without explicit authorization, and clearly stipulate that the platform has exclusive rights and interests in the collected and stored data and prohibits crawlers from crawling data without authorization. In judicial practice, it is not possible to directly determine that a third party's acquisition of data "held" by a platform is prohibited by the Anti-Unfair Competition Law because of the existence of the above-mentioned phenomena.

Take the behavior of a third party to obtain the data of goods and services of an e-commerce platform through automated technologies such as crawlers as an example.

In some of the earlier judgments, the e-commerce platform's setting up of the Robots agreement on the product detail page, clearly indicating its willingness to protect data from illegal crawling, and setting up anti-crawling verification mechanisms such as login verification mechanisms and IP frequency restriction mechanisms as direct reasons for determining the impropriety of third-party data acquisition. There is clearly room for discussion on these reasons for adjudication.

First of all, in the era of big data, both the overall economic development of society and the daily life of human individuals are increasingly highly dependent on data circulation to obtain corresponding information. In the process of accelerating the formation of the data element market, while the valorization of data is rapidly showing the trend of "three modernizations" of resourceization, capitalization and capitalization, the in-depth strengthening of the open sharing of public data is not only related to the overall situation of the healthy development of the digital social economy, but also related to the basic protection of social and public interests.

Secondly, the original commodity and service data of the platform released by the store seller belongs to the market commodity circulation elements, with strong market public information attributes. The fact that the platform is in the state of "holding" the data and information of goods and services does not mean that the platform has exclusive rights. Such data is not directly translated into the platform's competitive private interests because of the platform's willingness to prohibit free access by third parties. Giving platforms exclusive private rights and interests in competition law over commodity and service data is not in line with the original intention of the design of the data property rights system of "promoting the compliant and efficient circulation and use of data". In judicial practice, it is necessary to prudently identify whether the platform's prohibition of third parties from obtaining original goods and services data is a "data enclosure" that hinders commercial competition, and put an end to the abuse of data property rights by the platform, which in disguise becomes a competitive barrier and a competitive tool for the implementation of "data either-or".

Finally, in judicial practice, the specific behavior methods adopted by third parties to obtain the data of goods and services with the public attributes of the market should not be too harsh. Automatic data capture and collection refers to the technical means of simulating people's behavior of browsing the web through crawler programs, replacing human operations, and automatically grabbing data from e-commerce platforms. Digital technology replaces manual operation is the development trend of the digital era, and neutral automatic data capture and collection technology itself contains the important value of free data circulation and social public interest protection in the digital society.

Conclusion

According to information published by the Department of E-Commerce of the Ministry of Commerce of the People's Republic of China, online retail sales will reach 15.42 trillion yuan in 2023, an increase of 11%, making it the world's largest online retail market for 11 consecutive years. The system design and protection practice of data protection of e-commerce platforms are related to the sustainable development and prosperity of the e-commerce industry.

It is undeniable that in the process of obtaining and using the goods and services information of the e-commerce platform with elements of the public attributes of the market, there is also the possibility of harming the legitimate rights and interests of the sellers of the platform's stores, the consumers of the platform and the platform itself. While the judiciary may regulate on the basis of discretion, it should still exercise discretion based on the existing legal framework and the intent of the legislation.

In terms of the single acquisition and use of the original goods and services data disclosed by the e-commerce platform, if it involves damage to the legitimate rights and interests of the platform store seller, including intellectual property rights, the corresponding store seller shall claim the rights and interests from the third party; E-commerce platforms cannot claim exclusive protection as the "holder" of goods and services data. As for the damage caused by the excessive collection of such data by a third party or the excessive pressure on the platform's website server due to technical reasons, it is not essentially a data competition interest, but should be an ordinary civil damages.

Similarly, it cannot be denied that a third party can obtain the overall goods and services data "held" by a specific e-commerce platform, use it maliciously, and form a "substantial substitution". However, there is a marginal definition of "quality" and "quantity" of substitution in "substantive substitution". The third-party commercial use of the original goods and services data of the e-commerce platform is not necessarily improper. Even if traffic or transaction volume are the factors to be considered in the adjudication, the existence of substantive facts and the occurrence of actual damage that have a causal relationship between the third party and the platform must be substantiated, and the burden of proof must be borne by the claimant. However, at present, neither the existing laws nor judicial interpretations have formed clear rules and guidelines for "substantive substitution", and it is urgent to improve them.

(This article only represents the author's point of view and does not represent the position of intellectual property)

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