TMT (technology, media & telecommunications) trends to watch for in 2021: Part one – Technology

Already a fast-moving area, the pace of change in the
technology, media and telecommunications (TMT) sector increased
further during the COVID-19 pandemic, with this trend likely to
continue in 2021.

In this three-part series, the Corrs TMT team unpack
some of the key issues we think general counsel should be following
closely this year.

In part one, we consider: 

• AI and copyright law;
• FIRB and the new national security test;
• regulatory changes impacting the digital health tech sector;
  and
• key developments in Australian privacy and data law.

AI to challenge traditional authorship constructs under
copyright law - Eugenia Kolivos

Creative works produced substantially or wholly through
artificial intelligence will challenge the fundamental position
under the Copyright Act that copyright only subsists in original
works authored by an Australian citizen or resident. We are seeing
a rise in AI-generated creativity (particularly in terms of
literary, musical and artistic works) as machine learning enables
computers to absorb vast amounts of creative data, analyse the
features and patterns of this data and generate something entirely
new. 

We expect the number of AI-authored works to grow as
human-to-human collaboration is disrupted by the COVID-19 pandemic
and replaced with human-to-computer collaboration. 

If these works are not protected by copyright because they have
not been created by a human author then, theoretically, they could
be freely exploited. This could have a chilling effect on creative
AI investment in Australia. Commonwealth jurisdictions such as New
Zealand and the UK have updated their copyright laws to account for
the increasing role of technology and AI in creative works, but
Australia is lagging behind. 

We anticipate that Australian lawmakers will soon turn their
minds to attributing authorship of AI-generated works to the
creator of the AI system. In the interim, without default legal
recognition, it will be necessary to continue to protect these
assets contractually (to the extent possible).

FIRB and national security test for foreign buyers of
Australian technology - Justin Fox 
 

Foreign buyers of Australian technology assets will need to get
used to dealing with FIRB. The market has welcomed the
reintroduction of the monetary thresholds below which private
foreign buyers do not require FIRB approval. However, in the same
batch of changes, the Federal Government introduced a new national
security test that is likely to mean that many technology deals
still need FIRB approval.

The new rules impose mandatory notification for the acquisition
of a direct interest in a 'national security business',
irrespective of value. The definition of that term goes well beyond
businesses that might intuitively be expected to raise national
security concerns. We have previously discussed the application of these changes to technology
assets, and made the point that many dual use technologies will
be caught by the definition, and are therefore subject to mandatory
FIRB notification.

FIRB's net is cast even wider by the potential application
of the Treasurer's new call in powers. In essence, the
Treasurer is now empowered to 'call in' a transaction for
review on national security grounds up to ten years after it takes
place. A foreign buyer can extinguish that power by voluntarily
notifying a transaction.

Helpfully, FIRB has issued guidance that identifies a range of
transactions they 'suggest' should be voluntarily notified.
In practice, it will be hard for foreign buyers to ignore that
suggestion where they are pursuing a transaction that fits the
guidance.

In the technology space, FIRB suggests that foreign buyers
voluntarily notify an intention to invest in:

• any business that provides ICT services to the defence
  force;
• a business or entity that develops, manufactures or supplies
  critical technologies in the following areas:
  • material sciences and advanced manufacturing
  • quantum technologies
  • artificial intelligence and robotics
  • biotechnologies
  • communications and sensing
  • space capabilities
• a business that has access to sensitive personal information of
  over 100,000 Australian residents;
• any business that owns or operates a data centre;
• a cloud provider that stores or processes data for the
  Commonwealth, a state or territory government or a critical
  infrastructure asset;
• a business that has access to sensitive network or operational
  information in relation to a Commonwealth or state or territory
  government entity, a critical infrastructure asset or more than
  five businesses in the water, energy, telecommunications, banking
  and finance, space and hospital sectors; or
• a business that provides services to any of those
  customers.

Foreign buyers of Australian technology will therefore need to
form an early view as to whether mandatory or voluntary
notification to FIRB should be made. This will require a relatively
detailed understanding of the target technology, its applications
and customer base. Unfortunately, all of this will inevitably play
out in transaction timetables and costs. 

Digital health tech sector expected to grow following major
changes to the Australian regulatory framework - Frances
Wheelahan

In 2020, we saw the COVID-19 pandemic strengthen the focus on
digital health technologies due to our reliance on telehealth,
increased use of remote monitoring technology and a record level of
investment into the sector. 

These events placed an even greater spotlight on an industry
which had been calling for changes to the Australian medical device
regulatory framework to relax the rules for lower risk digital
health platforms, 'lifestyle' or 'consumer'
products, mobile apps and software. In January 2021, the
Therapeutic Goods Administration (TGA) announced a
range of major changes to how software-based medical devices will
be regulated in Australia. These changes commenced on 25 February
2021 and will have an immediate impact by: 

• excluding or exemption certain software-based medical devices
  from regulation (including general health and well-being products
  which monitor body functions);
• introducing new classification rules for software-based medical
  devices (these will impact both existing entries on the Australian
  Register of Therapeutic Goods and new entries); and
• amending the essential principles, and introducing new
  essential principles, for software-based medical
  devices. 

These changes provide important clarity and we expect to see
significant growth in the sector and an increased focus on
labelling, marketing and supply chains given their impact on
classification under the new regime. 

Key developments in Australian privacy and data law - Philip
Catania

The Australian Government's ongoing review of the Privacy Act 1988
(Cth) (Privacy Act) is a signal of the imminent
changes about to sweep Australia's privacy laws in response to
increasing developments in the digital environment and the
ACCC's Digital Platforms Inquiry recommendations. 

In particular, the Government is considering whether:

• individuals should be granted direct rights (i.e. compensation)
  to privacy obligations upon organisations in dealing with personal
  information;
• adjustments to enforcement powers and mechanisms under the
  Privacy Act are required (i.e. increasing fines and penalties to
  reflect those under Australia's consumer law regime); and
• long established privacy terms and principles should be updated
  to align with technology developments (i.e. expanding the scope of
  'personal information' to include technical data and online
  identifiers, and stricter requirements relating to how consent can
  be obtained).

In 2020, the Office of the Australian Information Commissioner
(OAIC) finalised more than 900 Information
Commissioner reviews, launched its first civil penalty proceedings
for an interference with privacy, opened 11 Commissioner-initiative
investigations and finalised 2,500 privacy complaints from
individuals. The OAIC's continued advocacy for the introduction
of greater privacy safeguards and organisational accountability
measures indicate their intentions to sustain their flurry of
enforcement and investigative activity in 2021, except with better
tools to do so. 

For example, in its recent submissions to the Privacy Act
reforms, the OAIC has called for the introduction of fairness and
reasonableness standards for the collection, use and disclosure of
personal information. Should this, and the proposed amendments
outlined above, be adopted, navigating compliance with
Australia's increasingly comprehensive privacy framework must
be an area of focus for every organisation that handles personal
information.

Some of the key privacy and data issues to follow this year
include:

• The introduction and implementation of data sharing regimes
  such as the Consumer Data Right and proposed Data
  Availability and Transparency Act, which will facilitate greater
  use of commercial and public data. These will be interoperable with
  Australia's privacy laws, and subject to strict privacy
  safeguards.
• Greater use of technologies relying upon biometric data, and
  automated decision-making processes such as facial recognition
  technologies. Expect further consideration of ethical use issues
  with respect to data and artificial intelligence.
• The potential for Australia to be deemed to be
  'adequate' for the purposes of international personal data
  transfers from the UK and Europe. 

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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