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Govt now accepts value of IPR in non-personal data, but its recommendations pose new problems

The Kris Gopalakrishnan-led Committee acknowledges how non-personal data and intellectual property rights are linked together.

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In December last year, the Kris Gopalakrishnan Committee, appointed to deliberate on a framework to regulate non-personal data, released a report that identified imbalances in the digital industry as a key reason to regulate it. The Committee had released an earlier version in July 2020. This report noted that large platforms possess vast amounts of data and benefit from network effects, which pose entry barriers to start-ups and other new entrants in digital markets. It also proposed to make it mandatory for businesses to share their raw data (subject to defined grounds) at no remuneration. However, this recommendation was criticised because it ignored various intellectual property rights that businesses enjoy over their data.

In sharp contrast, the December 2020 report extensively discusses intellectual property rights (IPR). It states that while Indian law does not recognise a “property right” (that is, a right conferring absolute ownership) for data, it allows for limited “proprietary rights” to be exercised over it. The Committee identifies copyright law and trade secrets protection as the two predominant sources for such rights, but cautions that they are not absolute. This observation has implications for determining the ownership of data.

The first step to unlock the social and economic value of data is to determine its ownership. While ownership rights in physical property manifest in an either-or binary, corresponding rights vested in data are layered, and thus difficult to determine. In the case of personal data, ‘data principals’, that is, individuals whose personal information is collected and processed, can express ownership by exercising control over how their personal information is used. Thus, data protection laws recognise data principals as the owners of their personal data.

The Committee acknowledges that in the case of non-personal data (NPD), it is not possible to rely on an individual ownership approach because there are no identifiable data principals. The most discernible expression of rights over NPD is by those who have IPR over it. Thus, IPR must be recognised while determining NPD ownership. The statutory basis for this approach is enshrined in Section 2(o) of the Copyright Act, 1957, which protects computer databases as “literary works”. This approach also protects data’s inherent value and incentivises investment in its collection and processing.

In this context, the Committee’s recognition of copyright and trade secrets as sources of proprietary rights in NPD is a step in the right direction. However, its recommendations regarding these are not without fallacies.

Also read: Indian govt took first step to unlock value of non-personal data, must now bring in nuance

Data sharing in the NPD report 

The Committee recognises that any compilation of data, which involves a modicum of creativity, is protected under copyright law. It also acknowledges that an inherently non-public compilation of data is entitled to trade secret protection, despite the absence of a codified statute. While this is a positive step, the Committee makes it mandatory for entities to share pre-determined subsets of a database for the creation of high-value datasets (HVD).

At first glance, this seems to be an improvement over the July report, which had recommended the unqualified mandatory sharing of NPD. However, the revised recommendations may end up creating more problems than they solve. The Committee does not define an HVD in concrete terms, but loosely describes it as a “public good”, which benefits the community at large. It gives various examples of what constitutes “public good” – such as poverty alleviation, job creation, education, the creation of new businesses, and financial inclusion. These examples are generic and susceptible to an excessively liberal interpretation. By providing an exception without delimiting its scope, the Committee renders the essence of proprietary rights in data moot.

Further, the Committee does not provide for an appellate mechanism in any disputes that may arise from its data-sharing requirements. While the Non-Personal Data Authority (NPDA) can adjudicate a matter that arises from a refusal to share data for designated HVDs, the framework does not give the aggrieved party an option to appeal the authority’s decision. As a result, there is a wide exception to the exercise of proprietary rights without sufficient safeguards to ensure procedural fairness.

Also read: India’s FDI rules for digital media begs one question — do we benefit from fewer news outlets?

A tenuous approach to IPR in datasets 

The Committee gives two broad justifications for the permissible dilution of intellectual property rights vested in data. First, it lays down that raw data and factual information cannot be protected under copyright law. While a compilation of information/data is copyrightable, the underlying raw data is not.

The Committee appears to use this legal principle to justify mandatory sharing of specified subsets of raw data to create HVDs. In essence, it seeks to treat a subset within a dataset as raw data. However, this principle is problematic because it is marred by ambiguity. For example, Article 10(2) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which India is a signatory to, states that the copyright subsisting in a compilation of data “shall be without prejudice to any copyright subsisting in the data or material itself”. This leaves open the possibility of a separate proprietary right vesting in such underlying data. Thus, the principle of non-copyrightability of underlying information in a data set may not be absolute.

The second justification the Committee gives is that of the state’s eminent domain over the data of its citizens. Eminent domain refers to a right, which allows the state to appropriate private property for public uses. The Committee cites Article 39(b) of the Constitution, a directive principle which says that the state must distribute material resources of the community in furtherance of common good, to say that its approach to data sharing is constitutionally valid.

It also relies on the judgment of the Supreme Court in State of Karnataka vs Ranganath Reddy, to support this contention.  In this case, the Supreme Court held that the phrase ‘material resources of the community’ in Article 39(b) includes “every thing of value or use in the material world”. The Committee suggests that material resources may also include private data.  However, this interpretation of Article 39(b) is currently under challenge before a nine-judge bench of the Supreme Court in the matter of Property Owners’ Association & Others vs State of Maharashtra & Others. Thus, the constitutionality of the Committee’s data sharing recommendations is not yet settled.

Also read: Why India needs to modernise its copyright laws for the digital era

Need for balanced solutions

While the Committee’s intent to facilitate access to NPD for public good is commendable, the approach suggested by them contains legal inconsistencies. The Committee must consider defining HVDs in precise terms, and delimiting the scope of what constitutes public good. It is critical to note that the European Union (EU)’s proposed Data Governance Act also recommends data sharing for public good. However, instead of making it mandatory, the framework is voluntary in spirit. The EU’s European Strategy for Data further states that data access can be compulsory only if there is a market failure, and must be effected in a way that respects the legitimate interests of data holders.

Additionally, mechanisms to maximise access to works already exist under the Copyright Act. It contains a provision on voluntary licensing, which helps facilitate commercial negotiations between copyright owners and those wishing to use their works. In case of market failure, it also provides for compulsory licensing, which can protect against any monopolisation of works by copyright owners. While these may need to be tweaked to ensure that they can adequately apply to data, the broad compulsory licensing mechanism under the Act may have some advantages over the Committee’s recommended approach.

Under the Act, the Intellectual Property Appellate Board (IPAB) determines whether a compulsory license must be granted. It makes these decisions on a case-by-case basis after conducting an inquiry and hearing relevant parties. This helps ensure that compulsory licenses are only granted in situations where they are absolutely necessary i.e., in cases of market failure. Further, a party aggrieved by the IPAB’s decision can now appeal before the concerned High Court, and even the Supreme Court. This helps overcome shortcomings in the Committee’s recommendations, by providing an effective appellate mechanism. While this approach may not be perfect, it is a starting point to explore other balanced solutions.

The authors work at Koan Advisory Group, a technology policy consulting firm. Views are personal.

This article is part of ThePrint-Koan Advisory series that analyses emerging policies, laws and regulations in India’s technology sector. Read all the articles here

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