Beijing piloting China’s route to new horizons in data IP rights

A data property rights system starts with data elements and takes the establishment of a data property rights registration system as the first step in its development. In this vein, the Opinions of the Central Committee of the Communist Party of China and the State Council on Constructing a Data Infrastructure System to Better Utilise the Role of Data Elements, which were released on December 19 2022, focus on the construction of a data property rights system and propose the consideration of “new ways of registering data property rights”.

In November 2022, the CNIPA designated eight provinces and municipalities – Beijing, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Shenzhen – as pilot locations to carry out data intellectual property (IP) rights work.

Shenzhen was the first to launch a data IP registration information system, on November 29 2022, and subsequently issued the first batch of data IP registration certificates in China.

Beijing has also explored the construction of such a system and registration practice. On May 12 2023, the Beijing Municipal Intellectual Property Office issued the Administrative Measures for the Registration of Data Intellectual Property Rights of Beijing Municipality (for Trial Implementation) (the Beijing Measures). The measures standardised the object, content, and relevant procedures of data IP rights registration and implemented the registration of data IP rights through institutions such as the Beijing Municipal Intellectual Property Rights Protection Centre Information Platform and the Beijing International Data Exchange.

Since then, the Beijing municipality has not only continued to improve and establish rules and regulations but has also gradually gone deeper in property rights registration. It has even joined forces with organisations such as the Beijing Internet Court and the Beijing International Data Exchange to explore cooperation in fields such as the registration of data IP rights, transaction and circulation, dispute resolution, platform construction, and talent cultivation.

Based on the recently issued Working Guidelines of Beijing Enterprises’ Data Intellectual Property Rights (for Trial Implementation) (the Guidelines), this article provides an overview of the progress made in the pilot work on data IP rights and the new features visible in Beijing as a data infrastructure system pilot zone in the past year.

In December 2023, the Beijing Municipal Intellectual Property Office, together with the Beijing Municipal Bureau of Economy and Information Technology and the Beijing Municipal People’s Procuratorate, issued the Guidelines, which provide guidance to enterprises on data IP rights registration, circulation, and assetisation based on the various data IP rights processes from the perspective of the enterprise.

As an extension of the Beijing Measures, the Guidelines share the same principles and logic, and provide guidance to enterprises regarding implementation of the Beijing Measures.

The main part of the Guidelines consists of five chapters, featuring aspects such as:

• The creation of data IP rights;

• The utilisation of data IP rights;

• The management of data IP rights;

• The protection of data IP rights; and

• Foreign-related data IP rights.

The following areas are worthy of enterprises’ attention.

The Guidelines aim to protect the rights and interests of ‘data holders’ and ‘data processors’, and guide enterprises in the creation, utilisation, and management of data IP rights by virtue of their status as data holders and processors, with the aim of motivating enterprises to continuously release the value of data elements and stimulate the market.

Consistent with the Beijing Measures, the Guidelines regulate the rights and interests of data collections gathered in accordance with the law or obtained in accordance with contractual agreements, processed according to certain rules (usually algorithms), and having practical value and intellectual achievement attributes, which highlights the fact that data and data collections are generally protected as IP rights under the current system. This is conducive to incentivising enterprises to pay attention to, and actively transform data into, enterprise assets or resources in data economy activities.

The Guidelines require enterprises to register, cancel, and change data assets through the city’s unified data IP rights registration platform. Meanwhile, to promote the formation of data assets from data IP rights, and, in particular, to give full play to the role of the Beijing Social Data Asset Registration Centre set up by the Beijing International Data Exchange, the Guidelines make it clear that the Beijing International Data Exchange plays an important role in regulating data IP rights, and encourage enterprises to register their data assets on it.

In addition, enterprises are encouraged to improve their ability to supply data products and services, enhance the value of data IP rights, and cultivate core competitiveness in IP rights.

Data can be regarded as an important intangible asset of an enterprise once it is used in innovation and applied. The establishment of a data IP rights registration system fosters data assetisation and capitalisation, and enhances the prosperity of the data circulation market. Thus, the Guidelines advocate that enterprises should actively carry out data asset registration to add to the value and competitiveness of the enterprise.

As a new type of asset for enterprises, data elements are at an early stage of development. The Guidelines encourage leading enterprises and platform enterprises to actively demonstrate the use of data IP rights and the circulation and use of data elements; explore the two-way fair authorisation model for large, medium-sized, small, and micro enterprises; and even build an open and a sharing data innovation ecology for the whole society.

And through the Beijing International Data Exchange and other trading platforms for data IP transactions, data IP rights do not only contribute to economic growth but also play a positive role in data compliance reviews, asset pricing, standard contracts, dispute arbitration, transaction traceability, and supervision.

In addition, the active participation of enterprises in the utilisation of data IP rights will foster the development of international, national, local, and industrial standards in this field.

In terms of data IP management, the Guidelines put forward specific measures for enterprises, including that they should:

• Build a data management system covering the whole life cycle of data;

• Enhance their data management capabilities and support data IP work;

• Improve enterprise data IP management in light of data operation and management needs; and

• Incorporate data IP compliance into the data compliance and IP compliance performance evaluation system.

The Guidelines encourage enterprises to regularly analyse the operation of products, software and hardware facilities, and business processes that may involve others’ data IP rights, and avoid illegal and unfair competition. The latter includes:

• The acquisition of data through theft or other illegal means;

• Indiscriminate and abusive use of data;

• Inappropriate use of data and other inappropriate data processing;

• The exclusion or restriction of competition by algorithms, platforms, or other rules and regulations;

• The establishment of a data monopoly, data hegemony, and other data-related unfair competition actions; and

• Conducting illegal data transactions or illegal data IP transactions.

In addition, enterprises should strengthen the protection of their data IP rights by working with the relevant departments to formulate reasonable protection measures for the data IP rights risks that may be involved in procurement, R&D, production, marketing, technology transfer (licensing) and cooperation, data trading, commissioned processing, import and export trade, asset valuation, M&A, and initial public offerings.

The Guidelines remind enterprises to:

• Pay timely attention to changes in the data protection and IP rights enforcement and judicial environment of the target market when conducting international digital trade and cross-border data flow business;

• Understand the data policy and industry IP rights of the target country or region; and

• Actively build an overseas risk early warning and dispute resolution mechanism for data IP rights.

Such measures will enhance the competitiveness of enterprises’ data IP rights.

Depository technology often plays an important role in a data IP rights registration system. The Zhejiang data IP rights registration platform ensures that the whole process of depositing, registration, and transaction transfer can be organically connected and synergistic. The Guidelines not only recognise the value of data IP registration but also clarify the significance of the use of depository technology in data IP registration.

The Beijing Measures provide that an application for registration must include the source of the data, the time of formation of the data collection and the relevant deposit, and notarisation, indicating the importance of the deposit in the whole process. In line with this, Article 20 of the Guidelines advocates that enterprises utilise advanced technological means – such as big data, AI, and blockchain – to strengthen their data monitoring, analysis, and certification capabilities, demonstrating the key role of blockchain depository technology in the management of data IP rights.

Article 30 states that enterprises can use a certificate of data IP rights registration as a legal proof of their interests when dealing with data IP rights dispute cases. Without a certificate of registration of data IP rights, enterprises need to provide sufficient supporting materials in order to safeguard their legal rights and interests, which highlights the importance of completing the certificate of registration procedure.

At the launch meeting of the Beijing Data Infrastructure System Pioneer Zone held in November 2023, experts pointed out that they hoped that Beijing would continue to explore and conduct pilot tests in the data ‘three rights’ allocation system, data circulation and trading, and the construction of data infrastructure. The Guidelines are designed to promote the construction of data infrastructure, cultivate a multi-level data circulation and trading system, make more data ‘active’, and make data security ‘active’.

It can be seen that Beijing’s intention is to effectively connect the registration of data IP rights with the trading of data assets and the judicial protection of data elements, and to strengthen innovation and practice concerning the data IP rights of enterprises. Along with a series of pilot measures taken by Beijing, the growth rate of data IP circulation has risen significantly, and the data element market has become increasingly active.

Since Beijing launched data IP rights registration in June 2023, nearly 30 data IP rights registration certificates had been issued by October 2023, and a multi-departmental synergy mechanism had been introduced to promote the validity of data IP rights registration certificates to be recognised in judicial trials and legal supervision through cooperation with the Beijing Internet Court.

By December 2023, more than 770 data products had been put online on the data trading platform of the Beijing International Data Exchange, involving information transmission, software and IT services, the internet, electronics and communications, agriculture, forestry, animal husbandry and fisheries, construction, transportation and postal services, financial services, scientific research and technology services, water conservancy, environment and public facilities management, culture, sports and entertainment, and many other fields.

After these data products entered the circulation market, according to the data obtained in October 2023, the Beijing International Data Exchange had accumulated 7,901 transaction contracts during the year, with a transaction amount of more than CNY1.5 billion, and the speed of circulation had been significantly enhanced.

The promotion of the development and utilisation of data resources, support for Beijing to create an advanced data foundation system zone, and the promotion of the construction of various related systems were written into the Official Reply of the State Council on the Work Plan for Supporting Beijing in Promoting the Construction of a Comprehensive Demonstration Zone for Further Opening up the National Service Sector, which was released on November 23.

The programme includes:

• Establishing a sound data property rights system, a data element circulation and trading system, a data element revenue distribution system, and a data element governance system;

• Growing the Beijing International Data Trading Alliance;

• Promoting the improvement of the data ownership registration and data asset assessment mechanism;

• Exploring the inclusion of data assets in the asset management system, and formulating standard contractual guidelines for data trading;

• Expanding the scope of the business entities in Beijing that can process and analyse data;

• Providing standardised IP rights data free of charge; and

• Lowering the cost of data reprocessing.

Beijing also implements enterprise incentives, such as providing:

• Subsidies to enterprises that register their data assets for the first time in the Beijing International Data Exchange and obtain certificates according to the Implementation Guidelines for Beijing’s High-grade, Precision and Advanced Industry Development Funds in 2023 (Third Batch); and

• Economic incentives to enterprises that table their data resources for the first time at an amount of more than CNY1 million.

The authors foresee that the measures to promote the standardisation of enterprises’ data IP rights will be developed further, and the regulations and policies will be continuously optimised.

Enterprises have great space for development in the above data IP rights areas, and along with the continuous stimulation of the data IP rights trading market by data elements innovation and practice, enterprises will obtain new trading opportunities and transform new enterprise assets through data elements, which will bring great potential for enterprise development.