Industrie 4.0 Does China offer sufficient Legal Protection?
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1 Dr. Oliver Maaz Industrie 4.0 Does China offer sufficient Legal Protection? VDMA China Seminar September 2, 2015 Shanghai
2 I. Introduction: Industrie 4.0 & The Law Industrie 4.0 Unchartered Legal Waters Machine to Machine communication (M2M) Internet of Things (IoT) Autonomous machines (Robotics) Smart Factory Digital transformation brings new business models & legal challenges Practicable legal solutions require Interdisciplinary cooperation between lawyers and technicians Industrie 4.0 requires clear legal framework Obvious Legal Issues Cybersecurity Risks Data Protection 2
3 II. Cybersecurity in China (1) Predictable Incident: Cyberattack on Smart Factory Industrial espionage or sabotage act (internal/external)? Lost profits (e.g. business interruption, production shutdown) Infringement of Intellectual Property ( IPR ) (e.g. theft of trade secrets and know- how) Legal Protection under PRC Law, e.g.: Criminal Law: Protection of Personal Data & Trade Secrets Anti Unfair Competition Law: Protection of Trade Secrets Civil Laws, including Tort Liability Law IPR Laws, including Patent and Copyright law 3
4 II. Cybersecurity in China (2) Draft PRC Cybersecurity Law Data Protection National Security Protection Network Security (products /services) Security Review Safe Operation of Network Multi-Level Protection System Network Data Security Network Information Security Security Review Online ID-Management System Unclear definitions of operators and service providers. Administrative organization unclear (cyberspace administration authority). Unclear application of relevant industry standards (products and services). Restricting free cross-border flow of data. Risk of abuse of this regulation to promote domestic industry. 4
5 III. Data Protection in China (1) Data Law Protection under PRC Law Currently, no comprehensive PRC Personal Data Protection Law, several sector-specific regulations and standards Data generated by autonomous machines is generally not subject to ownership & special protection under PRC law PRC Encryption Regulations Restrictions on use of encryption software Manufacturers of encryption products must under certain circumstances disclose encryption keys to authorities 5
6 III. Data Protection in China (2) Legal Challenges in Cloud Computing Censorship & blacklisting of cloud service providers Risk of disclosing state secrets PRC Law not ready for Automatic Contracting Systems No recognition of legal autonomy of intelligent machines Applying individual contractual solutions 6
7 III. Data Protection in China (3) Preventive Measures for Data Protection, e.g. Take technical measures, e.g. against unauthorized access, defacement, malware, phishing, information destruction, DDoS-attacks etc. Develop an internal security management system, e.g. Appoint data protection officer and define responsibilities Internal IT code of conduct IT compliance training Prepare cybersecurity protocols (security testing, alert mechanisms etc.) Stipulate liability limitations in contracts with respect to cyber attacks, and detailed contractual protection of data transfer, including penalties etc. Protection of trade secrets. Insurance coverage against cybercrimes 7
8 IV. Conclusion Industrie 4.0 complex & unregulated: Legal implications not yet fully identified. PRC legal framework does not yet offer sufficient legal security and incentives for foreign invested companies to develop and apply Industrie 4.0. Industrial espionage, protectionist & restrictive cybersecurity policy discourage foreign investors. Globally connected production process requires open and fast internet connections, clear legal guidelines over data ownership, transfer and usage. Legal uncertainties and restrictions in the telecommunication sector cause distrust. 8
9 Contact Dr. Oliver Maaz Attorney (Germany) Chong Hing Finance Center Room West Nanjing Road Shanghai P.R. China T F
10 Offices Berlin Potsdamer Platz Berlin T F berlin@ Hamburg Poststrasse 9 Alte Post Hamburg T F hamburg@ Brüssel 9 Rond Point Schuman 1040 Brüssel T F bruessel@ Düsseldorf Königsallee Düsseldorf T F duesseldorf@ München Sophienstr. 26 Lenbach Gärten München T F muenchen@ Istanbul Süleyman Seba Cad. BJK Plaza B Blok No:48 Besiktas Istanbul T F istanbul@ Frankfurt am Main Ulmenstrasse Frankfurt/Main T F frankfurt@ Shanghai Chong Hing Finance Center Room West Nanjing Road Shanghai P.R. China T F shanghai@ 10
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