A Way Forward on Data Flow Trade Discussions in TTIP

“I fully agree with that,” was the response by Antonio de Lecea, Minister of the EU Delegation to the United States.  IBM’s Steve Stewart had just expressed the view that an EU –US trade agreement resulting from the negotiations on the Transatlantic Trade and Investment Partnership (TTIP) would be an effective place to create a good template for binding rules on cross border data flows.

Stewart added that it would be possible to use the GATs framework in understanding how to have data flow principles in a trade agreement like TTIP while still respecting the right of sovereign countries to set their own privacy rules. He noted that this framework allowed countries to set their own privacy regimes, but contained a restriction that the implementation of privacy laws should not amount to a disguised restriction on trade and that enforcement had to be the least restrictive of trade possible.

At this point de Lecea expressed his agreement, and noted that it was important that trade agreements incorporate the ideas of proportionality and necessity. He added that for Europe privacy amounts to protection not protectionism.

The occasion was a public discussion on October 22 hosted by the Brookings Institution on the release of their report on transatlantic data flows.  Steve Stewart and Antonio de Lecea joined International Trade Commission Commissioner Meredith Broadbent and Brookings study author Joshua Meltzer in a spirited discussion of the extent of the electronic relationship between the world’s two largest economic communities.

This shared understanding between business representatives and the EU on how to incorporate data flow principles and privacy in a trade agreement is significant.  Several years ago the US and the EU signed an agreement on non-binding principles governing trade in information and communications technology.  Incorporating something like these principles seems like an achievable goal for the TTIP. They would have to be made binding and extended to sectors of the economy outside ICT, but they embody the right policy.

Another limitation on the ICT principles is that they exempted data protection from their scope.  But the GATs framework shows us how to integrate privacy and data flow provisions in a trade agreement.

These principles might not be absolutely essential to permit the continued flow of data between the US and Europe.  But they have the virtue of clarity.  And they send a good message to the rest of the world, where countries including China, India, Russia, Vietnam, and Malaysia have either proposed or adopted data localization rules, despite WTO commitments that indirectly forbid this.  Making data flow principles explicit in TTIP would send the message that the US and the EU intend to keep their markets open for data flows and the rest of the world should too.

Mark MacCarthy, Vice President, Public Policy at SIIA, directs SIIA’s public policy initiatives in the areas of intellectual property enforcement, information privacy, cybersecurity, cloud computing and the promotion of educational technology.

Intellectual Property Roundup

Publishers File Appeal in Lawsuit Against Used eBook Website (The Digital Reader)
The legal woes of the used ebook site Tom Kabinet continued as publishers filed an appeal of the July injunction which declared the site legal.

Publishers Win Reversal of Court Ruling That Favored ‘E-Reserves’ at Georgia State U. (The Chronicle of Higher Education)
The 11th Circuit Court of Appeals issued its long-awaited ruling in the Georgia State e-reserve case, in which the court reversed a lower court’s fair use finding and remanded the case with instructions for further consideration.

Google Imposes New Penalty on Pirate Sites in Search Results (GigaOM)
Google is taking new measures to punish sites that host pirated content by pushing them further down its search listings.

Former Google Lawyer Lee Nominated to Run Patent Office (Bloomberg Businessweek)
Former Google lawyer Michelle Lee is being nominated to run the U.S. Patent and Trademark, after having left Google in 2012 to run the patent office’s Silicon Valley outpost and being elevated to deputy director of the full agency in January.

Getty Fails to Get Injunction on Microsoft Image Widget (Reuters)
Getty Images failed to convince a federal judge to halt Microsoft Corp’s Bing Image Widget, which it said enabled massive copyright infringement, because the software company had already taken it down voluntarily.

What Happens to Tech Policy if Republicans Take the Senate? (The Washington Post)
A look at how a change in power in the Senate could shake up the tech policy landscape.

Keith Kupferschmid is General Counsel and SVP, Intellectual Property Policy & Enforcement at SIIA. Follow Keith on Twitter at @keithkup and sign up for the Intellectual Property Roundup weekly newsletter here.

Brookings Describes Critical Role of U.S.-EU Data Flows

Data flows between the U.S. and Europe are significant drivers of trade and investment.  For this reason, it is critical that leaders on both sides of the Atlantic get data flow policy right – adopting measures that promote data flows while ensuring that privacy, cybersecurity, law enforcement and national security equities are respected.

Today, the Brookings Institution is hosting an event to highlight a new report authored by Joshua Meltzer on “The Importance of the Internet and Transatlantic Data Flows for U.S. and EU Trade and Investment.”

This discussion is both vitally important and timely. Critical components of the effort to improve the data flows framework are represented in a number of ongoing U.S.-EU dialogues, including but not limited to the U.S.-EU Safe Harbor Framework, Mutual Legal Assistance Treaty reform, Transatlantic Trade and Investment Partnership negotiations, and the U.S.-EU umbrella agreement negotiations on law enforcement cooperation.

As these and other efforts progress, transatlantic policymakers should pay close attention to the five principal takeaways from the Brookings report.

First, data flows are mutually beneficial.  In 2012, the United States exported $140.6 billion in digitally-deliverable services to the European Union.  That same year, the EU exported to the U.S. $106.7 billion worth of digitally-deliverable services.

Second, the U.S. and the EU are globally competitive exporters of digitally-deliverable services.  In 2012, the European Union ran a $168 billion trade surplus with the world in this category.  The U.S. trade surplus was $150 billion.

Third, data flows between the United States and the European Union are so significant that the two partners have it within their power to influence how data flows will be considered all over the world.  This opportunity should be seized as data flows are a source of badly needed economic growth.

Fourth, “the majority of growth in transatlantic data flows will be generated by commercial and research needs.”  Indeed, already today almost 40% of data flows between the U.S. and EU are over business and research networks.  European firms such as BMW, Dassault Systems, and SAP are examples of this phenomenon.

Fifth, the potential for growth is particularly strong as the Internet of Things increasingly becomes a reality.  Given the EU’s $125 billion trade surplus with the U.S. in goods, data flows originating from Europe will likely increase.

Brookings has made an important contribution to our understanding of the economics of data flows.  It is our hope that this report and today’s event will help policymakers understand the mutual importance of those flows and guide their leadership in setting policy.

Carl Schonander is Director of International Public Policy at SIIA.

SIIA Applauds Move to Bring Permanent Leadership to PTO with Nomination of Michelle Lee

SIIA today welcomed the nomination of Michelle Lee to be the director of the U.S. Patent and Trademark Office (PTO). SIIA Vice President of Public Policy Mark MacCarthy issued the following statement:

“We are very thankful that the PTO is now likely to get permanent leadership, which is essential to meeting the multitude of challenges facing the business community.  Intellectual property issues are increasingly vital to the software and digital content industries, and critical to making certain America continues to be the world’s leading innovator. Lee is a well-regarded IP professional who will bring intelligence and needed leadership to this important role. We look forward to her successful confirmation by the Senate and to working closely with her in her new position.”

Sabrina Eyob is the Public Policy Coordinator at SIIA. Follow the Policy team on Twitter @SIIAPolicy.

SIIA Signs on to USCIB Letter on Data Flow Provisions in TPP

Wednesday, SIIA joined with 40 business groups in signing on to a USCIB letter on the need for data flow provisions in the Trans-Pacific Partnership (TPP) trade agreement. Sent out to TPP Ministers and negotiators, the letter stresses the necessity for businesses to be able to transmit data seamlessly, regardless of geography:

“The seamless movement of data across borders enables businesses of every size, in every sector, in every part of the world to access innovative products and services that enhance their productivity and help them reach new customers, driving growth and job creation.”

Co-signers of the letter include business groups  from 11 of the 12 TPP negotiating countries demonstrating the importance of this issue for business in all sectors in both developed and developing economies. Within the letter four factors were identified as crucial to promoting the health of the digital economy:

  1. Clear, enforceable obligations to allow the cross-border flow of data and that prohibit requirements to localize data in particular jurisdictions
  2. Exceptions and limitations to such obligations that are limited and consistent with existing international trade law
  3. Dispute settlement mechanisms on a par with all the other TPP obligations
  4. No additional reservations that undermine the effect and enforceability of such obligations

To read the letter in full, click here.

Sabrina Eyob is the Public Policy Coordinator at SIIA. Follow the Policy team on Twitter @SIIAPolicy.

Intellectual Property Roundup

Google Asks Supreme Court to Decide Oracle Copyright Fight (Reuters)
Google has asked the U.S. Supreme Court to wade into contentious litigation against Oracle Corp, arguing that the high court must act to protect innovation in high tech.

Anti-Piracy Group Plans to Block in Excess of 100 Sites (Torrent Freak)
An anti-piracy outfit ‘blockaded’ by the Pirate Party last week in Austria has revealed its expanded plans for website blocking. The Hollywood-affiliated group says it will strive for blocks of hundreds of sites while applying to the court for more effective blocking technical solutions.

YouTube’s Ads on Unauthorized Content Pay Off (Financial Times)
YouTube has hit $1 billion in payments to companies through Content ID, a program that scans user-generated content for copyright infringement and sells advertising on those clips as a way to monetize unauthorized use of the copyrighted material.

Patent Trolling Pays (GigaOM)
Since 2010, non-practicing entities (or patent trolls), have made three times as much money in court as real companies, according to recently published statistics.

Obama Urges Patent Reform (The Hill)
Obama stated that patent “trolls” are one of the “biggest problems” the administration is targeting, indicating the White House is still interested in moving forward with patent reform.

Sen. Cornyn: We Need to Limit the Business of ‘Frivolous’ Patent Litigation(VentureBeat)
Sen. John Cornyn says introducing new patent reform legislation is high on his agenda when a new body of Congress convenes in 2015.

Keith Kupferschmid is General Counsel and SVP, Intellectual Property Policy & Enforcement at SIIA. Follow Keith on Twitter at @keithkup and sign up for the Intellectual Property Roundup weekly newsletter here.

SIIA, Industry Offer Guidance to NIST Privacy Engineering

Privacy engineering can offer tremendous value to consumers. This is the premise of a new privacy engineering initiative launched by the National Institute of Standards and Technology (NIST) earlier this year.  After two workshops, a webcast and substantial outreach to industry, NIST is still seeking feedback to help them provide technical guidance to information system users, owners, developers and designers.

On October 10, SIIA joined with a dozen industry groups in submitting comments to NIST to help scope their initiative.  In the letter, the groups note that many of our member companies utilize privacy engineering solutions as part of their “privacy-by-design” practices and internal information management.  And we concur that refining and improving privacy engineering processes requires a collaborative effort involving information technology, compliance, legal, product development, marketing, customer service and other functional areas.

However, as SIIA has often pointed out, expectations surrounding the collection and processing of personal information are not purely personal.  They reflect evolving social norms – which often vary significantly across jurisdictions around the world.  As technologies evolve to become instrumental in all facets of our lives, our experience and expectations of privacy also evolve.  As for the legal framework, there are numerous ongoing discussions within myriad self-regulatory and governmental policy-making bodies, and a diversity of existing laws not just in the U.S., but around the world.

In short, the policy framework for privacy is still in flux.  As a result, an exercise to develop guidance in the form of technical standards could prove counterproductive, getting ahead of diverse international user expectations and policies.  The establishment of a technical framework or standard can only follow when we have achieved a consensus on policy objectives.  In the absence of clear, predefined policies, the result could have a chilling effect on innovation, thrusting engineers into the complicated process of critical decision-making on the various gray areas of privacy expectations and legal requirements.  For instance, is it really a matter for technical standards to be set by engineers whether a particular form of consumer consent should be opt-in or opt-out?

To that end, SIIA supports a more tailored effort, where NIST focus its efforts on cataloging, in a policy-neutral manner, how privacy engineers accomplish various privacy-by-design or information management processes.  This represents a pivot from what policy goals should be to how privacy engineering might achieve privacy goals that are defined elsewhere.

We value NIST’s technical expertise and interest in contributing to the shared goal of promoting privacy by design, and by developing a catalog to this end, NIST can make a significant contribution to the field by undertaking such an initiative.

David LeDuc is Senior Director, Public Policy at SIIA. He focuses on e-commerce, privacy, cyber security, cloud computing, open standards, e-government and information policy. Follow the SIIA public policy team on Twitter at @SIIAPolicy.

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