Laws Struggle to Keep Up with AI Advances and Data Theft

It's a widely accepted notion that the law often trails behind technological advancements, and this is especially evident today with the rapid evolution of technology. Take generative artificial intelligence (Gen AI) for example; it's raising a host of legal questions that are yet to be fully addressed.

One of the key challenges, as pointed out by Jeth Lee, Microsoft Singapore's chief legal officer, is finding the right balance between using data to train AI models and protecting the rights of content creators. In a video interview, Lee emphasized that leaning too heavily in either direction could have serious repercussions—too much restriction could stifle AI innovation, while too much freedom could lead to widespread misuse of data and content.

Another pressing issue is the intellectual property (IP) rights of content generated by Gen AI tools. Who should own these rights? Is the content produced by these tools creative enough to warrant IP rights for the user, or should the rights belong to the Gen AI tool itself? These are questions that need clear answers.

In the interim, major AI companies like Google, OpenAI, and Microsoft are stepping up to take responsibility for potential legal risks. For instance, Google offers a training data indemnity that covers any allegations of IP rights infringement related to the use of training data in their Gen AI services. This protection applies as long as customers haven't knowingly used copyrighted data or tampered with the tool's safeguards.

When it comes to the concerns organizations have about AI, Lee highlighted the primary goal of extracting value from Gen AI. However, organizations are also grappling with copyright challenges and data protection issues. They're keen to understand the flow of their data across AI systems, how to safeguard it, and who bears responsibility in case of a system malfunction or data breach.

"We've made significant strides since the initial rollout of Gen AI," Lee remarked, noting that increased awareness and education have helped clarify many of the legal ambiguities surrounding the technology.

Need for Stronger Deterrence Against Data Theft

In Singapore, there's a growing call for new legislation to better deter data theft and provide clearer recourse for victims. According to a spokesperson from the law firm Baker McKenzie Wong & Leow, organizations in the Asian market often resort to civil claims for breach of confidence when dealing with data theft. However, this approach may not deliver the justice victims seek or effectively deter future incidents.

"Such measures may not send a strong enough message to the public, particularly in an era where digital security is paramount and Singapore is pushing to be a smart nation," the spokesperson explained via email.

Despite Singapore's efforts to become an IP hub, it currently lacks specific legislation addressing trade secrets misappropriation or providing direct criminal penalties for such acts. The law firm suggests it might be time for Singapore to consider adopting such laws, similar to those already in place in countries like Germany, Japan, China, and the US.

"Implementing these laws would not only deter data theft but also assure businesses that their confidential commercial data is well-protected under a robust IP framework," the spokesperson added.

Genk Capital, a Singapore-based trading firm, supports this view. They filed both civil and criminal suits against a former employee who copied proprietary data before joining a competitor. The data included trading strategies, client details, and transaction records. The criminal suit, filed in 2021, led to a conviction in October 2023.

Terence Koh, Genk's founder and executive director, shared his frustration with the civil suit's outcomes in an email to ZDNET. "The potential monetary compensation from the civil suit didn't match the severity of the data theft," he said. Koh chose to settle the suit without financial compensation, aiming to set a deterrent example.

He then pursued a private criminal prosecution under Singapore's Computer Misuse Act, believing that a criminal conviction would better reflect the seriousness of the crime and the value of the stolen data. "I believe in the rule of law and wanted to see justice served," Koh added.

The process, spanning two years, left Koh questioning why the best legal recourse available was a piece of legislation primarily designed for traditional computer misuse cases. "It's not ideally suited for commercial data theft cases like ours," he noted. Despite the conviction, the former employee was fined only SG$5,000, even though the court recognized the premeditated nature of the theft and the deletion of evidence.

"In the absence of specific trade secrets theft legislation, the Computer Misuse Act was our best option," Koh said. "It's hard to fathom that a business-friendly IP hub like Singapore doesn't have a direct criminal penalty for trade secrets theft."

Koh argues that specific legislation with criminal penalties for trade secrets theft would greatly benefit small and midsize businesses, deterring potential offenders and fostering a pro-business environment. "Such laws are not new; many of our neighboring countries and others worldwide have them," he stated. "By adopting similar measures, Singapore can align with international standards and enhance its reputation as a secure place for business."

While Singapore lacks formal trade secrets legislation, the Intellectual Property Office of Singapore (IPOS) provides a Trade Secrets Enterprise Guide to help businesses protect and manage trade secrets. This guide includes examples of tools and services available to enterprises.

A January 2024 report from the US International Trade Administration (ITA) noted that "Singapore has no specific legislation concerning the protection of trade secrets." Instead, protection is provided under common laws like the Penal Code and the Computer Misuse Act. The US agency mentioned that "United States industry has expressed concern that this provision is inadequate."

The two countries have a free trade agreement, yet the need for more robust legal frameworks in Singapore remains evident.