Lexpert Magazine

52 LEXPERT MAGAZINE | MARCH/APRIL 2018 | BIG DATA ASSETS | 2. Title to the asset – no mandatory registry; so purchaser must "title search" through authors; there is potential leakage through contractors who haven't assigned their copyright in writing. 3. Joint Ownership – not common, but can be done where two parties both want to have solid tenure in the copyright. 4. Licensing – more typical model is one party owns the database, the other is granted a license. 5. Representations and Warranties – as with other intangible assets of the seller, including soware, there are concerns such as good and marketable title; no in- fringement of third party IP rights; com- pliance with CASL, Privacy law, and other law (e.g. Export control). 6. Personal Information – if dataset con- tains personal information, then as the Buyer, you also have to get comfortable that PIPEDA and other relevant privacy/ data protection laws have been complied with by the Seller. To the first concern, "Facts are facts," ex- plains Takach. "And the fact that it's nine degrees Celsius in Toronto today is a fact. No one can copyright that. "But a compen- dium of three hundred years of data points about Toronto weather with respect to cli- mate change and its impact on the econo- my? Now that same fact as a bundle within a bigger data set, achieves a very different economic value." Data is a chameleon, says Takach. It can be a company's "secret sauce," making that collection of facts worth millions. "It's one of the fascinating things about intangible Kratz explains that when you doing "an M&A deal with a company where you are acquiring data assets, you have to be con- cerned about what liability there is around any existing breaches that predate the closing date of the transaction. You have to think about what Representations and Warranties have been provided." Not all companies have a full under- standing of the security of their data or the business importance of that security in the event of a merger. Heather Barnhouse, an Edmonton-based member of Denton Canada LLP's Technology and Corporate Commercial Groups, says it can sometimes be difficult for clients to explain the actual underlying business relationship they have with their data. "Sometimes the client sort of intuitively knows it, but they haven't really done a Due Diligence or [sorted through] that entan- gled web." is can especially be the case if the seller never really utilized the full range of the data and therefore did may not have recognized its full value. ON THE TRANSACTION George Takach, of McCarthy Tétrault LLP, points out: "Quite literally, every company has the potential to be collecting and using all sorts of data," and on that ba- sis, according to Takach, there are six areas of legal concern that apply to virtually all M&A transactions: 1. Protection of Databases – Facts on their own are not protected. e selection and arrangement of facts, however, can be pro- tected as copyrights. assets. ey take their value from their con- tent and context." Determining if a data asset has copy- right – and whether that copyright claim is valid - is a complicated matter. It depends on where the data is coming from, and, to a large extent, what human intervention was involved in the collection and assemblage of that data, explains Kratz. "Just because there's a machine recording data through some sensors, does not mean there is copy- right. Because you need human beings as authors to have copyright." Kratz notes, that in April 2017, the Alberta Court of Appeal clarified the circumstances in which the production, compilation and processing of raw data can constitute copyright in Geophysical Service Incorporated v Encana Corpora- tion, 2016 ABQB 229. Geographical Service (GIS) is a company that gathers offshore seismic data in the Arctic and elsewhere. Aer processing the data through sophisticated soware pro- grams, it then licenses the results to oil and gas companies searching for deposits. GIS argued in the Alberta Court of Queen's Bench that it had copyright ownership of such data. e data GIS licenses to others must be submitted by production compa- nies to various energy boards when they seek permission to drill. Normally, boards will keep that data private for five to 15 years, but aer that, it may give the public – including other oil companies – access. GIS, bringing action against a number of regulatory boards and energy compa- nies, argued that was an infringement of its copyright, which under Canadian law would protect its data for 50 years or more. e defendants argued that since the data is primarily collected and processed by ma- chines, GIS had no copyright. e appeal court held up the lower court's ruling in favor of GIS, concluding it had copyright over its seismic data. It found that in the creation of map, charts and other material, even when their cre- ation was assisted by sophisticated technol- ogies, there was still the requisite human creativity, intervention and the authorship to grant copyright. Kratz says that the court held, "that the soware had to be programmed and set up to do certain processing functions ... so in the seismic case the human intervention HEATHER BARNHOUSE > DENTONS CANADA LLP "Sometimes the client sort of intuitively knows it, but they haven't really done a Due Diligence or [sorted through] that entangled web."

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