Saturday, April 15, 2017

Can Japan Build a Data Market?

Japan has been studying the intellectual property system for promoting the utilization of new data-related assets (e.g. IoT data), expecting a data market to be built to assist companies create new services. 

In March 2017, Intellectual Property Strategy Headquarters published a report “Committee to Review Intellectual Property regarding New Data-related Assets” (English summary is available.). 

The committee defined “valuable data” to be considered in this study as “data or aggregated data which has not been protected by existing IP rights such as copyright and patent, and needs certain investment or effort to collect, accumulate, store etc.” Data obtained from sensors of a machine tool, and data obtained from a car-mounted sensor/ camera,  a smartphone, or a wearable device are examples of the valuable data.

Data-based services are already provided by many companies. However, the government expects a more open data market where a company can create new services using the data which another company owns; e.g. damage insurance using car driving data, taxi dispatch system using position data of a mobile phone. This data market is expected to provide functions of price formation, matching demand and supply, refinement of trade terms and conditions, standardization of trade data, credit guarantee and so on.
The report concludes by pointing out the matters to be further discussed or considered, as follows.  

1. Support for contract for data usage
We will establish contract guidelines concerning use of valuable data, which will lead to clarification of points to be considered when establishing arrangements for sharing of profits created through data usage taking into account respective contributions. 

2. Construction of a good foundation for data sharing
We will promote efforts to secure information security and improve the environment such as demonstration of valuable data utilization and distribution infrastructure. In the data distribution base such as the data trading market, we will explore concretely about making de facto rules concerning usage and profit sharing accompanying it.

3. Secure a fair competitive order
In order to ensure fair competition and orderly markets where data holders and users can reliably provide and use valuable data, we will examine the data and actions which may be considered as “unfair competition practice” based on actual state of industry.

4. Review of restricted rights for promotion of utilization
While paying close attention to trends in data utilization business, to the situation of data trading market, and to situation of regulation in foreign countries, we will continue to consider the option of possible introduction of limited rights.

The concept of the data market is interesting. However, it is going to take some time before deciding the specification of the data market. Companies will continue to create new services using their valuable data without waiting for building of the data market. Also, there may be not so many companies which want to openly share their data itself with other companies, differently from the government or public sector’s open data.

Instead, companies may choose to provide and license an API or component which provides access to their data to enable other companies use it to develop their unique services, like a mashup in web development. Then, a directory service may be useful to locate such API or components.

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