Category: Startups and Scaleups

The AI Act: Preserving civic rights or hindering innovation in the EU? 

The first set of regulatory frameworks aiming at responding to the new challenges this technology brings

In recent years artificial intelligence tools of various applications and scales became more and more included in our life. And the faster the technology developed, the more present and available it became outside of specific industries and big corporations. To a point of a commercial boom so wide, that such AI tools swiftly reached small and medium enterprises (SME) and end-customers en mass. 

This quick and wide spread of a technology which evolves every day inevitably brought threads to information, personal data, intellectual property, jobs, businesses, human rights. That is why the European union moved to regulate artificial intelligence. 

A robot looking at a digital image of scales, symbolizing the regulation of artificial intelligence which comes into force in the European union.
Image by Freepik

The AI Act’s aim

On 13 March The European Parliament adopted the first amendments to the proposal for a Regulation of the European Parliament and of the Council laying down harmonised rules on artificial intelligence the so-called Artificial Intelligence Act.  

The new regulation aims to ensure safety and compliance with fundamental rights and also boost innovation. 

According to the first recital the purpose of this legislation is to: 

improve the functioning of the internal market by laying down a uniform legal framework in particular for the development, placing on the market, putting into service and the use of artificial intelligence systems in the Union in conformity with Union values, to promote the uptake of human centric and trustworthy artificial intelligence while ensuring a high level of protection of health, safety, fundamental rights enshrined in the Charter, including democracy and rule of law and environmental protection, against harmful effects of artificial intelligence systems in the Union and to support innovation.” 

Whom will the AI Act apply to?

  • Providers
    • placing on the market or putting into service AI systems or 
    • placing on the market general-purpose AI models in the Union, irrespective of whether those providers are established or who are located within the Union or in a third country.
  • Deployers of AI systems that have their place of establishment or who are located within the Union.
  • Providers and deployers of AI systems that have their place of establishment or who are located in a third country, where the output produced by the system is used in the Union.
  • Importers and distributors of AI systems.
  • Product manufacturers placing on the market or putting into service an AI system together with their product and under their own name or trademark; 
  • authorised representatives of providers, which are not established in the Union; 
  • affected persons that are located in the Union. 

What does the AI Act actually regulate?

The new regulation works in several directions to protect the interests of EU citizens and businesses. 

  1. The AI Act defines AI applications which pose a significant threat and completely bans them, such as certain cases of biometric categorisation, emotion recognition, social scoring, predictive policing, manipulation of human behaviour or exploitation of people’s vulnerabilities. 
  2. It provides an exception for strictly and narrowly defined situations in which biometric categorisation could be used by law enforcement only if strict safeguards are met: such as limited use in time and geographic scope and prior judicial or administrative authorisation. 
  3. The Act defines and regulates high-risk systems, for example AI uses in critical infrastructure, education and vocational training, employment, essential private and public services (e.g. healthcare, banking), certain systems in law enforcement, migration and border management, justice and democratic processes (e.g. influencing elections). It also gives citizens the right to submit complaints about AI systems and receive explanations about decisions based on high-risk AI systems that affect their rights. 
  4. The regulation imposes transparency requirements, including compliance with EU copyright law and publishing detailed summaries of the content used for training. Artificial or manipulated images, audio or video content (“deepfakes”) will need to be clearly labelled as such. Systems posing systemic risks will need to undergo additional evaluations. 
  5. The AI Act also requires measures at the national level to ensure SMEs and start-ups have a healthy environment to develop and train innovative AI before its placement on the market. 
A robot left hand and a human right hand typing on a laptop keyboard, symbolizing the development of artificial intelligence (AI) technologies. Image by Freepik.
Image by Freepik

What’s next?

The development of The AI Act took 3 years until it reached this point. Now the final Regulation needs to be formally adopted by both European Council and European Parliament before its publication to the Official Journal of the European Union. After the adoption from the European Parliament, the European Council is expected to adopt in due time the text without further changes or negotiations as the two institutions reached a deal on the Regulation at the beginning of December last year. 

The European Union is thus becoming a global pioneer in the regulation of the artificial intelligence sector, as happened a few years ago with the regulation of personal data. Since the introduction of the General Data Protection Regulation (GDPR) in the EU, similar regulations have been introduced elsewhere in the world. 

The new legislation enters into force 20 days after its publication in the official Journal and should fully apply from 2026. Yet there are some exceptions:

  • bans on prohibited practises will apply 6 months after the entry into force date; 
  • codes of practise – 9 months after entry into force; 
  • general-purpose AI rules including governance – 12 months; 
  • and obligations for high-risk systems – 36 months. 

 

Only the time will tell to what extent and how the new Regulation will face the many challenges the AI technology brings to the legislative and economic landscape within the member states of the European Union. Our team will analyse and stay up do date with the new set of rules making sure your business needs comply with the Regulation. We are committed to help companies navigate through the complexities of the European Union’s legal landscape. 

If you work in the field of AI, do not hesitate to get in touch and prepare your business ahead of time for the new legislation before its mandatory provisions kick-in.

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№1 easy way to get a single patent across the EU…

Good news for tech and innovative companies. But what is the risk?

A new Unitary Patent system was launched in the European Union on June 1, 2023. It introduces a new European jurisdiction for patent cases called the Unified Patent Court or UPC. The UPC will handle cases of alleged patent infringement as well as patent revocation proceedings.

Until now, obtaining a patent grant from the European Patent Office (EPO) meant only that the proprietor had the right to validate this patent in each member-state individually to obtain actual patent protection for their invention. This required every person who wished to obtain patent coverage in all 27 states to go through a validation procedure in each country separately.

Hands of people negotianting over a contract.
Image by aymane jdidi from Pixabay

The Unitary Patent system aims to lighten this burden on the business by providing for acquiring a singular patent valid and enforceable across the EU, without resorting to national patent offices.

Existing European patents which are validated in separate EU countries (also called “bundle patents”) will also fall under the jurisdiction of the UPC unless an opt-out is filed.

The UPC allows patent holders to seek protection of their EU patents in a single place, without having to seek local counsel for each national jurisdiction and have multiple simultaneous proceedings in different countries for one act of infringement. However, it also allows third parties to challenge bundle patents at the UPC and potentially invalidate them across Europe with a single court ruling.

This development is important, for example, for the tech and medical industries, as well as all businesses whose model is based on a strong intellectual property (IP) portfolio. It promises to lighten the bureaucratic burden and provide new opportunities but also introduces new risks to IP-oriented companies.

№1 easy way to get a single patent across the EU...

The new Unitary Patent and Court system will be of significance to you if your business, for example, is (but not limited to):

The UPC is a new institution and hence it lacks established practice, which introduces a degree of uncertainty. Under the prior system where national authorities and courts ruled on patent prosecution cases, there were different opinions adopted by each country’s office in similar cases. The UPC is expected to unify the practice of patent infringement proceedings, but its approach remains to be seen. Until practice accumulates there is a chance that certain cases might be treated unfavorably in regard to the rightful patent holder.

Judge hammer and books
Image by succo from Pixabay

Depending on the value and strength of the patents you or your company own, there might be different approaches to this new development.

  • If you are certain that your patent is “strong” (it is sufficiently distinct and inventive – such as a new language-based AI model) and it is unlikely that it can be successfully challenged, the UPC provides a great opportunity to protect the patent against infringement and bring forth proceedings against any third party located in the EU without having to resort to different national authorities in each member country.
  • However, if you are not confident in the strength of your patent, or if it represents great value to your business (such as the patent covering your main product – for example, a new type of 3D printer, VR device, etc.), it might be better to minimize the risk of invalidation by opting out of the UPC. Bundle patents can be challenged before the UPC and unvalidated across all national jurisdictions which can have tough consequences for the IP portfolio of your business. Persisting with the current fragmented system can thus be a tool to limit this risk as your bundle patent would need to be separately challenged in each national jurisdiction separately, increasing your chances of maintaining a level of patent protection for your products.

However, in practice every business is different, and this requires a personalized approach and timely action. To ensure the higher survivability of your patents, and to minimize the risk of invalidation, YNG Legal’s team offers customized support based on thorough analysis. The quicker you act the lower the chance for your patents to be challenged on an international level.

Get in touch with us now to protect your patents. Send us a request on yankov@ynglegal.com.