The European legislator has recently agreed on a final version of the EU Data Act which introduces new rules for agreements on data access and sharing.

The EU Data Act – a major breakthrough for the European data economy

For some time, the EU legislator has been very active in the field of data economy law. With the EU Data Act, a further key part of the EU’s data strategy is about to be completed. The Regulation creates uniform provisions for data exchange between companies, public authorities and other players of the data economy. The Data Act’s goal is to break up the concentration of data in the hands of a few large corporations and to make such data available to other players as well. Among other things, this is supposed to provide the basis for new, data-driven business models.  In particular, small and medium-sized enterprises stand to benefit from this. The Data Act will make it much easier for them to gain access to industrial data and to use the data themselves.

New rules for contracts on data access and sharing

One of the major changes introduced by the Data Act are the rules for agreements on data access and sharing. They apply wherever a right to access to certain data exists. This is already the case in the mobility sector or for data gathered by public authorities (Open Data). Further, the Data Act itself introduces new rights to data access: users of networked products and services (Internet of Things, IoT) can request manufacturers to provide usage data so that they can use the data for their own purposes – such as product development or training of AI algorithms. In the future, data sharing contracts will have to be concluded in accordance with the requirements of the Data Act whenever data have to be made available.

Contract drafting principles

The Data Act sets out three general principles for data sharing contracts. It is  critical to implement these requirements when drafting the contractual provisions, since otherwise any agreements between the parties as a general rule will be invalid.

• Non-discrimination: Data must be made available on “fair, reasonable and non-discriminatory” terms. For example, it is not permissible to make data available to a partner enterprise on more favourable terms as compared with a similar rival enterprise.  Practical advantage for data recipients: the data holder must prove that no discrimination exists.

• Compensation: The compensation for making data available must be reasonable. This is something the courts have to examine in the individual case. The data holder must disclose how it has calculated the compensation. Special rules apply for small and medium-sized enterprises: for them, the compensation is limited to the actual cost incurred by the data holder in making the data available.
   
• Prohibition of unfair terms: Certain terms in data sharing contracts are impermissible. In particular, the data holder may not prescribe how the data may be used by the recipient. Further, the data holder is limited in the extent to which it may terminate an existing data use contract as long as the data user is not able to switch to a similar provider. Such terms are usually invalid.

Risks and opportunities

The new provisions of the Data Act are likely to apply from the second half of 2024. The requirements for data sharing contracts will then quickly be clarified by the courts. But one thing is clear already: the economic potential of the Data Act is huge. The EU Commission estimates that roughly 80% of industrial data collected in the EU remain unused. In the first five years from entry into force of the Data Act alone, the added economic value is estimated to be around 270 billion euros. For many players, this offers real opportunities. In many sectors of the economy, we are likely to see the data silos of dominant undertakings actually being broken up for the first time. This will pave the way for hitherto unprecedented potential for the development of data-driven business models. Conversely, the Data Act is presenting many companies with new challenges – e.g. when it comes to protecting business secrets. Here, the rules of the Data Act still have room for improvement. It also has to be kept in mind that data holders, when drafting data sharing contracts, will have to observe new compliance requirements – or could otherwise face very stiff fines under the Data Act.