Wojdyło - legal aspects of new technologies

EU regulations banning certain AI practices go into effect on 2 February 2025. Some institutions may assume that the bans only apply to extreme practices, which they would never be involved in. But the ban on using AI systems to assess the risk of that someone has committed a crime, or will commit a crime, shows that this is not the correct approach. A more in-depth analysis reveals that some market practices now considered standard, especially in financial services, may prove questionable once the bans enter into force. This is particularly true for monitoring of money-laundering risk and more broadly the risk of fraud.

Regardless of whether we see benefits or an existential threat in the latest AI technologies, the gravity of the challenges these technologies bring is undeniable. Over the past few decades, technological advances have far outpaced reflections on their possible consequences. This need not and should not be the case. That technologies are not solely a source of good is becoming apparent today as we begin to perceive the destructive impact that certain digital technologies have on our democracies, security, and mental health. In the face of recent technological advances, such as artificial intelligence, we have an opportunity to avoid mistakes and at least try to redirect the development of these technologies toward authentic benefits, while at the same time mitigating risks. In this context, I decided to sign an appeal to temporarily halt work on AI systems. I also encourage others to do so. Below I present the main rationale that guided me.

It has long been obvious that within the next few years we would witness attempts to regulate the world of decentralised finance. As it turns out, one of the most revolutionary laws may be introduced through an amendment to an obscure regulation on information accompanying money transfers.

I’m referring to the proposed changes to Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds—also known as WTR2. It is part of a broader package of regulations aimed at combatting money laundering and financing of terrorism. The main aim of WTR2 is to ensure that money transfers are accompanied by relevant information enabling identification of the parties to the transaction.

Interest in the game development industry is not diminishing. The upward trend has been consistent for several years, and 2021 is sure to bring a further increase. Forecasts indicate that in 2023 the value of the game market will exceed USD 200 billion.

The Warsaw Stock Exchange has strengthened its position as the world leader in the number of listed companies from the game development industry, even ahead of the stock exchanges in Japan and South Korea. The game market is becoming an increasingly promising area for investors, which can be seen in both the number and value of transactions. The segments of mobile games, distribution under a subscription model, and cloud gaming are gaining. At the same time, with so many titles available on the market, game marketing becomes more difficult and skilful community-building around a specific title becomes vital.

Recognising the importance of the game industry, last year we published the report “Law for game development,” which deals with specific legal issues in the production and publication of games. However, new legal challenges are emerging that must be faced by all stakeholders in the broader game industry. Therefore, we are starting another series of publications in which we will touch upon, among other topics, intellectual property law, labour law, personal data, and less-obvious aspects of criminal or regulatory law. We will also devote a lot of space to commercial issues that can be useful for game developers and investors alike.

In previous articles in our series we discussed whether data can be subject to property rights or can be protected within known categories of intangibles. Today we will consider if and when data can be protected as a trade secret.

First we should clarify what a trade secret is and what protection this classification provides.

Trade secrets: When is protection provided?

Under Polish law, issues relating to the protection of trade secrets are mainly regulated by the Unfair Competition Act of 16 April 1993. At the European level, the Trade Secrets Directive (2016/943) has harmonised the protection of trade secrets to some extent.

The subject of the discussion below will be “trade secrets” (tajemnica przedsiębiorstwa), and not “business confidentiality” (tajemnica przedsiębiorcy) as referred to in Art. 5(2) of the Act on Access to Public Information of 6 September 2001. Judgments issued under that act indicate that in certain situations “business confidentiality” may be understood more broadly than “trade secrets” within the meaning of the Unfair Competition Act, and also includes information which has no economic value as such but the disclosure of which could have a significant impact on the undertaking’s economic situation and competitiveness (Supreme Administrative Court judgments of 17 January 2020, case no. I OSK 3514/18, and 5 July 2013, case no. I OSK 511/13).

To complement our previous considerations about the civil-law status of data, we should analyse the possibility of using data to create security interests in business transactions. The increasing economic value of data inspires a search for effective ways to collateralise these assets.

To better illustrate this point, let us use a visual example. Imagine a server owned by company X. Various data are stored on the server, including data collected by X for the purpose of training an advanced algorithm used for medical diagnostics. The market value of the data stored on the server exceeds many times over the value of the server itself.

X provided its creditor, company Y, with security in the form of a registered pledge on the movables of X. X did not fulfil its obligations towards Y, and therefore Y enforced its security and took ownership of the server storing the data. The value of the server alone is insufficient to satisfy all of Y’s claims against X, while the value of the data stored on the server exceeds X’s debt to Y. What is the effect of Y’s taking ownership of the server?