Proposals to Establish Property Rights in Data Could Restrict Information Flow, Harm Consumers, and May Violate Constitutional Rights, New Legal Analysis Finds

Washington, D.C., September 29, 2020 - A new legal analysis of proposals to establish property rights in data warns that legislative efforts to do so could inadvertently mandate a broad restriction on the free flow of information between parties, raise constitutional issues, and adversely impact consumers.

The analysis, published by the National Business Coalition on E-Commerce and Privacy (the “Coalition”), a non-profit entity comprised of ten brand name companies engaged in the development of national privacy policy, may constitute the first detailed inquiry into the evolving questions surrounding the legal treatment of data pertaining to consumers in the current U.S. business-to-consumer (B2C) data economy. The paper’s findings have implications for developing debates at the federal and state levels about establishing a “data dividend” or creating property rights to data about individuals. The white paper, entitled “Data Ownership: The Suitability of a Consumer Property Right in a 21st Century Economy,” was written for the Coalition by its counsels, Thomas M. Boyd and Tara Sugiyama Potashnik, both partners at Venable LLP.

The analysis examines the law surrounding a traditional property right and seeks to bring clarity to continuing efforts to define the U.S. data framework—in which the notion of B2C data ownership has surfaced. In doing so, its authors distinguish the terms “ownership” and “control,” as they have been used in the ongoing U.S. data debate, finding that the interchangeable use of the very different exercises of these terms have become more pronounced, usually without a full understanding of the legal effects inherent within each.

“As this analysis makes clear, consumer control has been an essential factor in the use of data about consumers,” said Tony Hadley of Experian, the Coalition’s Chair. “Efforts to confer actual ownership rights raise important constitutional concerns and could inadvertently harm consumers by sharply limiting their access to products and services that rely on the free flow of data.”

The treatment of data, in the B2C context, as a resource unconnected to a consumer property right, has delivered tremendous benefits to consumers and society, the authors note. The Coalition believes it is critically important that policymakers understand the legal and historical context for this approach. By placing the spotlight on the apparent conflation of the terms ‘control’ and “ownership” in the current data debate, the Coalition hopes this paper helps policymakers decide how data ought to be treated.