At this point I think most people of heard the notion of the Internet of Things (IoT) somewhere along the way.  If not, now is the time.  The IoT is a network of physical objects accessed and technologically interconnected through the Internet.  The objects contain embedded technology allowing them to interact with each other and various aspects of their external environment.  One benefit of this technology is that when objects can send and receive data and information, they can be controlled remotely and set to operate with maximum efficiency.  The data they collect, send and receive can be very valuable.

Cisco estimates that 25 billion devices will be connected in the Internet of Things by 2015, and 50 billion devices will be connected by 2020.  Machine-to-machine technology is being applied in most industries, and ranges from telematics in smart cars, factory automation, and incorporation into energy grid and health care applications, to running household appliances like stoves, refrigerators, toasters and thermostats.  Possibilities for the future are endless.

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So what is the legal issue?  Who owns that valuable data the machines generate and exchange!

Key to this consideration is an understanding of the property rights, if any, associated with “data.”  The law typically makes a distinction between the ownership rights associated with real (land) or personal (things) property. There is another category for intangible property like thoughts and ideas, and that is generally referred to as intellectual property. Data probably fits into the intellectual property category.  It is not land, is generally intangible and can be reproduced and can change continually over time.

When it comes to intellectual property, the law governing patents, trademarks and the law of copyright serve to define the legal rights associated with that intangible property.  Patent and trademark law is designed to protect inventions, scientific discovery and marks, phrases and logos used in commerce and associated with certain goods or services.  Copyright covers print, music, plays, artwork, film and recordings, and digital works such as computer programs or databases.

It does not seem that the data that is or will be generated by these communicating machines fit nicely into any of these categories, although copyright is closest to the mark.  But, United States law has what is known as a human authorship requirement when it comes to copyright protection.  According to the U.S. Copyright Office, “copyright law only protects “the fruits of intellectual labor” that “are founded in the creative powers of the mind.”  Trade-Mark Cases, 100 U.S. 82, 94 (1879). Because copyright law is limited to “original intellectual conceptions of the author,” the Office will refuse to register a claim if it determines that a human being did not create the work.  Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 58 (1884). Remember, the “Office will not register works produced by nature, animals, or plants. Likewise, the Office cannot register a work purportedly created by divine or supernatural beings.”  So, if computers create the work – data – rather than humans doing so directly, it might not be subject to copyright protection.

Closer to that point, the Office says it “will not register works produced by a machine or mere mechanical process that operates randomly or automatically without any creative input or intervention from a human author.”  Consequently, the data being generated and machines may not be subject to copyright protection, complicating the issue of ownership.  A significant question then is will the processing and communication by and between machines reach a level such that artificial intelligence is no longer predictable and mechanical such that the works they produce should be entitled to protection?  We think so.  Machines can synthesize billions of pieces of data and create a result having significant value.  It seems conceivable that, at some point, mechanical process will cross the line and become tantamount to intellectual labor and actual creativity.

 The issue might then become who along the many parties involved in the process of creating that data actually owns it – the owner of the machine, the programmer writing the code upon which it runs, the network operator or those about whom the data is being collected.  The possibilities and relating legal issues that will result are endless.

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Until answers to these various legal issues are more clearly developed, businesses should focus on the idea that a collection of data organized and maintained in a database can be protected by copyright.  Accordingly, it is important that measures be taken to ensure that data is collected and managed such that it qualifies for database protection, and that ownership of the database is contemplated and properly defined by contract.  Big disputes will arise as time passes and more data is mined in connection with the IoT, but businesses will be ahead of the game if they consider what the future might hold and plan accordingly.