JAPAN INTELLECTUAL PROPERTY ASSOCIATION
URL:http://www.jipa.or.jp/

May 13, 2022
European Commission
Charlemagne building
Rue de la Loi 170
1040 Brussels
Belgium
Re:JIPA Comments to Proposal for a REGULATION OF
THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
on harmonised rules on fair access to and use of data(Data Act)We, the Japan Intellectual Property Association (JIPA), are one of theworld's largest organizations of IP users with a membership of 1338 members (as of May
11, 2022), most of which are Japanese companies.
In light of the fact that our member companies expand business in Europe andhave a great concern on

Proposal for a REGULATION OF THE EUROPEANPARLIAMENT AND OF THE COUNCIL on harmonised rules on fair access to and use ofdata(Data Act, COM(2022) 68 final) . Therefore, JIPA has carefully considered the newlegislative proposal in February 2022 by European Commission. We, JIPA, respectfully
submit our comments on the act and the rules, as below.
European Commission is kindly requested to take our comments into consideration
when deciding on the revisions to the act and rules.
Sincerely yours,

Toshio ASAI

Hisashi ISHIJIMA

Toshihiko KOBAYASHI

Vice-PresidentManaging Director

Managing Director(Contact) Ms. Maho Furuya : furuya@jipa.or.jp

I.

Overview

Japan Intellectual Property Association (“JIPA”) has numerous member
companies cross-sectionally covering all industry sectors, many of which havebusiness operations on a global scale including European countries. These
member companies are placed in the Data Economy in one or multiple positions ofusers, manufactures of products, suppliers of related services and data holders.
JIPA expects that exploitation and use of data should lead the creation of innovationand the activation of businesses, and supports the aim of Data Act "ensuring fairness
in the allocation of value from data among actors in the data economy and to foster
access to and use of data."
JIPA is convinced that in order to achieve the intended objectives of the Data
Act and unlock the potential of data, it is necessary to minimize burdens ofstakeholders (actors) on a fair balance and also respect economic values ofimportant data possessed by companies in every aspect of the system. Further,intellectual properties possessed by companies, such as trade secrets, should be
respected and protected under the provisions of the Data Act from imperilment inscenes such as accesses to data.
More specifically, the Data Act imposes heavy duties on manufacturers of
products or data holders. JIPA concerns that obligations to provide data as asource of competitiveness to third parties, and human and financial burdens oncompanies caused by each obligation of the Data Act decline incentives to create or
exploit/use data of companies, consequently leading to opportunity losses. Further,
the cost required for fulfillment of the obligations is directly related to cost increasesof data businesses. In view of the forgoing, if obligations imposed on companies
are excessive, they rather give larger barriers to the development of data economy.
In this regard, the Japanese Government promotes exploitation and use of data on asoft law basis and keeps obligations or limitations to the minimum, and respects freeeconomic activities of companies. In order to "foster access to and use of data," wewish that the Data Act would provide a balanced system without imposing unfair,unreasonable or excessive burdens on each stakeholder.
In addition, as companies' properties that enable the promotion of existing
businesses and the creation of new businesses, the value of data has increased
every year. At the time of providing data, payment of an appropriate compensation
based on its value ensures "fair allocation of value from data," giving an incentive fora favorable cycle in the creation of new data and the promotion of businesses using
data. It is respectfully requested to design a system that respects the value of data
possessed by a data holder through the Data Act.

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In many cases, valuable data is protected with an intellectual property such a
trade secret. A trade secret is also an important property of a company, and is asource of competitiveness. We put a high value on the situation where in Europe,
EU Directive 2016/943 promotes the protection of trade secrets. With the premisethat the protection of trade secrets should be sometimes prior to accesses to data,
trade secrets should be sufficiently protected by the Data Act.
Hereafter, our opinions will be described on each article.

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II.

Particulars

1.
Articles 1 and 2(1) Scope of the Data Act
It is respectfully requested to clarify, in a more restrictive manner, data andproducts/services for which the Data Act is intended.
Paragraph (15) in the preamble of the Data Act says that servers, tablets andsmart phones, cameras and others are excepted from the scope of the Products;
however, it is difficult to clearly understand such exception from the definitions of the
Products in Article 2. Further, "devices that require human input to produce various
forms of content" is excepted from the scope of the Data Act, and human inputs may
be also considered to be for automobiles, trains, smart factories and surveillancecameras; however, it is practically difficult to determine whether they are in the scopeof the Data Act.
It is also unclear that platform services without use of a tangible object is
excepted from the scope of the Data Act. In addition, we would like to clarify thatcases where software is provided through a cloud or a platform (for example,
software for accounting, business management or data analyses) is excepted. Ifthese cases are interpreted to be covered, there is a concern that the applicablerange of the Data Act is very and too broad.
Further, data that is discarded by data holders should be excepted.
In the case that data acquisition amounts are large, it is difficult to store andprovide a huge amount of acquired data in real situations, and it is a businesspractice that is often performed to process data by edge-computing within products
or related services just after acquisition of it and delete unnecessary data. Before
deletion of unnecessary data, it may be possible to send all data on a real-time basis,but it is not realistic since a large data amount cause congestion on communicationlines. It is respectfully requested to create appropriate rules in line with businesspractices, having interviews to collect opinions of industries.
Moreover, when the scale of a business operation is small regardless of thesize of a company, obligations of the Data Act get to excessive burdens and may be
obstacles to business. We believe that a business operation handling a certain
amount of data or less should be exempt from the Data Act, and this avoids
discouraging entering businesses and produces a balanced system.
(2) Applicable time range of data under the Data Act- 3 -Regarding contracts and data covered by the Data Act, it should be clear thatdata generated or acquired and contracts agreed before effectuation of the Data Act
are exempted. Retroactive handling of old data or contracts before an effective dateof the Data Act would impose excessive burdens on companies.
In addition, data that has been stored for a specified period after creation
thereof should be exempt from the Data Act. A long period of storage imposes anexcessive burden on companies in terms of the management and cost. Term ofdata storage obligation should be limited to reasonable period in the same manner as
product liability.
2.
Article 3(1) The scope of data required to be provided
For the data accessible to the user, data intentionally recorded by the user
himself/herself should be enough to provide.
Further, the place, the method and the timing of obtainment of data are a trade
secret, and disclosure of such information would affect the competitiveness of acompany. If a trade secret is publicized even once, its value would be lost; andtherefore, in the case of a highly confidential trade secret, JIPA particularly andsignificantly concerns disclosure thereof. JIPA believes that a highly confidential
trade secret should be except from disclosure obligation (e.g., Article 4, paragraph 3,
and Article 5, paragraph 8). In addition, fulfillment of obligations of the Data Act,
such as management and providing of data in a format that enables a user to be
specified, and installation of a function of communication with users into theorganization, imposes a heavy burden on a data holder. Thus, the period forobligations of the Data Act should be defined as a specified term and measures forpreventing undue data request or abuse should be taken. As an exemplary
measure therefor, it is considered that a data holder who discloses data is allowed tocharge a certain degree of amount.
(2) Transitional measure
For this article, a transitional measure should be provided.
A penalty is applied to the violation of the article while preparations forfulfillment of the obligations are considered necessary. Thus, it is respectfully
requested to provide a measure such as giving a certain period until the Data Act
comes into effect or giving a certain period, during which a penalty is not applicable.

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3.
Articles 4 and 5(1) Data providing to users
It is respectfully requested to clarify that the obligation of Article 4, paragraph 1
is an obligation in the case that a request is made by a user. Further, Article 4,paragraph 1 and Article 5, paragraph 1 impose heavy burdens on data holders, sothey should be balanced.
As stated in the above proposal regarding Article 3, one of the obligations of
the Data Act imposing heavy burdens on data holders is an obligation for data
providing. The period of the obligation for data providing should be defined as a
specified term and measures for preventing undue data request or abuse should betaken. As an exemplary measure therefor, it is considered that a data holder who
discloses data is allowed to charge a certain degree of amount, and providing data
free of charge should not be stipulated by law.
(2) Protective measure for trade secrets (Article 4, paragraph 3 and Article 5,paragraph 8)"Specific necessary measures" for protecting trade secrets should be clarified.
It is not clear who defines "specific necessary measures" in what manner, andwho determines whether or not the defined measure is sufficient as "specificnecessary measures." Thus, we are concerned that an inappropriate application of
the Data Act may occur such as a situation where a company is required to disclosea trade secret under an insufficient measure that is not agreed by the company.
As data is a source of competitiveness, JIPA believes that handling of data as
trade secrets should be careful.
If a trade secret is publicized even once, its value would be lost; and therefore,
in the case of a highly confidential trade secret, JIPA particularly and significantly
concerns disclosure thereof. It is respectfully requested that a highly confidential
trade secret should be exempt from disclosure obligation.
Further, in trade secrets, information are different from another information interms of the importance or the management method, so specific contents of "allspecific necessary measures" are not uniform and they are varied depending on thedata to be provided. Thus, there is a concern that when the Data Act is applied in arigid manner, an appropriate protective measure would not be taken. We
respectfully request that appropriate protective measures for trade secrets would betaken under the Data Act.

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In Article 4, paragraph 3, trade secrets shall be disclosed to the extent that thetrade secrets are strictly necessary to fulfill the purpose in the same manner as inArticle 5, paragraph 8.
(3) Range of use (Article 4, paragraph 6)
The range of use of data should be left to an agreement between theconcerned parties.
In existing practices, the range of use of data is often defined by a contract
according to the general rule that use of data is freely carried out unless otherwise
agreed. However, if paragraph 6 allows use of data in only a range agreed with theuser, the above general rule is reversed in such a manner that data shall NOT be
used unless otherwise agreed. It is considered that such a limitation in exploiting
and using data is unsuitable for the purpose of the Data Act and possibly
discourages use and exploitation of data.
4.

Article 6 (Article 6, paragraph 2, part (e))
Use and exploitation of data including use of data for competing products
should be left to an agreement between the concerned parties.
In practice, it is difficult to distinguish a competing product from a noncompeting product, so there is a concern that such a restriction would discourage
use and exploitation of data. Services/products are often provided in combination ofseveral products, and some of them may be used in a manner that was not expectedduring the development thereof and may be unintentionally used in a competingproduct.
5.

Articles 7, 9 and 14
It is respectfully requested to design a system that is well-balanced between
micro, small or medium enterprises and other companies.
We agree with the purpose of facilitating use and exploitation of data of micro,
small or medium enterprises. On the other hand, when the Data Act is operated in
an imbalanced manner, there is a concern that profits of companies other than micro,
small or medium enterprises would be damaged irrationally.
6.
Articles 8 and 9(1) Conditions for data providing
We consider that FRAND obligation is not suitable for data transactions.
Another criterion suitable for the purpose of the Data Act that allows stakeholders tofairly share data values should be established.

- 6 -FRAND obligation is imposed after a FRAND license declaration on atechnology pertaining to a standard specification to a standardization body. Since a
standardization technology is concerned, the principle of freedom of contract islimited; however, data is not a standardization technology. Further, when FRAND
obligation is imposed, especially, “non-discriminatory” obligation becomes a problem,
making it difficult to provide data inexpensively or free of charge; and it impose totreat a competitor and a partner in the same way, therefore making it difficult toestablish cooperation with the partner. In this manner, FRAND obligation prevents
strategic and free handling of data for business operations.
(2) Compensation
A balance between the data holder and the user should be maintained.
While a wide range of data disclosure obligation is imposed on the data holder,the data holder is always required to indicate the basis for calculation of thecompensation according to Article 9, paragraph 4; and this is a heavy burden.
We consider that the purpose of Article 9, paragraph 4 is fulfilled when thedata holder indicates a reasonable basis for the compensation upon occurrence of adispute.
(3) Exemption of data within one corporate group
Data transactions within one corporate group should not be treated in thesame way as data transactions with a third party.
There are not a few instances where one business is operated in cooperation
within one corporate group. Thus, when obligations of the Data Act pertaining tointercorporate transactions, especially FRAND obligation, are applied to transactions
within one corporate group, this would be a great business concern.
7.

Article 11

It is respectfully requested to clarify rules on the exception.
Regarding "significant harm to the data holder" and "disproportionate in light of
the interests," criteria therefor are ambiguous, thus making it difficult to determine.
Please provide specific examples in the preamble or the guideline.
8.

Article 13
It is respectfully requested to explicitly stipulate that even when a data provider
sets limitation of liability, the setting itself is not regarded unfair.
Results obtained by effects of data and use of data are unpredictable, and inpractice, there are many cases where it is not suitable for a data provider to takeresponsibility for results of use and exploitation of data.
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9.

Article 15Cases corresponding to "exceptional need" or "public emergency" should beclarified in a more limitative manner.
We have concerns that authorities would easily abuse requests for data
providing requests. It is respectfully requested to clarity the circumstance therefor insuch a manner that the data holder can objectively determine whether or not
rejection of such a request is appropriate.
Further, the circumstance (C) should be deleted. This can be understood insuch that this is applicable in many cases when impediments occur in the use of data
during public services. However, cases other than "public emergency" are noturgent to put an obligation to provide data, and states or public sector bodies should
conclude an individual contract with the data holder to receive data.
10.

Article 19 (Article 19, paragraph 2)
It is respectfully requested to explicitly stipulate the responsibility including acompensation for a case where the data leaks from the authority having received
those data.
Even though it is stipulated that an authority should take appropriate protective
measures for protecting trade secrets and personal information, there is a possibilityof leakage despite the protective measures. In the case that there is a risk that the
inappropriate management of an authority causes the responsibility or the damage ofthe data holder, the data holder would hesitate to provide data if the responsibility of
the authority is unclear.
11.

Article 20
In the case that the data holder provides data to an authority, it is respectfully
requested to compensate for a market rate or, if the market rate is not present, theamount including a cost incurred to comply with the request plus a reasonablemargin.
In the case of public emergency (Article 15, part (a)), data shall be provided
free of charge; however, no rational reason for free of charge is indicated, but thevalue of data produced by corporate efforts should be respected. Further, in a casewhere a company suffers some sort of loss along with the providing of data to theauthority, for example, even a cost needed for the company to provide data cannot
be recovered, JIPA concerns that data providing is not carried out smoothly andresulting the fear that data needed for the public interest cannot be provided swiftly.

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12.

Article 21
In the case that research organizations or the like use the data for usages
other than the intended usage purpose of data determined at the time of providing
the data, they should have separate talks on the conditions with the data holder orshould pay an additional reasonable consideration.
13. Article 27(1) Obligation of providers of data processing services
Since obligations on the provider are heavy, it is respectfully requested toreconsider them.
Obligations pertaining to international transfer or governmental access are
imposed on the provider of data processing services, but cross-border circulation ofdata would contribute to the promotion of industries. These obligations oncompanies makes businesses in Europe and smooth cooperation with European
companies difficult, resulting the fear that opportunities for creation of new
businesses would be lost.
Further, if burdens on companies are heavy, only a limited number of large
companies can deal with them, and this causes the fear that oligopolization of mega
technology companies would be caused. Thus, placing obligations only on
businesses handling a certain volume of data or more would promote use andexploitation of data and contribute to creation of new businesses.
Furthermore, users of data processing service are allowed to conduct, in theenvironment prepared by the provider, international transfers of data freely with nolimitation as in conventionally done; and free cross-border transfers of data
contributes to industries, and therefore, it is requested by all means to ensure freetransfers.
(2) Access by governments
Providers of data processing services are obliged to take measures to prevent
governmental access, but this obligation should be deleted. This is an excessive
burden on one company, and we are concerned that this would be a significant
hurdle for data processing services. This problem should be resolved by authorities
of respective states.
(3) Consistency with the convention
Consistency with the convention should be taken into consideration.
Japan-EU Economic Partnership Agreement stipulates that "The Parties shallreassess within three years of the date of entry into force of this Agreement the need
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relationship with the Data Act is clarified, the consistency with inter-state agreementsof this type should be maintained, and it is requested to cause no discrepancy.
14.

Article 33
Penalties should be well-balanced not to discourage business activities.
Penalties possibly suppress use and exploitation of data, so toughening
penalties should be avoided.
Further, specific contents of penalties are not determined in the Data Act.
If penalties are varied depending on the state, this lowers the predictability or thetransparency. If the Data Act lays down penalties, contents thereof should beconcretely determined.
15. Article 34(1) Operation of model contracts
Model contractual terms should be used flexibly in light of businesses.
Even when they are non-binding, rigid use of a model term in contract talks will
prevent a smooth talk between concerned parties and thereby become an obstacle tobusinesses utilizing data.
(2) Process of formulating model contracts
For formulation of model contracts, it is respectfully requested to widely invite
stakeholders to give their opinions.
Since there are many stakeholders for data, it is considered that the discussion
should not be made only by the expert committee and gathering wide-range opinions
enables the formulation of more practically useful model contracts.

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