The guidelines present the following points as references for companies that intend to conclude a contract for data or for AI utilization and development:

Basic ideas that concerned parties or stakeholders should commonly understand; Issues that parties should generally discuss; Elements to be considered in concluding a contract; Model contracts; etc.

The guidelines are expected to contribute to the following:

Filling knowledge gaps between parties and decreasing costs involved in finalizing the contract. Allocating appropriate rights and obligations concerning data and AI to each party pursuant to the contract.

⇒The guidelines will not only encourage smooth conclusion of contracts but also promote data utilization and AI development and utilization among companies. 0

Formulation of Contract Guidelines on Utilization of AI and Data

Practical experience in this field is still scarce concerning contracts surrounding data or AI technologies.

What types of issues should be discussed?

What elements should be taken into consideration?

What terms and conditions of contracts should be considered as a basis for negotiations?

There are gaps in perception and understanding between two parties that intend to conclude a contract (or even between internal personnel of one of the parties in some situations).

Examples: What does “data ownership” mean?What types of fundamental differences are there between AI technologies and conventional software?

These questions are not always clear.

Challenges in Promoting Data Utilization and AI Development and Utilization

Outline of Data Section in the guidance ①【Purpose of data section in the guidance】· Short of actual cases of Data contracts (contracts related to data usage, processing, assignment and other handling). Therefore, it would be possible to reduce the transaction cost at the time of the contract by showing examples of contract provisions and items to be noted when preparing clauses for each type of data contract. Furthermore, it would contribute to promote utilization of data.【Expected readers】 All the people involved in data contracts (including business, management, IT system departments, etc., as well as legal department).

【Fundamental points】① Importance and issues of data distribution / utilization; Data itself isn’t valuable simply by holding it. Value of data is created by using it. When contracting, it is important to appropriately distribute the right to use data and the benefit b/w stakeholders. On the other hand, it is also necessary to consider risks of data leakage and unauthorized use.② Significance of following actual practice of data utilization in the contract; This guidance does not restrict freedom of contract. It is desirable to advance the contract, referring the guidance and considering the degree of contribution to the creation of value of the data and following the actual situation of the transaction.③ Promotion of innovation; It contributes to promote data utilization and open innovation to show concepts of data contracts and examples of contract provisions that take various positions into consideration.④ Significance of international cooperation; Under the circumstances where cross-border transactions often occur, issues concerning data crossing border are also taken into consideration in the guidance.

【Relationship with other legal systems】· When data is collected by unfair means etc, it might become a problem under the Antimonopoly Act.· As a means of protection against data leakage and unauthorized use, there is a system of injunction based on the Unfair Competition Prevention Law.

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【Distribution of reasonable profit】· Data is not subject to ownership. Depending on the case, it is important to decide the right to use data and the way of distribution of reasonable consideration / profit by contract.· The proper way of setting up consideration for data contracts is case by case. However, in this guidance, by referring to the following general consideration factors, it is used as a reference when the parties set in the contract.(1) data type, (2) data usage range, (3) value generated by data, (4) authority to use derivative data, (5) rights relation such as created IPR, (6) responsibility sharing in case of damage occurrence, (7)license fee & royalty setting, (8) cost sharing required for data creation and management, etc.

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①“Providing Data Type” ②”Creating Data Type” ③”Sharing Data Type”【Structure】· Providing data from the data provider to

the other party (in the case where only the data provider holds the target data)

【Structure】・Where data is newly created due to involvement of multiple parties, a contract for negotiating the use authority of the data among the parties involved in data creation.

【Structure】・Types of contracts aimed at sharing data through the platform

【Main Legal Issues in a Contract】· Whether to use derivative data· Responsibility that the provided data is not what was expected.· Responsibility for disputes with third parties due to provided data.· Use of provided data out of scope of its purpose.· Notices in cross-border transactions.· Notices when data includes personal. information etc.

【Main Legal Issues in a Contract】· Terms of usage set up between parties.· Scope & detail of target data.· Usage rights of derived data.· Restrictions on sub-licensing etc. to third parties.· Guarantee / non-guarantee of data content etc.· Profit sharing.· Cost / Loss sharing.· Management method, security.· Treatment at the end of contract.

【Main Legal Issues in a Contract】· Necessity of terms of service· Significance of describing usage range of data in usage agreement· Type of data.· Scope of participants, subjects to become PF operators.· Scope of license to use provided data.· Guarantee / non-guarantee of data.· Relationship of b/w deliverables.· Liabilities of platform operators.· Liabilities of data providers and users.· at withdrawal / termination.

【Appropriate ways to decide】· Checklist of contents in the guidance.· Sample clauses in the guidance.

【Appropriate ways to decide】· Checklist of contents in the guidance.· Sample clauses in the guidance.

【Appropriate ways to decide】· Major items shown the guidance

Outline of Data Section②In this guidance, data contract is divided into three types. Each type is analyzed with three aspects such as Structure, main legal issues in a contract, appropriate ways to make a contract

Provider X1

Provider X2

Provider X3

Platform

User Y1

User Y2

User Y3

提供 利用

集約・保管、加工、分析

Provider X1 Receiver Y1

Provider X2 Receiver Y2

Provider/Receiver3

データ提供/受領者Y3

Transfer

License

Mutual licensing

User of Machinery

Manufacturer of

Machinery

maintenance

Data UserAcquis

ition

Sales

Operational data

Statistical data

Outline of AI Section ①[Purpose of AI Section]· There are many uncertainties because shortage of sharing information of the characteristics of AI technology. Many stakeholders are concerned about the current situation due to expected difficulties in contract negotiation and increase of cost.· The purpose of AI section in the guidance is to develop and promote AI technology by providing enough information such as basic factors to consider, a method to form incentives to make a contract b/w both parties.【Expected Contracting Party】· Any companies using technologies such as statistical machine learning, especially deep learning.

【Characteristics of AI technology】(1) Nature of the learned model would be unclear at the time of making a contract, (2) Its nature might also depend on the learning data set, (3) Creation of the data set depends highly on know-how, (4) Reuse of created data sets is often required.【Issues about AI and solutions proposed by the guidance】① Insufficient understanding by the parties concerning the characteristics of the AI technology ⇒ The development process has been changed to a process (exploratory step type method) that takes into consideration the characteristics of the AI technology.② Ambiguity of legal relationship b/w as rights/liability ⇒ Clarify relationship of rights/liability among parties by contract. Presenting various and flexible contents, that is, not only attribution of rights but also setting conditions of use for deliverables and data finely in the guidance could achieve the purpose of the parties.③ The data that the user provides to the vendor could include economic value and confidentiality ⇒ By carefully setting the conditions reflecting the situation of the parties and data provided, it would be possible to harmonize b/w the user’s need for careful treatment of data and the vendor’s needs for utilization of deliverables from data.④ Practice of contract about AI has not established yet ⇒ Providing fundamental method (i) To form appropriate incentive, (ii) To prevent troubles in advance and (iii) To provide with sample clauses in a contract.

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【Explanation of AI technology】· Since understanding of AI does not prevail sufficiently, this guidancedescribes basic concepts related to AI technology like "AI", "Machine learning", “Supervised learning"," Unsupervised Learning", "Deep learning."

· In addition, the process of development and the characteristics of AI technology also explained in detail.Since a common understanding of stakeholders engaged in contracts on AI

is formed, we hope to reduce transaction costs for contracting parties.

【Development contract for learned model】In the development of a learned model, it is difficult to predict the deliverables at the time of making contract and to verify the products generated in the course of the development afterwards. Therefore, in this guidance, the process is divided into a number of separate and independent stages. We show model contracts depending on each stage, calling it "exploratory stage type“.

· It is important to be aware of "raw data", "learning data set", "learning program" and "learned model" at each stage. As necessary, it is also important to recognize "learned parameters" and “inference programs" that make up the learned model. In addition, it may be desirable to include "know-how" as well.

Outline of AI Section ②

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Purpose

To assess possibility ofgenerating learnedmodel by using someamount of data.

To confirm whether tocreate learned modelthat has enough qualityby using data sets formachine learning.

To develop learned model To make a learned modeldelivered from vender belearned additionally withextra data set

Outcome Reports Reports Learned models Reuse modelContract NDA Introduction of AI tech. Software developments Case by case

【Contract of utilization of AI technology】Not only AI's development contract but also model contracts where AI technology such as a learned model developed by a vendor is used by the user are also considered in the guidance.The guidance includes various relationship b/w venders and users as followings;· a vendor provides a learned model, and then users make use of it as a service.· the vendor provides a learning program, and then users make use of it as a service.· when the AI technology owned by the vendor is provided after being customized users’ request· when service is provided in combination with other related services (ex. data collection service, data processing service..)· when the vendor provides consulting services etc. based on the analysis result of the user's data using AI technology.

①Assessment ②Proof of Concept ③ Development ④ Extra Learning