Clifford Chance

China proposed to establish a registration system that recognises data as a property right – data sets that have been processed under certain rules and are in an undisclosed state could be the object of protection.  This mechanism challenges typical intellectual property laws that require some form of intellectual input to warrant protection.

Chinese Laws on Data Property Rights

In the digital age, data has emerged as a critical asset. China is notably in the forefront and in some provinces currently recognise data as a property right.

In 2022, China introduced a "top-level design" to build the data property rights system ("System"). The System established three distinct property rights for data processors, namely, the right to hold data resources, the right to process and use data and the right to manage data products. However, it remains silent on the ownership of big data. It merely stipulates that rights over data are obtained through the creation of new data from raw data but not through shared ownership with data subjects. Rules for the System were implemented in 2023-2024 and on 31 December 2024, in furtherance of the System, China issued the National Data Infrastructure Guidelines that directs and contemplates that a main infrastructure to hold China's national data should be complete by 2029; in particular, that a unified data property certification system should be developed utilizing blockchain, encryption technology, smart contracts and other means to improve the traceability and trust of such data property certificates.

Distinctiveness and Divergences

When compared to international laws on data property rights, China's system reveals distinct priorities and approaches.

China's current data property framework is inspired by the "Bundle of Rights" theory and primarily focuses on the rights to use and transfer data. It emphasizes on the recognition that the value of data stems from its aggregation into big data rather than isolated individual data points. Thus, it addresses the rights to hold, process and use data while avoiding the assignment of ownership.  Such an approach may be helpful in reducing the complexities and disputes stemming from ownership claims, rendering data circulation more efficient and allowing China to utilize data commercialization as its key economic driver. On the contrary, other common law frameworks, such as the EU's is more inclined towards defining, and hence protecting data ownership.

A further distinguishing feature lies in its more direct administration by the government. Under China's System, regulatory bodies oversee data rights registration and compliance through administrative inspections and guidance.  While enforcement of rights of individuals or private entities to data property under the new Chinese System is not yet established, an attempt was made in the Draft Revisions to the Anti-Unfair Competition Law of the People's Republic of China in 2022 to introduce a provision to address misuse of commercial data (hence protection of data ownership). Other common law jurisdictions adopt more individual-centric and privacy-focused approaches. Individuals are encouraged to commence legal action to protect their own rights as their rights are clearly defined under the laws. For instance, the EU's General Data Protection Regulation sets a high bar for personal data processing by mandating explicit consent, data portability and the right to erasure, empowering citizens to pro-actively safeguard their own rights.

Another aspect that sets China apart from other jurisdictions is that China's regulations are mainly applicable only to domestic entities that process data within China.

Typical Use Cases

In 2024, China has seen registrations for data that relate to carbon emissions in an industrial park, ammonia gas concentration at a construction site, specific patterns of brain regions to study and identify early signs of neurodegenerative diseases (such as Alzheimer's disease) and ship navigation.

These registrations, as opposed to the data set itself, has helped define and scope sharing of data among industry stakeholders for further research and development while protecting the data owner's rights against misuse. A registration could also effectively be insured against and/or used to obtain pledge financing for a business.

What this means for you

If you are looking to invest in a business that is data-heavy based in China, it may be worthwhile considering whether the data held could be registered in China.  A data registration, similar to a traditional IP registration, could bring benefits such as legal recognition of rights, enhance the value of a business and enable licensing or commercialization opportunities that create additional revenue streams.

While the System is not implemented across the whole of China just yet, it is worth keeping an eye out for developments on this front as the registration could prove useful for data-heavy businesses to secure its competitive edge with the data held.