Prompting the Future of IP Regulation & Innovation Management

The educated guess on AI-generated innovation

The EU's wish to lead AI regulation is explicit. “The AI Act under discussion aims to broadly regulate text and data mining initiatives, addressing societal concerns such as security, trust, and privacy”, Kamperman Sanders observes. Legitimising the complex regulatory landscape could foster a favorable business environment for AI innovation development.

Conversely, an overregulation scenario could lead Europe to miss out on AI benefits by not allowing sufficient exceptions for its ongoing development. For Moerland, the questions might be: “How far will we allow the use of training data for AI-machine learning which may provide solutions to technical problems?” This opens a procedural dilemma: is IP the right tool to handle and manage AI-generated inventions?

The persistence of legal uncertainty in the field of AI may threaten future knowledge disclosure tied to innovations. Moerland notes how, IP-wise, AI developers are potentially resorting to the use of trade secrets to regulate their technologies. The proprietary operational mode of many AI applications and their lack of transparency contribute to the ‘black box’ effect.

Undoubtedly, the employment of AI and the challenge to classify its outcomes are shaking the essence of intellectual property, questioning the notions of human creativity and artistic expression that have defined it until now. The ethical value attributed to human involvement in this field will be significant in developing a system able to incentivise and reward producers of AI-generated outputs (and create a market for these contents/products) without losing sight of human developments.

The potential of AI to be an enabler for further human inventiveness and creativity is a valid argument, but Kamperman Sanders wonders: “Can a human being still compete with machines that only need electricity and a prompt to produce images in the style of famous painters?”.

The multiple threats of power concentration

Kamperman Sanders feels the UN’s WESS report from 2018 is still an interesting read in terms of the risks it flagged on possible future inequalities and power concentrations in the digital domain. In this respect, the building of portfolios of IP concentration by platform economy giants must be closely monitored. Major platform-owning companies are registering patents for AI-related services and products (i.e., from drone delivery to automated driving systems; from AI home assistants to the digitalisation of agriculture). “Allowing platforms to accumulate such an enormous amount of market power is one of the shortcomings of IP policy (and Competition Law) in the past 10/20 years”.

Their collection of IP assets, paired with access to a wide range of data retrieved through platforms‘ daily operations, positions big tech companies at the top of the digital chain. A concentration of power that translates into a geopolitical dominance of USA-based industries harvesting and processing information: “With most server farms crunching data located on the US and Chinese soils, powered by local energy supplies, it becomes ‘physically’ challenging for the European hub to play a leading role in this new digital economy”.

Not addressing power imbalances, including through IP regulation, and relying on post-facto fixes with Competition Law might lead to a bifurcated, less globalized world. Recent focus in IP has been on unilateral measures and export restrictions, especially in high-tech and sensitive production areas like semiconductor chips. This approach may hinder the import and export of technology essential for tackling climate change and hamper broad access to the benefits of the fourth industrial revolution, as highlighted by Kamperman Sanders. Consequently, the WTO's goal of technology transfer to developing nations and lower global trade tariffs remains largely unachieved.

The demise of the WTO and the future of dispute settlements

The waning power of the WTO as a rule-based forum for trade is a concern for both Kamperman Sanders and Moerland. The presence of an entitled body supervising dispute settlements is critical for the future. “The whole dispute resolution system overseen by the WTO is frozen due to the fact that the USA blocks the appointment of judges”, Kamperman Sanders considers. “The sidelining of the WTO has led to ad-hoc, shady solutions for dispute settlement resolutions which are often not in the interest of IP and innovation regulation, both from a state and a public society perspective”, Moerland underlines.

The ’right’ to circularity

There is no looking at the future without an eye for sustainability and the circular economy. “There is a very broad spectrum of tools on IP law that could be used for the benefit of circular economy goals and this is a priority area for the European Commission to work on”, comments Moerland. “Pillars of the circular economy such as the right to repair and the eco-design approach are blind spots in IP regulation” - Kamperman Sanders declares – “We only see sector-specific regulation in relation to eco-design and the circular economy”. Promoting the patenting of ecological manufacturing processes through policy awareness and support mechanisms for the diffusion of this technology is where IP law can make a concrete contribution to the circular economy.

Europe has the potential to take a leading role in setting eco-design standards for product development, similar to its past role in ICT (e.g., GSM technologies), also by creating standard essential technologies that can be licensed to companies to promote circular product design and energy-efficient production, including repairability options for users and consumers.

IP in service of society

Attention to consumers, end users and society leads back to the ultimate purpose of intellectual property. Historically, IP rights have evolved largely through rights holders' lobbying for exclusive entitlements to protect their works or inventions. Kamperman Sanders cautions on the use of this ‘privilege’: “achievements in innovation must always serve the interest of society and societal interests must always prevail over those of the individual right holder”.

Concretely, IP law works towards the public interest by recognising limitations and exceptions to individual rights over inventions and technologies able to safeguard and improve social well-being. This includes ensuring that stakeholders, like governments, who contribute capital to developing technical solutions, can fully benefit from them, particularly when the technology's widespread use is crucial for human survival, such as climate mitigation tools and drug development.

This is an article from the Horizon Future Watch Newsletter (Issue 4, November 2023), presented by Foresight on Demand.