AI, Machine Learning & Big Data 2021 – Technology | #itsecurity | #infosec


Trends

Artificial intelligence and other forms of innovative technology
will continue to shape our ways of life and all sectors of society.
Be it health, education, finance, entertainment, or other economic
sectors, there is no escaping the disruptive effects of technology.
This said, technology is a remarkable enabler which, if implemented
appropriately, will reward the efforts made in meeting the various
challenges that it poses.

Conscious of the global shift towards a digital economy, Malta
has, over the past years, embarked on a number of policies and
strategies aimed at placing innovation and emerging technology at
the centre of its developmental strategy.

The Malta Digital Innovation Authority (MDIA) was set up in 2018
as the public authority to promote and foster innovative technology
by, amongst others, offering a certification system for innovative
technology arrangements. This framework, which was originally
limited to distributed ledger technology (DLT) and smart contracts,
in line with the country’s vision of a “Blockchain
Island”, is being widened to capture other forms of
technology, including Artificial Intelligence (AI). Having a public
authority that is focused entirely and specifically on infusing
trust in technological solutions, through adequate regulation where
required, is deemed critical in ensuring that technological
solutions and developments will be embraced by what have always
been highly regulated sectors, including health and financial
services.

It is expected that, over the coming months, a number of schemes
and policies aimed at fostering the development of technology and
building upon other initiatives and policies that had already been
launched, including Malta’s AI and Digital strategy, will be
launched.

The public policy focus on technology in Malta is supported by a
network of other authorities and bodies, each having their own
scope and purpose. These include MITA (the public agency tasked
with assisting the Government in transforming technology
innovations into real business solutions and to provide ICT
infrastructure, systems and services to the Government), the
Chamber of Commerce and Enterprise (the constituted body that
represents businesses in Malta), TechMT (a joint initiative between
the Government and the Chamber of Commerce, aimed at providing
support to the technology industry and start-ups) and Malta
Enterprise (the Government agency that supports businesses through
grants and schemes).

Whereas digital policy and strategy seems to be high on
Malta’s political agenda, the enthusiastic pace has not been
matched when it comes to adapting legal principles to the change in
realities brought about by technology. Apart from a thorough
legislative framework aimed at DLT, which is still to be enacted,
there have been few legislative projects that were not egged on by
European Union directives or regulations. This said, it is also
true that, over the past few years, the EU has legislated rather
extensively, and is currently in the process of discussing or
adopting laws, on most legal aspects surrounding technological
developments; which begs the question whether any Member State will
be allowed to legislate on aspects such as ethics and civil
liability, any differently from other Member States.

As things currently stand in Malta (and subject to changes at an
EU or domestic level over the coming months), there is scope for
better and more effective legislation relating to, amongst others,
the taking of security over IP assets, in particular computer
programs, and liability for actions performed by autonomous
machines with no, or limited, supervision. It is a well-known fact
that traditional Civil law concepts are not the most adapt to deal
with such matters. Similarly, intellectual property laws and data
protection principles do not adequately address novel issues coming
to the fore through automated generation of inventions or works of
art and processing of data, whilst the immense value of big data
sets used to train machines is not necessarily sufficiently
protected by the trade secrets framework. On the flip side, current
competition laws cannot be expected to cater adequately for
anti-competitive practices through algorithmic collusion and
monopolisation of data sets. Consequently, unless harmonisation of
these aspects of law is achieved at EU level, we expect the Maltese
legislator to have to provide adequate solutions in the
not-so-distant future.

Finally, ethics and the adoption and application of ethical
standards in AI development is likely to become more central to
policy formation and regulation, in line with the stance taken at
EU level.

Ownership/protection

The Intellectual Property law aspects relating to AI-generated
works and technical solutions are amongst the most debated in the
field of emerging technology.

The Maltese IP office (IPRD) has not issued any guidelines
relating to the patentability of AI systems and AI-generated
solutions. Neither does Maltese law specifically deal with such
matters at this point in time.

The Maltese patent registration system is a registration-based
system (as opposed to an examination-based one) and, consequently,
it is expected that, if a patent is challenged on the basis of lack
of inventive step and excluded subject matter, it would be the
Maltese Courts or Patent Tribunal that would have to decide this
issue. Guidance will be drawn from the European Patent Office (EPO)
and precedents of the UK Courts, except where the two diverge, such
as in the instance of “mixed-type inventions” (a term
used by the EPO to refer to inventions containing technical and
non-technical features).

In terms of inventions made through the assistance of AI
solutions, it is expected that the defining point would be the
extent to which the invention was made through an automated AI
solution. Where the invention is generated by an AI system without
human intervention, the invention would not be patentable until and
unless the law would specify that ownership to the patent of the
AI-generated invention would lie with the designer(s)/creator(s) of
the AI system. Such specific laws regulating the ownership of IP
generated entirely by automated systems, in particular AI, have to
date not been adopted.

In terms of protection, AI, being in the most part code, is
protected through copyright under the Copyright Act,1
where a “computer program” is identified as falling
within the definition of a “literary work”. In the
context of the Copyright Act, the definition of computer programs
extends to such programs irrespective of the mode or form of their
expression, including those which are incorporated in hardware,
interfaces which provide for the physical interconnection and
interaction or the interoperability between elements of software
and hardware and preparatory design material leading to the
development of a computer program, provided that the nature of the
preparatory design material is such that a computer program can
result therefrom at a later stage.

In order to be eligible for copyright protection as a literary
work, a computer program must have an original character and be
written down, recorded, fixed or otherwise reduced to material form
by an author. Whilst this would not seem to pose any difficulties
to the AI code itself, the definition of “author” would
seem to exclude the possibility of a fully automated AI-generated
literary or artistic work to be copyrightable. This is due to the
fact that an author is defined as “the natural person or
group of natural persons (including a body of persons) who created
the work eligible for copyright”
.2 Naturally,
the argument will focus on whether the automated AI was created
specifically to produce the results that it did produce and
whether, in such a case, the AI was merely a tool in the hands of
the “author” and not the “author” itself.

In terms of copyright ownership, both with respect to the AI
application itself, as well as any works generated by the AI which
(based on the discussion set forth above) would qualify for
copyright protection, it is pertinent to note that the Copyright
Act defines the term “owner of copyright” as the
“author who is first owner, an assignee or an exclusive
licensee, as the case may be of, of a copyright and in the case of
a collective work, the first owner of copyright shall be the
natural or legal person under whose initiative and direction the
work has been created”
.3 Co-ownership would
arise where two or more individuals author the literary or artistic
work and, in the case of the AI being created by an employee in the
course of his employment, the economic rights conferred by
copyright shall be deemed to be transferred to the author’s
employer, subject to any agreement between the parties excluding or
limiting such transfer.

An aspect of IP rights that is often overlooked in the academic
debate is the all-important and economic effect of commercialising
these rights which are deemed to be assets (albeit intangible) of
high value. These assets may be used as a form of collateral to
raise finance and allow for the further development of the same or
other (complementary) assets. This is of particular relevance to
start ups that, generally, would have little other means to finance
their projects.

The granting of credit and collateral go hand in hand.
Underlying most credit facilities supplied by lenders is some form
of collateral or “security”.

Malta has, over the past decade, maintained its position as a
financial hub in the Mediterranean, and the market is very familiar
with the traditional requests of lenders to have the credit secured
by a general and/or special hypothec attaching to land or real
estate. However, the discussion now is whether real estate security
will continue to adequately serve Malta’s economy and financial
sector in a digital and non-traditional future.

To date, Maltese law has not been very accommodating when
creating security over intellectual property. This is expected to
change in line with Malta’s ambitions for a digital
economy.

This shift in the way security is granted is perfectly evidenced
by the recently enacted Trademarks Act, 20194 and the
Trademark Rules 20215 which finally cater,
legislatively, for the granting of a trademark by way of
collateral. In simple words, a bank can now lawfully accept a valid
pledge over trademarks with much less legal uncertainty than was
the case prior to these Trademark Rules 2021.

Footnotes

1 Copyright Act, Chapter 415 of the laws of
Malta.

2 Ibid.

3 Ibid. article 2.

4 Trademarks Act, Chapter 597 of the laws of
Malta.

5 Trademarks Act, Legal 50 of 2021 Trademark
Rules.


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