The European unitary patent: what possible advantages and disadvantages?
Until now, at the European level, patents have been governed by the Munich Convention, which provides for a single, centralized procedure for granting patents entrusted to the European Patent Office (EPO).
While the procedure is uniform in terms of the granting of the patent, the same cannot be said for its protection; the European patent granted must in fact be validated in each State party to the Convention in which protection is sought. It is commonly said that the European patent corresponds to a “bundle” of national patents: in essence, following the grant, the European patent confers on the holder the same rights as would be conferred by a national patent, and all questions concerning the validity and infringement of the patent are referred to the national courts.
This situation is about to change.
European unitary patent
As we all know, the Agreement on the Unified Patent Court will enter into force on 1 June 2023 and at that point the European unitary patent will be effective, which will confer uniform protection in all European states that have chosen to adhere to this new system.
It should be made clear that the European unitary patent will not replace the “traditional” European patent, on the contrary, it will stand alongside the latter by allowing the patent holder to choose which system to join.
As it happens with the “traditional” European patent, the EPO will still be the competent office to grant unitary patent rights; furthermore, the new system has not changed the way the patent is granted. Quite simply, at the end of the grant procedure of the European patent, the patent proprietor will have the option to request unitary effect within one month and will have to do so in the language of the proceedings.
Currently, twenty-five European states have chosen to participate in this system (the big missing country is Spain); only seventeen, however, have ratified the Agreement.
This means that when the system comes into force, uniform protection will only extend to the seventeen ratifying states. The question to be asked is therefore: what will happen next? When other states ratify the Agreement, will the uniform protection automatically extend to them?
Surprising as it may be, the answer is no.
In fact, over time several “generations” of unitary patents will be created with different territorial coverage depending on the number of states ratifying the Agreement. At least in the first instance, therefore, there will not be a truly unitary patent in all the states participating in the system.
Given that this is an alternative system, how can one choose not to join it?
It is already possible to do so. As of 1 March 2023, in fact, the so-called sunrise period began, i.e. a three-month period during which the holders of European patents already granted, holders of European patent applications and holders of supplementary protection certificates granted for a product protected by a European patent may request the exclusion of these from the system and consequently remove them from the jurisdiction of the Unified Patent Court (this is referred to as an opt-out, as provided for in Article 83 of the Agreement). The opt-out can also be exercised during the transitional period (seven years). However, it is a good idea to make this choice during these three months because, if you are involved in a court action before the Unified Court after 1 June, the opt-out will no longer be permitted. If one chooses to opt-out, is one forever excluded from the system? No, it is possible to change your mind and choose to opt-in, but this choice cannot be revoked again.
What concrete advantages will the new system bring?
There are many advantages. First of all, uniform protection will be available in all states that have ratified the Agreement and the EPO will be the only office to which applications will be submitted (not only that, but the EPO will also centrally manage the post-registration phases). In addition, holders of unitary patents will pay a single annual maintenance fee and costs related to the validation phase of the patent will obviously not be paid anymore. In addition, disputes that arise in connection with the unitary patent will be subject to the exclusive jurisdiction of the Unified Patent Court, whose decisions will have effect in all states affected by the unitary effect (this will make it easier for the patent holder to stop ongoing infringement activities in all affected states).
However, the European unitary patent also seems to have certain limitations. First, it has potentially less territorial coverage than the European patent. The new system only involves those EU states that have ratified the Agreement (unlike the EPC, which also includes non-EU states such as, for example, Switzerland and Turkey). It should be added that the new system is, in certain cases, a double-edged sword. On the one hand, uniform application of the law is provided for, but on the other hand, the patent holder may be exposed to a higher risk: if the Unified Patent Court judges a patent invalid, it would be invalid in all states affected by the unitary effect.
So, is it worth joining the new system or not?
There is no straightforward answer to it. It seems compulsory to make an assessment that takes into account the peculiarities of each individual case. For example, the patent at issue and its “strength” must first be considered. But also the procedural position one takes in a possible court action; in fact, as a plaintiff, it might be useful to obtain a single decision for all the territories adhering to the patent system with unitary effects (with obvious savings in time and costs), while as a defendant, on the other hand, it might be useful to defend oneself in different states, and therefore before different judges, thus gaining time, and avoiding that an unfavorable decision would have effect on all the territories of the UPC at the same time, thus preventing the sale of the product considered to be infringing in the 17 countries adhering to the Agreement.
It should also not be forgotten that the system is new and right holders will be “exposed” to it. The tightness and efficiency of the rules will really be put to the test once the system comes into force. Likewise, the case law of the new Court is obviously not known. It has also been pointed out by several parties that the unitary patent provides less flexibility; it will not, for example, be possible to carry out the so-called selective abandonment, which is instead feasible for the “traditional” European patent (the unitary patent will have to be maintained or abandoned in all countries). It will also not be possible to transfer the patent only in certain states.
Conclusions
In conclusion, the unitary patent presents some advantages on the one hand, but also disadvantages on the other, which must be carefully weighed up according to the specific case. In the case of the opt-out, this is the right time to start making initial assessments. For everything else, one will have to wait for the entry into force of this new system to understand its actual scope and operational efficiency.
The “Magic Avatar” and the world of artificial intelligence: lights and shadows of a trend that “revolutionizes" privacy and copyright
On December 7, 2022, “Lensa” has turned out to be the most popular iPhone app on the Apple store. The reason? Although “Lensa” has been on the market since 2018, last November it launched a new feature called “Magic Avatar”: taking advantage of artificial intelligence, this feature allows users – upon payment of a fee - to transform their selfies into virtual avatars.
At first glance, once does not catch the problem arising from an avatar who shows the face (clearly enhanced) of the subject of the selfie; however, upon closer analysis, there are several legal issues connected to the use of this “Lensa”’s feature.
Indeed, the application thereof works thanks to artificial intelligence and on the basis of a huge amount of data (so-called “datasets”) which are stored and used to improve the performance of the application itself. In most of the cases, these datasets are nothing more than images collected randomly on the web in relation to which obviously there is no real control on the existence of any rights. This is the first problem: the diffusion and collection of illustrations without the consent of the artists who previously created them turn out to be a copyright’s infringement. Authors are not recognized of any contribution or prize for their works – which, instead, should be guaranteed to them pursuant to the Copyright Italian Law (l. 633/1941 and subsequent amendments) – and they also find themselves competing with artificial systems which are able to “emulate” their style in few minutes.
The problem does not concern the avatar generated by “Lensa” application, but the huge number of images extrapolated from the web, used by the system to trains itself and from which it must “learn” to then reproduce the avatar. The consequences of such a trend should not be underestimated since it is fair to wonder whether one day the artificial intelligences might completely replace human activity. Such undesirable scenario is not so unlikely if we consider that the treatment of visual works created by the use of artificial intelligence’ systems is currently being studied by the US Copyright Office.
In order to (partially) face this issue, the website “Have I Been Trained” has been created to help content creators carry out research aimed at understanding whether the datasets used by artificial intelligences unlawfully reproduce their creations.
There is also a second and more worrying aspect concerning the processing of personal data by “Lensa”. Upon payment of a very low amount to generate the avatar, people provide the application with personal data and information that may also be used for purposes completely different from the creation of “filtered images” and that have therefore a significant economic value. This is one of the main complaints made against this app, namely that, once installed, “Lensa” collects more data that those necessary for its operation, transferring them to servers located in the USA (where the company’s registered office is located). That’s enough to state that the data processing does not comply with the GDPR.
Indeed, Lensa app’s privacy policy states that users’ biometric data (defined under Art. 4 par. 14 of GDPR as “those personal data resulting from specific technical processing relating to the physical, physiological or behavioural characteristics of a natural person, which allow or confirm the unique identification of that natural person, such as facial images or dactyloscopic data”) would be delated from the servers once the app has used them to generate the Magic Avatar.
The point is that – as often happens – “Lensa”’s privacy policy is long and complex, namely it adopts legal terms difficult to be understood by the users; for example, we read that “Lensa” does not use “facial data” for reasons other than the application of filters, unless the user gives consent to use the photos and videos for a different purpose. This might seem comforting but, on a deeper analysis of the terms and conditions, it turns out that “Lensa” reserves far broader powers – of distribution, use, reproduction, creation – over the work raised from user content, subject to an additional “explicit consent” required by the applicable law (i.e., the various national laws).
But where does such “explicit consent” come from? Easy: by sharing the avatar on the public or tagging “Lensa” on social networks, even via hashtag, the user gives consent to use that content and thus authorizes the company to reproduce, distribute and modify it. This licence – which ends with the deletion of the account – is justified in Lensa’s privacy policy on the basis of the so-called “legitimate interest” (i.e. “it is our legitimate interest to make analytics of our audience as it helps us understand our business metrics and improve our products”).
However, this statement raises some concerns, especially in the light of the decision issued by the Italian Privacy Guarantor concerning the social media “Clubhouse”, according to which company’s “legitimate interest” is not the proper legal basis for processing such data and therefore it is not correct either for carrying out data analysis or for the systems “training” process.
In the end, artificial intelligence undoubtedly represents an epoch-making technological evolution, but its use may imply the risk of un unlawful compression of users’ rights; indeed, a European Regulation on artificial intelligence aimed at defining the scope and conditions of its use has been under consideration for some time.
In this respect, hopefully “Lensa” application will take steps as soon as possible to protect the illustration creator’s rights through the recognition of a proper remuneration to them, and so that the user data will be collected and processed correctly, in accordance with applicable privacy’s laws.
The expression “Neapolitan pizza” finally protected
On December 18, 2022 the new Implementing Regulation (EU) No. 2022/2313 came into force through which the European Commission officially included “Pizza Napoletana” in the register of “Traditional Specialities Guaranteed” (TSGs).
Therefore, from that date, the expression “Neapolitan pizza” may be used only to distinguish products that exactly comply with the characteristics of preparation defined in the official document approved by the Commission (so-called Disciplinary Regulations) upon proposal of AVPN (Associazione Verace Pizza Napoletana) and APN (Associazione Pizzaiuoli Napoletani).
The fact that Neapolitan Pizza is a Guaranteed Traditional Specialty is certainly not news.
Neapolitan pizza has, in fact, been on the TSG register since 2010 without reservation of the name, with the consequence that until new Regulation came into force anyone could use the expression “Neapolitan pizza” to distinguish the famous traditional Italian dish but could not affix the acronym "TSG" to it.
However, the above Regulation introduces new rules requiring, in particular, that in order to use the expression “Neapolitan pizza” the Disciplinary requirements must be met, with the consequence that, in their absence, pizza can no longer be identified and named on restaurant menus or on restaurant signs as “Neapolitan”, under application of a penalty, as well as, clearly, the prohibition of use of the expression.
But what exactly is TSG certification for?
In this regard, reference should first be made to the discipline of TSG certifications contained in Regulation (EU) No. 1151/2012, which generally concerns quality schemes for agricultural products and foodstuffs.
The quality regime is guaranteed by three European certifications (P.D.O., P.G.I., TSG), which can be attributed to food products or preparations with certain characteristics related to the territory.
The objectives of "TSG" Certification
This Regulation aims to safeguard traditional production methods and recipes by helping producers communicate the characteristics and production methods of these products to buyers, also in order guarantee transparency of information and fair competition among producers.
For example, consider the hypothesis in which a consumer intends to buy a pizza (or any other typical product): the latter might be attracted by a slogan bearing the expression “the real Neapolitan pizza”.
Such an expression could therefore cause confusion among the consumers and consequently unfairly favor one business over another when used in the absence of the requirements for TSG-certified “true Neapolitan pizza”.
Thus, the purpose of certification is to safeguard producers and guarantee market balance.
The requirements for TSG protection and the “Disciplinary Regulation” of Neapolitan pizza
A name can be registered as a TSG if it designates a product made by a production method that corresponds to a traditional practice and/or if it is made from traditionally used raw materials or ingredients (Art. 18).
In order to obtain registration, a so-called “Disciplinary Regulation” must be presented and, according to Article 19, must indicate the following information:
- the name whose registration is requested (in our case, in fact, “Neapolitan pizza”);
- the description of the product, including the main physical and chemical characteristics, demonstrating the specificity of the product;
- the basic elements attesting its traditional character.
The requirements for Neapolitan TSG pizza are, as it is obvious, about the raw materials, shape and flavor, as well as dough and baking.
As for the raw materials they are wheat flour, brewer's yeast, drinkable natural water, peeled and/or fresh tomatoes, sea salt or table salt, and extra virgin olive oil. Other ingredients that may be on the list are: garlic and oregano, Buffalo Mozzarella from Campania PDO, fresh basil and Mozzarella TSG.
However, it is not only the ingredients that identify the product.
In fact, the Disciplinary Regulation requires that the shape must be "wavy," the diameter must not exceed 35 cm, and the raised edge must not exceed 2 cm in height.
Other requirements, however, concern texture, states that the dough should be soft, elastic and not sticky, and flavor, which should be "savory" and mixed with the typical acidity of tomato and cooked mozzarella.
As for leavening, it must be two hours in the first stage and, after the formation of the buns, another 4-6 hours. With reference to baking, on the other hand, the pizza maker must use a wooden shovel and use only wood-fired ovens at 485° and the time must not exceed 60-90 seconds.
Conclusions
Thanks to the registration in the SGT registry, it is now possible to prohibit the use of the expression “Neapolitan pizza” by anyone who does not make pizzas according to the rules of the aforementioned Disciplinary Regulation, with penalties (including heavy ones) imposed on violators.
This could lead to the (almost paradoxical) consequence that many of Naples' historic pizzerias may be forced to remove the designation "Neapolitan pizza" from their signs and menus.
In light of the new regulation, therefore, all Italian (and even Italian abroad) pizza makers and restaurants will have to pay special attention to how they identify their pizzas and their business in order to avoid the penalties under the regulations in case of violation.
That’s not enough. Another aspect that needs special attention is intellectual property rights.
In particular, in the process of registering a trademark, it is necessary, not only that a mark does not infringe earlier identical and/or similar trademarks, but also with all terms that have TSG (or PDO, PGI) certification, such as the name "Neapolitan Pizza”.
Although such new regulation implies many limitations for all subjects who have never adapted their product to the traditional characteristics of Neapolitan pizza, we believe that the new Regulation is acceptable because it finally gives proper protection to a typical and globally appreciated product, as well as to its vast public of consumers.
Drones and Privacy: an imperfect match
While until a few years ago the use of drones was the prerogative of video editors and the military sector, nowadays, thanks to technological evolution and lower costs, these small, compact-sized aircrafts increasingly represent recreational devices through which evocative landscape shots can be taken.
Precisely because of their ability to show the world as it has never been seen before, from an original and unusual perspective, the unmistakable buzzing sound perceptible dozens of meters away is also beginning to be heard in cities, beaches, or simply at organized events.
Any drone includes at least a GPS and a camera although the configuration can become more elaborate if required; in fact, more advanced drones also include cameras with night vision, 3D scanners, thermal imaging cameras, WiFi and Bluetooth devices, and so on.
So, one can wonder to what extent is the use of such devices lawful? The answer is not obvious especially when one considers that a drone is equipped not only with a camera, but also with internal memory capable of collecting and storing data and information about individuals in the area flown over.
The nature of such machines and the advanced technologies with which they are equipped make them inherently suitable tools for capturing "sensitive" data. It is clear that careless use of the drone, even if only for recreational purposes, could come into conflict with the right to confidentiality of the persons filmed and its privacy.
To answer this question, we must first look at European Regulation 2016/679, also known by its acronym GDPR.
Not all droners are experts in privacy so it could happen that those who decide to use one, even in a moment of recreational entertainment and fun among friends, are unaware that they have to apply certain rules and good practices to avoid a violation of privacy regulations, but not only that. In fact, it is good to keep in mind that careless use of the same could have civil as well as criminal implications.
Therefore, two different issues come into play in this regard: that of the privacy of the people filmed (in terms of data acquisition) and that of the protection of personal data (in terms of subsequent use).
First of all, as is well known, it is necessary to know that the right to privacy of third parties cannot be violated by filming from above private residences or places closed to the public. Such an infringement, in fact, will entitle the injured party to compel the video maker to destroy the collected images, preventing him from taking further videos, without prejudice to the right to take legal action to obtain compensation for any damages suffered (Art. 10 of the Civil Code).
The issue becomes more delicate when we not only make videos, but also decide to disclose the footage and images now in our possession by posting them, for example, on our social networks or on the Internet. In such cases, it is essential to take all the measures imposed by the GDPR in order to minimize the risk of incurring the heavy penalties that the Italian Data Protection Authority might impose.
First of all, the Italian Data Protection Authority emphasizes that when flying a drone equipped with a camera in a public place such as parks, streets or beaches, one should avoid invading people's personal spaces and intimacy or, in any case, avoid capturing images containing personal data such as license plates of cars or residential addresses.
Not only that. In fact, If the decision to disclose the footage is made, as a first step, it is essential to collect consent to the publication of the images from the subjects involved, which is the legal basis for making their distribution lawful (Art. 6 GDPR). Such consent is not required only if, due to the distance of the filming, the faces of the subjects are not recognizable or, in any case, the same are obscured.
The GDPR also considers lawful the filming necessary for the execution of the contract concluded with the person that purchases a product delivered to his or her home by the seller by means of a drone.
The pilots, moreover, should always observe the principles on data processing set forth in Article 5 of the GDPR, which requires compliance with the adequacy, relevance and non-excessiveness of data with regard to the purposes for which they were captured. The Droner, therefore, in compliance with the aforementioned principles should favor proportionate technology and prefer anonymization techniques that, through blurring or other graphical effects, allow images to be automatically obscured in order to avoid identification of individuals where it is not necessary.
For more shrewd pilots, it is emphasized that it is extremely risky to justify the collection of sensitive data by invoking the non-applicability of the GDPR to the processing of personal data “carried out by a natural person for the exercise of activities of an exclusively personal or domestic nature" (Art. 3 GDPR). Indeed, the judges of the Court of Justice of the European Union interpret this rule narrowly and, therefore, as a general rule this article does not constitute an exemption from the GDPR (Judgment of the Fourth Chamber, December 11, 2014, František Ryneš v. Úřad pro ochranu osobních údajů).
Finally, it must not be forgotten the criminal aspect into which the pilot who decides to make more brazen use of the drone by procuring footage, visual or sound, containing data pertaining to the daily routines of people taking place in private residences may fall. The risk is to be punished with imprisonment from six months to four years (Articles 614 and 615 bis of the Criminal Code).
Even in this case, the law is more severe when the filming is unlawful, referring to those taken without the consent of the person filmed. Thus, once again emerges the importance of the acquisition of consent, which could be for the Droner the only exemption to avoid a certain conviction, together with objective reasons of a higher order that justify such filming (e.g., public order requirements).
In conclusion, it can be highlighted that privacy protection must be carefully evaluated because of the enormous technological potential of drones and the underlying economic interests. It is easy to speculate that the increasing use of drones in activities with high social impact will make the issue of protecting people's privacy increasingly prominent. Common sense and precaution, after all, remain the best principles in the responsible use of new technologies. It would be sufficient to refer to them to resolve many doubts and disputes.
Intellectual Property on Memes
Who among us has never received an image or photograph of a character (even a well-known one), accompanied by a caption capable of making us laugh?
Well, these elements are commonly referred to as “Memes”[1] and have the capacity to spread rapidly by mass communication media.
Beyond the communicative capacity of such Memes, one might wonder whether they receive any form of legal protection or if they are in the public domain and therefore freely usable by web users. To answer this question, it is first appropriate to understand the legal framework of Memes.
As mentioned, the Meme is nothing more than an ironic re-elaboration of an original work (usually photographic) already protected by copyright. It follows therefore that Meme - if has the degree of creativity required by copyright law - can be considered a derivative work (pursuant to Article 4 of Law no. 633 of 22 April 1941[2]), i.e. a work created on the basis of a pre-existing work.
This means that the owner of the rights on the main work - hence on the photograph or image created - will have the right to rework it and create derivative works, including Memes, and exploit them for commercial purposes.
Moreover, on the basis of the above considerations, anyone who intends to create and/or commercially exploit Memes will have to previously obtain the owner's permission of the original work, thus requesting a licence against payment of a fee.
But then one has to wonder why such Memes circulate on the web and/or via Whatsapp freely and without any licence?
As far as the European Union is concerned, the answer to this question is to be found in European Directive No. 2019/790 on Copyright in the Digital Single Market, which aims to harmonise the EU copyright framework in the field of digital technologies and in particular the Internet.
In particular, Article 17, VII paragraph, of that Directive states as follows: "Member States shall ensure that users in each Member State are able to rely on any of the following existing exceptions or limitations when uploading and making available content generated by users on online content-sharing services:
- quotation, criticism, review;
- use for the purpose of caricature, parody or pastiche”
It is therefore expressly provided that Member States may use and apply - within certain limits - exceptions allowing free use of copyright protected content via the Internet.
The ratio of the mentioned article is evidently to grant a discrete freedom for web users to share digital content, also protected by copyright, with the sole condition that such use must not even indirectly have an intent / purpose of profit, but only a satirical purpose.
In Italy, the right of satire, although not expressly provided by law, has found widespread application in case law over time[3]. The Meme can, therefore, be considered as an expression of right of satire, which, however, must be exercised within a well-defined perimeter, i.e. in the total absence of profit-making purposes.
This is because the owner of the rights over the Meme holds all the rights of economic exploitation over the work itself and, consequently, can prevent anyone from making a profit from their use. Indeed, there have been several legal actions commenced by Meme’s rights holders, especially in the United States[4].
In conclusion, due to the extremely quick digital evolution and the Internet world we are now witnessing, the outlined intervention of the European legislator can only be welcomed, which aimed at facilitating the exchange of content between Internet users and safeguarding their freedom of expression.
This European directive seems to have managed for the time being in properly balancing the freedom of expression of web users and the protection of copyright. We hope, in this regard, that the national legislator will follow this direction.
[1] “Digital memes are viral content that can monopolise the attention of users on the web. A video, a drawing, a photo becomes a meme when its "replicability", which depends on its ability to arouse an emotion, is maximised.” This is the definition of “Meme” provided by “Treccani” Dictionary.
[2] "Without prejudice to the existing rights on the original work, the elaborations of a creative character of the work itself, such as translations into another language, transformations from one into another literary or artistic form, modifications and additions constituting a substantial remake of the original work, adaptations, reductions, compendia, variations not constituting an original work, are also protected."
[3] Supreme Court no. 23144/2013: [...] satire constitutes a corrosive and often merciless modality of the right to criticism and can also be realised by means of the artistic image, as in the case of cartoons or caricatures, consisting in the conscious and accentuated alteration of the somatic, moral and behavioural features of the persons depicted. It differs from the chronicle in being removed from the parameter of truth in that it expresses, by means of paradox and surreal metaphor, an ironic judgement on a fact, remaining subject to the limit of continence and functionality of the expressions or images with respect to the purpose pursued. In the formulation of the critical judgment, expressions of any kind may therefore be used, even those damaging to the reputation of others, provided that they are instrumentally linked to the manifestation of a reasoned dissent from the opinion or conduct targeted and do not result in a gratuitous and destructive attack on the honor and reputation of the person concerned."
[4] Recalled in this regard is the case of Pepe the Frog, a cartoon character created by cartoonist Matt Furie. The author sued the website Infowars and its owner in 2014 for having used the image for the purpose of creating memes with a sexist, xenophobic and even racist background. Furie was awarded $15,000 in compensation in 2019.
Artificial intelligence travels fast and with autopilot
Self-driving, profiling, social scoring, bias, chatbot and biometric identification are just some of the many terms entered in our daily life. They all refer to artificial intelligence (“AI”), which is the machine’s ability to show human-like skills such as reasoning, learning, planning and creativity[1]. Today like never before, AI has an enormous impact on persons and their security. It is sufficient to mention the Australian case that involved the driver of a Tesla “Model 3” who hit a 26-year-old nurse[2], while the vehicle was on autopilot.
With reference to this tragic accident, one naturally wonders who should be held liable for the critical conditions of the poor nurse. Is it the driver, despite the fact she was not technically driving the vehicle at the moment of the accident? Is it the manufacturer of the vehicle that hit the nurse? Or, again, the producer/developer of the software that provides to the vehicle the information on how to behave when it detects a human being on its way?
As of now, the driver – although she was released on bail – has been accused of causing a car accident. That doesn’t change the fact that – if the charge will be confirmed after the pending judgement – the driver will have the subsequent right to claim damages on the producer/developer of the AI system.
The above-mentioned case deserves an in-depth analysis, especially regarding the European AI industry.
It is worth mentioning that, despite the gradual rise of the AI use in the widest scope of our daily life[3], to date there is no law, regulation or directive related to the civil liability on the use of AI systems.
At an EU level, the Commission seems to have been the first that seriously dealt with the issue of civil liability by highlighting gaps regarding this subject, and publishing, among other things, a Regulation proposal establishing harmonized rules of AI systems[4].
By analogy, it is possible to retrieve from the above proposal three different definitions of civil liability: liability from faulty product, developer’s liability and vicarious liability.
Liability from faulty product applies in the case under exam, which considers the machine to lack legal personality[5].
Hence, as is evident, in the event an AI system causes damage to a third party, the liability will be on its producer/developer and not, on the contrary, on the device/system that incorporates it.
Returning to the case in question, it would therefore be up to the developer of the AI system (i.e. the US company Tesla) to compensate the injured nurse, if the latter is able to prove the connection between the damage/injuries caused and the fault of the AI system. For its part, the developer of the AI system could exclude the damage only if it is able to prove the so-called “development risk”, i.e. providing proof that the defect found was totally unpredictable based on the circumstances and manner in which the accident occurred.
Some commentators have observed on the point that the manufacturer should be able to control the AI system remotely and predict, thanks to the algorithms, unscheduled conduct at the time of its commercialization[6]. Moreover, as we already know, the algorithms incorporated in the AI systems installed in cars can collect data over time, self-learn and study particular behaviors and/or movements of human beings, increasingly reducing the risk of accidents.
From this point of view, the manufacturer would therefore have an even more stringent burden to exclude any hypothesis of liability, that is, to demonstrate that it has adopted all the appropriate safety measures to avoid the damage.
In this regard, the European Parliament has also drafted the “Resolution containing recommendations to the Commission on a civil liability regime for artificial intelligence” which introduces the category of the so-called “High-risk AI”, i.e. those artificial intelligence systems operating in particular social contexts such as, for example, education, or those technologies that collect sensitive data (as in the case of biometric recognition), or that are used in the selection of personnel (which would risk falling back into social scoring or other discriminatory acts) or, again, the technologies used in the field of security and justice (through which there would be the risk of biases: prejudices of the machine on the subject being judged). It has been observed that for such “high-risk AI” systems there is an objective liability of the producer in case of a harmful event unless the latter is able to demonstrate the existence of force majeure event.
In conclusion, despite the efforts made by the Commission and then by the European Parliament with regard to the regulation of AI systems, there are still a lot of questions to be answered regarding the profiles of liability connected to them.
For example, it would be useful to understand how AI systems that are not considered to be “high risk”, such as the self-driving systems discussed in this article, should be framed and regulated. Or again, what threshold of liability to apply if in the not-too-distant future an AI device may be considered fully comparable, in terms of reasoning capabilities, to a human being (as recently claimed by a Google employee on the search engine AI system[7]).
What is sure is that, as often happens with any technological innovation, only a significant integration and adoption in our society of artificial intelligence systems will outline concrete hypotheses of liability, as applicable in contexts of daily operations.
In any case, we have high hopes that the aforementioned Regulation - whose date of entry into force is not yet known - will be able to provide a discipline that is as complete as possible and that above all reduces the risks and responsibilities of the users of AI systems and increases, on the other hand, the burdens borne by the manufacturers of the same to guarantee their safety.
[1] https://www.europarl.europa.eu/news/it/headlines/society/20200827STO85804/che-cos-e-l-intelligenza-artificiale-e-come-viene-usata
[2] https://www.drive.com.au/news/melbourne-hit-and-run-blamed-on-tesla-autopilot-could-set-legal-precedent-for-new-tech/
[3] Considerando (2), Proposta di Regolamento del Parlamento europeo e del Consiglio che stabilisce regole armonizzate sull'intelligenza artificiale (legge sull'intelligenza artificiale) e modifica alcuni atti legislativi dell'unione, 2021/0106, del 21 aprile, 2021
[4] Proposta di Regolamento del Parlamento europeo e del Consiglio che stabilisce regole armonizzate sull'intelligenza artificiale (legge sull'intelligenza artificiale) e modifica alcuni atti legislativi dell'unione, 2021/0106, del 21 aprile, 2021
[5] Barbara Barbarino, Intelligenza artificiale e responsabilità civile. Tocca all’Ue, Formiche.net, 15/05/2022
[6] Ut supra fn 5
[7] https://www.theguardian.com/technology/2022/jun/12/google-engineer-ai-bot-sentient-blake-lemoine
Smart contracts
We often hear about “smart contracts”, but it is not always clear how useful they are or where they can be applied.
Let's start by saying that, in essence, a smart contract is nothing more than a computerised transaction protocol that executes the terms and conditions of a contract. The purpose of such tools is to automate and simplify certain processes.
Consider, for example, the case of insurance policies for flight delays; normally, when the insured event occurs (i.e. the delay), the insured must get in contact with the insurance company in order to receive, at the end of the investigation and unless there are objections, the compensation foreseen with a time frame that can be quite long.
The purpose of a smart contract in this case is to automate the process of claiming damages and paying compensation. Specifically, the insured and the insurance company negotiate the terms of the contract (e.g. the severity of the delay, the amount of compensation, etc.), and then translate the negotiated clauses into computer instructions (algorithms), which are “triggered” automatically when the event occurs. To make it simple, the compensation will be automatically paid into the insured's bank account as soon as the information on the plane's delay is recorded by the smart contract.
However, for the smart contract to achieve the desired automatic effect, the occurrence of the contractual event, i.e. the delay of the aircraft, must be notified to the smart contract. Without this fundamental step, the clauses could not be activated and would remain just a line of code on an isolated device. For this specific reason, the reliability of the source of information to which the execution of the clauses is linked is a crucial aspect in the negotiation phase between the parties, since once it has been selected, its reliability and impartiality cannot be challenged in the course of the relationship.
Once the negotiation phase has been completed, the next issue is the accuracy of the implementation of the smart contract and its accountability. For some time, in fact, the large-scale spread of these instruments has been hampered by the lack of a third-party intermediary who would certify the effective compliance of the lines of code - whose writing must necessarily be entrusted to a technician - with the will of the parties, as well as the inalterability of the instructions over time and their ready verifiability by all interested parties. This function, which in traditional contracts is carried out by professionals such as lawyers and notaries, who guarantee with their work the official nature of what was agreed and the protection of the interests of their clients, is in fact unknown to the world of algorithms.
This, however, has changed with the advent of the blockchain. The latter is in fact a register of information grouped in 'blocks' that are almost impossible to alter and are potentially accessible to any party interested in verifying their content.
By inserting the smart contract into a blockchain through the payment of a cryptocurrency “commission”, a twofold result can be achieved: the verifiability of the information entered (which is thus removed from the exclusive sphere of control of the programmer) and the certainty of this information, which cannot be altered or manipulated without the knowledge of either party. In essence, the blockchain performs the function of a digital notary, archiving and formalising the will of the parties when the contract is concluded. Subsequently, upon the occurrence of the event referred to therein, the so-called “oracles” - blocks that serve to transmit information from the world to the blockchain - communicate it to the registered contract, which will execute the instructions for which it was programmed.
In addition to the insurance field, other areas in which these instruments can be applied are M&A - for example, the possibility of obtaining immediate credit of sums in an escrow account upon the occurrence of the event referred to in the deed of acquisition - and the financial field, where the degree of digitalisation is already very high and where relevant information is already exchanged through computer applications that have an immediate effect on the value of stocks. By way of example, the occurrence of a war event in a given country almost simultaneously causes a collapse in the value of the relative government bonds, just as the statements of central bank presidents are immediately recorded by the financial system, raising or depressing the trend of the international stock exchange over the course of a single day.
From the above examples, it is clear that smart contracts are undoubtedly useful in certain areas, although it is still too early to say that they are destined to replace “traditional” contracts.
This is because not all clauses of a contract can be applied and interpreted through automatisms (e.g. clauses referring to uses and practice), nor all contracts provide for obligations that can be performed by a computer. It is sufficient to think about the clauses providing that the renewal of the contract is subject to the successful completion of a trial period - necessarily linked also to evaluations of personal nature that cannot always be codified ex ante - or to events of force majeure that by their nature cannot be regulated ab origine.
To this must be added that it is still not clear how a smart contract that contains errors or no longer corresponds exactly to the will of the parties can be modified, especially from the moment of its registration on the blockchain. The paradox in such cases would be the automatic and potentially “infinite” execution of an arrangement of interests no longer acceptable to the contracting parties themselves. This aspect also makes it unlikely that smart contracts can be used to regulate, for example, relationships of duration, precisely because the intrinsic uncertainty connected to the changing conditions over time would be incompatible with the ex ante determination of any possible contractual consequences.
Without prejudice to above important considerations, however, it is worth highlighting the great advantage in terms of reducing transaction costs that widespread adoption of this technological innovation could bring. This is especially true in all those cases where the needs to be met do not require complex negotiation; therefore, it is not unlikely that smart contracts will start to be implemented in all those cases where the parties prefer the speed and certainty of automatic performance of an obligation over the renegotiability or flexibility of the relationship.
In conclusion, there is no question of the usefulness and economic savings that can be achieved by using smart contracts. What is certain is that, as is often the case with any technological innovation, these advantages will only be truly perceived through significant integration and adoption of these tools in our society.
However, it can already be said that smart contracts will find wide application especially in standard relationships where a minimum contribution in terms of creativity and customisation of contractual solutions is required.
Under a different point of view, a real challenge for legal professionals is to be able to integrate such tools into traditional contracts in order to improve and enhance the effectiveness of the legal protection provided. This could be a truly “smart” objective to be achieved.
Free transfer of personal data to Republic of Korea: a historic adequacy decision is coming
The European Data Protection Board (“EDPB”) has issued its opinion on the draft adequacy decision published by the European Commission on last 16 June 2021 (available here) concerning the transfer of personal data to the Republic of Korea.
This is a decision that, once in force, will allow the EU economic operators – such as, first of all, all the electronic communication service providers, cloud providers and multinational companies - to freely transfer personal data from Europe to the Republic of Korea without having to adopt either the appropriate safeguards (e.g., "Standard Contractual Clauses") or the additional measures (e.g., consent of data subjects) required by Chapter V of EU Regulation No. 679/2016 ("GDPR").
Indeed, pursuant to articles 44 et seq. of the GDPR, the transfers of personal data to countries outside the European Economic Area or to an international organization are allowed provided that the adequacy of the third country or organization is expressly recognized by a decision of the Commission.
We will now examine in detail the contents of the opinion issued by the EDPB.
Firstly, it was noted that the Republic of Korea's legal framework on the protection of personal data is substantially aligned with the European one, especially with regard to the main definitions provided for by law (“personal data”, “processing” and “data subject”), the requirements for a lawful data processing, the general principles and the security measures.
This has been possible not only thanks to the presence of an effective privacy law (i.e., the "Personal Information Protection Act" or "PIPA" which came into force in 2011) but also because of a series of "notifications" (included the “Notification no. 2021-1”) issued by the Korean Data Protection Authority (i.e., "Personal Information Protection Commissioner" or "PIPC") which explain and make easily understandable the provisions of PIPA.
Moreover, as noted by the EDPB, the Republic of Korea is part of a number of international agreements that guarantee the right to privacy (including the "International Covenant on Civil and Political Rights", the "Convention on the Rights of Persons with Disabilities" and the “ONU Convention on the Rights of the Child"), which confirms the attention that the Republic of Korea has paid to the protection of personal data for several years now.
The EDPB's analysis then focused on some key aspects of PIPA that slightly differ from the GDPR and therefore require more attention - such as, in particular, the absence of a general right to withdraw the consent provided by the data subjects, for example, for marketing activities.
According to the EDPB, although article 37 of PIPA grants data subjects the right to request the “suspension” of the processing of their personal data - a right that can be exercised also in case of direct marketing, as expressly clarified by Recital 79 of the EU Commission adequacy decision – the PIPA provides for the right to withdraw the consent only in two specific cases:
- in relation to the transfers of personal data carried out in the context of special corporate operations (such as mergers, acquisitions, etc.);
- with regard to the processing of personal data for marketing activities by providers of electronic communication services.
The EDPB therefore considered it necessary to draw the Commission's attention to the above-mentioned issues in order to analyze in detail the consequences that, in the light of the Korean legal framework, the absence of such a right might cause for data subjects and to clarify, in the adequacy decision, the actual scope of the above-mentioned right to request the “suspension” of the processing.
Secondly, the EDPB observed that, pursuant to article 58 of PIPA, a substantial part of PIPA - including Chapters III, IV and V, which respectively regulate the general principles for data processing, the security measures and the rights of data subjects - does not apply to several processing of personal data (including those necessary to meet urgent needs for the protection of public health and safety).
The EDPB also notes that the word “urgent” in the PIPA expresses an extremely broad concept that needs to be limited and contextualized, also with the help of practical examples, in order not to compromise the confidentiality of the data subjects’ personal data.
Moreover, the EDPB, in the light of the current emergency situation caused by the Covid-19 pandemic, drew the Commission's attention in relation to the need to ensure an adequate level of protection also for personal data transferred to the Republic of Korea for purposes related to public health protection.
This is because "sensitive" information relating to European citizens (for example, the vaccination status), should receive at least the same level of protection as granted under the GDPR once transferred to the Republic of Korea. In this regard, the EDPB therefore invited the Commission to closely monitor the application of the exemptions provided for in article 58 of PIPA.
Finally, the EDPB considered it appropriate to focus on the possibility for Korean public authorities to access the personal data of European citizens for national security purposes. In this respect, there is no specific obligation for Korean authorities to inform data subjects of the access to their personal data, especially when data subjects are not Korean citizens.
However, even in the absence of such obligation, the balance between the needs of protection of the national security and the protection of the fundamental rights of the data subjects can be found in the same Korean Law that protects the privacy of interpersonal communications (the "Communications Privacy Protection Act" - see also Recital 187 of the adequacy decision), according to which the access to the personal data of European citizens for purposes of national security can be made only if certain legal requirements are met (for example, in the case of communications between "foreign agencies, groups or citizens suspected of being involved in activities threatening national security").
The EDPB notes that, as a further guarantee of the confidentiality of communications accessed by the Korean authorities, the South Korean Constitution states essential data protection principles applicable to this specific matter.
In the light of the favorable opinion issued by the EDPB, it is certainly desirable, and likely, that the European Commission will adopt an adequacy decision in respect of the Republic of Korea.
In an increasingly data-driven global economy based on the economic value of personal data as well as on the sharing of personal data, such an adequacy decision would open the door to the liberalization of trade with the east, also from a privacy perspective.
This regulatory intervention, object of this article, was due and awaited and it certainly follows the "Free Trade Agreement" between the EU and South Korea in force since 2011, which has been able to exponentially increase bilateral trade between the two countries (in 2015 the trade value of transactions amounted around € 90 billion).
Our hope is that, as the years go by, the European Commission's adequacy assessments will cover more and more legal frameworks so that the international transfer of personal data can represent a real and concrete instrument for promoting the economy and innovation worldwide.
Insight publishes on the "Mitteilungen der deutschen Patentanwälte" magazine
Insight Studio Legale is pleased to announce that on the journal Mitteilungen der deutschen Patentanwälte it is now online the article by Alessandro Merolla entitled “Doctrine of equivalents in patent infringement: the Italian Supreme Court rules on the relevance of patent prosecution history in the European legal framework”.
Table of contents November issue
Esports: a global challenge
In 2020, the video games industry generated only in Italy revenues of 2.2 billion euros, with a growth of 21.9% compared to 2019 and of 100% compared to 2016[1]. Worldwide, the video game industry's 2020 revenues reached $159.3 billion[2], almost surpassing the combined revenues of the North American film and sports industries[3].
With specific regard to the esports sector, i.e. competitions and tournaments with an audience of spectators in which individual players or teams compete in the most popular video games, revenues generated at global level reached 947.1 million dollars in 2020 and are expected to exceed 1 billion dollars in 2021, with an annual growth trend of 14.5%[4]. According to recent data, there are more than 1.6 million people in Italy who are passionate about esports events and competitions[5].
These data show how the world of gaming is increasingly becoming a relevant matter in our country’s economy. Just consider the number of events and initiatives organised only in 2021, a year in which Italy started a slow recovery after the traumatic event of the pandemic that hit it hard.
Indeed, in chronological order, the very recent "Milan Games Week & Cartoomics", namely the ambitious union of the Milan Games Week and Cartoomics in a single event dedicated to video games, esports and digital entertainment in general and of course the world of comics, has just ended. Among the many gaming events on the programme, it is worth mentioning the finals of two important national tournaments[6], as well as a series of meetings such as "in my shoes", an initiative organised by PG Esports to discuss and reflect on how new models of inclusion can be effectively launched within the gaming industry.
Moreover, the Amazon University Esports, a tournament between Italian universities sponsored by Amazon, is still in progress with several prizes, as well as the possibility for winners to access international tournaments. Such initiative shows how this sector has finally attracted the interest of Italian institutions, which, in partnership with major tech industry giants, have grasped its potential in terms of visibility and self-promotion.
All these examples show that esports and the world of gaming in general represent a sector with a very high economic potential. In fact, the existing tournaments are already countless and continue to increase year after year. The skills required to take part in such tournaments are within everyone's reach and this allows the continuous entry of new players, who in turn feed the audience of people potentially interested in buying new consoles, virtual objects to be used during the game, targeted advertising.
There are also many types of tournaments, from online tournaments to those organised in physical locations, and their success depends mainly on the organisers' ability to create interesting events that entertain players and spectators. One example is the possibility of hosting concerts and fashion shows in the context of tournaments, as demonstrated by the collaboration between Louis Vuitton and Riot Games for the 2019 League of Legends World Championship.
The growth of the sector therefore appears to be exponential in every respect, and big investors are realising this.
It is precisely the major economic interests in question, however, that highlight the absence of an ad hoc regulatory framework capable of protecting investors on the one hand and players and spectators on the other. At the moment, in fact, in Italy there is no specific regulation of the phenomenon in question.
Those approaching this sector must therefore rely on professionals who understand the different issues, from copyright on new games developed to the drafting of a sponsorship contract.
In this regard, the recent initiatives promoted by CONI (Italian National Olympic Committee) for the recognition of esports as a legitimate sport are certainly worth following with interest.
In fact, it is clear that, once official recognition as a sporting discipline has been obtained, the next step for esports will be to identify and establish shared rules specifically designed for this sector. This brave initiative has, however, been criticised and in fact many doubts have been raised that esports will be superficially assimilated to traditional sports competitions, managed by national entities and subject to strict rules that do not seem to be in line with a creative and innovative context such as that of video games.
Our hope is that the legislator will understand as soon as possible the importance of ensuring a clear and easy-to-apply regulatory framework for an ever-changing sector, able to dictate clear directives on what is admissible - think, for example, of the thriving sports betting market - and at the same time that will be able to grasp the peculiarities of the technological context that has allowed esports to become a global phenomenon.
[1] https://www.censis.it/sites/default/files/downloads/Rapporto%20Integrale.pdf
[2] https://www.wepc.com/news/video-game-statistics/
[3] https://www.marketwatch.com/story/videogames-are-a-bigger-industry-than-sports-and-movies-combined-thanks-to-the-pandemic-11608654990
[4] https://newzoo.com/insights/trend-reports/newzoos-global-esports-live-streaming-market-report-2021-free-version/
[5] See footnote 1 above
[6] PG Six Nationals Winter 2021 and Italian Rocket Championship