The Information Commissioner’s Office (ICO) recently launched a consultation series on how data protection laws should apply to the development and use of generative AI models (“Gen AI”). In the coming months, the ICO will publish further views on how to interpret specific requirements of UK GDPR and Part 2 of the DPA 2018 in relation to Gen AI. This first part of the consultation focusses on whether it is lawful to train Gen AI on personal data scraped from the web. The consultation seeks feedback from stakeholders with an interest in Gen AI.

As outlined by the ICO, web scraping will involve the collection and processing of personal data, which may not have been placed online directly by the data subjects themselves. To comply with the UK GDPR, Gen AI developers would need to ensure there is a valid lawful basis for their processing under UK GDPR, as well as comply with the relevant information requirements pertaining to indirect personal data collection.

For the first part of the consultation series, the ICO published a policy position on the lawful basis for training Gen AI models on web-scraped data which can be found here. More specifically, this consultation focusses on the ‘legitimate interest’ lawful basis under art. 6(1)(f) UK GDPR and the ‘three-part’ test that a data controller must pass to meet the legitimate interest basis (a so-called Legitimate Interest Assessment). The ICO has considered various actions that Gen AI developers could take to meet this three-part legitimate interest test to guarantee that the collection of training data through web scraping, i.e. processing of data, is complaint with the principles of UK GDPR. The ICO would now like to hear from relevant stakeholders on their view of the proposed regulatory approach and the impact this would have on their organisation. A link to the survey can be found here.

The deadline to submit a response is 1 March 2024.

First publication: K&L Gates Cyber Law Watch blog with Sophie Verstraeten

Join our session as we explore the implications of the EU AI Act. In this webinar, we’ll:

  • Break down the four levels of AI risk under the AI Act
  • Discuss legal requirements for deployers and providers of AI systems
  • Provide a playbook for deployers and providers to accelerate EU AI Act compliance

Featured speakers

Yücel Hamzaoğlu​

Partner
HHK Legal

Melike Hamzaoğlu

Partner
HHK Legal

Claude-Étienne Armingaud​

Partner
KL Gates

Noshin Khan​

Ethics & Compliance, Associate Director
OneTrust​

Harry Chambers

Senior Privacy Analyst
OneTrust

Register here.

New ranking in Who’s Who Data 2024 as Recommended in the Data Privacy & Protection and Information Technology categories.

The UK’s Information Commissioner’s Office (the “ICO”) has recently sent warnings to the UK’s most visited websites to inform them that they may face enforcement action if they do not make changes to their cookie banner to ensure compliance with UK data protection law. For example, some websites warned by the ICO do not provide their user with a fair choice on tracking for personalised advertising. This position aligns with the EU’s stance, noting France (see prior Alert here).

The ICO’s actions are part of a larger commitment to ensure individuals’ privacy rights are upheld by companies active in the online advertising industry. Publishers receiving a warning only have 30 days to amend their websites in line with UK GDPR. As further incentive for publishers to get compliant, the ICO has also warned that it will publish the details of those websites that have not made the requested changes in January. Such publicity may be even less welcome than the potentially large fines associated with breach of the data protection framework.

The statement made by the ICO highlights once again the importance for companies to review how cookies are used on their websites and how their cookie banners, along with the cookie consent management solution, are displayed. To be compliant, websites must make it as easy as possible for users to reject all advertising cookies. Personalized advertising can be compliant as long as it is based on the user’s consent. In case users reject all advertising cookies, websites can only show general adverts that are not tailored to the users’ browsing history. Consequently, websites should display a cookie banner that makes it as easy for users to reject cookies, as it is for them to accept cookies.

The ICO’s guidance in relation to cookie banners can be found here, which may need to be further updated with the newly presented Data Protection and Digital Information Bill.

First publication: Cyber Law Watch Blog with Sophie Verstraeten

On 18 October 2023, the French National Assembly voted in favour of a law aiming to secure and regulate the digital space (“Loi visant visant à sécuriser et réguler l’espace numérique” or “SREN”), otherwise called the “Sorare Act.” This new development marks a first step towards the establishment of a regulatory framework dedicated to games integrating non-fungible tokens (NFTs) and monetisation models based on digital assets.

These new provisions are aimed at the creation of a new category of games under French law called games with monetisable digital objects (“jeux à objets numériques monétisables” or “JONUM”). This new regime will enter into force ‘on an experimental basis and for a period of three years’ from the promulgation of the law and will authorise Web3 games with monetisable digital objects (including NFTs).

The Sorare Act defines JONUMs as “game elements, which only confer on players one or more rights associated with the game, and which may be transferred, directly or indirectly, for consideration to third parties,” while excluding digital assets covered by 2° of Article L. 54-10-1 of the French Monetary and Financial Code.

France is one the first jurisdictions in the world to create a specific regime for companies using NFTs as part of their games and the objective is to provide certainty to the industry.

Please reach out to our team if you need further information on this new development. 

First publication: K&L Gates Hub, in collaboration with Lucas Nicolet-Serra

A bit of Jyn Erso to wrap up the week!

New episode of K&L Gates Gateway to Privacy is out, and this time with our first external guest — our dear friend Arya Tripathy joins us with Whitney McCollum and Camille Scarparo for a deep dive into India’s new data protection law, the Digital Personal Data Protection Bill, 2023.

What’s to know, what’s to expect? Listen and find out!

Amidst a sudden increase in paid-for posts that went viral for dubious products and services, France has taken a significant step toward the regulation of influencer communication. The Act no. 2023-451 (Influencers Act), which came into effect on 9 June 2023, aims not only to protect consumers but also to support the influencers, in order to foster the healthy growth of this ecosystem. France is now the first European Union (EU) country to implement a thorough framework regulating commercial influence.

Background information

Digital influencers have changed the way companies can promote their products and services, from beauty and fashion to technology, notably by blurring the lines between commercial advertising and genuine consumer reviews.

Between 8 to 31 January 2023, the French Ministry of the Economy conducted a public consultation on the influencer ecosystem, to evaluate of the contemplated regulation, which received an overwhelming support from the panels.

Key provisions beating on influencers

General ban on certain communications

The following communications are explicitly banned from any influencer communication:

  • Cosmetic surgery and procedures;
  • Alternative therapeutic technics;
  • Nicotine-based products;
  • Non-domestic animal trade.
  • Certain financial services, notably as they pertain to blockchain-based services (e.g. NFT); and
  • Online gambling and betting;

With regard to the latter, the communication remains possible provided that it occurs exclusively on platforms restricted to adults over the age of 18 and subject to the usual specific disclaimer pertaining to the advertising of such services.

Mandatory labeling

The Influencers Act requires influencers to label:

  • Their promoted posts with the mention “advertisement” or “commercial collaboration” in a clear, legible and identifiable manner to avoid falling under misleading commercial practices further to Art. L. 121-3 of the French Consumer Code (“FCC”).

Influencers failing to comply with this obligation face up to 300,000 euros in fines and up to two years of imprisonment (Art. 5 Influencers Act).

  • The pictures (still or moving) they post and which have been
    • edited to enlarge or refine the general appearance or modify the appearance of the model’s face to clearly include the “Retouched images” mention; or
    • generated through artificial intelligence (AI), notably generative AI (gen AI) to clearly include a “Virtual image” disclaimer

Influencers failing to comply with this obligation face up to 4,500 euros in fines and up to one year of imprisonment (Art. 5 Influencers Act).

Drop-shipping

In case of sales of goods through a third party (so-called “drop-shipping” practices), influencers will need to abide by obligations of transparency about the identity of the supplier, pursuant to Art. L. 221-5 of the FCC and will bear the liability relating to the legality and availability of the promoted products.

Content moderation and insurance

Influencers based outside of the European Economic Area or Switzerland but directing their activities to a French audience are required to appoint a legal representative in the EU, as well as to subscribe to a dedicated insurance covering the potential damage resulting from their activities.

Key provisions bearing on platforms used by influencers

Further to the entry into force of the European Regulation no. 2022/2065 on a Single Market for Digital Services (Digital Services Act or DSA) on 25 August 2023, the Influencers A amended the Act no. 2004-575 of 21 June 2004 for trust in the digital economy (Loi pour la Confiance dans l’Économie Numérique or LCEN) increasing the burden on digital platforms, notably for such platforms which allow influencers to conduct their activities.

These platform now have the obligation to promptly remove any illegal content which would be notified through the “trusted flaggers” introduced under Art. 22 DSA.

Key provisions bearing on brands

  • The Influencers Act now mandate a written contract between the influencer and the advertised brands, or their respective representatives. This contract, which must imperatively be subject to French law, must include:
  • The identity of the parties, including their domiciliation for tax purposes;
  • The detailed nature of the influence services;
  • The financial compensation or any equivalent advantage resulting from the influence services;
  • As the case may be, any provision pertaining to intellectual property.

With regard to liability on the influence services, a joint and several liability between the brand and influencer has been implemented, rendering the brand de jure liable for any damage caused to third party.

Enforcement of the Influencers Act

Just prior to the summer holidays, the French Ministry of the Economy appointed a team of 15 agents responsible for monitoring social networks and responding to complaints.

In parallel, the French Directorate General for Consumer Affairs, Competition and Fraud Prevention (“DGCCRF”) audited fifty influencers in the first quarter of 2023, resulted in 60% of the audited influencers to be found in breach of the then-current (and pre-Influencers Act) misleading commercial practice framework.

These findings led to eighteen injunctions to cease illicit practices and sixteen criminal reports. In the following context, in July, the DGCCRF published a code of conduct for influencers and content creators in July, explaining their duties and obligations in accessible language.

Whether you are a brand considering hiring the services of influencers or an influencer yourself, the K&L Gates Luxury Product & Fashion team remains at your disposal to assist you in your compliance with the new French framework.

First publication: K&L Gates Fashion Law Watch Blog in collaboration with Camille Scarparo.

Thrilled to share that I’ve been shortlisted for Privacy Leader: Legal for this year’s PICCASO (Privacy, InfoSec, Culture Change & Awareness Societal Organisation) Awards.

Grateful to the award committee for the recognition and to our K&L Gates #DataProtection team as a whole who is a constant source of motivation, motivation and fun even in complex moments (especially in Europe cc Ulrike Elteste (Mahlmann) Noirin McFadden Andreas Müller Veronica Muratori Thomas Nietsch Camille Scarparo). Also psyched to be among such a roster nominees, whether in this category or the others as a whole. Whoever gets awarded, it’ll always be a win for #privacy!

Looking forward to celebrate with you all in person in London!

On 14 June 2023, the European Parliament (Parliament) plenary voted on its position on the Artificial Intelligence Act (AI Act), which was adopted by a large majority, with 499 votes in favor, 28 against, and 93 abstentions. The newly adopted text (Parliament position) will serve as the Parliament’s negotiating position during the forthcoming interinstitutional negotiations (trilogues) with the Council of the European Union (Council) and the European Commission (Commission).

The members of Parliament (MEPs) proposed several changes to the Commission’s proposal, published on 21 April 2021, including expanding the list of high-risk uses and prohibited AI practices. Specific transparency and safety provisions were also added on foundation models and generative AI systems. MEPs also introduced a definition of AI that is aligned with the definition provided by the Organisation for Economic Co-operation and Development. In addition, the text reinforces natural persons’ (or their groups’) right to file a complaint about AI systems and receive explanations of decisions based on high-risk AI systems that significantly impact their fundamental rights.

Definition

The Parliament position provides that AI, or an AI System, should refer to “a machine-based system that is designed to operate with varying levels of autonomy and that can, for explicit or implicit objectives, generate outputs such as predictions, recommendations, or decisions, that influence physical or virtual environments.” This amends the Commission’s proposal, where an AI System was solely limited to software acting for human-defined objectives and now encompasses the metaverses through the explicit inclusion of “virtual environments.”

Agreement on the final version of the definition of AI is expected to be found at the technical level during trilogue negotiations, as it does appear to be a noncontentious item.

Another notable inclusion relates to foundation models (Foundation Models) that were not yet in the public eye when the Commission’s proposal was published and were defined as a subset of AI System “trained on broad data at scale, is designed for generality of output, and can be adapted to a wide range of distinctive tasks.

(more…)

Access the full list of the EDPB and WP29 Guidelines here, including consultation versions, now-current versions and redlines between versions.