TILTing Perspectives 2019 Report 2

After enjoying the comprehensive Day 1 program covering topics such as data sharing, ownership and governance, AI, and copyright exceptions, on 17th May, this Kat attended the IP Tracks of the TILTing Perspectives 2019 Conference. 

IP Track 1: 
Policy, industrial property and innovation 

1. 
Léon Dijkman [PhD candidate, European University Institute] presented his current research project, entitled Can patent injunctions be counter-innovative? He looks into whether the European framework for IP remedies, as set by the Enforcement Directive, can be weaponized to stop instances of patent enforcement that would be harmful to innovation.

Patent scholars and industry alike increasingly worry about the harmful effects of patent enforcement on innovation. Given European patent law's express purpose of fostering innovation, these concerns seem reasonable. In this respect, the Enforcement Directive and in particular the proportionality principle contained therein are praised as a step towards empowering courts to prevent abusive practices. But, the case-law of the Court of Justice of the European Union (CJEU) on proportionality in IP so far seems limited to what Dijkman calls "short term" balancing: IP exclusivity is weighed against relatively clearly articulated and acute third-party interests in cases like Scarlet Extended and McFadden. At the same time, the cases that worry commentators most are those in which patents are used in an opportunistic manner to extract disproportional royalties from unknowing infringers. Contrary to the balancing cases we've seen so far, these cases require "long term" balancing whereby patent exclusivity is weighed against the more abstract interest of fostering an innovative and competitive business environment. The question, then, is how these cases fit within the European proportionality framework.

Dijkman suggests that we should look more closely at both sides of the balancing scales: if a patent is enforced in an opportunistic manner, that should influence the relative weight attached to the patentee's rights under Article 17(2) of the Charter. This is justified, Dijkman argues, because contrary to most other forms of property patents are explicitly utilitarian in nature. In sum, where the circumstances of the case suggests patent enforcement may have counter-innovative effects, the patentee's right to exclusivity may be outweighed by the rights of the infringer, as protected inter alia under Article 16 of the Charter.

2. 

Johan David Michels (Queen Mary University of London) presented his recent findings Mind the Gap: The Status of Digital Files Under Property Law, based on research with Professor Christopher Millard and Dimitra Kamarinou. 

This research concerns the property status of digital files stored in the cloud, which, as the clever title indicates, is examined under English law. 

Johan argues that since digital files do not fit the definition of things in possession, nor of things in action, users are unlikely to have a property right in their digital files. 

This can lead to gaps in the rights and remedies available to users of cloud services, since issues like access to files will be governed mainly by the terms and conditions of cloud contracts, which are often highly restrictive. It may also have various legal consequences. For instance, the absence of property rights may affect the available remedies for claiming compensation in commercial disputes, as well as under succession, copyright, and criminal law. For example, will a deceased user’s heirs inherit a right to access the files the user had stored in the clouds? 

He then considered whether English law should be amended so as to extend property rights to cover digital files. He concluded that this is not per se necessary, since solutions can be found under contract law or by introducing specific, sui generis legal provisions as appropriate.

The presentation was based on the paper “Mind the Gap: The Status of Digital Files Under Property Law”, co-authored by Johan David Michels and Christopher Millard, which can be accessed here. This survey-based paper which looks at trends in the terms and conditions of cloud services “Beyond the Clouds, Part 1” is interesting to read as well. 

Keynote addresses

Two excellent keynote speeches were given on Day 3. Again thanks to Tilburg University, both of the keynote speeches can now be watched online (by just clicking on the titles of the speeches): 

• Prof. Geert van Calster: Too clever by half? What the regulation of AI might want to learn from environmental law?
• Dr. Seda Guerses: Justice and the data market 

Afternoon session

In the afternoon of the day when the bitcoin price plunged 13.49% to $6,400 (sure bitcoin ≠ blockchain)… the IP Panel on blockchain technology started...

IP Track 2: 

To Decentralize Everything, Hash Here: 

Blockchains, Intellectual Property and Data Protection

Organizer’s words: 

Blockchain is the latest technological hype to promise disruptive decentralization, especially as it relates to information goods and services. While one of the goals of decentralized technologies is to operate without the need to adhere to existing legal systems, blockchains face challenges of compatibility with these systems so as to facilitate wider adoption. This panel examined these challenges from the perspective of information law, focusing on their treatment under the legal regimes of copyright, data protection and competition.

Balázs Bodo (founder of the Blockchain & Society Policy Research Lab at the Institute for Information Law, University of Amsterdam) opened the panel. He encouraged everyone to re-consider what the term “blockchain” really means. He opined that, many of the ways in which blockchain has been discussed are actually different formulations of how we want society to be organized, how we imagine power to be distributed. 

Nowadays attention is focused on the clash between law and blockchain technologies in, for example the domains of data protection, enforcement or financial services. But we have to note that the many of the legal frameworks, such as the GDPR or the DSM Directive, are also imaginaries about societal relations, and power, often no more proven to be just, effective or reasonable than the alternatives expressed in the language of technology. This “clash” between the rule of law, and the rule of code is often just a co-existence of a technology with unproven potentials, and a legal framework with untested effects and effectiveness. It is not just that the technology has an unforeseeable impact, but also many of our legal frameworks are brand new as well. This point of double uncertainty is both scary and may be incredibly productive. 

Balázs in the only slide of his presentation used an impressive metaphor, comparing the status quo of blockchain and society to the poor nuclear ‘safeguards’ adopted in the Chicago pile – the first nuclear reactor built in a sport field in the middle of Chicago in 1942-- Then, the uncontrollable chain reaction was supposed to be prevented by persons standing around with buckets and axes. Today we are experimenting with similarly untested technologies, and the lawyers are the ones supposed to be providing security. Balazs was wondering if they have tools better suited to the task those axes and buckets were half a century before. The challenge we are dealing with today are also similar to those raised by the first successful nuclear reaction: even if we are prepared to deal with the short term consequences, do we really understand the long term implications of a particular technology, i.e. blockchain, on social relations and power? And is there a way to look beyond the current uncertainty behind which the future hides, and regain our agency?

1. 

Valeria Ferrari (PhD candidate, University of Amsterdam) discussed financial regulation meets decentralized technologies: regulatory and enforcement issues raised by crypto-assets. 

She explained that the creation of blockchain-based financial networks is presented as a solution to issues of trust in financial institutions and opaque financial governance following the 2008 crisis. But it’s also the continuation of a libertarian ideology that starts way before the crisis, and that sees in technology a tool for networked, horizontal, free forms of financial coordination. Such techno-libertarian trend is nowadays in sharp contrast with the response of the legal system to such crises in the financial sector. If on one side we have the dispersion of controlling nodes and elimination of possible points of corruption, on the other we have legal reforms that enhance the role of centralised institutions and create burdensome systems of liability. 

Looking at the enforcement of financial regulation over blockchain-based networks is therefore a crucial, effective way to understand the interplays and the tradeoffs between legal, regulatory goals and constrains on one side, and instances of decentralisation, emancipation and technologisation on the other. 

Blockchain-based digital assets become legally problematic when they match legal categories that are recognised and heavily regulated by financial authorities. The case of major interest is when tokens issued and traded on DLTs qualify as securities. In such cases, a whole set of regulatory instruments applies. 

The presentation provided examples of legal instruments (i.e. the MiFID framework and the Prospectus Regulation) that - while being applicable to crypto-assets when they qualify as securities - are hard or impossible to enforce in the context of blockchain-based applications. 

Her analysis revealed that regulatory issues derive from the unsuitability of legal classifications to capture the fluid nature of crypto-assets. Enforcement shortages, instead, mainly arise from: a) decentralised governance/business model of platforms; b) non-incorporation of entities; and c) chances of regulatory arbitrage, such as geographical relocation of entities and “technological displacement”.

2. 

Alexandra Giannopoulou (postdoctoral researcher at IViR , University of Amsterdam) presented her findings on Data protection by design and by default on the blockchain 

There are multiple difficulties in ensuring compliance of blockchain technologies with the data protection legal framework created by the GDPR. Most of the incompatibilities stem from the technological architecture of the new disruptive decentralized tool that necessitates personal data processing in order to fulfill its intended function. At the same time, the blockchain’s technological design presents itself conceptually in sync with privacy because it relies heavily on asymmetric encryption and because it aims to empower users by giving them individual control of their data. While recognizing the value of these technological features, dr. Alexandra Giannopoulou sought to illustrate the tensions between data protection by design -enshrined in article 25 GDPR- and blockchains. 

During her presentation, Dr. Giannopoulou recalled the multifaceted concept that is the data protection by design and by default; she pointed out that article 25 of the GDPR goes beyond the approach of data protection as confidentiality even though it is often constrained within the limits of applicable pseudonymization and anonymization techniques. Blockchain involves privacy-aware communities that strive to establish privacy as the technological default. In fact, current privacy enhancing technologies (PETs) applied in blockchains (such as zero knowledge proofs, ring signatures, Taproot scriptless scripts) are used as a means to make reidentification harder or alternatively, to divulge as little information as possible about the transactions recorded. PETs are progressively becoming prevalent in most blockchains. These efforts to improve the blockchain technological design are derived from the common aspiration to develop technologies that escape ubiquitous surveillance state mechanisms, which constitutes a predominant ideology among crypto-communities (“crypto as in encryption and not as in cryptocurrencies”, as Dr. Giannopoulou points out). 

Starting from the ideological underpinnings of both data protection by design and of the cryptocommunities that participated in the creation of blockchains, the presentation presents examples of the interplay between privacy and technology in order to demonstrate that even though there are –conceptually- a lot of similarities between the privacy by design broader theoretical context of protection and that of blockchains, these remain largely insufficient when considering the scope of protection depicted by the data protection by design principles and its implications on technological choices. PETs and the systematic use of encryption in blockchains are without a doubt a rather good stepping stone in the current highly ambivalent state of compliance of blockchains with data protection rules. However, as dr. Giannopoulou concludes, blockchain resorts to trusting in the development of the technology’s ability to effectively protect from reidentification; in that way, it does not reinforce individual control over data but it rather instills trust in the technology to protect individuals. 

Finally, the presentation concluded with open questions to the public pertaining to the ambivalence surrounding the standardization of PETs, the governance rules that need to be developed in order to implement PET updates on an existing blockchain, as well as the lack of guidelines with regards to implementation of data protection by design on the blockchain.

3. 

Dr. Jurgen Goossens (Tilburg University) pitched a research proposal that he is developing for an upcoming NWO-MVI call. 

There are evolutions from centralized government to network governance as an allegedly more effective and legitimate method to exercise public authority. Due to this shift an incremental horizontalisation and fragmentation of the public realm is unfolding, leading to connectivity of public and private actors, complexity, and even a deprivation of legal guarantees and effective judicial review. Most recently, the interest of public actors in distributed technologies, such as blockchains, could lead to even more complexity due to hyper-connectivity of public and private actors as well as a lack of transparency (cfr. the black box). 

Therefore, there is a need for an interdisciplinary analysis of the interaction between the exercise of public authority through distributed technologies and the public values trust, transparency and legitimacy from a legal, ethical and technical perspective. Goossens focused on blockchain technology given its growing popularity and promise of substantial societal impact. Goossens mentioned that blockchain is basically a data structure to which data can be added that is collectively shared and kept secure. Several public actors are developing blockchain pilots, while the general level of trust of citizens in digitalization by the Dutch government is relatively low and the blockchain technology is complex. 

The aim of the intended research is twofold. Firstly, to identify and design the rule of law conditions to steer the role and responsibilities of public actors in distributed networks in order to maximize the potential for societal good. Secondly, to identify and mitigate undesirable effects of the exercise of public authority through the use of distributed technologies. Goossens stressed the importance of a focus on the end-user perspective. 

...

Once again, the TILTing Perspectives Conference 2019 provided a great opportunity to bring together the professionals from different disciplines to discuss and suggest answers to the contemporary challenges. This bi-annual three-day conference managed to cover a wide range of topics in an in-depth manner – it is not to be missed by anyone with an interest in the many fronts of the society transformed by technological innovations. The next edition of TILTing Perspectives will be hosted in 2021 at Tilburg.

*Potos: by Tian.