Preface
From E-commerce to mobile payment, from 5G, cloud computing to the recent AI boom represented by ChatGPT, iterations of the Internet and digital technology are overturning and reshaping institutional perceptions and business models from political, economic, educational, ecological and many other perspectives. During the decade of 2010s, China's digital economy had grew from 11 trillion RMB to 45.5 trillion RMB, ranking top 2 in the world for many years. Also, the percentage of digital economy in GDP has increased from 21.6% to 39.8%. Such achievements give the credit to the continuous improvement of legal policies such as the E-Commerce Law, the Data Security Law, New Generation of Artificial Intelligence Development Plan, etc. As well as the powerful top-level institutional guarantee provided by the Chinese government for the growth of the digital economy and enterprises’ digital transformation.
Recently, the Overall Layout Plan for the Construction of Digital China has been issued, proposing to lay out the plan according to a “2522” overall framework: consolidating “two foundations”(digital infrastructure&data resource system); promoting the in-depth integration of digital technology with economic, political, cultural, social and ecological civilization construction; strengthening “two capabilities”(digital technology innovation&digital security shield), and optimizing “two environments” (domestic and international digital development). At the same time, China is relying on the Inter-ministerial Joint Meeting Mechanism of the Digital Economy to accelerate the formulation of data foundation policies and supporting policies; promote the classification and grading of data to clarify the ownership for use; build data trading as well as governance systems and rules; coordinate and regulate the national data market. Externally, China is strengthening international cooperation in the field of digital economy and trade, such as actively promoting the accession to the Digital Economy Partnership Agreement (DEPA).
In the era of digital economy centered on data and digitization, the strategic value of intellectual property rights for enterprises is becoming increasingly prominent While profiting from data assetisation, enterprises also face challenges of regulatory compliance and data security risks.With the trend of digital technology integrating innovation and application cycle constantly shortening, how to transform the existing intellectual property system to safeguard enterprises development in terms of subject conditions, object content, achievement transformation protection as well as achieve a balance between intellectual property and open source circulation...such topics require all sectors of society to jointly explore..This article briefly reviews the intellectual property issues that enterprises should be aware of in the digital economy and provides suggestions to address them.
I.Data Asset and Compliance Protection
In the digital economy, as an important part of an enterprise's competitiveness, data asset's processing and exploitation, as well as their IP protection need enterprise managers’ immediate attention..
The national standard Information Technology Big Data Data Asset Valuation (Draft for Comments) defines data assets as data resources with data as a carrier and expression, which can be measured and can bring direct or indirect economic benefits to an organization. According to the Overall Layout Plan for the Construction of Digital China, China is continuing to improve its data property rights system, using official data trading institutions as hubs to promote the valuation of data assets, facilitating a unified national data circulation market and unlocking the value of commercial data.
The appreciation of data assets relies on enterprises transforming their original data resources into products with clear ownership, high value density, and well-defined usage scenarios through various carriers such as datasets and SaaS; and subsequently participating in market circulation after processes such as pricing and compliance. Currently, many cities have piloted the actual operation and circulation of data assets. For example, Beijing has piloted the application of data asset valuation, allowing enterprises to use their data products for pledged financing; Shanghai has utilized blockchain technology to create data asset certificates. In this process, the actual ownership of the underlying data of the data product, the legal basis for data pricing, and the copyright of software used in the processing process not only rely on the continuous improvement of the new intellectual property object and content in the intellectual property system, but also require internal control over the classification of collected and processed data in the enterprise's own business process, and pay attention to data ownership, compliant use of data processing software and hardware, etc.
In the process of conducting data asset processing and operation, enterprises need to strengthen data protection from various aspects, including technical measures, legal compliance, and security auditing. Regarding technical protection measures, data encryption, access control, cyber security, data backup, and other technical means can be employed to safeguard information security and prevent incidents such as information leakage, tampering, and loss. In terms of legal protection, digital proprietary technical information, operational information, and other data assets are the core trade secrets of enterprises. The security of these data assets during circulation and processing can be ensured through measures such as confidentiality clauses and non-compete clauses. In addition, regular information security audits can be conducted to assess the adequacy of existing protective measures and identify and rectify potential security vulnerabilities. Furthermore, strengthening employee education and training, conducting regular security drills and technical assessments, and establishing sound information security cooperation mechanisms with suppliers, partners, and other stakeholders are also essential.
Enterprises should not only meet the requirements of China's Data Security Law, Personal Information Protection Law, Cybersecurity Law and related regulations on data classification, data exit security assessment and personal information collection, but also comply with the data compliance legal regimes of various countries, such as the European General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) in the US, when going abroad. In addition, enterprises should pay due attention to the specific data regulatory requirements of their industry (e.g. automotive, healthcare, finance, etc.) and seek professional legal compliance solutions to avoid regulatory penalties and other operational risks from violating the data compliance requirements of their country or industry.
II.Copyright Compliance Protection
The iterations of digital technologies and content in the digital economy are also exerting significant influence on the traditional regimes of object and content protection in copyright. Key areas of concern include the utilization of open-source software and platforms, the emergence of Non-Fungible Token (NFT) digital collectibles, and the current popular trend of artificially intelligent-generated objects.
Enterprises undergoing digital transformation should pay attention to the legal usage and protection of open-source software and platforms. In the era of the digital economy which is characterized by openness and sharing, many enterprises build upon the work of predecessors when iteratively developing software, aiming to reduce software development and maintenance costs, improve development efficiency, and foster technological collaboration. However, before using open-source software, enterprises should consider the type of open-source license and comply with relevant license terms to avoid infringement. When releasing products or services on open platforms, enterprises should also take measures to protect their intellectual property rights, such as conducting prior assessments, refining contractual requirements, and strengthening platform user supervision.
Driven by unique, traceable, and anti-counterfeiting properties based on digital technologies such as blockchain and smart contracts, digital collectibles in the form of NFT have become popular in the art market in recent years,; many enterprises also started to launch their own NFT collections for brand marketing purposes. However, the diverse types of NFT works and the wide range of transaction parties have resulted in a higher risk of copyright disputes. The first-instance judgment of a copyright infringement case concerning NFT digital collectibles in China played a guiding role in defining the legal nature of NFT digital collectibles, the legal relationships in NFT transactions, and helping enterprises mitigate risks. In summary, when introducing NFT collections, enterprises should carefully investigate the copyright ownership of the original works used for minting. When engaging in NFT transactions on platforms, attention should be paid to the platform rules and transaction rules regarding copyright ownership provisions. Depending on the circumstances, enterprises may also consider entering into separate copyright transfer or licensing agreements with platforms or transaction parties.
In addition, the popularity of AI-generated content (AIGC) tools such as ChatGPT, a large language model, and Mid Journey, an AI drawing tool, has greatly enhanced people's productivity in content creation. However, enterprises must be cautious about the potential legal risks regarding copyright when using AIGC tools in their daily operations. Pure AIGC is generated by software through machine learning based on existing data and falls outside the scope of protection under the Copyright Law, which only applies to human creative works. As the datasets used to train AI tools may include works of other copyright holders without authorization, developers of these AI products should take care to avoid infringement risks. Enterprises that use such AI products should also ensure that employees adhere to proper usage to prevent copyright infringement and other disputes. Specifically, enterprises can require AI product companies to make commitments to copyright compliance and establish provisions for liability in copyright infringement in the procurement agreements. They can develop internal workflow guidelines to regulate the use of AIGC tools by employees and strengthen copyright review for products or works published externally. Additionally, enterprises may consider purchasing intellectual property-related insurance to mitigate potential losses caused by AIGC copyright disputes.
III.Patent Compliance Protection
Digital technology-related hardware and software provide powerful support for data storage, processing, analysis and transmission in the digital transformation for enterprises, and the importance of patent protection for related inventions has become increasingly prominent. On the one hand, the accelerated iteration rate and shortened innovation cycle of digital technology make it difficult to effectively regulate and stop patent infringement, and enterprises need to obtain patent protection more actively and quickly in order to prevent the underlying technology products of the digital economy from being infringed and stolen, on the other hand, enterprises competing in the same track in the digital economy attach more importance to building competitive barriers through patent layout. In view of this, enterprises should maintain a high degree of sensitivity to the validity and enforcement of their patents in the competitive digital economy market. Specifically, enterprises can conduct a self-examination from the following three perspectives:
1Pre-patent Investigation
Enterprises should conduct patent investigations before developing new products or technologies to avoid accidentally infringing the patent rights of others and to avoid using unauthorised patents of other enterprises.
2Total Patent Process Management
Enterprises should establish a system for managing the entire patent process and improve the processes and measures for patent protection in order to ensure timely protection and maintenance of patent rights.
3Early Patenting
Enterprises should apply for patents early to protect their innovations and reduce the risk of infringement. Strengthen awareness of IPR protection and improve the self-protection capabilities of digital economy enterprises.
IV.Trademark Protection
The digital economy has driven the emergence of new business models that integrate online and offline activities. As a typical carrier of brand reputation, trademarks used by enterprises have expanded their application scenarios from physical stores to e-commerce platforms, digital collectibles, and even metaverse marketing. In early 2023, the Nice Classification, an internationally recognised trademark classification system, added categories such as NFT, cryptocurrency and virtual reality, reflecting the increasing proportion of new digital technologies and product sectors in the world economy; and yet the accompanying trademark strategy and infringement issues cannot be ignored.
Enterprises can enhance trademark management and protection in their operations through the following approaches: developing internal trade mark management planning documents, improving the process of trade mark registration, use and enforcement of rights, standardising trade mark licensing and other business models, using the legal system to preserve and increase the value of the brand, and establishing a competitive advantage for the brand. In a digital economy where cross-border and online business is becoming mainstream and digital media is spreading at an accelerated pace, it is particularly essential to identify, register and renew trademarks as early as possible and as soon as possible in relevant regions and industries. In addition, enterprises can also strengthen the publicity of their trademark operations to enhance the visibility and influence of their trademarks, establish an effective trademark infringement litigation mechanism and hire a team of professional lawyers to defend their legal rights, so as to prevent malicious trademark grabbing or confusion of trademarks, free-riding and other acts from damaging the good image of enterprises and protecting the rights and interests of trademarks.
Conclusion
In the era of the digital economy, enterprises' business models, products, and services increasingly rely on data and technological innovation. Intellectual property infringement has become more covert, highlighting the growing importance of effective protection. Besides ensuring compliance and mitigating infringement risks, enterprises need to adopt proactive strategies to strengthen the protection of their intellectual property rights, including data assets, copyrights, patents, and trademarks. Only by doing so can enterprises gain greater market returns and a competitive advantage in the digital economy era, enabling sustainable development.
