The Role of Text and Data Mining in the Data Economy

As of 12 December 2021, the Copyright Act (L. 22 April 1941 No. 633) has incorporated two specific provisions, set out in Articles 3 and 4 of the Copyright Directive 2019/790/EU, relating to Text and Data Mining (TDM) – an automated method of analysing digital content. This practice has become central in multiple sectors of the data economy, from pharmaceutical research to the application of Artificial Intelligence (AI) and Big Data. Let us therefore examine below, the introduction of the new Articles 70-ter and 70-quater, l. 633/1941 (hereinafter also ‘Copyright Law’) into the Copyright Law, 

Definition and importance of the TDM for the European Union

TDM, defined by Art. 70ter of the Act as “any automated technique aimed at analysing large amounts of text, sound, images, data or metadata in digital format with the purpose of generating information, including patterns, trends and correlations”, is crucial for the advancement of the data economy and, consequently, for the growth of the European Union’s digital single market.

TDM’s interference with copyright

However, automated data mining – a typical TDM activity – may interfere with copyright and related rights. Indeed, the TDM process usually involves the temporary reproduction of the sources used, which could include protected works or significant parts of the databases used. This could be a violation of the exclusive right of reproduction under Section 13 of the Copyright Act and could also contradict a database creator’s right to prohibit the extraction or reuse of the entire database or a substantial part of it.

Copyright reform in the European Union

Despite these challenges, the European Union has decided to reform the sector by introducing exceptions and limitations to copyright that are mandatory for every Member State. These were implemented in Art. 70ter and 70quater of the Copyright Act. These provisions, slavishly transposing the content of Art. 3 and 4 of the new Copyright Directive, allow the extraction of data from sources and databases to which one has legal access, without any need for authorisation by the holders of copyright or sui generis rights to the databases.

Differences between Art. 70ter and 70quater

 However, the two regulations just mentioned have different scopes of application. Whereas Art. 70ter applies exclusively to extraction for scientific purposes by research organisations and cultural heritage institutions, Art. 70quater allows the extraction of text and data in general, by anyone, even for profit.

Protection of digital database rights

This scenario complicates the protection of exclusive rights to digital databases, with a greater impact on the sui generis right of the database creator than on copyright. However, there are measures that can be taken to protect databases, including limiting access and using the opt-out option provided by Section 70quater of the Copyright Act. This option allows right holders to reserve the use of reproduced works and materials in the context of text and data mining, unless expressly stated.

Use of the opt-out option

Despite the uncertainty of how to properly exercise the opt-out, there are several tools that can be used. For example, software can technically recognise an opt-out expressed in the terms of use of a site, which could be considered an appropriate way to express the reservation mentioned in Article 70quater. Moreover, the use of IT tools such as a robots.txt file could provide more effective protection for right holders.

The balance between innovation and copyright protection

In conclusion, while text and data mining represents a huge opportunity for the advancement of research and the development of the data economy, it is important that copyright and related rights are adequately protected. This requires a careful balance between the need to protect intellectual property and the importance of maintaining the competitiveness of the European market. The recently introduced provisions in the Copyright Act are an important step in this direction, but it is crucial that the remaining issues are resolved to ensure the effective protection of copyright in the age of text and data mining.

The issue of the commercial exploitation of works of art in the public domain was at the centre of a recent legal dispute between the Gallerie dell’Accademia in Venice and the German companies Ravensburger AG, Ravensburger Verlag GMBH and their Italian branch, represented by Ravensburger S.r.l.. The issue concerned the use of the image of Leonardo da Vinci’s Vitruvian Man, a public domain work preserved at the Gallerie dell’Accademia in Venice, to produce and sell puzzles without authorisation or payment of a fee.

The order issued by the Court of First Instance of Venice, which prohibited the defendants from using the image of the work for commercial purposes and condemned them to pay a penalty of €1,500 per day in case of delay in the execution of the precautionary order, raised many perplexities and questions about the application of the concept of public domain and the compatibility of Italian laws with European copyright laws.

First, it is important to clarify the meaning of public domain. It is a set of artistic, literary, scientific and technological works that are no longer subject to copyright protection, either because the period of protection under the law has expired or because the author has chosen not to protect them. Works in the public domain, at least in the abstract, can be used freely by anyone, without the need to request authorisations or pay fees. 

In fact, Article 14 of Directive (EU) 2019/790 provides that: “Member States shall ensure that, upon expiry of the term of protection of a work of the visual arts, the material resulting from an act of reproduction of that work is not subject to copyright or related rights.“

However, the case of Ravensburger’s jigsaw puzzle depicting Leonardo da Vinci’s Vitruvian Man shows that the practical application of the public domain concept can be more complex than one might think. Especially when there are national rules in open conflict with EU principles. 

In fact, in what would seem to be a rule in stark contrast to the above-mentioned principle, according to the Italian Cultural Heritage Code, faithful digital reproductions of cultural heritage works – including those in the public domain – may only be used for commercial purposes upon authorisation and payment of a fee. 

This means that cultural institutions that hold works in the public domain have the right to request authorisations and fees for the commercial use of faithful digital reproductions of the works, even if they are no longer encumbered by copyright. Therefore, the decision to request authorisation and payment of a fee is left to the discretion of each cultural institution, as provided for in Articles 107 and 108 of the Cultural Heritage Code. 

Lastly, it is worth emphasising that the case in question is not an isolated event; in fact, it was only a few months ago that the Uffizi Museum took legal action against a well-known French fashion house for illegally reproducing the image of Botticelli’s Venus.

In conclusion, it should be noted that these cases are bound to leave behind numerous ethical as well as legal issues such as great uncertainty about the use of cultural heritage in the entire single market, the risk of hampering artists’ creativity, and a reduced and impoverished public domain. In order to address these problems, it is hoped that the European Court of Justice will soon have the opportunity to clarify that the public domain cannot be restricted, especially by rules unrelated to copyright and related rights, which undermine the clear intent of the European legislator to support the public domain.

The advent of blockchain technology and with it the opportunity to create ‘unique’ digital objects, such as NFTs, has raised many legal questions, most notably those concerning intellectual property rights, in particular copyright.

What is an NFT?

First of all, and before continuing with the article, it is worth dwelling on the notion of NFT. Not everyone knows that NFT stands for ‘Non-Fungible Tokens‘, where non-fungible stands for non-interchangeable, i.e. an asset that is considered in its identity and therefore not interchangeable with another asset. For example: one euro, which is a fungible good, is equivalent to another euro; a Banksy, on the other hand, although it is a work of contemporary art, is not equivalent to a Basquiat.

Thus, NFTs turn digital artworks and other collectibles into unique, identifiable and verifiable assets. In this way, NFTs can also represent real-world objects such as paintings, songs, clothes, bags, etc. They can be created (rectius ‘mined’) based on any work and are bought and sold online, often through the use of cryptocurrencies.

Consequently, NFTs are used to create verifiable digital scarcity, digital ownership and/or opportunities for interoperability of resources across platforms, acting as a ‘certificate of ownership’. This certificate therefore gives an economic value and attractiveness to the digital medium of a work due to its unique and non-replicable character.

Intellectual property and NFT: risks and opportunities

The advantages that NFTs bring are manifold: as mentioned above, they offer the opportunity to confer uniqueness to digital works of art and thus increase their value. Secondly, the combined use of smart contracts and NFTs makes it possible to automate the royalty management process, guaranteeing and protecting the owners of intellectual property rights.

Another advantage of using blockchain technology, which applies not only to the art sector, but to any field involving intellectual property, is that the ownership of rights, as well as licences, are transparent and accessible to all users of the blockchain. This facilitates access to the history of ownership transfers and can make the work of collecting societies more efficient.

Having stated the advantages, however, it is worth making a few remarks about the risks and grey areas resulting from infringements that NFTs may entail against copyright and intellectual property owners.

With the ever increasing number of NFT minting, there is the risk of as many rights violations, which may affect both the moral rights of the artist and the economic exploitation rights of the owner. In this respect, it should be noted that ‘fakes’ have become a growing problem on NFT marketplaces.

Although new tools are trying to change the situation, for instance by using artificial intelligence to detect IP infringements, ‘counterfeit’ or ‘unauthorised’ NFT, which in most cases constitute copyright infringement, are certainly a serious problem.

Furthermore, as far as law enforcement is concerned, the decentralised nature of TLD raises issues of applicable law, jurisdiction and competent authorities. To this should be added that, from a practical point of view, enforcement is difficult in cases where the identity of the infringer is unknown.

For this reason, it is always good practice to constantly monitor NFT marketplaces (among the most important: OpenSea and Nifty) in order to counter activities that may damage IP rights.