2016 Annual Meeting Conference Agricultural Law Track Rooms

Transcription

1 2016 Annual Meeting Conference Agricultural Law Track Rooms Big Data in Ag Legal Issues Surrounding Farm Data Ownership, Transfer and Control 9:00 a.m. - 10:00 a.m. Presented by Todd Janzen Janzen Agricultural Law LLC 8425 Keystone Crossing Suite 261 Indianapolis, Indiana janzen@aglaw.us Phone: MONDAY, JUNE 13

2 Legal Issues Surrounding Farm Data Ownership, Transfer and Control By Todd Janzen Nearly every agriculture technology provider likes to use the phrase the farmer owns the data in their marketing materials and press releases. While this generates good buzz with farmers, the phrase assumes that farm data is something that a farmer can legally own and control. This article examines the question of farm data ownership by first examining what farm data is, then how one should legally protect and transfer data, and finally concludes with some thoughts on evaluating transparency in contracts concerning farm data. I. What is farm data from a legal point of view? A. Defining farm data. To date, there are no published cases in the United States interpreting or defining farm data. The term is a legal question mark. Understanding farm data requires one to first define what it is. Merriam-Webster s online dictionary defines data as: facts or information used usually to calculate, analyze, or plan something, information that is produced or stored by a computer. At its most basic level, data is an arrangement of 1s and 0s in a certain order. This pattern, when created, can be transferred from computer to computer and then translated into something else. Although the term could encompass a variety of data collected on the farm, today there are at least three different types of important data that make up the more general common phrase farm data. These three categories are: Agronomic Data information related to land and plants, such as soil nutrient levels, crop selection, herbicide and pesticide application, and yield. Machine Data information related to the performance measurement of machines, such as fuel usage, hour operated, RPMs, ground speed, oil usage, etc. Weather Data information related to climate, such as temperature and precipitation.

3 All of these types of data can be tied to geospatial information. That is what makes farm data unique. A farmer can record not just his entire yield on an 80-acre field, but the exact yield in every point in the field. My prediction is that courts and legislative bodies will give each of these categories of farm data different levels of protection, as the law develops to address farm data privacy and ownership issues. B. How will the law analyze farm data? For farm data ownership to exist, farm data must fit into an already existing legal framework. This raises the question, is farm data a form of intellectual property that the law recognizes? Could farm data be patentable, copyrightable, or protected by trade secret law? A patent is something new, useful, and non-obvious. 35 U.S.C The Segway scooter is a great example of a patentable invention. Agronomic data does not neatly fit within this mold. While farm data is certainly useful, it lacks the new or non-obvious elements required for patent protection. From a practical standpoint, no farmer is going spend the time or money to navigate the patent process to try to patent their farm data anyway. A copyright exists to protect creative and literary works. 17 U.S.C Examples include music, books, magazines, pictures, videos, and sculptures. Software can also be copyrighted. Agronomic farm data doesn t neatly fit into the category of copyrightable work since it lacks the creative element of these other art forms. For example, there is little creativity in the pattern a farmer makes when crisscrossing a field to plant corn. Likewise, when a combine generates yield data for a field, the farmer is not authoring the yield map the combine is. The combine is not a creative author. That does not mean farm data could not be copyrighted, but protection from infringer is dubious at best. That leaves the law of trade secrets as the only real path for protection of farm data. Trade secrets are governed by the Uniform Trade Secrets Act, which has been adopted in similar forms in most states. A typical definition of a trade secret is: Information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic 2

4 value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. E.g. Ind. Code The classic example is the formula for Coca-Cola. Coke guards this formula like a hawk, making sure that no one else can reproduce the exact flavor without knowing the exact formula. Of course, Coke has been reverse engineered many times, but never exactly replicated (from this author s palate). Coke s formula is not readily ascertainable by others. If a court attempted to determine whether agronomic farm data was a trade secret, the court would do a multi-part examination of the elements. Here is an example of how that analysis might unfold, using the example of an entire year of agronomic data generated on an 80- acre cornfield: Trade Secret Element A formula, pattern, method, technique or process That creates economic value Is not generally known or Readily ascertainable to other persons Its secrecy is maintained. Application to Agronomic Data The manner in which a field was planted, tilled (or no-tilled), sprayed, and harvested. This likely satisfies the first element of the definition. There is generally value in knowing how to raise a field of corn over the course of a year. This element is likely satisfied. This depends. If there farmer is not doing anything unique or unusual in how he or she farms the land, it may not be a trade secret. However, certain aspects like yield are unique to each field. Some aspects of agronomic data a person could ascertain without access to the raw data. For example, plant population could be determined by county the number of plants in a certain row distance. This depends on how the farmer treats agronomic data in his or her possession. Although the definition of trade secret is not a perfect fit for agronomic data, a farmer who 3

5 keeps the agronomic data for years and understands a particular field better than anyone else probably has a strong argument that his or her farm data could be a trade secret provided reasonable steps are taken to maintain its secrecy. Machine data could also be protected, although the ability to readily ascertain a modern machine s data makes protection less likely than agronomic data. However, manufacturers that collect machine data remotely and prevent others from doing so may have a strong argument that such data is the manufacturer s trade secret. Weather data is likely not a trade secret unless it is generated by a farmer s personally owned weather station. Even then, it is hard to argue that particular weather data is not ascertainable from other sources and therefore not protected. II. Issues concerning transfer and control of farm data. With the general understanding that farm data likely contains trade secrets assuming certain conditions are met issues surrounding transfer and control of farm data should be addressed using the law of trade secrets. That means that owners of farm data should take steps to protect and maintain farm data secrecy. There are two areas where farmers routinely are asked to share data, in farm leases and in arrangements with other persons who perform farming activities on the farmer s land. A. Landowner/tenant relationship In a farmland lease, a landowner and farmer have three basic ways they can address the ownership of data generated on farmland: (a) the person farming the land, normally the tenant, can own all data generated on the land; (b) the landowner can own all data generated on the land; or (c) the landowner and tenant can share, or co-own any farm data generated. Regardless of who the landowner and tenant determine will own the data, a lease should address at least three data issues. First, a lease should define what Farm Data is since there is no widely recognized legal definition that fills in this blank. Second, the lease should establish who is the default owner of the defined Farm Data. Finally, the lease should spell out what happens to Farm Data generated during the lease when the lease expires or is terminated. 4

6 Here is a suggestion of what these provisions could look like when added into a farmland lease. This particular example assumes that the tenant will own the data, but when the lease ends the tenant has an obligation to transfer such data to the landowner. Note that in this example tenant s ownership rights are absolute, but it would be possible to add certain restrictions on ownership, such as a prohibition on sharing farm data with certain third parties: 1. Landowner and tenant recognize that tenant s farming of the leased farmland during the term of the lease will generate agronomic data, including information related to soil, water, seed variety, crop health, crop maturity, disease, nutrients, fertilizer, herbicides, pesticides, yield etc., in various digital forms, including files, imagery, records, video, photos, etc. ( Farm Data ). 2. Landowner assigns all rights and interest to Farm Data to tenant and relinquishes landowner s rights in the same. Tenant is the exclusive owner of all Farm Data generated on the leased farmland during the lease term. Tenant shall have all rights associated with Farm Data ownership, including deletion, transfer, sale, and disclosure rights. 3. At the conclusion of the lease, tenant shall assign and transfer all Farm Data from the prior crop year to landowner, or at landowner s election, the subsequent tenant. Depending on the landowners interest in the farming activities on his or her land, a landowner may also want to require periodic uploads from the tenant of the current farm data. Today s online cloud-based data sharing tools would facilitate this transition as a landowner could be granted permission to access their tenant s files remotely. In the long run, the data will certainly be an asset of the landowner as it will assist with establishing the proper rental rate, productivity, and nutrient content of the farmland. B. Custom farming arrangements. Likewise, farmers often utilize local cooperatives, seed consultants, and other persons to engage in farming activities on their farmland. A local co-op that provides spraying of pesticide is a perfect example. The question this raises is who owns the data generated by the co-op s sprayer? 5

7 Applying the trade secret definition onto the data generated by the sprayer, suggests that the person who creates the pattern, method or technique the co-op would be the owner of the trade secret. But that is oversimplifying the analysis, because intellectual property law also recognizes that intellectual property can be created as a work for hire. The employer is the owner of the work in those situations. Perhaps a court would view a co-op s farm data as a work for hire belonging to the farmer. We are still likely years away from an appellate court giving us an opinion on this question. Assuming that the co-op owns the data, which is the safe assumption, I suggest that the time has come to address farm data ownership in custom applicator agreements. Here are few provisions I think should be included: Ownership: Co-ops should explain which party owns the data generated by custom farming activities. Either the farmer or the co-op could be considered the data owner, depending on contractual preferences. The important thing is that the contract removes any uncertainty as to who owns the data after the work is done. Transfer: A custom applicator contract should require that farm data be transferred or made accessible to the farmer after the work is complete. Accuracy: A good, farmer-friendly contract will require the co-op to warrant that their equipment has been properly calibrated before each use, and that data generated by their operations is accurate. Without assurances that the data is accurate, sorting out ownership is pointless. Privacy Protection: A co-op should promise to take reasonable steps to safeguard information gathered during custom farming operations. Retention: A contract should spell out exactly how long the co-op will maintain the farm data before it is deleted. There is no magic formula here, but I suggest the time-frame be at least one growing season to allow farmers plenty of time to remove data before it is deleted. Similar provisions should be incorporated into contracts with agronomists, seed consultants, and custom harvesters if farmers want to protect the data generated on their fields. 6

8 III. Efforts to bring transparency to technology contracts. The void created by a lack of case law in this area has opened the door to consortiums of interested parties to create industry standards for ownership, control, and usage of farm data. Although there are many organizations working on these issues, two notable examples are AgGateway and American Farm Bureau Federation. AgGateway is a consortium of 200+ industry stakeholders who periodically meet and discuss farm data issues. AgGateway produces guidance in the form of whitepapers which address many of the issues raised here. More can be found at AgGateway.org. Similarly, American Farm Bureau Federation worked with over a dozen commodity groups and agricultural technology providers to come up with core principles concerning privacy and security of farm data. The result is a document titled: Privacy and Security Principles for Farm Data which was published on November 13, (See below). The next step in Farm Bureau s process is to conduct an industry wide analysis of contracts between ag tech providers and farmers to determine their transparency. Look for a roll out of this transparency evaluator in About the author: Todd J. Janzen is an attorney dedicated to the furthering agricultural law, having served as the chair of ABA s Agricultural Management Committee and Indiana s Agricultural Law Section. Todd authors a nationally recognized blog on agriculture, law and technology, the Janzen Ag Law Blog. Todd is a 2014 graduate of the Indiana Agricultural Leadership Program. In 2008, the Indiana Lt. Governor selected Todd as the legal representative to serve on the Agricultural Regulatory Structure Task Force, a group that analyzed Indiana state agencies regulating agriculture. Todd recently worked with American Farm Bureau Federation to develop the Privacy and Security Principles for Farm Data, an agreement signed by over 30 prominent agriculture technology providers. Todd serves as the Administrator of the Ag Data Transparency Evaluator. Todd also serves as the General Counsel to the Indiana Professional Dairy Producers, an organization representing more than 200 dairy farmers in Indiana. Todd has been the lead attorney in two of Indiana s foremost Right to Farm Act cases, Lindsey v. DeGroot Dairy, LLC (2009) and Parker v. Obert s Legacy Dairy, LLC (2013). In 2015, Todd founded the Janzen Agricultural Law firm to further his support of U.S. agriculture ( 7

9 PRIVACY AND SECURITY PRINCIPLES FOR FARM DATA November 13, 2014 The recent evolution of precision agriculture and farm data is providing farmers with tools, which can help to increase productivity and profitability. As that technology continues to evolve, the undersigned organizations and companies believe the following data principles should be adopted by each Agriculture Technology Provider (ATP). It is imperative that an ATP s principles, policies and practices be consistent with each company s contracts with farmers. The undersigned organizations are committed to ongoing engagement and dialogue regarding this rapidly developing technology. Education: Grower education is valuable to ensure clarity between all parties and stakeholders. Grower organizations and industry should work to develop programs, which help to create educated customers who understand their rights and responsibilities. ATPs should strive to draft contracts using simple, easy to understand language. Ownership: We believe farmers own information generated on their farming operations. However, it is the responsibility of the farmer to agree upon data use and sharing with the other stakeholders with an economic interest, such as the tenant, landowner, cooperative, owner of the precision agriculture system hardware, and/or ATP etc. The farmer contracting with the ATP is responsible for ensuring that only the data they own or have permission to use is included in the account with the ATP. Collection, Access and Control: An ATP s collection, access and use of farm data should be granted only with the affirmative and explicit consent of the farmer. This will be by contract agreements, whether signed or digital. Notice: Farmers must be notified that their data is being collected and about how the farm data will be disclosed and used. This notice must be provided in an easily located and readily accessible format. Transparency and Consistency: ATPs shall notify farmers about the purposes for which they collect and use farm data. They should provide information about how farmers can contact the ATP with any inquiries or complaints, the types of third parties to which they disclose the data and the choices the ATP offers for limiting its use and disclosure. An ATP s principles, policies and practices should be transparent and fully consistent with the terms and conditions in their legal contracts. An ATP will not change the customer s contract without his or her agreement.

10 Choice: ATPs should explain the effects and abilities of a farmer s decision to opt in, opt out or disable the availability of services and features offered by the ATP. If multiple options are offered, farmers should be able to choose some, all, or none of the options offered. ATPs should provide farmers with a clear understanding of what services and features may or may not be enabled when they make certain choices. Portability: Within the context of the agreement and retention policy, farmers should be able to retrieve their data for storage or use in other systems, with the exception of the data that has been made anonymous or aggregated and is no longer specifically identifiable. Non-anonymized or non-aggregated data should be easy for farmers to receive their data back at their discretion. Terms and Definitions: Farmers should know with whom they are contracting if the ATP contract involves sharing with third parties, partners, business partners, ATP partners, or affiliates. ATPs should clearly explain the following definitions in a consistent manner in all of their respective agreements: (1) farm data; (2) third party; (3) partner; (4) business partner; (5) ATP partners; (6) affiliate; (7) data account holder; (8) original customer data. If these definitions are not used, ATPs should define each alternative term in the contract and privacy policy. ATPs should strive to use clear language for their terms, conditions and agreements. Disclosure, Use and Sale Limitation: An ATP will not sell and/or disclose non-aggregated farm data to a third party without first securing a legally binding commitment to be bound by the same terms and conditions as the ATP has with the farmer. Farmers must be notified if such a sale is going to take place and have the option to opt out or have their data removed prior to that sale. An ATP will not share or disclose original farm data with a third party in any manner that is inconsistent with the contract with the farmer. If the agreement with the third party is not the same as the agreement with the ATP, farmers must be presented with the third party s terms for agreement or rejection. Data Retention and Availability: Each ATP should provide for the removal, secure destruction and return of original farm data from the farmer s account upon the request of the farmer or after a pre-agreed period of time. The ATP should include a requirement that farmers have access to the data that an ATP holds during that data retention period. ATPs should document personally identifiable data retention and availability policies and disposal procedures, and specify requirements of data under policies and procedures. Contract Termination: Farmers should be allowed to discontinue a service or halt the collection of data at any time subject to appropriate ongoing obligations. Procedures for termination of services should be clearly defined in the contract. Unlawful or Anti-Competitive Activities: ATPs should not use the data for unlawful or anticompetitive activities, such as a prohibition on the use of farm data by the ATP to speculate in commodity markets. Liability & Security Safeguards: The ATP should clearly define terms of liability. Farm data 2

11 should be protected with reasonable security safeguards against risks such as loss or unauthorized access, destruction, use, modification or disclosure. Polices for notification and response in the event of a breach should be established. The undersigned organizations for the Privacy and Security Principles of Farm Data as of November 13, American Farm Bureau Federation American Soybean Association Beck s Hybrids Dow AgroSciences LLC DuPont Pioneer John Deere National Association of Wheat Growers National Corn Growers Association National Farmers Union Raven Industries The Climate Corporation a division of Monsanto USA Rice Federation 3