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Principles for a Data Economy: Data Transactions and Data Rights

This work canvasses legal rules for transactions in data as an asset or tradeable item and assesses the application of those rules to these transactions.

Publisher: American Law Institute

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Conducted jointly with the European Law Institute, this project studies, identifies, and collates the existing and potential legal rules applicable to transactions in data as an asset and as a tradeable item and assesses the “fit” of those rules with these transactions.

Reporters
Neil B. Cohen, Brooklyn Law School, Brooklyn, NY
Christiane C. Wendehorst, University of Vienna, Department of Civil Law, Vienna, Austria

Co-Chairs
Lord John Thomas of Cwmgiedd, Essex Court Chambers, London, England
Steven O. Weise, Proskauer Rose LLP, Bainbridge Island, WA

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Table of Contents

TABLE OF CONTENTS

Page
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XIX
Reporters’ Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XXI
Introductory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

PART I. GENERAL PROVISIONS
Principle
1. Purpose of these Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Comment:
a. Addressees and added value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
b. Relationship with specific areas of the law not addressed by
these Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
c. Relationship with contract rules and doctrines . . . . . . . . . . . . . . . . 13
d. Relationship with property law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2. Scope of these Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Comment:
a. Focus on information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
b. Asset, resource, or tradeable commodity . . . . . . . . . . . . . . . . . . . . 19
c. Issues addressed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
d. Public bodies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Comment:
a. “Data” and “copy.” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
b. “Processing data” and “access to data.” . . . . . . . . . . . . . . . . . . . . . 26
c. “Control of data,” “controller,” and “processor.” . . . . . . . . . . . . . . . . 27
d. “Co-generated data” and “derived data.” . . . . . . . . . . . . . . . . . . . . 29
e. “Data contracts,” “data rights,” and “data activities.” . . . . . . . . . . . . 29
f. “Supply,” “supplier,” and “recipient.” . . . . . . . . . . . . . . . . . . . . . . . . . 30
g. “Transfer,” “porting,” and “erasure.” . . . . . . . . . . . . . . . . . . . . . . . . . 31
h. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
i. Definitions in other Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
j. References to “person,” “operation,” or “activity.” . . . . . . . . . . . . . . . 32
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Comment:
a. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
b. Return as part of a remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

PART II. DATA CONTRACTS
CHAPTER A. RULES AND PRINCIPLES GOVERNING DATA CONTRACTS
Principle
5. Application of these Principles to Data Contracts . . . . . . . . . . . . . . 43
Comment:
a. Hierarchy of sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
6. Interpretation and Application of Contract Law . . . . . . . . . . . . . . . . 49
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
b. Factors to be considered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

CHAPTER B. CONTRACTS FOR SUPPLY OR SHARING OF DATA
Principle
7. Contracts for the Transfer of Data . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
b. Default terms as to the mode of supply . . . . . . . . . . . . . . . . . . . . . . 56
c. Default terms as to the characteristics of the data . . . . . . . . . . . . . . 56
d. Default terms with regard to control of, and other data activities
with regard to, the supplied data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
e. Application of other law by analogy . . . . . . . . . . . . . . . . . . . . . . . . . 63
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8. Contracts for Simple Access to Data . . . . . . . . . . . . . . . . . . . . . . . . 68
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
b. Default terms with regard to the mode of the recipient’s access to
the data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
c. Default terms with regard to the characteristics of the data
supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
d. Default terms with regard to legal rights and obligations with respect
to any data ported by the recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
e. Application of other law by analogy . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
9. Contracts for Exploitation of a Data Source . . . . . . . . . . . . . . . . . . . . 74
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
b. Default terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
c. Application of other law by analogy . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10. Contracts for Authorization to Access Data . . . . . . . . . . . . . . . . . . . 79
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
b. Default terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
c. Duties with respect to third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
d. Application of other law by analogy . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11. Contracts for Data Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
b. Default terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
c. Application of other law by analogy . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

CHAPTER C. CONTRACTS FOR SERVICES WITH REGARD TO DATA
Principle
12. Contracts for the Processing of Data . . . . . . . . . . . . . . . . . . . . . . . . . 91
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
b. Default terms applicable to contracts for processing of data . . . . . . . . 93
c. Protection of third parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
d. Rules applicable to contracts for processing of data . . . . . . . . . . . . . . 96
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
13. Data Trust Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
b. Typical data trust arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
c. Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
d. Distinguishing between the data trust contract and legal structures it
may create . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
e. Default terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
f. Incorporation of default terms into governing principles of structure of
the data trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
g. Analogies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
14. Data Escrow Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
b. Purposes of data escrow arrangements . . . . . . . . . . . . . . . . . . . . . . . . 112
c. Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
d. Default terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
e. Incorporation into governing principles of data escrow structure . . . . . 114
f. Analogies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
15. Data Marketplace Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Comment:
a. Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
b. Default terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
c. Application of other law by analogy . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

PART III. DATA RIGHTS
CHAPTER A. RULES AND PRINCIPLES GOVERNING DATA RIGHTS
Principle
16. Data Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Comment:
a. The concept of data rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
b. Typical data rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
c. Difference between data rights under Chapters B and C . . . . . . . . . . . 125
d. Nonexclusive character . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
17. Application of these Principles to Data Rights . . . . . . . . . . . . . . . . . . . 129
Comment:
a. Hierarchy of sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

CHAPTER B. DATA RIGHTS WITH REGARD TO CO-GENERATED DATA
Principle
18. Co-Generated Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
Comment:
a. The concept of data rights in co-generated data . . . . . . . . . . . . . . . . . . 133
b. General factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
c. Insignificant contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
19. General Factors Determining Rights in Co-Generated Data . . . . . . . . . 141
Comment:
a. Relationship with existing legal frameworks . . . . . . . . . . . . . . . . . . . . . . 142
b. Determining factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
c. Choice of factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
d. Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
20. Access or Porting with regard to Co-Generated Data . . . . . . . . . . . . . . 148
Comment:
a. General observations on access rights . . . . . . . . . . . . . . . . . . . . . . . . . . 149
b. User-generated data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
c. Supplier-generated data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
d. Establishing facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
e. Development of smart products or services . . . . . . . . . . . . . . . . . . . . . . 153
f. Prevention of lock-in effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
g. Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
21. Desistance from Data Activities with regard to Co-Generated Data . . . 159
Comment:
a. General observations on desistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
b. Grounds to be put forward for desistance . . . . . . . . . . . . . . . . . . . . . . . . 160
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
22. Correction of Co-Generated Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Comment:
a. Right to require correction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
23. Economic Share in Profits Derived from Co-Generated Data . . . . . . . . 167
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
b. Monetary remuneration or compensation on other grounds . . . . . . . . . . . 168
c. Exceptional nature of the right . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

CHAPTER C. DATA RIGHTS FOR THE PUBLIC INTEREST
Principle
24. Justification for Data Rights and Obligations . . . . . . . . . . . . . . . . . . . . . . 173
Comment:
a. Data rights motivated by the public interest . . . . . . . . . . . . . . . . . . . . . . . . 173
b. Justification for encroachment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174
c. Limited need for justification for open data in the public sector . . . . . . . . . 175
d. Application of the proportionality test to modalities . . . . . . . . . . . . . . . . . . . 175
e. Functionally equivalent data sharing obligations . . . . . . . . . . . . . . . . . . . . 176
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177
25. Granting of Data Access by the Controller . . . . . . . . . . . . . . . . . . . . . . . . 181
Comment:
a. Relationship of Principles 24 and 25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
b. Access under fair, reasonable, and nondiscriminatory conditions . . . . . . . . 182
c. Protection of others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
d. Compliance with duties under Principle 32 . . . . . . . . . . . . . . . . . . . . . . . . . 183
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
26. Data Activities by Recipient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
Comment:
a. Freedom of use as the default rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
b. Limitations on freedom of use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186
c. No-harm principle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188
27. Reciprocity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Comment:
a. Reciprocity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192

PART IV. THIRD-PARTY ASPECTS OF DATA ACTIVITIES
CHAPTER A. PROTECTION OF OTHERS AGAINST DATA ACTIVITIES
Principle
28. Wrongfulness of Data Activities vis-à-vis Another Party . . . . . . . . . . . . . . . 195
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
b. Grounds of wrongfulness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
c. Data security and other additional standards . . . . . . . . . . . . . . . . . . . . . . . . 198
d. Justifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
29. Rights that Have Third-Party Effect Per Se . . . . . . . . . . . . . . . . . . . . . . . . . 202
Comment:
a. Traditional erga omnes rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
b. A general data ownership right? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203
c. Effects governed by the applicable law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 204
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
30. Contractual Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 208
Comment:
a. Contractual protection as compared with intellectual property protection . . . . 208
b. Limits of protection as between the contracting parties . . . . . . . . . . . . . . . . . . 210
c. Downstream, third-party effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
31. Unauthorized Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214
b. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216

CHAPTER B. EFFECTS OF ONWARD SUPPLY ON THE PROTECTION OF OTHERS
Principle
32. Duties of a Supplier in the Context of Onward Supply . . . . . . . . . . . . . . . . . . 219
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220
b. Direct effect versus due diligence duties versus strict vicarious liability . . . . . . 220
c. Duty to pass on restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
d. Duty to monitor and remediate wrongful activities . . . . . . . . . . . . . . . . . . . . . . . 223
e. Waiver of duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
33. Direct Action against Downstream Recipient . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Comment:
a. Direct action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229
34. Wrongfulness Taking Effect vis-à-vis Downstream Recipient . . . . . . . . . . . . . . 231
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232
b. Conditions for wrongfulness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 233
c. Protection for downstream recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234
d. Application to similar situations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237

CHAPTER C. EFFECTS OF OTHER DATA ACTIVITIES ON THE PROTECTION OF
THIRD PARTIES
Principle
35. Duties of a Controller with regard to Data Processing and Derived Data . . . . . 241
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
b. Duties of controller when processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
c. Prevailing duties and restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
d. Considerations in case of doubt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
e. Subsequent grounds for wrongfulness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 246
36. Wrongful Processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
b. Duty to disaggregate, reverse-engineer, or delete . . . . . . . . . . . . . . . . . . . . . . . 249
c. Limits on duty to disaggregate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
d. Application with regard to products and services . . . . . . . . . . . . . . . . . . . . . . . . 250
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
37. Effect of Nonmaterial Noncompliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254
b. Criteria for application of this rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
c. Obligation to remove data upon request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
d. Relationship to other law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256

PART V. MULTI-STATE ISSUES
Principle
38. Application of Established Choice-of-Law Rules of the Forum . . . . . . . . . . . . . 259
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
b. Deferral to the choice-of-law rules of the forum for contract issues . . . . . . . . . . 260
c. Deferral to the choice-of-law rules of the forum for other issues as to which the
forum state has clear rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262
39. Issues Not Covered by Established Choice-of-Law Rules of the Forum . . . . . 267
Comment:
a. General observations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
b. Most significant relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268
c. Choice of applicable law by the parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 269
40. Relevance of Storage Location . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270
Comment:
a. The limited role of territorial location of data storage and of physical
establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
b. Choice of law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
c. Storage location as connecting factor of residual nature . . . . . . . . . . . . . . . . . . . 272
d. Extraterritorial application of law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272
Reporters’ Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273

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Principles for a Data Economy: Data Transactions and Data Rights

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