The importance of the EU’s proposed Data Act for suppliers of products and services that collect data
Does your business use or develop services based on products that collect data? The EU’s proposed Data Act may have an impact.
Work is currently underway to adopt a new data regulation called the “Data Act” which will regulate access to and use of data collected through physical products, where the product can communicate with an electronic communication service - a so-called “connected product”. A “connected product” is a product that is equipped with a sensor, an actuator or other device that can generate data when using the product or a related service - for example, a physical device combined with a sensor that collects data, such as for example smart buoys, remotely controlled underwater robots or vessels with tracking functions. The Data Act stipulates, among other things, increased obligations for the supplier of connected products, and greater rights for users linked to the products.
Increased obligations for suppliers - duty to share data and requirements for product design
The Data Act will give both individuals and businesses greater control over the data generated through connected products. The value of data generated and collected when using connected products can be great. For example, data on movement patterns and use of a vessel can be used to determine an adapted insurance offer. Sensor data from loading cranes can be used to optimise container handling and minimise waiting time for ships at ports. By analysing the data, bottlenecks can be identified, operational processes optimised and resource allocation planned more effectively.
Suppliers of connected products must ensure that the products are designed and manufactured in such a way that data generated by their use is easily and securely accessible to the user. This means that the user must be able to have direct access to data that has been collected or generated by the use of the connected product, as far as it is relevant and appropriate. If the product is supplied with an associated software solution, for example in the form of an app, it will be appropriate for the user to be able to view the data directly in the app. If the data is not directly accessible to the user, the supplier must ensure that the data becomes available when the user requests it, and if it is technically possible, the user must be able to request the disclosure of data through a simple electronic request.
As a general rule, the data must be made available free of charge, and if possible on a continuous basis. The user can also request that the data be shared with other parties, for example with an insurance or analysis company. For the user, this will mean the possibility of better (and potentially cheaper) services, as there will be more parties than today who can make use of the data generated through connected products.
For suppliers, the Data Act will therefore entail increased obligations related to product design and the sharing of data. In addition, the Data Act could lead to increased competition, as there will be more parties who can offer services in connection with the data generated by the supplier’s products. Third parties who receive data are nevertheless prevented from using the data to develop competing products to the product that originally collected the data. This is to safeguard the competitive advantage and the intellectual property rights held by the supplier.
Greater rights for the user – significance for SMEs and after-market service providers
The regulation may have positive consequences for small and medium-sized enterprises (SMEs). The legislation will protect SMEs from unfair contract terms and standardised contract clauses will be developed to ensure fair data exchange agreements with larger companies. This will stimulate SMEs to participate more actively in the data sharing economy, and give them a better negotiating position.
Easier access to data for SMEs and users can also contribute to more providers of after-market services. More suppliers of such services can stimulate increased utilisation of products and better access to suppliers who can carry out maintenance and repair, which in turn provides a basis for increasing the lifetime of the products. Such increased business and production efficiency can conceivably have positive consequences in the form of a reduction in waste, energy consumption and CO2 emissions.
SANDS’ assessment
The Data Act will contribute to increased opportunities for the users of connected products and for suppliers that want to utilise data from such products. For suppliers with access to data, there will be new requirements to take into account. These parties should assess whether their own services enable compliance with the Data Act’s requirements for the sharing and transfer of data, or whether adaptation and further development must be done in order to comply with the requirements of the regulation.
It is still uncertain what consequences a breach of the Data Act will have. The regulation stipulates that the rules on consequences for violations are to be determined nationally. The sanctions must be effective, proportionate and deterring, and it is therefore not inconceivable that violations may be sanctioned with fines.
The regulation has not yet entered into force, and changes may still be made. However, the process relating to the adoption of the final version of the Data Act has come a long way, so it is useful to be familiar with the regulation already now.