Blockchain and General Data Protection Regulation (GDPR) compliance issues (2019)
Blockchain and General Data Protection Regulation (GDPR) compliance issues (2019)
I. Brief
Blockchain technology can solve the problem of trust between data demanders and data providers. In other words, in a centralized mode, data demanders can only choose to believe that the centralized platform will not contain the false information. However, in the decentralized mode, data isn’t controlled by one individual group or organization[1], data demanders can directly verify information such as data source, time, and authorization on the blockchain without worrying about the correctness and authenticity of the data.
Take the “immutable” for example, it is conflict with the right to erase (also known as the right to be forgotten) in the GDPR.With encryption and one-time pad (OTP) technology, data subjects can make data off-chain storaged or modified at any time in a decentralized platform, so the problem that data on blockchain not meet the GDPR regulation has gradually faded away.
II. What is GDPR?
The purpose of the EU GDPR is to protect user’s data and to prevent large-scale online platforms or large enterprises from collecting or using user’s data without their permission. Violators will be punished by the EU with up to 20 million Euros (equal to 700 million NT dollars) or 4% of the worldwide annual revenue of the prior financial year.
The aim is to promote free movement of personal data within the European Union, while maintaining adequate level of data protection. It is a technology-neutral law, any type of technology which is for processing personal data is applicable.
So problem about whether the data on blockchain fits GDPR regulation has raise. Since the blockchain is decentralized, one of the original design goals is to avoid a large amount of centralized data being abused.
Blockchain can be divided into permissioned blockchains and permissionless blockchains. The former can also be called “private chains” or “alliance chains” or “enterprise chains”, that means no one can join the blockchain without consent. The latter can also be called “public chains”, which means that anyone can participate on chain without obtaining consent.
Sometimes, private chain is not completely decentralized. The demand for the use of blockchain has developed a hybrid of two types of blockchain, called “alliance chain”, which not only maintains the privacy of the private chain, but also maintains the characteristics of public chains. The information on the alliance chain will be open and transparent, and it is in conflict with the application of GDPR.
III. How to GDPR apply to blockchain ?
First, it should be determined whether the data on the blockchain is personal data protected by GDPR. Second, what is the relationship and respective responsibilities of the data subject, data controller, and data processor? Finally, we discuss the common technical characteristics of blockchain and how it is applicable to GDPR.
1. Data on the blockchain is personal data protected by GDPR?
First of all, starting from the technical characteristics of the blockchain, blockchain technology is commonly decentralized, anonymous, immutable, trackable and encrypted. The other five major characteristics are immutability, authenticity, transparency, uniqueness, and collective consensus.
Further, the blockchain is an open, decentralized ledger technology that can effectively verify and permanently store transactions between two parties, and can be proved.
It is a distributed database, all users on the chain can access to the database and the history record, also can directly verify transaction records. Each nodes use peer-to-peer transmission for upload or transfer information without third-party intermediation, which is the unique “decentralization” feature of the blockchain.
In addition, the node or any user on the chain has a unique and identifiable set of more than 30 alphanumeric addresses, but the user may choose to be anonymous or provide identification, which is also a feature of transparency with pseudonymity[2]; Data on blockchain is irreversibility of records. Once the transaction is recorded and updated on the chain, it is difficult to change and is permanently stored in the database, that is to say, it has the characteristics of “tamper-resistance”[3].
According to Article 4 (1) of the GDPR, “personal data” means any information relating to an identified or identifiable natural person (‘data subject’); an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person.
Therefore, if data subject cannot be identified by the personal data on the blockchain, that is an anonymous data, excluding the application of GDPR.
(1) What is Anonymization?
According to Opinion 05/2014 on Anonymization Techniques by Article 29 Data Protection Working Party of the European Union, “anonymization” is a technique applied to personal data in order to achieve irreversible de-identification[4].
And it also said the “Hash function” of blockchain is a pseudonymization technology, the personal data is possible to be re-identified. Therefore it’s not an “anonymization”, the data on the blockchain may still be the personal data stipulated by the GDPR.
As the blockchain evolves, it will be possible to develop technologies that are not regulated by GDPR, such as part of the encryption process, which will be able to pass the court or European data protection authorities requirement of anonymization. There are also many compliance solutions which use technical in the industry, such as avoiding transaction data stored directly on the chain.
2. International data transmission
Furthermore, in accordance with Article 3 of the GDPR, “This Regulation applies to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the Union, regardless of whether the processing takes place in the Union or not. This Regulation applies to the processing of personal data of data subjects who are in the Union by a controller or processor not established in the Union, where the processing activities are related to: (a) the offering of goods or services, irrespective of whether a payment of the data subject is required, to such data subjects in the Union; or (b) the monitoring of their behaviour as far as their behaviour takes place within the Union”.[5]
In other words, GDPR applies only when the data on the blockchain is not anonymized, and involves the processing of personal data of EU citizens.
3. Identification of data controllers and data processors
Therefore, if the encryption technology involves the public storage of EU citizens' personal data and passes it to a third-party controller, it may be identified as the “data controller” under Article 4 of GDPR, and all nodes and miners of the platform may be deemed as the “co-controller” of the data, and be assumed joint responsibility with the data controller by GDPR. For example, the parties can claim the right to delete data from the data controller.
In addition, a blockchain operator may be identified as a “processor”, for example, Backend as a Service (BaaS) products, the third parties provide network infrastructure for users, and let users manage and store personal data. Such Cloud Services Companies provide online services on behalf of customers, do not act as “data controllers”. Some commentators believe that in the case of private chains or alliance chains, such as land records transmission, inter-bank customer information sharing, etc., compared to public chain applications: such as cryptocurrencies (Bitcoin for example), is not completely decentralized, and more likely to meet GDPR requirements[6]. For example, in the case of a private chain or alliance chain, it is a closed platform, which contains only a small number of trusted nodes, is more effective in complying with the GDPR rules.
4. Data subject claims
In accordance with Article 17 of the GDPR, The data subject shall have the right to obtain from the controller the erasure of personal data concerning him or her without undue delay and the controller shall have the obligation to erase personal data without undue delay under some grounds.
Off-chain storage technology can help the blockchain industry comply with GDPR rules, allowing offline storage of personal data, or allow trusted nodes to delete the private key of encrypted information, which leaving data that cannot be read and identified on the chain. If the data is in accordance with the definition of anonymization by GDPR, there is no room for GDPR to be applied.
IV. Conclusion
In summary, it’s seem that the application of blockchain to GDPR may include: (a) being difficulty to identified the data controllers and data processors after the data subject upload their data. (b) the nature of decentralized storage is transnational storage, and Whether the country where the node is located, is meets the “adequacy decision” of Article 45 of the GDPR.
If it cannot be met, then it needs to consider whether it conforms to the transfers subject to appropriate safeguards of Article 46, or the derogations for specific situations of Article 49 of the GDPR.
Reference:
[1] How to Trade Cryptocurrency: A Guide for (Future) Millionaires, https://wikijob.com/trading/cryptocurrency/how-to-trade-cryptocurrency
[2] DONNA K. HAMMAKER, HEALTH RECORDS AND THE LAW 392 (5TH ED. 2018).
[3] Iansiti, Marco, and Karim R. Lakhani, The Truth about Blockchain, Harvard Business Review 95, no. 1 (January-February 2017): 118-125, available at https://hbr.org/2017/01/the-truth-about-blockchain
[4] Article 29 Data Protection Working Party, Opinion 05/2014 on Anonymisation Techniques (2014), https://www.pdpjournals.com/docs/88197.pdf
[5] Directive 95/46/EC (General Data Protection Regulation), https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32016R0679&from=EN
[6] Queen Mary University of London, Are blockchains compatible with data privacy law? https://www.qmul.ac.uk/media/news/2018/hss/are-blockchains-compatible-with-data-privacy-law.html
On March 6, 2014, The Energy Bureau of Ministry of Economic Affairs has published a pre-announcement on a Trial Program of Voluntary Base Green Electricity Framework （hereafter the Trial Program） and consulted on public opinion. In light of the content of the Trial Program, STLI provide the following suggestions for future planning of related policy structure. The institution of green electricity as established by the Trial Program is one of the policies for promoting renewable energy. Despite its nature of a trial, it is suggested that a policy design with a more options will be beneficial to the promotion of renewable energy, in light of various measures that have been undertaken by different countries. According to the Trial Program, the planned price rate of the green electricity is set on the basis of the total sum that the electricity subsidy to be paid by the Renewable Energy Development Fund divided by the total sum of electricity generated reported by Tai Power Company. The Ministry of Economic Affairs will adjust the price rate of the green electricity on the base of both how many users subscribe to the green electricity and the price rate of international green electricity market rate and, then announce the price rate in October of each year if not otherwise designated. In addition, according to the planned Trial Program, the unit for the subscription of green electricity is 100 kW·h. It is further reported that the current planned price rate for green electricity is 1.06 NTD/ kW·h. And it shall be 3.95 NTD/ kW·h if adding up with the original price rate, with an 37% increase in price per kW·h. In terms of the existing content of the Trial Program, only single price rate will be offered during the trial period. In this regard, we take the view that it would be beneficial to take into account similar approaches that have been taken by other countries. In Germany, for instance, the furtherance of renewable energy is achieved by the obligatory charge（EEG Umlage）together with the voluntary green electricity program provided by the private electricity retail sectors. According to German Ministry of Economics and Energy （BMWi）, the electricity price that the German public pays includes three parts: （1）the cost of the purchase and distribution of the electricity, including the margin of the electricity provider（2）regulated network fees, including those for the operation as well as for the measurement works of the meters（3）charges imposed by the government, including tax and the abovementioned obligatory charge for renewable energy（EEG Umlage）, as prescribed by the Act on Renewable Energy （Gesetz für den Vorrang Erneuerbarer Energien, also known as Erneuerbare-Energien-Gesetz - EEG）. In terms of how it is implemented on the ground, an example of the green electricity price menu program from the German electricity retail company, Vattenfall, is given in the following. In all price menu programs provided by Vattenfall in Berlin, for instance, 29.4% of the electricity comes from renewable energy as a result of the implementation of the Act on Renewable Energy. Asides from the abovementioned percentage as facilitated by the existing obligatory measures, the electricity retail companies in Germany further provide the price menus that are “greener”. For example, among the options provided by Vattenfall（Chart I）, in terms of the 12-month program, one can choose the menu which consist of 39.4% of renewable energy, with the price of 0.2642 Euro/ kW·h（about 10.96 NTD/ kW·h）. One can also opt for a menu of which the energy supply comes from 100% of renewable energy, with the price of 0.281 Euro/ kW·h（about 11.66 NTD/ kW·h） Chart I : Green Electricity Price Menus provided by Vattenfall in Berlin, Germany Percentage of Renewable Energy Supply Percentage of Renewable Energy Supply Electricity Price 12-month program 39.4% 0.2642 Euro/ kW·h（about 10.96 NTD/ kW·h） All renewable energy program 100% 0.281 Euro/ kW·h（about 11.66 NTD/ kW·h） Source：Vattenfall website, translated and reorganized by STLI, April 214. In addition, Australia also has similar programs on green electricity that is voluntary-base and with the goal of promoting renewable energy, reducing carbon emission, and transforming energy economy. Since 1997, the GreenPower in Australia is in charge of audition and certification of the retail companies and power plants on green electricity. The Australian model uses the certification mechanism conducted by independent third party, to ensure the green electricity purchased by end users in compliance with specific standards. As for the options for the price menu, take the programs of green electricity offered by the Australian retail company Origin Energy for example, user can choose 6 kinds of different programs, which are composed by renewable energy supply of respectively 10%, 20%, 25%, 50%, 75%, and 100%, at various price rates （shown in Chart II）. Chart II Australian Green Electricity Programs provided by Origin Energy Percentage of renewable Energy Electricity Price per kW·h 0 0.268 AUD（About 7.52 NTD） 10% 0.274868 AUD（About 7.69 NTD） 20% 0.28006 AUD（About 7.84 NTD） 25% 0.28292 AUD（About 7.92 NTD） 50% 0.2838 AUD（About 7.95 NTD） 100% 0.2992 AUD（About 8.37 NTD） Source：Origin Energy website, translated and reorganized by STLI, April 214. Given the information above, it can thus be inferred that the international mechanism for the promotion of green electricity often include a variety of price menus, providing the user more options. Such as two difference programs offered by Vattenfall in Germany and six various rates for green electricity offered by Origin Energy in Australia. It is the suggestion of present brief that the Trial Program can reference these international examples and try to offer the users a greater flexibility in choosing the most suitable programs for themselves.
Impact of Government Organizational Reform to Scientific Research Legal System and Response Thereto (2) – For Example, The Finnish Innovation Fund (“SITRA”)Impact of Government Organizational Reform to Scientific Research Legal System and Response Thereto (2) – For Example, The Finnish Innovation Fund (“SITRA”) III. Comparison of Strength and Weakness of Sitra Projects 1. Sitra Venture Capital Investment Model In order to comprehend how to boost innovation business development to upgrade innovation ability, we analyze and compare the innovation systems applied in Sweden, France and Finland[1] . We analyze and compare the characteristics, strength and weakness of innovation promotion models in terms of funding, networking and professional guidance. Generally, the first difficulty which a start-up needs to deal with when it is founded initially is the funding. Particularly, a technology company usually requires tremendous funding when it is founded initially. Some potentially adequate investors, e.g., venture capitals, seldom invest in small-sized start-up (because such overhead as supervision and management fees will account for a high percentage of the investment due to the small total investment amount). Networking means how a start-up integrates such human resources as the management, investors, technical advisors and IP professionals when it is founded initially. Control over such human resources is critical to a new company’s survival and growth. Professional guidance means how professional knowledge and human resource support the start-up’s operation. In order to make its product required by the market, an enterprise usually needs to integrate special professional knowledge. Notwithstanding, the professional knowledge and talents which are available from an open market theoretically often cannot be accessed, due to market failure[2]. Assuming that Sitra’s funding is prioritized as Pre-seed-Initiation stage, Seed-Development stage and Follow-up – Growth stage, under Finland model, at the Pre-seed-Initiation stage, Sitra will provide the fund amounting to EUR20,000 when Tekes will also provide the equivalent fund, provided that the latter purely provides subsidy, while the fund provided by Sitra means a loan to be repaid (without interest) after some time (usually after commercialization), or a loan convertible to shares. Then, the loan would be replaced by soft or convertible (to shares) investment and the source of funding would turn to be angel investors or local seed capital at the Seed-Development stage. At this stage, the angel investors, local seed capital and Sitra will act as the source of funding jointly in Finland, while Tekes will not be involved at this stage. At the Follow-up-Growth stage, like the Sweden model, Sitra will utilize its own investment fund to help mitigate the gap between local small-sized funding and large-sized international venture capital[3]. How to recruit professional human resources is critical to a start-up’s success. Many enterprises usually lack sufficient professional human resources or some expertise. DIILI service network set up by Sitra is able to provide the relevant solutions. DILLI is a network formed by product managers. Its members actively participate in starts-up and seek innovation. They also participate in investment of starts-up independently sometimes. Therefore, they are different from angel investors, because they devote themselves to the starts-up on a full-time basis[4]. In other words, they manage the starts-up as if the starts-up were their own business. 2. Key to Public Sector’s Success in Boosting Development of Innovation Activity Business In terms of professional guidance, voluntary guidance means the direct supply of such professional resources as financing, human resource and technology to starts-up, while involuntary guidance means the supply of strategic planning in lieu of direct assistance to help the enterprises make routine decisions[5]. The fractured and incomplete professional service attendant market generates low marginal effect. Therefore, it is impossible for the traditional consultation service to mitigate such gap and the investment at the pre-seed initiation stage will be excessive because of the acquisition of the professional services. Meanwhile, professional advisors seldom are involved in consultation services at the pre-seed initiation stage of a start-up because of the low potential added value. Therefore, at such stage, only involuntary professional guidance will be available usually. Under Sitra model, such role is played by an angel investor. Upon analysis and comparison, we propose six suggested policies to boost innovation activities successfully as the reference when observing Sitra operation. First of all, compared with the French model, Finland Sitra and Sweden model set more specific objectives to meet a start-up’s needs (but there is some defect, e.g., Sitra model lacks voluntary professional guidance). Second, structural budget is a key to the successful model. Sitra will receive the funds in the amount of EUR235,000,000 from the Finnish Government, but its operating expenditure is covered by its own operating revenue in whole. Third, it is necessary to provide working fund in installments and provide fund at the pre-seed-initiation stage. Under both of Finland model and Sweden model, funds will be provided at the pre-seed-initiation stage (Tekes is responsible for providing the fund in Finland). Fourth, the difficulty in networking must be solved. In Sitra, the large-sized talent network set up by it will be dedicated to recruiting human resources. Fifth, the voluntary professional guidance is indispensable at the pre-seed-initiation stage, while the same is unavailable at such stage under Sitra model. Instead, the Sweden model is held as the optimal one, as it has a dedicated unit responsible for solving the difficulty to seek profit. Sixth, soft loan[6] will be successfully only when the loan cannot be convertible to shares. At the pre-seed initiation stage or seed-development stage, a start-up is usually funded by traditional loan. Assuming that the start-up is not expected to gain profit, whether the loan may be convertible to shares will also be taken into consideration when the granting of loan is considered (therefore, the fund provider will not be changed to the “capital” provider). Besides, the government authorities mostly lack the relevant experience or knowledge, or are in no position to negotiate with international large-sized venture capital companies. For example, under the French model, the government takes advantage of its power to restrict the venture capital investment and thereby renders adverse impact to starts-up which seek venture capital. Finally, the supply of own fund to meet the enterprises’ needs at seed-development stage and follow-up-growth stage to mitigate the gap with large-sized venture capital[7] is also required by a successful funding model. IV. Conclusion－Deliberation of Finnish Sitra Experience As the leading national industrial innovation ability promoter in Finland, Sitra appears to be very characteristic in its organizational framework or operating mechanism. We hereby conclude six major characteristics of Sitra and propose the potential orientation toward deliberation of Taiwan’s industrial innovation policies and instruments. 1. Particularity of Organizational Standing In consideration of the particularity of Sitra organizational standing, it has two characteristics observable. First, Sitra is under supervision of the Finnish Parliament directly, not subordinated to the administrative organizational system and, therefore, it possesses such strength as flexibility and compliance with the Parliament’s requirements. Such organization design which acts independently of the administrative system but still aims to implement policies has been derived in various forms in the world, e.g., the agency model[8] in the United Kingdom, or the independent apparatus in the U.S.A. Nevertheless, to act independently of the administrative system, it has to deal with the deliberation of responsible political principles at first, which arouses the difficulty in taking care of flexibility at the same time. In Taiwan, the intermediary organizations include independent agencies and administrative corporations, etc., while the former still involves the participation of the supreme administrative head in the right of personnel administration and is subordinated to the ministries/departments of the Executive Yuan and the latter aims to enforce the public missions in the capacity of “public welfare” organization. Though such design as reporting to the Parliament directly is not against the responsible political principles, how the Parliament owns the authority to supervise is the point (otherwise, theoretically, the administrative authorities are all empowered by the parliament in the country which applies the cabinet system). Additionally, why some special authorities are chosen to report to the parliament directly while other policy subjects are not is also disputable. The existence of Sitra also refers to a circumstantial evidence substantiating that Finland includes the innovation policy as one of the important government policies, and also the objective fact that Finland’s innovation ability heads the first in the world. Second, Sitra is a self-sufficient independent fund, which aims to promote technical R&D and also seeks profit for itself, irrelevant with selection of adequate investment subjects or areas. Instead, for this purpose, the various decisions made by it will deal with the utility and mitigate the gap between R&D and market. Such entity is responsible for public welfare or policy projects and also oriented toward gain from investment to feed the same back to the individuals in the organization. In the administrative system, Sitra is not directed by the administrative system but reports to the Parliament directly. Sitra aims to upgrade the national R&D innovation ability as its long-term goal mission and utilizes the promotion of innovation business and development of venture capital market. The mission makes the profit-orientation compatible with the selection of investment subjects, as an enterprise unlikely to gain profit in the future usually is excluded from the national development view. For example, such industries as green energy, which is not likely to gain profit in a short term, is still worth investing as long as it meets the national development trend and also feasible (in other words, selection of marketable green technology R&D, instead of comparison of the strength and weakness in investment value of green energy and other high-polluted energy). 2. Expressly Distinguished From Missions of Other Ministries/Departments For the time being, Sitra primarily invests in starts-up, including indirect investment and direct investment, because it relies on successful new technology R&D which may contribute to production and marketability. Starts-up have always been one of the best options, as large-sized enterprises are able to do R&D on their own without the outsourcing needs. Further, from the point of view of an inventor, if the new technology is marketable, it will be more favorable to him if he chooses to start business on his own or make investment in the form of partnership, instead of transfer or license of the ownership to large-sized enterprises (as large-sized enterprises are more capable of negotiation). However, note that Sitra aims to boost innovation activities and only targets at start-up business development, instead of boosting and promoting the start-up per se. Under the requirement that Sitra needs to seek profit for itself, only the business with positive development view will be targeted by Sitra. Further, Sitra will not fund any business other than innovation R&D or some specific industries. Apparently, Sitra only focuses on the connection between innovation activities and start-up, but does not act as the competent authority in charge of small-sized and medium-sized enterprises. Meanwhile, Sitra highlights that it will not fund academic research activities and, therefore, appears to be distinguished from the competent authority in charge of national scientific research. Though scientific research and technology innovation business, to some extent, are distinguished from each other in quantity instead of quality, abstract and meaningless research is existent but only far away from the commercialization market. Notwithstanding, a lot of countries tend to distinguish basic scientific research from industrial technology R&D in the administration organization's mission, or it has to be. In term of the way in which Sitra carries out its mission, such distinguishing ability is proven directly. 3. Well-Founded Technology Foresight-Based Investment Business The corporate investments, fund investments and project funding launched by Sitra are all available to the pre-designated subjects only, e.g. ecological sustainable development, energy utilization efficiency, and social structural changes, etc. Such way to promote policies as defining development area as the first priority and then promoting the investment innovation might have some strength and weakness at the same time. First of all, the selection of development areas might meet the higher level national development orientation more therefor, free from objective environmental restrictions, e.g. technical level, leading national technology industries and properties of natural resources. Notwithstanding, an enterprise’s orientation toward innovation R&D might miss the opportunity for other development because of the pre-defined framework. Therefore, such way to promote policies as defining development areas or subjects as the first priority will be inevitably based on well-founded technology foresight-based projects[9], in order to take various subjective and objective conditions into consideration and to forecast the technology development orientation and impact to be faced by the home country’s national and social economies. That is, said strength and weakness will be taken into consideration beforehand for foresight, while following R&D funding will be launched into the technology areas pre-designated after thorough analysis. 4. Self-Interested Investment with the Same High Efficiency as General Enterprises Sitra aims to gain profit generally, and its individual investment model, e.g., DIILI, also permits marketing managers to involve business operation. The profit-sharing model enables Sitra to seek the same high efficiency as the general enterprises when purusing its innovation activity development. The investment launched by Sitra highlights that it is not “funding” (which Tekes is responsible for in Finland) or the investment not requiring return. Therefore, it has the system design to acquire corporate shares. Sitra participates in a start-up by offering its advanced technology, just like a general market investor who will choose the potential investment subject that might benefit him most upon his personal professional evaluation. After all, the ultimate profit will be retained by Sitra (or said DIILI manger, subject to the investment model). Certainly, whether the industry which requires permanent support may benefit under such model still remains questionable. However, except otherwise provided in laws expressly, said special organization standing might be a factor critical to Sitra profit-seeking model. That is, Sitra is not subordinated to the administrative system but is under supervision of the parliament independently, and how its staff deal with the conflict of interest issues in the capacity other than the public sector’s/private sector’s staff is also one of the key factors to success of the system. 5. Investment Model to Deal With Policy Instruments of Other Authorities/Agencies Sitra decides to fund a start-up depending on whether it may gain profit as one of its priorities. As aforesaid, we may preliminarily recognize that the same should be consistent with funding to starts-up logically and no “government failure” issue is involved. For example, the funding at the pre-seed-initiation stage needs to tie in with Tekes’ R&D “funding” (and LIKSA service stated herein) and, therefore, may adjust the profit-seeking orientation, thereby causing deviation in promotion of policies. The dispute over fairness of repeated subsidy/funding and rationality of resource allocation under the circumstance must be controlled by a separate evaluation management mechanism inevitably. 6. Affiliation with Enhancement of Regional Innovation Activities Regional policies cannot be separable from innovation policies, especially in a country where human resources and natural resources are not plentiful or even. Therefore, balancing regional development policies and also integrating uneven resource distribution at the same time is indispensable to upgrading of the entire national social economic benefits. The Finnish experience indicated that innovation activities ought to play an important role in the regional development, and in order to integrate enterprises, the parties primarily engaged in innovation activities, with the R&D ability of regional academic research institutions to upgrade the R&D ability effectively, the relevant national policies must be defined for adequately arranging and launching necessary resources. Sitra's approaches to invest in starts-up, release shares after specific period, integrate the regional resources, upgrade the national innovation ability and boost the regional development might serve to be the reference for universities’ centers of innovative incubator or Taiwan’s local academic and scientific sectors[10] to improve their approaches. For the time being, the organization engaged in venture capital investment in the form of fund in Taiwan like Sitra of Finland is National Development Fund, Executive Yuan. However, in terms of organizational framework, Sitra is under supervision of the Parliament directly, while National Development Fund is subordinated to the administrative system of Taiwan. Though Sitra and National Development Fund are both engaged in venture capital investments primarily, Sitra carries out its missions for the purpose of “promoting innovative activities”, while the National Development Fund is committed to achieve such diversified goals as “promoting economic changes and national development[11]” and is required to be adapted to various ministries’/departments’ policies. Despite the difference in the administrative systems of Taiwan and Finland, Sitra system is not necessarily applicable to Taiwan. Notwithstanding, Sitra’s experience in promotion and thought about the system might provide a different direction for Taiwan to think when it is conceiving the means and instruments for industrial innovation promotion policies in the future. [1] Bart Clarysse & Johan Bruneel, Nurturing and Growing Innovation Start-Ups: The Role of Policy As Integrator, R&D MANAGEMENT, 37(2), 139, 144-146 (2007). Clarysse & Bruneel analysis and comparison refers to Sweden Chalmers Innovation model, French Anvar/Banque de Developpement des PMEs model and Finland Sitra PreSeed Service model. [2] id. at 141-143. [3] id. at 141. [4] id. at 145-146. [5] id. at 143. [6] The loan to be repaid is not a concern. For example, the competent authority in Sweden only expects to recover one-fourths of the loan. [7] Clarysse & Bruneel, super note 26, at 147-148. [8] 彭錦鵬，〈英國政署之組織設計與運作成效〉，《歐美研究》，第30卷第3期，頁89-141。 [9] Technology foresight must work with the innovation policy road mapping (IPRM) interactively, and consolidate the forecast and evaluation of technology policy development routes. One study case about IPRM of the environmental sustainable development in the telecommunication industry in Finland, the IPRM may enhance the foresighted system and indicates the potential factors resulting in systematic failure. Please see Toni Ahlqvist, Ville Valovirta & Torsti Loikkanen, Innovation policy road mapping as a systemic instrument for forward-looking policy design, Science and Public Policy 39, 178-190 (2012). [10] 參見李昂杰，〈規範新訊：學界科專辦法及其法制配套之解析〉，《科技法律透析》，第23卷第8期，頁33（2011）。 [11] National Development Fund, Executive Yuan website, http://www.df.gov.tw/(tftgkz45150vye554wi44ret)/page-aa.aspx?Group_ID=1&Item_Title=%E8%A8%AD%E7%AB%8B%E5%AE%97%E6%97%A8#(Last visit on 2013/03/28)
Finland’s Technology Innovation SystemI. Introduction When, Finland, this country comes to our minds, it is quite easy for us to associate with the prestigious cell-phone company “NOKIA”, and its unbeatable high technology communication industry. However, following the change of entire cell-phone industry, the rise of smart phone not only has an influence upon people’s communication and interaction, but also makes Finland, once monopolized the whole cell-phone industry, feel the threat and challenge coming from other new competitors in the smart phone industry. However, even though Finland’s cell-phone industry has encountered frustrations in recent years in global markets, the Finland government still poured many funds into the area of technology and innovation, and brought up the birth of “Angry Birds”, one of the most popular smart phone games in the world. The Finland government still keeps the tradition to encourage R&D, and wishes Finland’s industries could re-gain new energy and power on technology innovation, and indirectly reach another new competitive level. According to the Statistics Finland, 46% Finland’s enterprises took innovative actions upon product manufacturing and the process of R&D during 2008-2010; also, the promotion of those actions not merely existed in enterprises, but directly continued to the aspect of marketing and manufacturing. No matter on product manufacturing, the process of R&D, the pattern of organization or product marketing, we can observe that enterprises or organizations make contributions upon innovative activities in different levels or procedures. In the assignment of Finland’s R&D budgets in 2012, which amounted to 200 million Euros, universities were assigned by 58 million Euros and occupied 29% R&D budgets. The Finland Tekes was assigned by 55 million Euros, and roughly occupied 27.5% R&D budgets. The Academy of Finland (AOF) was assigned by 32 million Euros, and occupied 16% R&D budges. The government’s sectors were assigned by 3 million Euros, and occupied 15.2% R&D budgets. Other technology R&D expenses were 2.1 million Euros, and roughly occupied 10.5% R&D. The affiliated teaching hospitals in universities were assigned by 0.36 million Euros, and occupied 1.8% R&D budgets. In this way, observing the information above, concerning the promotion of technology, the Finland government not only puts more focus upon R&D innovation, but also pays much attention on education quality of universities, and subsidizes various R&D activities. As to the Finland government’s assignment of budges, it can be referred to the chart below. As a result of the fact that Finland promotes industries’ innovative activities, it not only made Finland win the first position in “Growth Competitiveness Index” published by the World Economic Forum (WEF) during 2000-2006, but also located the fourth position in 142 national economy in “The Global Competitiveness Report” published by WEF, preceded only by Swiss, Singapore and Sweden, even though facing unstable global economic situations and the European debt crisis. Hence, observing the reasons why Finland’s industries have so strong innovative power, it seems to be related to the Finland’s national technology administrative system, and is worthy to be researched. II. The Recent Situation of Finland’s Technology Administrative System A. Preface Finland’s administrative system is semi-presidentialism, and its executive power is shared by the president and the Prime Minister; as to its legislative power, is shared by the Congress and the president. The president is the Finland’s leader, and he/she is elected by the Electoral College, and the Prime Minister is elected by the Congress members, and then appointed by the president. To sum up, comparing to the power owned by the Prime Minister and the president in the Finland’s administrative system, the Prime Minister has more power upon executive power. So, actually, Finland can be said that it is a semi-predisnetialism country, but trends to a cabinet system. Finland technology administrative system can be divided into four parts, and the main agency in each part, based upon its authority, coordinates and cooperates with making, subsidizing, executing of Finland’s technology policies. The first part is the policy-making, and it is composed of the Congress, the Cabinet and the Research and Innovation Council; the second part is policy management and supervision, and it is leaded by the Ministry of Education and Culture, the Ministry of Employment and the Economy, and other Ministries; the third part is science program management and subsidy, and it is composed of the Academy of Finland (AOF), the National Technology Agency (Tekes), and the Finnish National Fund Research and Development (SITRA); the fourth part is policy-executing, and it is composed of universities, polytechnics, public-owned research institutions, private enterprises, and private research institutions. Concerning the framework of Finland’s technology administrative, it can be referred to below. B. The Agency of Finland’s Technology Policy Making and Management (A) The Agency of Finland’s Technology Policy Making Finland’s technology policies are mainly made by the cabinet, and it means that the cabinet has responsibilities for the master plan, coordinated operation and fund-assignment of national technology policies. The cabinet has two councils, and those are the Economic Council and the Research and Innovation Council, and both of them are chaired by the Prime Minister. The Research and Innovation Council is reshuffled by the Science and Technology Policy Council (STPC) in 1978, and it changed name to the Research and Innovation Council in Jan. 2009. The major duties of the Research and Innovation Council include the assessment of country’s development, deals with the affairs regarding science, technology, innovative policy, human resource, and provides the government with aforementioned schedules and plans, deals with fund-assignment concerning public research development and innovative research, coordinates with all government’s activities upon the area of science, technology, and innovative policy, and executes the government’s other missions. The Research and Innovation Council is an integration unit for Finland’s national technology policies, and it originally is a consulting agency between the cabinet and Ministries. However, in the actual operation, its scope of authority has already covered coordination function, and turns to direct to make all kinds of policies related to national science technology development. In addition, the consulting suggestions related to national scientific development policies made by the Research and Innovation Council for the cabinet and the heads of Ministries, the conclusion has to be made as a “Key Policy Report” in every three year. The Report has included “Science, Technology, Innovation” in 2006, “Review 2008” in 2008, and the newest “Research and Innovation Policy Guidelines for 2011-2015” in 2010. Regarding the formation and duration of the Research and Innovation Council, its duration follows the government term. As for its formation, the Prime Minister is a chairman of the Research and Innovation Council, and the membership consists of the Minister of Education and Science, the Minister of Economy, the Minister of Finance and a maximum of six other ministers appointed by the Government. In addition to the Ministerial members, the Council shall comprise ten other members appointed by the Government for the parliamentary term. The Members must comprehensively represent expertise in research and innovation. The structure of Council includes the Council Secretariat, the Administrative Assistant, the Science and Education Subcommittee, and the Technology and Innovation Subcommittee. The Council has the Science and Education Subcommittee and the Technology and Innovation Subcommittee with preparatory tasks. There are chaired by the Ministry of Education and Science and by the Minister of Economy, respectively. The Council’s Secretariat consists of one full-time Secretary General and two full-time Chief Planning Officers. The clerical tasks are taken care of at the Ministry of Education and Culture. (B) The Agency of Finland’s Technology Policy Management The Ministries mainly take the responsibility for Finland’s technology policy management, which includes the Ministry of Education and Culture, the Ministry of Employment and Economy, the Ministry of Social Affairs and Health, the Ministry of Agriculture and Forestry, the Ministry of Defense, the Ministry of Transport and Communication, the Ministry of Environment, the Ministry of Financial, and the Ministry of Justice. In the aforementioned Ministries, the Ministry of Education and Culture and the Ministry of Employment and Economy are mainly responsible for Finland national scientific technology development, and take charge of national scientific policy and national technical policy, respectively. The goal of national scientific policy is to promote fundamental scientific research and to build up related scientific infrastructures; at the same time, the authority of the Ministry of Education and Culture covers education and training, research infrastructures, fundamental research, applied research, technology development, and commercialization. The main direction of Finland’s national scientific policy is to make sure that scientific technology and innovative activities can be motivated aggressively in universities, and its objects are, first, to raise research funds and maintain research development in a specific ratio; second, to make sure that no matter on R&D institutions or R&D training, it will reach fundamental level upon funding or environment; third, to provide a research network for Finland, European Union and global research; fourth, to support the research related to industries or services based upon knowledge-innovation; fifth, to strengthen the cooperation between research initiators and users, and spread R&D results to find out the values of commercialization, and then create a new technology industry; sixth, to analyze the performance of national R&D system. As for the Ministry of Employment and Economy, its major duties not only include labor, energy, regional development, marketing and consumer policy, but also takes responsibilities for Finland’s industry and technical policies, and provides industries and enterprises with a well development environment upon technology R&D. The business scope of the Ministry of Employment and Economy puts more focus on actual application of R&D results, it covers applied research of scientific technology, technology development, commercialization, and so on. The direction of Finland’s national technology policy is to strengthen the ability and creativity of industries’ technology development, and its objects are, first, to develop the new horizons of knowledge with national innovation system, and to provide knowledge-oriented products and services; second, to promote the efficiency of the government R&D funds; third, to provide cross-country R&D research networks, and support the priorities of technology policy by strengthening bilateral or multilateral cooperation; fourth, to raise and to broaden the efficiency of research discovery; fifth, to promote the regional development by technology; sixth, to evaluate the performance of technology policy; seventh, to increase the influence of R&D on technological change, innovation and society; eighth, to make sure that technology fundamental structure, national quality policy and technology safety system will be up to international standards. (C) The Agency of Finland’s Technology Policy Management and Subsidy As to the agency of Finland’s technology policy management and subsidy, it is composed of the Academy of Finland (AOF), the National Technology Agency (Tekes), and the Finnish National Fund Research and Development (SITRA). The fund of AOF comes from the Ministry of Education and Culture; the fund of Tekes comes from the Ministry of Employment and Economy, and the fund of SITRA comes from independent public fund supervised by the Finland’s Congress. (D) The Agency of Finland’s Technology Plan Execution As to the agency of Finland’s technology plan execution, it mainly belongs to the universities under Ministries, polytechnics, national technology research institutions, and other related research institutions. Under the Ministry of Education and Culture, the technology plans are executed by 16 universities, 25 polytechnics, and the Research Institute for the Language of Finland; under the Ministry of Employment and Economy, the technology plans are executed by the Technical Research Centre of Finland (VTT), the Geological Survey of Finnish, the National Consumer Research Centre; under the Ministry of Social Affairs and Health, the technology plans are executed by the National Institute for Health and Welfare, the Finnish Institute of Occupational Health, and University Central Hospitals; under the Ministry of Agriculture and Forestry, the technology plans are executed by the Finnish Forest Research Institute (Metla), the Finnish Geodetic Institute, and the Finnish Game and Fisheries Research Institute (RKTL); under the Ministry of Defense, the technology plans are executed by the Finnish Defense Forces’ Technical Research Centre (Pvtt); under the Ministry of Transport and Communications, the technology plans are executed by the Finnish Meteorological Institute; under the Ministry of Environment, the technology plans are executed by the Finnish Environment Institute (SYKE); under the Ministry of Financial, the technology plans are executed by the Government Institute for Economic Research (VATT). At last, under the Ministry of Justice, the technology plans are executed by the National Research Institute of Legal Policy.
After the European Union's Artificial Intelligence Law, the draft of AI Basic Law is announced in Taiwan.After the European Union's Artificial Intelligence Law, the draft of AI Basic Law is announced in Taiwan. 2024/09/19 Countries around the world are currently seeking to establish AI governance principles. The U.S. currently has only AI executive orders and state bills, and the European Union (EU) first AI law came into effect in August 2024. Taiwan has announced a draft of AI Basic Law for public comments on July 15, 2024, which, if passed by the Legislative Yuan, will become the world's second special legislation on AI. Taiwan's Coming AI Basic Law - Legislative Development and Progress With the successful conclusion of the 2024 Paris Olympics, AI technology has demonstrated its potential on the global stage, bringing new experiences to the public in varied areas, such as sport competition analysis, athlete training, and referee assisting, and showing that AI has also crossed over into the sports industry, in addition to its known applications in areas such as healthcare, finance, transportation, arts and culture fields. As AI will be apply in various industries, it may also bring new risks or impacts to individuals or society. Countries are seeking to establish guidelines and principles for AI governance. The EU’s Artificial Intelligence Act, which was announced to take effect in August 2024. Even in the AI pioneer, the U.S., there are currently only U.S. President’s AI Executive Orders and bills introduced by Congress or state governments. When Taiwan President Lai announced the promotion of the Island of Artificial Intelligence, Taiwan also had a draft of the AI Basic Law announced for public comments by the National Science and Technology Council (NSTC) on July 15, 2024, proposing the principles of basic values for the development of AI in Taiwan. What is the Basic Law in Taiwan? There are 11 basic laws/acts in Taiwan, including the Fundamental Science and Technology Act, and the Ocean Basic Act, etc. A basic law/act is a legislative model of principle, progress, or guideline for a specific important matter. The AI Basic Law serves as a declaration of policy integration, reveals the government's goals and principles, and regulates the executive branch without directly regulating the people, or deriving the rights for substantive claims. Why Taiwan need a Basic Law on Artificial Intelligence? AI is evolving rapidly, and its applications are spreading to a wider range of areas. If all sectors and administrations have different values, there will be no way for a country to develop AI. NSTC has announced a total of 18 articles in the draft, in Article 3 first set out 7 common principles, such as human autonomy, from the AI research and development to the final market application must comply with the basic values; and in the following provisions of Article 4 to declare that the government's 4 major promotional focuses. The most important provision is found in Article 17, which requires that government ministries should review and adjust the functions, businesses and regulations under their scope in accordance with the Basic Law, so as to enable the executive branch to accelerate its response to the changes brought about by AI, and to share a common set of values: the promotion of innovation while taking human rights into consideration. 7 basic principles The draft AI Basic Law in the announcement contains the following 7 basic principles: 1. Sustainable development and well-being: Social equity and environmental sustainability should be taken into account. Appropriate education and training should be provided to minimize the possible digital gap, so that people can adapt to the changes brought about by AI. 2. Human autonomy: It shall support human autonomy, respect for fundamental human rights and cultural values such as the right to personal integrity, and allow for human oversight, thereby implementing a human-based approach that upholds the rule of law and democratic values. 3. Privacy Protection and Data Governance: The privacy of personal data should be properly protected to avoid the risk of data leakage, and the principle of data minimization should be adopted; at the same time, the opening and reuse of non-sensitive data should be promoted. 4. Security and safety: In the process of AI research and development and application, security measures should be established to prevent security threats and attacks and to ensure the robustness and safety of the system. 5. Transparency and explainability: The output of AI should be appropriately disclosed or labeled to facilitate the assessment of possible risks and the understanding of the impact on related rights and interests, thereby enhancing the trustworthiness of AI. 6. Fairness and non-discrimination: In the process of AI research and development and application, the risks of bias and discrimination in algorithms should be avoided as much as possible, and should not lead to discriminatory results for specific groups. 7. Accountability: Ensure the assumption of corresponding responsibilities, including internal governance responsibilities and external social responsibilities. 4 key areas of promotion 1. Innovative Collaboration and Talent Cultivation: Ensuring the resources and talent needed for AI. 2. Risk management and application responsibility: Risks must be identified and managed before AI systems can be safely applied. 3. Protection of rights and access to data: People's basic rights, such as privacy, cannot be compromised. 4. Regulatory Adaptation and Business Review: Policies and regulations must be agile to keep pace with AI development. The AI Basic Law is paving the way for Taiwan's future opportunities and challenges. AI development requires sufficient resources, data and a friendly environment; to ensure the safe application of AI, it is necessary to first identify and plan for different possible risks, and the draft AI Basic Law has initially drawn a blueprint for the above innovative development and safe application. In the future, various government ministries will need to work together to keep up with the wave of AI innovation in terms of business and legal regulations for multiple fields and industries. It is believed that Taiwan can leverage the advantages in the semiconductor industry and talent resources to gain a favorable global strategic position for the development of AI, as well as to help achieve the goal of "AI for good" to enhance the well-being of Taiwan people through a sound legal environment.
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