Resisting IP Overexpansion: The Case of Trade Secret Protection of Non-Personal Data

Abstract

This article analyses how intellectual property rights (IPRs) affect access to non-personal data (NPD). In so doing, it homes in on a quasi-IPR, trade secrecy, and shows how applying it to NPD can lead to the overexpansion of IP protection. The risks of overprotection relate to the perpetuity of trade secret protection and the predominant interventions to correct market failure that scholars advance in order to restrict IPRs and quasi-IPRs. The paper then goes one step further to survey regulatory and interpretive solutions that could help to mitigate the risks of overprotection and make room for creating data access rules. Specifically, it explores two principles deriving from “physical” property theory that can be rejigged for the purpose: the numerus clausus of IPRs and the social function of intellectual property. Conceptualised in a novel fashion, these could steer legislatures and courts towards a restrictive understanding of IP forms and contain the propertisation of new intangibles, such as NPD aggregations.

1 Introduction

Investigation of data and information ownership is no longer in its early infancy. Questions such as “Who is the data owner?” have attracted media coverage for some time now¹ and have raised major ethical dilemmas that academics struggle to face.² Moreover, the important issue of data ownership, being inherent to the growth of the digital economy, has caught the attention of policymakers and legal scholars. A laundry list of sub-questions, such as “What is data?”, “What is ownership?”, “What do we mean by property?”, ensues.

The paper examines intellectual property rights (IPRs) in non-personal data (NPD) making up large-scale sets. “Big Data” is the conventional shorthand used here. Intellectual property rights impact both the collection and usage of datasets by “affect[ing] the ease of access to the data, despite its nonrivalrous nature”.³ To use the nomenclature with which economists are more familiar, they create barriers that curtail access to assets, determining “who can exploit a resource, who benefits and who loses”.⁴

This analysis relies on several assumptions that circumscribe its scope. One first delimitation comes from how we conceptualise data. “Data” is a rather vague notion that should be treated carefully. For present purposes, it means any machine-readable syntactic digital element that is defined only by its representative characters (bits), regardless of its content.⁵ Second, we need to understand what data is “non-personal”. In this respect, the paper deals with data that does not fall under the GDPR definition of “personal data”.⁶ This limitation, albeit controversial,⁷ is needed only to avoid investigating the intersections of intellectual property and data protection laws for present purposes. Third, the topic and the arguments presented here operate on the assumption that in the digital economy there is a need for opening up access to data and furthering data sharing practices.⁸ Intellectual property rights, forming an access barrier, can stand in the way of these objectives. Data collectors can restrict access for “non-owners” that do not have access to data – e.g. a public authority, a small business, a researcher, etc. For a matter-of-fact illustration, let’s imagine a digital company (a technology provider) and city authorities cooperating on a smart city project. The technology provider is commissioned to implement a smart waste management solution that harvests data of diverse typologies (e.g. bin load, bin location, and so forth). To protect the data it stores, it will most likely adopt technical and contractual measures. In the absence of a clear provision on the matter in their agreement, the digital company can deny the city authorities access to these datasets, claiming they are trade secrets.⁹ The city authorities will then have little choice but to negotiate a new agreement. Otherwise, they will not be able to access data that they might intend to reuse for (other) public purposes. Likewise, competitors, unless they can replicate the data,¹⁰ would not be able to access datasets that the provider collects, for example in order to repurpose the data and enter a secondary market (e.g. manufacturing of rubbish bin gears). By the same token, a national train operator can temporarily obtain a precautionary injunction blocking access to publicly available data on the train ride status, since it amounts to the extraction of “substantial parts of a database” under EU database rights.¹¹

The article analyses how IPRs, and specifically a quasi-IPR (trade secrecy), affect access to NPD.¹² In so doing, it homes in on the specific case of trade secrecy and how applying it to NPD might lead to overprotection. The prevailing understanding of access-enhancing solutions pivots on competition law and policy interventions that aim to resolve specific market failures. The paper goes one step further to survey regulatory and interpretive solutions that could help to mitigate the risks of overprotection. The remainder of the paper continues over three sections. Section 2 sets the scene by outlining recent developments in the history of IPRs and quasi-IPRs. It explains how and why IP can stretch all the way to massive sets of NPD. Proprietary overexpansion to NPD follows from the long-standing evolution of a highly protectionist legal system. Once the bigger picture has been drawn, I move on in Sect. 3 to scrutinise one instance of this overexpansion, i.e. the intersection between trade secrecy and NPD. As will be seen, trade secrecy is one of the most flexible forms of (quasi-)proprietary protection for data that actualises the issues of overprotection. The latter are worsened by the perpetuity of trade secrecy. To shape data governance across different actors, further interpretive and regulatory routes can reduce the impact of the IP system on NPD. Therefore, Sect. 4 explores how intellectual property rights can be “resisted” (i.e. restricted) in the light of the need to open up data access.¹³ In doing so, it delineates two principles deriving from (physical) property theory: the numerus clausus (“fixed number”) of IPRs, and the social function of intellectual property. The former, I argue, can restrict IP forms if it is construed as a fixed list of standards with fixed rationales and objectives. Thus conceptualised, it can steer legislatures and courts towards a restrictive understanding of IP forms and contain the propertisation of new intangibles, such as NPD aggregations. The social function doctrine construed as a meta-regulatory tool incorporating the interests of non-owners (e.g. small companies, consumers, researchers, and city authorities) in the balancing of opposing fundamental rights can also serve as an alternative to steer the judiciary and the legislature towards restricting IPRs in NPD. Making these more fit for the IP realm (and specifically for trade secret protection) in the data economy might mitigate proprietary overexpansion to NPD and leave more room for data access. Section 5 gives a conclusion.

2 Data: The Latest Direction of a Highly Protectionist Trend

There are similarities and differences between physical property and intangible intellectual property. What they have in common is that they both single out legal constructs governing the allocation of wealth in human societies.¹⁴ They are “relations between individuals”,¹⁵ amounting to forms of private sovereignty¹⁶ over things.¹⁷ Typically, intellectual property laws confer monopolies on something intangible that stems from human ingenuity (“abstract objects”). Real property and personal property laws, on the other hand, establish rights in material goods, such as chattels and land. The borderline between the two proprietary macrocosms has been nearly uncontested since time immemorial.¹⁸

Sorting out the objects of property and those of intellectual property is rather simple. What is more challenging, however, is to ascertain which intangibles attain legal protection. Intellectual property, quite unlike property, has been in a transient state with regard to its core areas for many years now, particularly since the advances in digital technologies dating back to the 1980s. Traditionally, the core areas of IP have been trade marks, patents, copyright, and design rights. More nebulous as to their proprietary nature are trade secrets¹⁹ and unfair competition. In recent decades, the scope of intellectual property rights has increased dramatically, to stretch far beyond the original range of application.²⁰ Some have argued that IP has drifted into a highly protectionist regime,²¹ leading to proprietary overprotection. Proprietorial expansion follows the process of hoarding immaterial resources that previously belonged to the public domain. Thus conceived, today’s IP standards have largely become “the product of the global strategies of a relatively small number of companies and business organisations that realised the value of intellectual property sooner than anyone else”.²² Being formed this way, the IP legal framework frequently fails to provide the public with the results of innovative activities.²³

The last chapter of IP, the hyper-protectionism story, concerns data. Data in digital format, unlike knowledge, is a good that can perfectly well be excluded according to economic theory. As Hess and Ostrom put it with respect to information, “[t]hese technologies have generated greater access […] while at the same time enabling profit-oriented firms to extract value from resources previously held in common and to establish property rights”.²⁴

Quite unlike in the 1990s and early 2000s, what is at stake here is intellectual property rights not in well-arranged databases,²⁵ but in unstructured aggregations of data. The success of technologies such as Big Data, the Internet of Things (IoT), and artificial intelligence (AI) hinges on harnessing large-scale datasets (such as those stored in non-relational databases)²⁶ from which programmers extract valuable information through powerful algorithms. Data that makes up massive digital aggregations is typically a raw meaningless component when it is produced. Therefore, not only is it a by-product of other activities, but it has also become a basic “recorded abstraction of the world” resulting from the transformation of all aspects of reality into data (“datafication”).²⁷ In most applications, it has become an infrastructure that makes any kind of activity, good or service possible.²⁸ Data dependency then goes through processes of data appropriation²⁹ and propertisation, making reliance on massive datasets a matter of survival in global markets. IP standards contribute to this cause, for they form the basis of and formalise the relationship between individuals and social aggregations in their proprietorial endeavours. By taking this to the extreme, Haggart argues that they open the door to a “‘neo-feudal’ global economy, with IP (and data) owners ensconced at the top”.³⁰ Thus, novel challenges for intellectual property ensue in today’s “datafied” world. If any component of reality is computable and convertible into data, then a widespread proprietary architecture is a plausible future. If we open the way for IPRs and quasi-IPRs in respect of data, it is striking how most data elements can virtually turn into something eligible for protection.³¹

Some empirical evidence can pinpoint the problems of a proprietorial data ecosystem. Today, a company can quite easily rely on trade secrecy or database rights to protect NPD by referring to such protection schemes within the terms and conditions of a given data-driven service. Even though the protection does not meet the legal requirements, it will usually take some time before a non-owner that does not have access to NPD (typically a smaller competitor, a newcomer, a public authority, or a weaker contractual counterparty) can obtain judicial redress. The actors with little or no bargaining power at all will most likely abstain from getting involved in costly and endless lawsuits. One may also think, for example, of data collected by smart agriculture machinery, which is routinely transferred to product manufacturers “using copyright and licensing agreements to control the data collected by their products’ software”.³² Smart car data³³ and, more generally, IoT data³⁴ suffer a similar proprietorial fate. Similarly, “cleansing” or anonymising research data may amount to imbuing that dataset with copyrightable expression,³⁵ and so preventing reuse by others.

After outlining the issues related to IP and quasi-IP overexpansion to NPD, the following section zooms in on the application of trade secrecy to NPD to show the status of data propertisation in practice.

3 Trade Secret Protection of Non-Personal Data in the EU: Features and Overprotection Issues

Thus far, numerous legal scholars have investigated whether and how IP and quasi-IP³⁶ rights (i.e. copyright, sui generis database rights, trade secrets, and patents) apply to NPD.³⁷ Other jurists have proposed creating a data producer’s right in NPD to enhance the allocation of NPD as a tradeable commodity.³⁸ For present purposes, I will home in on the form of quasi-IP protection that can easily stretch to NPD, that is trade secrecy.³⁹ Not coincidentally, this has been deemed “the most important legal instrument for protecting data exclusivity”.⁴⁰

Litigation concerning trade secrecy and large-scale datasets is still in its infancy though. To date, no judgment has dealt precisely with the protection of massive data aggregations as a trade secret in the EU. In the US, Lyft Inc v. City of Seattle,⁴¹ a case filed with the Washington Supreme Court, recently shed light on the challenges of using trade secret protection to prevent data access. By contrast, at great length secondary sources dwell on how trade secrecy can apply to large-scale datasets. In the following sub-section, I will draw on the doctrinal debate to determine to what extent trade secrecy extends to NPD. Subsequently, I will move on to analysing the problems of overprotection and provide some empirical evidence of these by expanding on Lyft.

3.1 Trade Secrecy and Non-Personal Data: A Closer Look

The traditional role of trade secret protection is to complement other IPRs,⁴² since it aims to safeguard business integrity from the misappropriation of valuable confidential information, rather than encourage information holders to keep it secret.⁴³ At the international level, trade secret protection is established by Art. 39 of the TRIPS Agreement. In the EU, it has recently been harmonised under the Trade Secrets Directive (TSD).⁴⁴ The majority of legal scholars posit that it does not confer a property-like exclusive right (such as the “formal” intellectual property standards), but is more akin to unfair competition or tort law.⁴⁵ Other scholars, however, disagree with this conceptualisation, making it clear that trade secrets are instead (or should be viewed as) a genuine IP right, underscoring the advantages⁴⁶ and the disadvantages⁴⁷ of this approach. Other commentators rightly maintain that trade secrecy is “quasi-IP”, meaning that it is an atypical mesh of liability rules and property rules,⁴⁸ making it akin to both typical IP standard forms and unfair competition. The TSD embraces the latter regime by providing both injunctions and compensatory mechanisms to preserve trade secrecy.⁴⁹

Leaving the nature of trade secrecy aside, we should see whether it can easily stretch to NPD gathered in large-scale sets. To ascertain this, we need to determine (i) whether NPD gathered in large-scale sets falls within the definition of “trade secret” under Art. 2(1) TSD, and (ii) who is the “trade secret holder” under Art. 2(2) TSD.

3.1.1 Definition of “Trade Secret” and Non-Personal Data

The TSD refers to trade secrets as “information”. This wording might suggest that “data”, being something "less" than information, is left out. Some legal scholars, in fact, have employed the distinction between the semantic layers (i.e. data as information conveying a meaning) and the syntactic layers (i.e. data as sequences of zeros and ones) to ascertain whether data falls within the purview of the TSD. Zech and Drexl maintain that the legal definition applies to the semantic level.⁵⁰ Data aggregations as a syntactic whole, especially if they are not organised or processed in any way, may seem to fall outside the scope of the EU legislation.⁵¹ In many cases, however, the data masses embody information that doubtless qualifies as a trade secret, since the threshold for information to be considered eligible for trade secret protection is virtually non-existent.⁵² Thus, keeping data and information apart would be a rather difficult and artificial task,⁵³ as the Commission appears to acknowledge as well.⁵⁴ Not only must information within the scope of trade secrecy be related to business activities, but also pretty much any kind of information that a firm can produce in the course of its corporate activities falls within the ambit, including connected device data and data resulting from analytics processes.⁵⁵ Moreover, as Noto La Diega and Sappa maintain in respect of IoT data, “[e]ven if the Trade Secrets Directive does not expressly refer to data resulting from a machine-to-machine process, an extensive interpretation of this text, which includes them in the protectable subject matter together with data generated in other and more traditional ways, has to be followed”.⁵⁶

In sum, pretty much all data aggregates that contain and represent (semantic) information fall within the scope of the TSD. That said, we now need to see if NPD amounts to protectable “information” according to the definitional specifics of the TSD. Trade secrecy protects information that meets three prerequisites: (i) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (ii) it has commercial value because it is secret; and (iii) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret.⁵⁷

Secrecy is not an absolute criterion, but a relative and functional one.⁵⁸ This means that parties can share information without destroying its secret status, as long as they do not publicly disclose it but only transfer it from one storage system to another. For instance, this is the case for confidentiality agreements that bind cloud service providers.⁵⁹ Similarly, according to Ottolia, the following events do not destroy secrecy: (i) releasing portions of information that do not provide knowledge advantages; (ii) structuring and arranging a dataset in a different fashion, where the structure and arrangement have economic value; or (iii) unlawfully opening up access to datasets for which secrecy can be restored by means of injunctions.⁶⁰ Other legal authors maintain that the secrecy criterion depends on how a holder collects data. Determann and Drexl argue that data produced by sensors in IoT environments (e.g. cars, tractors, thermostats) is not secret, since smart devices collect and store data that is “generated and displayed in plain sight, depriving such information of secrecy”.⁶¹ Similarly, data harvested by a smart car on a freely accessible road can be collected by cars of diverse manufacturers, and thus cannot meet the secrecy prerequisite.⁶² This interpretation, however, revolves around the fact that (semantic) information in the public domain is not secret and is out there, “up for grabs”, so to speak. Secrecy of data, being a recorded abstraction of this information, is nevertheless another thing. As shown in the foregoing, data can be kept secret by means of contractual and technical measures. Hence, it can meet the requirements of Art. 2(1) TSD even if its source is information “in full sight”.

The second prerequisite is the commercial value that is connected with keeping information secret. Recital 14 of the TSD stipulates that commercial (or economic) value can be either actual or potential. Protecting potential economic value establishes quite a high protection threshold that is built not on the (positive) effect that another actor (e.g. a competitor) can gain from information misappropriation, but on the “likelihood of harm that could be suffered by a trade secret holder”.⁶³ In short, the TSD construes the economic value requirement through the lens of the trade secret holders themselves. Thus defined, it turns into the competitive advantage that stems from keeping information secret.⁶⁴ In Big Data applications, any dataset can virtually amount to a competitive advantage for an information holder. Even unstructured NPD may have potential commercial value and therefore can meet the requirement. This seems to downplay the fact that single data elements⁶⁵ or raw data⁶⁶ are left out of the subject matter since they amount to “trivial information”.⁶⁷ It is very unlikely that an individual item of data interests the data stakeholders of the data value chain. Moreover, it is not clear what constitutes an individual (syntactic) item of data in practice. This depends on what one considers to form a data element, but there is no common agreement on this. For example, a data element can be just a zero-one sequence. But how long should the zero-one sequence be to qualify as a single data element? It is then problematic to ascertain what a data element is. More importantly, the scope of the trade secret definition does not preclude data combinations and aggregations from protection.

The third requirement concerns the reasonable steps a holder must take to keep information secret. As for massive datasets, holders routinely rely on contractual agreements and technical measures (e.g. encryption) to avoid data diffusion. Trade secrets can thus safeguard data and information against unfair practices of employees, contractors, and any other market player with which companies are involved (e.g. unauthorised copy of an entire dataset).⁶⁸ As stated above, erecting contractual and technical barriers amounts to taking “reasonable steps,” making trade secrecy easy to gain in respect of NPD aggregations.

3.1.2 Trade Secret Holders in Data-Driven Applications

A substantial part of the legal scholarship has underscored the issue of identifying the trade secret holder under Art. 2(2) TSD when it comes to large-scale datasets. It is virtually impossible to single out one rightholder when data is generated and exchanged by networks of companies.⁶⁹ Specifically, identifying one holder results in considerable uncertainty in data pools and interconnected smart devices (for example, manufacturers and users of a smart device or machine; or contractors, providers and users of an AI system).⁷⁰ As Drexl puts it, “it is not necessarily clear whether the manufacturer exercising de facto control over the data or the user of the device, physically possessing and operating the device, is controlling the trade secret in this sense. Yet another possibility would be to consider both persons as co-holders of the trade secret”.⁷¹ Article 2(2) TSD, however, defines the trade secret holder as “any natural or legal person lawfully controlling a trade secret”. Unlike a formulation such as the “trade secret owner”, the “holder” notion can encompass not only the first entity protecting information as a secret, but also the subsequent persons that (lawfully) have access to the information (e.g. licensees). In the absence of specific case law on the matter, the broad notion seems to enable joint data control that is protected by trade secrecy and involves multiple contractual parties voluntarily sharing data. There can be issues nevertheless in respect to cases where contractual measures between the parties do not govern data-related rights and obligations (for example, which company can retain data, and which company must delete it).

3.1.3 Interim Conclusion

Trade secrecy is a flexible form of quasi-IP protection that can easily apply to NPD. The vast majority of data aggregations can qualify as trade secrets under Art. 2(1) TSD. Single data elements may be left out, but this does not prevent companies from accessing trade secrecy because it is difficult to determine what qualifies as a “data element”. Moreover, it is very unlikely that they are interested in individual items of data. That said, singling out the trade secret holder presents a conundrum when contractual measures do not regulate the data-related rights and obligations in networks of businesses. Multiple firms can then qualify as joint trade secret holders if they contribute to creating sets of NPD.

3.2 Problems of Overprotection: Theory and Practice

In the foregoing we have seen that trade secrecy is flexible and adaptive to ever-changing data-driven technologies. The previous section has shown that businesses can quite easily harness trade secrecy to protect large-scale datasets. That said, we should look into how trade secret protection of NPD impacts the data economy. The problems of overprotection concern the very ambit of trade secrecy.

One first set of issues associated with it concerns transparency and public oversight of corporate activities. A thorough study by Kapczynski has cast light on the transformation of US trade secret law into a significant driver for corporate power. Specifically, it enables firms to consider almost any information that they hold as a trade secret, “empower[ing] [them] to keep important information about their commercial products and services secret, and to obscure information about benefits that corporations receive from government”.⁷² In practice, US trade secret protection stretches to nearly any type of data aggregation, including (among NPD illustrations) data about the source and processing of toxic waste, information about water and energy use that Google needed to collect to build a novel data hub in North Carolina, and information held by Uber and Lyft about zip codes of drop-offs and pick-ups.⁷³ The extension of trade secrecy to all these settings may mean that “claims to property in information and data come into conflict with what the public needs to know to govern itself” if corporations’ risky products and practices involving vast aggregations of data are kept secret. The same gamut of issues concerns EU trade secret legislation. Viewed through the lens of an activity designed to balance fundamental rights, the rights and interests of trade secret holders come into conflict with other actors’ rights and interests when it comes to fostering algorithmic fairness, transparency, and accountability.⁷⁴

A second source of problems impacts the dynamics of competition and, more generally, the position of weaker actors in the data markets. Trade secrecy may form the basis of exploitative conduct by businesses that prevents others from accessing data. In this case, the businesses are simply not willing to exchange data, in order to preserve a competitive advantage in the markets.⁷⁵ When there are “unique data access points” in data markets,⁷⁶ trade secrecy can thus amount to an insurmountable advantage that actors with limited bargaining power (most typically, small companies or local public entities) cannot overcome. This has motivated the EU Commission to propose the Data Act, which purports to open up data access while restricting the boundaries of trade secrecy.⁷⁷ Some key features of trade secrecy compound the problems of overprotection. Unlike other IP standards, trade secret protection is perpetual.⁷⁸ The longer items of information are kept secret, the longer they are afforded with protection. Accordingly, a trade secret holder (or a few holders) can just retain datasets and avoid sharing without any time limit so long as “reasonable measures” to exclusively control data are put in place. Thus defined, trade secrecy stands in the way of access to data categories that lose value over time, such as real-time data, or cannot be easily replicated in future.

We have seen above that the TSD came into force in 2016. Unsurprisingly, there is no EU case-law regarding trade secrecy and its application to large-scale processing practices. A US case, Lyft Inc v. City of Seattle,⁷⁹ is a useful illustration of the aforementioned problems. Lyft Inc and Rasier LLC (an Uber subsidiary) carry out data-driven transportation services in Seattle.⁸⁰ In 2014, in the light of mediation amongst the city, Lyft, Rasier, and the taxi and for-hire stakeholders, Lyft and Rasier were supposed to submit quarterly standardised reports to Seattle encompassing various data categories (e.g. the total number of rides, the percentage of rides for each zip code, pick-up and drop-off zip codes, and so forth). Lyft and Rasier objected by raising confidentiality concerns connected with transferring data to the municipal authorities. The city administration had implemented appropriate technical and organisational measures to prevent data losses and unintentional disclosure. Lyft and Rasier nevertheless insisted that quarterly zip code reports consisted of trade secrets protected by the Uniform Trade Secrets Act (UTSA). In 2016, a Texan resident filed a request under the Public Records Act (PRA) to access reports made up of data from late 2015. The municipality of Seattle warned him that those reports were deemed confidential by Lyft and Rasier, while seeking an injunction under the PRA to obtain access to the requested reports. The King County Superior Court, however, issued a permanent injunction preventing said reports from being disclosed, maintaining that the zip code reports were trade secrets under the UTSA. Eventually, the Washington Supreme Court overturned this decision, granting access to the reports. According to the court, the latter qualified as “public records” even if they were trade secrets. Their disclosure can be prevented only if “disclosure would clearly not be in the public interest, and would substantially and irreparably damage a person or a vital government interest”.⁸¹

Some lessons can be learnt from Lyft by checking the problems of overprotection against the case findings. First, even though the court eventually ruled in favour of the municipal authorities, it took a while before the latter could access datasets collected by the private providers. Trade secrecy perpetuity made it impossible for the city administration to access data. Time-sensitiveness, however, is essential to getting valuable insights out of datasets, e.g. elaborating urban policies based on data reuse. This suggests that regulatory tools other than ex post interventions such as antitrust law remedies (Art. 102 TFEU)⁸² might complement the existing framework by focusing on less time-consuming procedures, as we will see further below.⁸³ Access-restricting conduct, moreover, frustrated the municipality’s attempts to pursue the public interest. This shows that reflecting on how to restrict IP and quasi-IP rights in issues connected to data governance involves going beyond considerations of competition law and policy. When it comes to governing data flows across different stakeholders of the data economy, there are multiple rights and interests involved that antitrust laws alone cannot encapsulate. For these very reasons, coupling competition policy with further regulatory and interpretive tools as explored below might offer novel grounds for discussion.

4 Herding IPCats: Stemming the Tide of Intellectual Property Through Property Theory

Section 3 has shown that trade secrecy does provide some protection for NPD. As much as other access barriers, it can prevent different actors (e.g. public authorities, non-profit organisations, competitors, and so forth) from making use of datasets held by trade secret holders. In Sect. 2, we also saw that IP and quasi-IP expansion to NPD might curtail access to data.^84,85 An exploration of alternative solutions, therefore, ought to find regulatory and interpretive tools that make more room for data access. A viable strategy, I would argue, entails looking for solutions that restrict the ambit of IP and quasi-IP forms to a more circumscribed set of cases.

Hence, in the subsequent sub-sections I address a rather functional question: “Bearing in mind the risks of IP and quasi-IP overprotection of NPD, how can IP and quasi-IP forms be restricted for this purpose?”. In this sense, looking into the IP exceptions and limitations to apply to our case is a well-trodden path in the legal literature.⁸⁶ These studies are certainly thought-provoking, but they neglect an element on which I intend to concentrate below: the regulatory and interpretive principles capable of informing lawmakers and judiciaries. Finding appropriate regulatory and interpretive impetus, I would argue, is much more vital in the data economy. The law just cannot keep pace with data-driven technologies. As Fairfield puts it, we need legal narratives that can increase the speed at which laws can be adopted⁸⁷ instead of rule-based and sector-specific approaches. Thus, narratives for different interpretations of existing laws⁸⁸ can play a more crucial role than targeted rules, which can quickly go awry and ultimately fail to resist proprietary overprotection. IP and quasi-IP laws need tools that make them sufficiently flexible with regard to ever-changing technologies.

In the rest of the section, I delineate two regulatory principles that can help to restrict the IP and quasi-IP legal framework. One is the numerus clausus principle of IPRs. This posits a closed number of IP and quasi-IP standards. Its justiciability can prevent legislatures and courts from extending IP forms to intangibles that fall short of IP laws’ rationales and fixed objectives. The second is the social function of intellectual property. Understanding it as a balance of rights that takes proper account of non-owners’ interests can revitalise its salience. Its main addressees, we will see, would be the judiciary. The two principles are analysed in turn. Subsequently, I check their feasibility against EU trade secret protection.

4.1 Numerus Clausus Principle for IPRs (Pursuing Fixed Objectives and Rationales)

The ever-expanding nature of intellectual property reveals another difference with physical property. In civil law and (to a lesser degree) common law jurisdictions, property is systematised according to the numerus clausus (“closed number”) principle. The origins of this date back to ancient history. In Roman law, it was never codified in the legislation, but was applied in practice as a way of ensuring legal certainty for third parties.⁸⁹ In doing so, it held a meta-regulatory⁹⁰ status because it restrained the dominium [ownership and control of property] as a powerful exclusionary protection applying to all third parties. Romans were concerned with the consequences of ownership on wider society.

In contemporary law, the numerus clausus means that property rights are confined to a closed inventory of allowable forms.⁹¹ Historically, this “fixed list” has found at least three justifications.⁹² First, in civil systems it stands as a bulwark against the dissolution of the unitary concept of ownership, whereby as a default rule property rights in things must be allotted to an individual owner rather than split into fractional rights shared among two or more people.⁹³ Second, some legal literature has seen the numerus clausus as a tool for “optimal standardisation” of property rights⁹⁴ by lowering the costs of investigating them. To put it concisely, a closed number of types standardises property burdens and drives down information costs for potential purchasers and tortfeasors, “who need to know which rights in relation to things are property rights, because of their potential tort liability for interfering with property rights”.⁹⁵ Third, other commentators have cast light on the “democratic” dimension of the numerus clausus principle of property law. This has to do with the fact that “the inherently public quality of property rights justifies substantive and procedural limits on the creation of new property forms. New property forms must reflect values the collectivity approves of and must be ratified through democratic processes”.⁹⁶

Hence the conclusion that the numerus clausus does not prevent new property forms, such as the “common goods” (beni comuni) in Italy and the Community Land Trust (CLT) in the US, Australia, New Zealand, and Belgium,⁹⁷ from bourgeoning. It operates instead as a threshold for legitimising novel property standards according to the collectivity’s input.

In the realm of intellectual property, the numerus clausus takes on a meaning that somewhat mirrors the “democratic” dimension of the numerus clausus of physical property, so to speak. It pertains to how IPRs breed artificially scarce environments. Patents and copyright are not things of the physical world, but legal creations (read: artificial monopolies) aimed to incentivise corporate innovation. Legislatures and courts across the world are aware of the distortive potential of legitimising monopolies in abstract concepts. Thus, the numerus clausus doctrine aims to confine intellectual property to a handful of fixed standards,⁹⁸ thus limiting the default rule of economic freedom in the form of free flow of ideas and knowledge.⁹⁹ It is the legislature’s job to “put IP in order”, directing its evolution in such a way as to prevent overexpansion at the expense of other constitutional rights and liberties.¹⁰⁰ The numerus clausus of intellectual property, therefore, ensues from the principle of separation of powers, whereby allocative choices are the responsibility of democratically elected legislatures.¹⁰¹ Hence, not all practices for appropriating immaterial assets are worthy of protection – only those meeting the needs of market failures that legislatures redress by creating an IP standard.

In the area of intellectual property, however, the numerus clausus is “probably at its weakest”¹⁰² or “essentially non-existent”.¹⁰³ There are at least three reasons why the principle has not been seen at work in the realm of intangibles. First, it only applies to “primary” rights (the IP standards, such as copyright, trade marks, and patents), not to “economic” rights (i.e. pecuniary interests, or “fractioned” rights) in intangible entities.¹⁰⁴ Economic rights are routinely transferred by means of contractual agreements (e.g. licences), irrespective of whether an underlying primary right exists. Private arrangements form a texture of iterative social norms of data appropriation.¹⁰⁵ (Exclusive) licence agreements virtually turn into ownership gridlocks, for private autonomy has no real limits.¹⁰⁶

Second, the courts and even (regulatory) private actors¹⁰⁷ restrain the formal rigour of the numerus clausus of IP forms as well. Today, legal systems are not limited to domestic legislation. Sources of international law, supranational law (such as EU law), transnational law (such as the lex mercatoria), and soft law (e.g. codes of conduct, commercial practices) tend to be in addition to, and even prevail over, national “law-as-command” instruments. This has particularly been the case since intellectual property entered the “global” era in the 1990s.¹⁰⁸ Hence, new forms of exclusive rights in abstract objects proliferate. Their recognition mostly involves the courts. The latter operate on the assumption that exclusivity is the optimal governance mode of any form of intangible. So, for example, they are prone in Italy to recognise IPRs in novel incorporeal goods, such as the depictions of other tangibles or intangibles.¹⁰⁹ At times, courts even endorse the customary propertising efforts of private (regulatory) bodies: one may think of the code of conduct of the advertising industry in Italy.¹¹⁰ Overall, in both civil law and common law jurisdictions the judiciary has lost sight of the original meaning of the numerus clausus as a way of containing the consequences of ownership for society in general.

Third, the legislators less frequently transpose the entrenched hermeneutic routes of the courts into law. Legitimisation of new IPRs mostly occurs in a “disguised” fashion, that is by extending the scope of standard forms or lowering the threshold of proprietary protection.¹¹¹ IP extension to computer programmes, TV formats and domain names illustrates this.

Despite its original potential, the principle of numerus clausus of IPRs as it is understood today does not have sufficient force to counter the overexpansion of IP. A reconsideration of its role may nevertheless render it a well-functioning principle in today’s data economy. First, there is a need for reinstating the original meta-regulatory significance of the numerus clausus as a component of the right of intellectual property (Art. 17(2) of the Charter of Fundamental Rights of the European Union, CFREU).¹¹² Meta-regulation means finding governance modes of other forms of regulation.¹¹³ The numerus clausus pertains to how governance of intangibles ought to work. In this sense, a “fixed number” of IP and quasi-IP standards would encourage courts to adopt more restrictive approaches to recognising IPRs, since the latter are just one of many ways of governing abstract objects. Hence, the judiciaries would have to consider data governance modes (such as shared and “open” management based on use rights)¹¹⁴ that they frequently neglect by taking IPRs as the default rule.¹¹⁵

Second, regulators and courts should view the numerus clausus as an inventory of IP and quasi IP-forms attached to definite rationales and pursuing objectives for which those IP standards have been designed.¹¹⁶ This stems from the fact that legal provisions are anchored in doctrines and rationales that give grounds for their existence and functioning in empirical and pragmatic terms. By contrast, the very normative foundations of intellectual property seem to have an identity crisis when it comes to protecting data in the data economy. Today, the strength of the typical IP rationales, such as the “fairness”, “personhood” and “welfare” theories of intellectual property,¹¹⁷ seems to be faltering under the pressure of features of the data economy. IP fairness doctrines are based on the natural law consideration that individuals have a natural right to the fruits of their creations and discoveries. Personhood theories of IP are grounded in the fact that intellectual assets display and express authors’ personalities. Welfare theories see IPRs as legal constructs that address the underproduction of public goods by offering an incentive for their creation. All such theories have lost their traction in data-intensive environments to some extent. It is problematic to argue along Lockean lines¹¹⁸ that natural law can justify data production as property, as the same data routinely stems from different producers. Similarly, the assumptions and implications of personhood theories, that is the strong link between creative works and their author’s personality, simply fades away in data production contexts as there is no such connection. The utilitarian arguments of the welfare theories (i.e. the creation incentive) do not apply to IP in today’s world, where informational assets (such as data) are produced at near-zero marginal cost.¹¹⁹ More practically, the proposed rendition of the IP “closed number” would thus require explaining the application of IP forms according to rationales that show the objectives that their protection pursues. As Fairfield notes, the most effective rules governing technology should be “humble”, “tak[ing] one case at a time, one issue at a time”, since

… rules divorced from lived experience or the actual context that caused humans to think those rules were a good idea turn bad quickly … In fact, keeping a rule humble, tied to its origins and context, without immediately generalizing it, may enable us to act quickly without destabilizing other areas of law.¹²⁰

Thus conceptualised, the novel numerus clausus of IPRs could have two practical implications. First, allocating property rights in abstract things would become the primary job of legislatures.¹²¹ Hence the conclusion that any novel proprietary form should undergo a legislative process and be backed up only by definite rationales and objectives. Legislatures would encompass national and supranational legislators such as the EU, which gathers different stakeholders in the decision-making process through public consultations.¹²² Forging exclusive rights by means of international trade agreements, therefore, may also increase the bottom-up participation of consumers, end users, and activists. Second, being circumscribed within their rationales and objectives, IP standards cannot stretch to new intangibles by means of judicial interpretations solely grasping at exclusivity as the default rule. Moreover, legal analogical reasoning would need to be linked to a given IP rationale and objective for granting protection. In doing so, the numerus clausus could steer courts towards denying protection to new intangibles that do not meet the prerequisites of the IPR fixed list, such as NPD.

I will now summarise the proposed understanding of the numerus clausus principle of IPRs with fixed objectives and rationales. The “closed number” of IP forms has a democratic core. In the data economy, it could be used to ratchet down the trend to consider property as the “natural” governance mode of intangibles. To do so, the numerus clausus of IPRs should be designed as a fixed number of IP and quasi-IP forms attached to rationales and pursuing fixed objectives. Thus articulated, a closed number could prevent exclusive rights from stretching to data and other immaterial assets that do not meet the original IP protection goals. So, on the one hand, the main regulatory forum for allocating new incorporeal rights would be the legislature. On the other hand, courts and other non-legislative actors would have to refrain from creating or recognising proprietary iterations, unless they could account for an underlying objective and rationale for which the IP form was designed.¹²³ They would be required to fall in line with the meta-regulatory nucleus of the numerus clausus of IPRs.

4.2 Bringing the Social Function of Intellectual Property Back to Life

A second force for restricting intellectual property lies in valuing its social function. The social function of law conjures up philosophical ideas dating back to Thomas Aquinas.¹²⁴ In the early 1900s, legal scholars with diverse backgrounds, such as Josserand, Duguit, Kohler and von Gierke, applied the social function principle to property rights.¹²⁵ Their scholarship shared a critical view of private property as a bourgeois absolute right, with no limitations on owners’ sole and despotic dominion over their assets. These scholars maintain that property rights should, on the contrary “have their share of social responsibility”¹²⁶ and entailed obligations for owners. The principle then served as a foundational basis to constitutionalise the limitations, “for the public good”, on the right to property, especially in Germany and Italy,¹²⁷ as well as in the European Convention on Human Rights (ECHR).¹²⁸ Within the EU secondary legislation, the social function doctrine has stretched even beyond the field of property rights and turned into an essential component of how different fundamental rights are balanced.¹²⁹ Some legal scholars have recently turned their attention to delineating the principle in the realm of intellectual property.¹³⁰

The social function doctrine of property law revolves around the consideration that rights can clash with one another. Thus, there is a need for a fair balance of opposing rights and interests. As Geiger puts it,

[b]alance is the key concept that lies behind the social function. If law is a question of balance, there cannot be an “absolute” right that can be exercised in a totally selfish manner with no consideration for the consequences that this exercise involves, but only rights that are “relativised” by the rights of others and the wellbeing of the community.¹³¹

The key to weighing and balancing rights is to draw boundary lines for how they are laid out in the legislation. This turns into considering the general interest as the lodestar for exercising property rights. Overall, the rights of property and intellectual property “can be restricted in order to safeguard the public interest”¹³² according to the “principle of proportionality” of Art. 52(1) of the CFREU.¹³³ In this sense, the CJEU has, since the 1970s, employed the social function doctrine to limit property rights, in order to build up the European single market.¹³⁴ More recently, the social function has turned into a “general clause” limitation to deal with general interest issues that Member States and the EU as a whole address as public policy matters, such as security, public health and environmental protection.¹³⁵ In Sky Österreich, the CJEU went even further, seeing the social function as a limitation on freedom to conduct business, in order to counterbalance freedom of the press.¹³⁶ Thus defined, the social function is a flexible concept that not only serves a market-correcting function, but can also redress any imbalance in proprietary and non-proprietary interests.¹³⁷

Influenced by European Court of Human Rights (ECtHR) jurisprudence, the CJEU has used fair balancing to offset the author’s exclusive rights (copyright) against users’ rights in the digital realm. In the judgments Scarlet Extended v. SABAM¹³⁸ and SABAM v. Netlog,¹³⁹ the Court viewed the (opposing) fundamental rights (specifically, freedom of expression and information as established by Art. 11 CFREU) as the lodestar for this balancing act. The prevailing understanding of the social function of IPRs has more recently come to encapsulate fair balancing in the exceptions and limitations established by national and EU secondary legislation. The CJEU cases Pelham,¹⁴⁰Funke Medien¹⁴¹ and Spiegel Online¹⁴² are illustrations of this tendency. In these decisions, the CJEU emphasised that the domestic courts of EU Member States could not rely on the rights established in the CFREU to derogate from an author’s exclusive rights when an exception or a limitation did not apply. In short, the exceptions and limitations of copyright “internalise” the balancing act between different rights and interests.¹⁴³ By contrast, fundamental rights cannot serve as an external limitation of copyright protection. Thus conceptualised, the Court’s view seems to reiterate the leading position of “rights holders at the top and users’ interest below”.¹⁴⁴ As Schwemer and Schovsbo assert, “even though the Court apparently accepts that sometimes conflicts between IPR and fundamental rights may occur, one should – when within the copyright system – assume that priority has been given to the exclusionary powers of rights holders at the immediate expense of users”.¹⁴⁵ Hence the conclusion that pre-emptively excluding external limits of copyright law may well pose challenges when the internal limitations (read: the exceptions and limitations stipulated by EU secondary legislation) fall short of “ensuring full compliance with the European [freedom of expression] standards”.¹⁴⁶ This is a likely scenario when it comes to technological developments that make certain exceptions or limitations obsolete.

A novel understanding of the social function of IPRs can redress the imbalances in IP owners’ and non-owners’ interests and rights. Being adaptable, the social function can be a suitable tool for driving down the dominium of IP owners over non-personal data. As with the numerus clausus, its meta-regulatory capability is promising. Under this perspective, the social function of intellectual property would require courts and legislatures not only to balance rights against one another, but also to consider the interests of non-owners as the lodestar for this balancing act. This stems from the fact that (intellectual) property rights can be envisaged to be “non-equal rights”. IP allocation is not a neutral choice, but rather a distributive equity matter¹⁴⁷ that has to consider the needs of those whose rights and interests are left aside.¹⁴⁸ Hence, control over data by means of IPRs can be re-decentralised¹⁴⁹ by restricting the ambit of intellectual property itself. To illustrate this, it is from this perspective that a farmer, a small company or a researcher can seek judicial redress for an agreement that allocates IPRs in data to a conglomerate with stronger bargaining power. On a similar note, city authorities can see proprietary protection of urban mobility data collected by private providers restricted.¹⁵⁰

We can summarise our conceptualisation of the social function of intellectual property as follows. Fostering the social function of IPRs amounts to making them fit for the interests not only of rightholders, but also of a wide number of beneficiaries that have limited bargaining power and are interested in keeping data out of IP enclosures (e.g. small companies, researchers, public authorities, non-profit organisations). In this sense, the lodestar for balancing rights against one another is constituted by the interests and rights of non-owners. Thus, putting the social function doctrine to work can contain the rights of IP owners in NPD. An effective restricting exercise lies in the way in which IPRs are balanced against other fundamental rights in the light of the interests of non-owners. Yet it remains to be examined which other fundamental rights of non-owners can offset IPRs in both judicial and legislative contexts.

The most obvious one may be freedom of expression and information (Art. 10 ECHR; Art. 11 CFREU). Data, we have seen, is nothing but a tiny piece of information. As Hugenholtz notes, freedom of expression and information stands in the way of recognising property rights in data, for the notion of information encompasses syntactic data and commercial speech as well. In his words,

[f]rom this perspective, data and information must flow freely, uninhibited by property rights or other state-created restrictions, unless a compelling societal need for protection ("necessary in a democratic society") can be established. Freedom of expression and information, in other words, makes IP rights in data the exception to the default rule of freedom.¹⁵¹

Freedom of information can serve the needs of multiple categories, such as journalists, urban communities, and researchers, as well as municipal authorities and small companies – individuals and organisations interested in seeing IP protection driven down. It is noteworthy that the TSD provides for an exception to the trade secret protection where the “use or disclosure of the trade secret was carried out […] (a) for exercising the right to freedom of expression and information as set out in the Charter, including respect for the freedom and pluralism of the media”.¹⁵² Access to the “intangible components” of a smart device, such as the data produced, can therefore be placed on such a legal footing.¹⁵³

Second, freedom of scientific research is another force to counterbalance intellectual property rights. NPD is the raw material of research activities; however, companies and public bodies routinely refuse to provide access to their stored datasets to research institutions. There is a burgeoning literature exploring the relationship between science, human rights, and intellectual property.¹⁵⁴ In the EU, Art. 13 CFREU requires that academic research be “free of constraint”. Restrictions to freedom of research activities are possible, but, under Art. 52(1) CFREU, are “subject to a strict standard of review”.¹⁵⁵ Now, there is no denying that intellectual property is included in these restrictions, but “hard questions can be asked regarding whether the balance struck by existing [IPRs] does justice to the values of academic and research freedom”.¹⁵⁶ Today’s data-intensive research environments call for restricting intellectual property laws that apply to data to make full use of data-mining techniques.¹⁵⁷A fortiori, IPRs in NPD hardly prevail over freedom of academic research. Such a line of reasoning filters through the text and data mining (TDM) exception in the DSM Directive.¹⁵⁸ The latter nevertheless ends up creating a secondary market for TDM practices that fall into the hands of private publishers, which are “well aware that their publishing portfolios have informational value beyond the published articles they have aggregated”.¹⁵⁹ By contrast, a hermeneutical tool such as the social function can reverse the trend by empowering researchers to restrict IPRs in data held by large publishers in judicial proceedings and by directing the national and EU legislatures towards recognising freedom of academic research as prevailing over IPRs.

Third, freedom of services as established in the Treaties can counterbalance the overexpansion of IPRs in NPD.¹⁶⁰ In its 2017 Communication, the European Commission has construed this freedom as a “principle of free movement of data within the EU”,¹⁶¹ as already established in respect of personal data.¹⁶²

4.3 Practical Consequences of the Proposed Theories for EU Trade Secret Law and Interplay with EU Secondary Legislation

At this stage of the analysis, one question arises: How can we relate the theoretical framework that has been sketched out to the central theme of this paper, i.e. EU legal protection of trade secrets? Both the numerus clausus of IPRs and the social function of intellectual property as conceptualised above can prove useful.

The numerus clausus of IPRs can be seen in action in restricting the extension of trade secrecy to NPD. Trade secrets have been designed to safeguard valuable business and workplace information, giving a competitive advantage and protection from misappropriation. Thus conceived, they relate to the know-how type of information in the TRIPS Agreement formulation (Art. 39) and the TSD. The latter explicitly enumerates clear examples in this respect.¹⁶³ One can think of customer lists, information on suppliers, business plans, formulas for products and market research and strategies. However, one may retort that NPD aggregations, in contrast, fall outside the rationales and goals that motivated the EU legislator to promulgate the TSD. Syntactic data does not amount to valuable information taking on a straightforward meaning, unless one synthesises and analyses it by means of complex analytics processes.¹⁶⁴ Non-processed and raw NPD, therefore, would be excluded from trade secret protection in the light of the numerus clausus principle.

In seeking to elaborate an answer in respect of the social function of intellectual property, two caveats are worth noting before proceeding. First, the TSD establishes a suite of exceptions to trade secrecy, aiming to offset opposing rights and interests, pretty much as the social function sets out to do. Specifically, Art. 5 reads:

Member States shall ensure that an application for the measures, procedures and remedies provided for in this Directive is dismissed where the alleged acquisition, use or disclosure of the trade secret was carried out in any of the following cases: (a) for exercising the right to freedom of expression and information as set out in the Charter, including respect for the freedom and pluralism of the media; (b) for revealing misconduct, wrongdoing or illegal activity, provided that the respondent acted for the purpose of protecting the general public interest; (c) disclosure by workers to their representatives as part of the legitimate exercise by those representatives of their functions in accordance with Union or national law, provided that such disclosure was necessary for that exercise; (d) for the purpose of protecting a legitimate interest recognised by Union or national law.

As Schovsbo maintains, this provision does not, strictly speaking, refer to predetermined “exceptions”, but to obligations for EU Member States to “ensure that an application for the measures, procedures and remedies provided for in the [TSD] is dismissed in any of the listed cases”.¹⁶⁵ Aplin argues that the wording of Art. 5 may be an “instruction to judicial authorities of Member States to interpret existing provisions in the light of article 5”¹⁶⁶ instead. To transpose this provision into domestic law, Member States have nevertheless been given much leeway. Different approaches have thus been adopted,¹⁶⁷ the consequence being that the national legislations have followed highly divergent paths of implementation, and the associated risk of legal uncertainty with regard to EU legal systems has arisen.¹⁶⁸ Moreover, some specific challenges concern the exceptions of Art. 5 that might come in handy to counter overprotection. The exception for freedom of expression or information (Art. 5(a)) might require an “unjustified” restriction of the rights in question, if viewed through the lens of ECtHR case law.¹⁶⁹ By the same token, the legitimate interest exception (Art. 5(d)) may leave unresolved the question of what a legitimate interest is and how the balancing act would operate in such settings.¹⁷⁰

Second, nothing prevents the CJEU from extending the internalisation processes of the balancing act that we have seen above in respect of copyright law cases to other IPRs and quasi-IPRs, such as trade secrets.¹⁷¹ The detrimental effects of internalisation may specifically circumscribe the balancing act to the realm of freedom of expression and information (Art 5(a)). This would mean that the TSD provides a major limitation to offsetting other fundamental rights. However, Recital 21 bodes fairly well as it opens the way to a broader balancing act:

[i]n line with the principle of proportionality, measures, procedures and remedies intended to protect trade secrets should be tailored to meet the objective of a smooth-functioning internal market for research and innovation, in particular by deterring the unlawful acquisition, use and disclosure of a trade secret. Such tailoring of measures, procedures and remedies should not jeopardise or undermine fundamental rights and freedoms or the public interest, such as public safety, consumer protection, public health and environmental protection, and should be without prejudice to the mobility of workers.

The proposed view of the social function of intellectual property may offer guidance in filling in the blanks of the TSD seen above. Viewing the interests and rights of non-owners as the lodestar for the balancing act may well help to flesh out the exceptions enshrined in Art. 5 and bridge the legislative gaps, with specific regard to the exceptions of Art. 5(a) and (d) and the wording of Recital 21. A broader assortment of fundamental rights and interests, such as those mentioned in the previous sub-section, would strengthen the position of non-owners as opposed to the trade secret holders in the balancing act. Moreover, the social function of IP would provide a fresher set of tools to provide a basis for data access where competition law and policy are of little help, and redistributive equity needs to be restored. To be sure, antitrust aims to find effective ex post remedies to economic dominance that can help in the data economy. It deals with the market effects of an undertaking’s (or several undertakings’) conduct. Such considerations are nevertheless less helpful when we look at the data life-cycle as an ecosystem gathering actors that pursue interests other than business optimisation and welfare maximisation. One may take public institutions and non-profit organisations as examples of actors that do not necessarily pursue these objectives. For example, with regard to Art. 102 TFEU, Drexl points out that

[i]t is to be noted that the new-product rule would also exclude application of competition law to public entities that seek access to data in the public interest where these entities do not engage in any economic activity in the sense of the concept of an undertaking under EU competition law.¹⁷²

Reflections of competition policy and law thus provide a basis for data governance in the form of a set of remedies that resolve well-defined market failures. To cite Drexl again, “[a]s regards data access regimes, the question will therefore be what market failures and what interests will justify a deviation from exclusivity”.¹⁷³ By looking at non-owners’ fundamental rights and interests, the legislature and the judiciary can in fact even more effectively limit the overexpansion of trade secrecy when it comes to issues such as data-driven exploitative and exclusionary practices and algorithmic fairness. On the legislative front, the proposed Data Act is moving in this direction by mandating the disclosure of trade secrets when a smart device user requests access to data generated by the product, as long as “all specific necessary measures are taken to preserve the confidentiality of trade secrets in particular with respect to third parties”.¹⁷⁴

5 Conclusion

This article has examined the intersection between IP and quasi-IP rights and NPD by homing in on the most important legal means for protecting data exclusivity, i.e. trade secrecy.¹⁷⁵ It then explored the regulatory and interpretive tools that may help to overcome issues of overprotection when it comes to imposing limitations on access to NPD, with specific regard to those associated with trade secrecy. Section 2 showed that the path towards IP overprotection of novel intangibles such as NPD has been followed for quite some time. The overexpansion of IP is the linchpin of a highly protectionist system. Because of the “datafication” of reality, IPRs and quasi-IPRs can virtually stretch to any data aggregation. Section 3 then examined how EU trade secrecy legislation applies to NPD. Specifically, businesses can easily apply trade secrecy to protect troves of NPD by implementing confidentiality agreements and technical measures (e.g. encryption). As Lyft demonstrates, applying trade secrecy to NPD combinations can create issues of overprotection, related mainly to data-driven exclusionary conduct in the data markets and lack of algorithm transparency. The perpetuity of trade secret protection exacerbates these issues even further.

Against this background, I have delineated ways of resisting IPRs in respect of data. Such a reflection, we have seen, amounts to coming up with regulatory and interpretive solutions that can complement competition policy. Accordingly, Sect. 4 delineated two meta-regulatory principles that, mostly drawing on physical property theory, could restrict the ambit of IPRs and thus mitigate proprietary “spill-over” into NPD. First, clawing back a numerus clausus of IPRs could steer courts and legislatures towards a more restrictive understanding of IP forms and contain the propertisation of new intangibles, such as NPD aggregations. IP and quasi-IP forms would amount to a fixed list of standards explained by clear rationales and pursuing fixed original objectives. Extending and allocating IPRs and quasi-IPRs would require national legislators and supranational regulators to identify those rationales and objectives. By contrast, courts would be left out of the legitimisation of new IP forms unless they could demonstrate that a rationale and objective for protection applied. Second, the social function doctrine, construed as a meta-regulatory tool focusing on the interests of non-owners (e.g. small companies, researchers, journalists, public authorities, and non-profit organisations) within the balancing act between opposing fundamental rights, could serve as an alternative, to direct the judiciary and the legislature towards restricting IPRs in respect of NPD. For this purpose, fundamental rights such as freedom of information and expression, freedom of academic research, freedom to conduct business and freedom of services are the most suitable principles to offset IPRs. I then checked the proposed theories against the issue of the overexpansion of trade secrecy. Specifically, a numerus clausus of IPRs with fixed objectives and rationales might stem the tide of the trade secret protection of syntactic data aggregations. Even more fundamentally, the social function of IP would help to interpret the exceptions enshrined in Art. 5 TSD so as to consider a broad assortment of non-owner fundamental rights and interests as a counterbalance to trade secrecy. This would complement competition law and policy tools, which may well leave public entities and non-profit organisations aside when weighing and balancing the interests of data stakeholders.

The paper has aimed to investigate the premises of an intellectual property system fit for data access rules. Further research should now move on to study how to make access rules a reality. The proposed Data Act is a promising starting point in this respect, as we have seen. Overall, the framework that I have explored here is in its early stages. The next steps in this direction will of course be even more challenging.