May 2024
No. A&S_031

European Council gives final approval to Landmark AI Act
On May 21, 2024, Council of the European Union issued a press release announcing Council gives finalapproval to the Artificial Intelligence Act (short: AI Act). The full release can be found here. This legislation,
was originally proposed by the European Commission on 21 April 2021, has been politically agreed uponby all three EU institutions (8 December 2023), and adopted by European Parliament on 13 March 2024.
During the legislative process it had faced significant challenges in reaching a consensus among member
states, addresses the rapid proliferation of AI technologies, exemplified by systems like ChatGPT, and thecomplexities in regulating them to balance various national interests.
The rules will come into force in 20 days after its publication in the official Journal. They will then apply
from two years after they come into force. If companies do not comply with the regulations, the member
states must decide on sanctions, such as monetary fines.
The AI Act applies outside of the European Union national borders and will therefore also be relevant forJapanese companies without presence in the EU. The Act applies to all high-risk AI systems that aredeveloped and used outside of the EU, if the output of those systems is intended for use in the EU.
Consequently, the AI Act is poised to become a de facto global standard 1, much like the GDPR, potentiallyexerting substantial influence on businesses worldwide that utilize AI technologies. Key highlights fromthe release include:
1. Banned AI Applications: The new rules prohibit certain AI applications that threaten citizens'rights. This includes:•••

Biometric categorisation systems based on sensitive characteristics.
Social scoring and predictive policing based solely on profiling or assessing personal characteristics.
AI that manipulates human behaviour (cognitive behavioral manipulation).

2. High-Risk AI Systems: There are clear obligations for other high-risk AI systems.
Such systems must:•••

Assess risks.
Ensure transparency.
Need to be registered in the EU database.

3. General-Purpose AI (GPAI) Systems: GPAI systems and the models they are based on must meet
specific transparency requirements.
The regulation of digital markets and services is a high priority for the EU, with many laws and regulations
intersecting and impacting the development and use of GPAI. Key areas of focus in the EU regarding GPAI
include data protection, copyright, and cybersecurity.
See also the opinion expressed in the National Law Review: https://natlawreview.com/article/eu-artificial-intelligenceact-what-s-impact
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1©Atsumi & Sakai 2024

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a. Data Protection: The General Data Protection Regulation (GDPR) provides the legal basis for thetraining and subsequent use of GPAI models. Important principles under the GDPR include
transparency, data minimization, and purpose limitation. These principles have been extensively
discussed in guidelines from various regulatory authorities, such as those in the United Kingdom,France, Bavaria, Baden-Württemberg, and Hamburg.
b. Copyright: Training and output of GPAI can potentially infringe copyright laws. At the EU level, there
is an exception for "text and data mining," which allows the use of copyrighted content for training
GPAI models unless rights holders opt-out. Many rights holders do this by declaring their reservations
in a machine-readable format. This exception, however, does not apply in all relevant jurisdictions,such as the United Kingdom (see ICO guidelines) or the United States (see information from theCopyright Office). Notable lawsuits outside the EU include New York Times Co. v. Microsoft Corp. etal. and Getty Images (US), Inc. v. Stability AI, Inc., which focus on the training of machine learningbased models.
c. Cybersecurity: Cybersecurity risks associated with GPAI include adversarial attacks, where attempts
are made to deceive the model into producing incorrect results, and misinformation such as"hallucinations" (seemingly plausible results that contradict the input data). These risks highlight theneed for robust security measures and continuous monitoring.
In Conclusion, companies must navigate a complex regulatory landscape when developing and deploying
GPAI systems, ensuring compliance with GDPR, addressing copyright concerns, and mitigating
cybersecurity risks. Keeping abreast of legal developments within and outside the EU is crucial for staying
compliant and avoiding potential legal challenges.
Therefore, before the AI Act comes into effect in two years, companies must thoroughly prepare to ensurethat their AI systems comply with the new regulations. We will continue to provide updates as more details
about the AI Act and other related regulation of digital markets and services become available.
---------------------------------------------------------------------------------------------------------------------------THIS NEWSLETTER IS PROVIDED FOR INFORMATION PURPOSES ONLY; IT DOES NOTCONSTITUTE AND SHOULD NOT BE RELIED UPON AS LEGAL ADVICE.
----------------------------------------------------------------------------------------------------------------------------Authors/Contacts
Frank Becker*
Partner
Atsumi & Sakai Europa GmbH Rechtsanwälte und Steuerberater**
E: frank.becker@aplaw.deFumiaki Matsuoka
Partner
E: fumiaki.matsuoka@aplaw.jp
Burak Kara*
Associate
Atsumi & Sakai Europa GmbH Rechtsanwälte und Steuerberater**
E: burak.kara@aplaw.de* Not Registered as a Foreign Lawyer in Japan**A corporation registered in Germany providing legal andtax advisory services

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May 2024
No. A&S_031--------------------------------------------

Atsumi & Sakai is a multi-award-winning, independent Tokyo law firm with a dynamic and innovative approach to legal
practice; it has been responsible for a number of ground-breaking financial deal structures and was the first Japanese law
firm to create a foreign law joint venture and to admit foreign lawyers as full partners. Expanding from its highly regarded
finance practice, the Firm now acts for a wide range of international and domestic companies, banks, financial institutions
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Atsumi & Sakai has an outward-looking approach to its international practice, and has several foreign lawyers with extensive
experience from leading international law firms, providing its clients with the benefit of both Japanese law expertise andreal international experience.
We are the only independent Japanese law firm with affiliated offices located in New York, London, Brussels and Frankfurt
which, together with our Tokyo office and Fukuoka affiliated office, enables us to provide real-time advice on Japanese law
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www.aplawjapan.com/en/
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Atsumi & Sakai is a partnership consisting of Atsumi & Sakai Legal Professional Corporation, a Japanese professional corporation, a foreign law joint venture underthe Act on Special Measures Concerning the Handling of Legal Services by Foreign Lawyers with certain Registered Foreign Lawyers of our firm, a Japanese Civil Codepartnership among Japanese lawyers, represented by Yutaka Sakai, a lawyer admitted in Japan, and a foreign law joint venture with Janssen Foreign Law Office,represented by Markus Janssen, a foreign lawyer registered in Japan to advise on the laws of the Federal Republic of Germany. In addition to lawyers admitted inJapan, our firm includes foreign lawyers registered in Japan to advise on the laws of the US States of New York and California, the Republic of Korea, India, Englandand Wales*, and the State of Queensland, Australia. Foreign lawyers registered in Japan to advise on state laws also are qualified to provide advice in Japan on thefederal laws of their respective jurisdictions.
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will undertake any reserved legal activity as defined in the United Kingdom Legal Services Act 2007. Advice provided in Germany on the laws of Germany will beprovided by a lawyer admitted in Germany, and advice provided in New York on the laws of New York will be provided by a lawyer admitted in New York.

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