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XXX.THE TRANSFORMATION OF LAW IN DIGITAL WORLD

Дронова Л.С.

Университет имени О.Е.Кутафина (МГЮА) Студент

Directive on Copyright and Related Rights in the Digital Single Market: Application Issue and Contradiction with Directive on Electronic Commerce

The need to adopt new rules on copyright protection is ripe since the directives1 adopted back in the 2000s do not take into account such modern phenomena as social networks,educational online courses,news aggregators,and others.

The main purpose of the Directive on Copyright and Related Rights in the Digital Single Market (the Directive)2 is to ensure that content creators and copyright holders are entitled to be rewarded for the online use of their works.As the practice of the Court of Justice of the European Union (the EU Court) has shown,the use of the notice and takedown mechanism and blocking in practice does not solve the problem of using proxies, VPNs, and other manipulations to infringe intellectual rights.Besides,new ways of creating and distributing objects protected by copyright in the digital space have appeared and are evolving,and copyright holders still do not have sufficient control over the circulation of their intellectual propertyrights on the Internet3.Rightsholders,in particular,face difficulties in licensing and receiving remuneration for the use of intellectual property on the Internet4.

Therefore, the European Commission developed and adopted on 26 March 2019 the Directive to bring European Union (EU) copyright legislation in line with the digital marketplace. Most of the controversy was caused by Art. 17. The main purpose of this research is to find out whether the current EU legislation sufficient to protect intellectual property rights on the Internet? Does it cover all types of websites and resources on the internet?

Art. 17 provides that online content sharing platforms perform an act of communication to the public or an act of making available to the public when they give the public access to copyright-protected works or other protected subject matter uploaded bytheir users.The article stipulates the obligation of such online platforms to obtain the prior consent of the copyright holders,for example,by concluding a license agreement.If the platforms are communicating protected works to the public, they shall not be subject to the exclusion of liability under Art. 14 of the Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (E-Commerce Directive) (hosting), unless the platform operator is not subject to the Directive’s regulation (i.e.is not a content sharing platform).This provision applies to those platform providers who are in an active role, that is, they take additional steps beyond providing computing power to store content5.

Such platforms are liable for cases of unauthorized communication of copyrighted works, insofar as they do not prove that (the terms apply collectively):

1)they took active steps to obtain the consent of the copyright holders to post content;

2)theyhave taken,following the highest standards of professional discretion in the relevant industry,best practices to restrict the availability of protected works and other content notified to them by copyright holders,and

3)upon receipt of a sufficientlysubstantiated claim,the copyright holders took prompt measures to remove or restrict access to the controversial content from their site,and also made efforts to prevent future downloads of such content.

Thus, the article establishes the direct liability of the «active» hosting providers in relation to the posted and infringing content.

1 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services,in particular electronic commerce,in the Internal Market [2000]; Directive 2001/29/EC of the European Parliament and of the Council of 22 May2001 on the harmonisation of certain aspects of copyright and related rights in the information society [2001]; Corrigendum to Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights [2004].

2 Directive (EU) 2019/790 of the European Parliament and of the Council of 17April 2019 on copyright and related rights in the Digital Single Market [2019].

3 L’Oréal SA and Others v eBay International AG and Others [2011] UKHC; André Rau v.Google and Aufeminin.com.[2012] FSC. 4 Explanatory Memorandum,Proposal for a Directive of the European Parliament and of the Council on Copyright in the Digital Single

Market https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52016PC0593&from=EN accessed 22 September 2021.

5 Giancarlo F.Frosio,‘Reforming Intermediary Liability in the Platform Economy: A European Digital Single Market Strategy [2017] 112(19) Northwestern University Law Review 17 http://www.law.northwestern.edu/journals/lawreview/ accessed 20 September 2021.

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Definition of the content sharing platform is contained in Art. 2 (6) of the Directive.According to its wording, it is an information service provider whose main purpose is to store or provide public access to a large number of copyrighted works or other works uploaded by users, which it organizes and promotes for commercial purposes.That means that Art.17 is aimed at platforms such as Facebook,YouTube.

Platforms are expected to payroyalties based on content licenses.These platforms must remove,block and filter all content that copyright holders are not willing to license, but which users nevertheless try to upload to their services. To assess the necessary measures taken by the provider, the following is taken into account: the type, audience, and size of the services provided, as well as the types of work uploaded by users; in addition, the availability of necessary and effective tools and their cost to the service provider (Art.17 (5)).

Art. 17 (8) suggests that nothing in this article, however, should be construed as a general monitoring obligation. This provision is considered untenable because the only way to recognize Art. 17 as it does not impose a general monitoring obligation,insofar as it applies onlyto the content on which the rights holders have provided the necessary information to the platform for monitoring1.

Concerns and controversial nature of Art. 17 are related to the fact that copyright holders may not want to license content on fair terms,and blocking and filtering content wouldviolate users’rights; these measures lead to unnecessary blocking and filtering of the legitimate use of works, including all kinds of manifestations of freedom of speech and cases of exclusion and limitation of copyright; other concerns are that these measures may result in unnecessary costs for content sharing platforms2.

Although, it is not clear which intermediaries are considered to be providing information services and how many works should be considered a lot. The use of content recognition systems is contrary to Art. 15 of the E-Commerce Directive,which prohibits the establishment of a general monitoring obligation and contradicts the freedom to conduct business.Since these technologies imply the inspection of the IP addresses of all users,this provision goes against the rights of users to personal freedom and legal protection of personal data3.

The other problem is those filtering mechanisms do not allow distinguishing between illegal and legal content: often automatic systems do not take into account exceptions and limitations from the existing system of copyright protection.Another concern is that filtration technologies may discourage the use of public domain works4.

Thefoundersoftheglobalnetwork,representativesofpublicorganizations,andcommercialstructureswereagainst the enactment of the article5. Their main concern was the possible censorship of the Internet and the unreliability of filters. There are numerous examples of YouTube technologies blocking non-copyright-infringing content, such as when pop music was used in a professor’s video lecture for educational purposes6.

Art. 17 of the Directive is contrary to Art. 15 of the E-Commerce Directive, as any content recognition system involves checking all downloadable content and comparing it with a database of protected works7.

It is not known in advance what content the users will download,so the license must cover a wide range of works. If licensing agreements cover only a limited repertoire, EU citizens will not be able to enjoy freedom of expression by uploading remixes, mesh-ups, and other materials. Instead, they will only be able to download works covered by licensing agreements that content sharing platforms have been able to negotiate with copyright holders and collective management organizations8.

1 Dirk J. G. Visser, ‘Trying to Understand Article 13’ [2019] Leiden Law School https://ssrn.com/abstract=3354494 accessed 20 September 2021.

2 ibid P.2.

3 Annette Kur and Thomas Dreier,European Intellectual Property Law (Edward Elgar Publishing Limited 2013) P.458.

4 GiancarloF.Frosio,‘ReformingIntermediaryLiabilityinthePlatformEconomy:AEuropeanDigitalSingleMarketStrategy’[2017] 112(19) Northwestern University Law Review P. 24 http://www.law.northwestern.edu/journals/lawreview/ accessed 20 September 2021.

5 Vint Cerf,Tim Berners-Lee ‘Article 13 of the EU Copyright Directive Threatens the Internet’ 12 June 2018 https://www.eff.org/ files/2018/06/12/article13letter.pdf accessed 21 September 2021.

6 Julia Reda,‘When filters fail: These cases show we can’t trust algorithms to clean up the internet’ (Julia Reda, 28 September 2017) URL: https://juliareda.eu/2017/09/when-filters-fail/ accessed 19 September 2021.

7 Aleksandra Kuczerawy,‘EU Proposal for a Directive on Copyright in the Digital Single Market: Compatibility of Article 13 with the EU Intermediary Liability Regime’ [2019] Fundamental Rights Protection Online: The Future Regulation of Intermediaries P. 11.

8 Martin Senftleben,‘Bermuda Triangle — Licensing, Filtering and Privileging User-Generated Content Under the New Directive on Copyright in the Digital Single Market’[2019] University of Amsterdam—Institute for Information Law (IViR) P.4.

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The question of what constitutes the obligation to install content filtering systems was raised in Scarlet Extended SA v.SABAM1,in which the EU court concluded that court decisions are contrary to EU law if they:

—require filtering all electronic communications using the intermediary’s server;

—apply to all users receiving the provider’s services; and others.

Although content filtering systems must affect certain works that the rights holders have notified the platforms of, their use may nevertheless be contrary to Art.16 of the European Charter on Freedom of Business2.

To conclude, mechanisms provided for by EU legislation allow suppressing violations of intellectual rights on the Internet. But the contradiction of such measures with existing practice and the legislation of the European Union is clear.There are still gaps and inconsistencies in the existing EU legislation that has yet to be resolved.

To correct the shortcomings of the article in terms of the contradiction between the E-Commerce Directive and the practice of the EU court, it is suggested, firstly, to create a system for responding to notifications of copyright infringement,which would provide for the transmission of the notification to the direct and alleged infringer.Secondly, theremustbeanoticeandareasonablewaitingperiodbeforethecontentisremoved.Thecopyrightholder’snotification is sent to the provider who submits it to the content sharing platform and waits for a response within a reasonable time. If the alleged intruder doesn’t respond, then the intermediary removes the content. This measure will prevent incidents when,on the one hand,content is illegally deleted,and on the other hand,the opinion of users is taken into account as part of this procedure.If the episode of violation repeats,then the intermediary can block a specific user.If the intermediary is slow to take action to remove the content, then a judicial mechanism should be resorted to when the applicant can obtain an injunction to remove the content3.

Изюмова П.С.

Университет имени О.Е.Кутафина (МГЮА) Студент

Digitalization of the world and its impact on public international law in the context of cyberspace regulation

Digital transformation of the world,on the one hand being an unconditional achievement of humanity,hides manydangers associated with the new world order. Potential threats in cyberspace such as cyber-terrorism, espionage or data theft make governments all around the world defenseless without an effective legal response to cybercrimes.That is whythe international community had to adapt to the modern reality and transform the existing norms, as well as to create the new ones. It is important to note that the question of cyberspace governance has been widely discussed since the very start of the Internet due to the fundamental issues relating to the subjects of cyberspace law and its completely different structure.

Even though several attempts have been made in order to create an international treaty to govern cyber issues since 1996, the real transformation of law started in 2004, after the Council of Europe’s Budapest Convention, or a so-called Convention on Cybercrime entered into force.The travaux préparatoires for the convention lasted for almost 16 years4 and resulted into the first in ever multilateral binding agreement on cyberspace,remaining the last one5.

The Convention itself was aimed at harmonization of the actions of State parties in combatting cybercrime, unification of the domestic regulation of cyberspace of the parties and mutual assistance in international arena.It was of a high importance to establish an effective cooperation between agencies that are of a law enforcement nature in each countryto battle,or at least,reduce the riskof a malware cyberspace conduct not being criminalized in a particular country6. Even though the Convention being clear on some most fundamental issues such as domestic legislation in relation to the cyberspace, international cooperation or mutual assistance, nonstate actors do still express a unified

1 Scarlet Extended SA v. Société belge des auteurs, compositeurs et éditeurs SCRL (SABAM) [2011] Cour d’appel de Bruxelles, Belgium.

2 Sophie Stalla-Bourdillon and others, ‘A Brief Exegesis of the Proposed Copyright Directive’ [2016] P. 8 https://ssrn.com/ abstract=2875296 accessed 20 September 2021.

3 Himanshu Arora, ‘Article 13 of EU Copyright Directive — A Step Forward or Rearward?’ [2019] P. 7–9 https://ssrn.com/ abstract=3296955 accessed 20 September 2021.

4 Transborder Group,‘Transborder Access and Jurisdiction: What Are the Options?’(Discussion Paper No T-CY (2012) 3,Cybercrime Convention Committee,Council of Europe,6 December 2012),p 7.

5 Clough,Jonathan.(2014).AWorld of Difference:The Budapest Convention On CybercrimeAndThe Challenges Of Harmonization. Monash University Law Review.P.699.

6 United Nations Office on Drugs and Crime, ‘Comprehensive Study on Cybercrime’ (Report, February, 2013) (‘Comprehensive Study on Cybercrime’).

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opinion that international law,although its changes,still lacks regulation in cybersphere.Microsoft’s current President Brad Smith expressed that the world is in urgent need of a new«Digital Geneva Convention» to regulate state behavior in cyberspace1, he considers the changes that have happened in international law not to be effective since there are still no provisions on cyber wars and other issues.However,even with nonstate actors expressing worries,international law is still evolving on the matter of cyberspace due to a very fast digitalization. Many countries emphasize that the existing norms of international law have to adapt to a digital reality faster.

In order to battle the uncertainty and clarify its position, the United Nation’s Group of Governmental Experts on the use of cyber technologies affirmed that the application of existing international law norms is possible with regards to cyber activities2. With only that, we may claim that the UN Charter, as well as its provisions in relation to self-defence alongside with other norms and principles of public international law would apply to cyberspace which already illustrate the changes that happened in international law in terms of its application3.

However, even after the publishment of the Tallin Manual on Cyber Operations4 which was conducted in 2013 by the international group of experts at the invitation of the NATO Cooperative Cyber Defence Center of Excellence to offer the most up-to-date guidance on the law of cyber activities under international law5 different scholars believe that situations which continue to appear in international arena might be found troubling for international law to resolve based on the current regulations.

We may look at some recent examples of cyberattacks that got the international community in question of whether international law mayresolve such disputes due to the lackof conventional regulation: a 2020 serious cyberattackthat hit Israel’s water infrastructure facilities was attributed to Iran by Israeli authorities and caused a response from the side of Tel-Aviv which resulted in cyberattack against Iranian port facilities6 and was condemned by the international community or a cyber interference in the 2016 election in the US which was attributed to Russia by the US authorities and led to a significant deterioration in relations between two countries7.A lot of highly qualified professors of public international law still do not have the only one solution to such complicated issues.

The answer that a changed international lawis to provide does not offer specificeither: without specialized treaties on cyber issues the only possible way to resolve the situation would be to refer to customary international law,which consists of wide state practice and opinio juris8. Considering that the Moonlight Laze was the first cyber incident between two states namelyRussia and the United States there have been more than 12 years of relevant state practice, situations that have occurred during this period created what states now consider to be an acceptable cyberspace behavior alongside with having the opinio juris formed in some cases9.This might also be very problematic for a judiciary organ to go through such diverse practice of states in making a final decision.

And even though a customary rule might exist due to the fact that international law is trying to adapt to the new kinds of crimes, international law is far away from establishing a consistent practice on a collection of evidence during the proceedings in cyberspace issues10. This remains an unsolved problem in international law which has no legally established body to analyze and precisely determine the exact intent of another party which conducted cyber activities. This assumption might be challenged with the International Court of Justice being the main body to resolve cyber conflicts according to the Budapest Convention11, but even at the ICJ the dispute of admissibility of evidence is still in

1 Transcript of Keynote Address at the RSA Conference 2017 «The Need for a Digital Geneva Convention», Brad Smith, Feb 14, 2017.P.10.

2 Report of the Group of Governmental Experts on Developments in the Field of Information and Telecommunications in the Context of International Security of July 2013 (A/68/98).P.2.

3 United Nations,Charter of the United Nations,24 October 1945,1 UNTS XVI.

4 Schmitt, Michael N. 2013.Tallinn manual on the international law applicable to cyber warfare: prepared by the International Group of Experts at the Invitation of the NATO Cooperative Cyber Defence Centre of Excellence. Cambridge : Cambridge University Press.

5 William Banks,State Responsibility and Attribution of Cyber Intrusions After Tallinn 2.0,95 Texas L,Rev 1487,1501 (2017).

6 Tal Mimran, Yuval Shany, Israel, Cyberattacks and International Law, International Electronic Journal Lawfare, Dec. 30, 2020, available at https://www.lawfareblog.com/israel-cyberattacks-and-international-law#.

7 Steven J. Barela, Cross-Border Cyber Ops to Erode Legitimacy: An Act of Coercion, Just Security (Jan. 12, 2017), available at https://www.justsecurity.org/36212/cross-border-cyber-ops-erode-legitimacy-act-coercion/.

8 North Sea Continental Shelf, Germany v. Denmark, Order, 1968 ICJ Rep 9, ICGJ 149 (ICJ 1968), 26th April 1968, United Nations; International Court of Justice,at para 77–80.

9 William Ashmore,Impact of Alleged Russia Cyber Attacks,Baltic Security and Defence Review 11,no.8 (2009).

10Brown,Gary,andKeiraPoellet,TheCustomaryInternationalLawofCyberspace,StrategicStudiesQuarterly6,no.3(2012).P.136.

11Council of Europe,Convention on Cybercrime,23 November 2001,Article 45.

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place and depends highlyon the decision of the Court itself to whether relyon the evidence presented or not1.This might be a huge problem considering that most of cases with cyberattacks or that are happening in cyberspace,particularly,the WikiLeaks case or others can only rely on evidence in computer systems and databases obtained illegally.

This example illustrates that even though international law has adapted to the modern world in some aspects, it still does have certain areas where the influence of a new digital era causes massive collusions connected mostly with the extraterritorial jurisdiction of cybercrimes, effects test with regards to the question of jurisdiction of cyberspace and responsibility of states for cyberattacks2.

Having that stated, we may conclude that international law will continue to become even more influenced by the digitalization of the world and will definitely evolve more in the nearest future.

Ларина С.М.

Университет имени О.Е.Кутафина (МГЮА) Студент

Big Tech: is selling data more profitable than selling oil?

Big Tech is an informal term that is used to refer to the major technology companies such as Apple, Google,Amazon,Microsoft,and Facebook.For now,the term expanded to all semi-influential tech companies.The influence that is caused byBigTech seems to be important and unimportant at the same time.Societyis still frightened bythe impact of Gas and Oil distributors that tend to destroy the land one day when technology seems like a safety tool to save the day.

However, as it grows, the image of ‘good’ technology is breaking down. People are being subjected to cybercrimes, not the least of which are being committed by the governors of the tech industry.

Cybercrimes, such as data theft, especially when they are performed by platform owners, raise several challenges for criminal law and criminal legislation. But in this case, domestic law only reflects international concern. Data leakage does not happen on a selective basis to the citizens: everyone who signed up for any social media platform is a potential victim.That is why the international community is raising awareness and signing treaties one after another3.

The execution of data theft is relatively new,although the rights it breaches are old as time.The most low-hanging fruit here is the Declaration of Human Rights (1948)4 with its article 3 which states: ‘Everyone has the right to life, liberty,and security of person’.

Security of a person is a very broad term, but it has a direct connection to the security of personal information. A person’s online persona—is not a trick for creating a new self.It is a reflection of a real-life persona.

Making a distinction between online and offline security is not reasonable. It is like speculating that money theft from one’s purse and from one’s bank account has a different loss capacity.This statement is also supported byEuropean Convention on Human Rights,which specified that the part of the term security of a person might also meanrespect for a private life (article 8)5.

Modern researchers claim that the way personal information is held and protected is an inseparable part of private life protection6.However,being the fundamental sources for human rights image,these acts onlybuild a base for further legislation.

Budapest Convention (or Convention on Cybercrime 2001)7 was introduced as a response to the radical changes in regular life caused by internet activity spread. It defined all of the novelties back then. Not only civil torts were

1 Mansour Fallah, S., The Admissibility of Unlawfully Obtained Evidence before International Courts and Tribunals, 19(2) The Law & Practice of International Courts and Tribunals (2020),147–176.P.156.

2 Denis T. Rice and Julia Gladstone, An Assessment of the Effects Test in Determining Personal Jurisdiction in Cyberspace, The Business Lawyer,Vol.58,No.2 (February 2003).P.601–654.P.602.

3 The European legal framework on cybercrime: striving for an effective implementation // Crime,Law and Social Change,54(5), 339–357 URL: https://d-nb.info/119190590X/34.

4 Universal Declaration of Human Rights // United Nations URL: https://www.un.org/en/about-us/universal-declaration-of- human-rights.

5 European Convention on Human Rights // European Court of Human Rights URL: https://www.echr.coe.int/documents/ convention_eng.pdf.

6 Your right to respect for private and family life // Citizens Advice URL: https://www.citizensadvice.org.uk/law-and-courts/civil- rights/human-rights/what-rights-are-protected-under-the-human-rights-act/your-right-to-respect-for-private-and-family-life/.

7 Convention on Cybercrime // Council of Europe URL: https://rm.coe.int/1680081561.

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supplemented by infringement of copyrights,but illegal access,data interference,and more were officially recognised as criminal offences.All that seems to be a legit solution for the upcoming problems.But who would know,that there would be huge data-collecting platforms,which we all would use voluntarily?

The first major data leakage scandal happened in 2018,when Cambridge Analytica1,the company,which at the time worked for Trump’s election campaign,harvested data from 87million Facebook users through a simple quiz.The consequences of this incident were not really serious (users got pro-Trump ads on their Facebook page) compared to following Facebook cybercrimes,but it showed the loophole in the Facebook security firewall.After the conflict was almost settled down without anylegal action,social media platform was accused of knowing about its data leakage and resting on one’s oars.This claim was supported by many facts, including Facebook and Cambridge Analytica sharing a few managers. In other words, people, who worked for Cambridge Analytica used to work or even at the time worked for Facebook, being not just low-level staff, but board members and whistleblowers. However, the tie on the neck of Facebook’s CEO Mark Zukerberg was going to tighten even more.This events were followed by many others,creating a‘domino effect’.

In 2019 Facebook users faced new data leakage, but, for this time, more than 500 million of them. The data was collected and then published online on underground websites used by cybercriminals. Citizens of 106 countries were under attack. It quickly became clear this was not a new data breach, but an older one that had come back to haunt Facebook and the millions of users whose data are now available to purchase online.The data breach is believed to relate to a vulnerability that Facebook reportedly fixed in August of 2019.While the exact source of the data can›t be verified,it was likely acquired through the misuse of legitimate functions in the Facebook systems.

Further investigation revealed,that it was not a hacking incident,but a misuse of a perfectly legitimate function of the Facebook platform. Just like the with Cambridge Analytica scandal, Facebook was entirely responsible for this yet it was making excuses as it was not a theft but data scraping.

As for now,it seems important to show the difference between data leakage and data scraping.Data scraping is a legal technique that is used to collect the data from publiclyavailable resources,basically,an extraction tool.In contrast, data leakage is the unauthorised transmission of data from within an organisation to an external recipient,i.e.theft.

After the unfortunate events, Facebook finally faced legal action2. The Data Protection Commission (Ireland) launched a formal inquiry into the matter to establish whether the incident constituted a breach of the General Data Protection Regulation.Under the law,the maximum fine that can be imposed for a breach is 4 % of global turnover or € 20m.Moreover,the US Federal Trade Commission also made its voice heard and fined Facebook $ 5bn for numerous cybercrimes including the two mentioned above3. FTC accused Facebook of giving other big tech companies like Amazon extensive access to users’ personal data, in effect exempting them from its usual privacy rules.The press agents from all around the world are still waiting for Facebook and FTC to comment on the dispute settlement.

This case among other things raises a question: ‘was the data leaked due to the poor system and security services imperfection or it was sold?’

There’s no clear evidence, that Facebook or any other social media platform is selling its users’personal data. However, tools like ad-targeting do not seem legit neither to users nor to lawyers.Giving away the access to ‘online behaviour’of the user to show them the ad connected to it lays in a greyzone.And,of course,Facebook does not do that for free.Independent researchers claim that Facebook makes at least $ 200 for one user’s personal information4. It leaves the company with a $ 55.8bn profit per year. For instance, Saudi Aramco, the biggest oil-production company in the world made $ 200bn the same year.This difference might seem crucial,but it’s a comparison between two completely different fields.It’s a comparison between limited natural resources and the data,which,unlike oil,only increases in its quantity.

Every day millions of people worldwide produce terabytes of data. They sign in for a new social media platform, click on the ad in their web browser and post a picture of their pet. While being seemingly useless, this information

1 Revealed: 50 million Facebook profiles harvested for Cambridge Analytica in major data breach // The Guardian URL: https:// www.theguardian.com/news/2018/mar/17/cambridge-analytica-facebook-influence-us-election.

2 Facebook faces mass legal action over data leak // BBC.URL: https://www.bbc.com/news/technology-56772772.

3 Facebook data scandal: Social network fined $ 5bn over ‘inappropriate’ sharing of users’ personal information // Independent. URL: https://www.independent.co.uk/news/world/americas/facebook-data-privacy-scandal-settlement-cambridge-analytica- court-a9003106.html.

4 What Your Data Is Really Worth to Facebook // Washington Monthly URL: https://washingtonmonthly.com/magazine/july- august-2019/what-your-data-is-really-worth-to-facebook/.

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keeps the key for accessing someone’s private life.International treaties created the base for recognition of the importance of privacy offline and online.Legislators from all around the globe have an urgency to implement it correctly.

Мжельская А.C.,Звонарев А.А.

Университет имени О.Е.Кутафина (МГЮА) Студенты

Own-a-piece-of-anything?

Would you like to buy a piece of Mona Lisa?

Maybe you would like to own а quarter of Banksy’s painting?

What do you think is more difficult to buy: a piece of Mona Lisa or a cup of coffee in Cofix? It is astonishing but now it is not only possible, but also on the front burner. Today almost everyone knows about the existence of the stock market.The mechanics of buying and selling shares is becoming an increasingly popular way to save money not only in Russia, but in the whole world.Along with the popularization of buying a «piece of the company», methods of buying a «piece of something» are becoming more and more accessible.The most popular item to buy piece by piece is art.It is an open secret that art objects are an element of luxury in the up-to-date world.Paintings by Picasso, Monet, Rembrandt and others can be worth several million dollars.

Art assets are also a great way to save money.According to Forbes research,the growth in the cost of paintings by the 100 most popular artists since 2000 has significantlyoutpaced the dynamics of the S&P500.For example,the cost of a painting by Pablo Picasso in 2018 increased by 7.4 %1.The emergence of derivative financial instruments already in the 2000s significantly lowered the threshold for entering the art investment business. Now the New York startup Masterworks is activelydeveloping,with the help of which investors can buysmall shares in paintings byfamous artists for 1 202.During the COVID-19 pandemic,there was a sharp increase in demand for such investments,as in conditions of self-isolation and overheated stock markets, people were looking for new ways to invest money. Introduced back in early 2020, this «secondary market» for paintings is the first online platform to buy and sell art investments while providing liquidity potential. Modern methods of digitalizing assets, such as blockchain and cryptocurrencies, allow almost everyone to feel like the owner of a piece of Munch’s or Cézanne’s paintings.As the market for one-piece-to-buy assets grows,there are many legal gaps that are becoming increasingly urgent to fill.

The art assets securitization market has been developing for a long time. This is due to the similarity to the financial instruments market in many aspects.Information about the issuer on the art market is information about the author, his works, and their recognition and relevance. Market capitalization is the value of all submitted works. The depth is the turnover for the last 12 months,and the width is the number of artists represented.Also,there have been art indexes for a long time,representing dynamic statistics of market movements (Mei Moses Annual Art Index).

The question is «How does the art asset securitization market work?» There is the most commonly used scheme: securities created on the basis of the considered group of non-financial assets (for example, paintings) are long-term bonds with a zero coupon and an expiry date similar to the moment when the assets are supposed to be sold. In this case,however,it turns out that we are not dealing with the right of ownership for one painting (for example,per square centimeter of Mona Lisa), but with the right of ownership of a set of assets. Nevertheless, such methods, in general, are quite well regulated byRussian legislation.Quite often,some private communities come together to buyindividual works and even create a small portfolio. Such clubs were the Peau de L’ours club in the 1890s and Léon Lambert’s art club in the 1970s (famous for the works of Giacometti and de Kooning,sold through Art of Artemis,a dealer company opened in 1970 byLambert and David Carritt)3.It turns out that securities created on the basis of the considered group of non-financial assets will be long-term bonds with a zero coupon (similar to US Treasury bonds).

However,despite the fact that the securitization of art objects through traditional financial instruments has a fairly serious legal regulation, the emergence of such methods of securitization as smart contracts and cryptocurrencies

1 Artinvestment.ru. Индекс «голубых фишек» Artprice100 2019 всё еще превосходит индекс S&P 500 в долгосрочной пер-

спективе // URL: https://artinvestment.ru/news/artnews/20191220_blue.html (дата обращения: 20.09.2021).

2 Masterworks.Ourmissionistodemocratizethe$1.7Tartmarket//URL:https://www.masterworks.io/about/about-masterworks (дата обращения: 19.09.2021).

3 Аввакумова А.Н.Секьюритизация нефинансовых активов : дис.…соискание степени магистра экономики.М.,2010 // URL: http://www.mirkin.ru/_docs/dissert059.pdf (дата обращения: 22.09.2021).

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has become a completely new challenge not only for the economic,but also for the legal space.These methods bring with them typical blockchain problems.Firstly,there is an extremely low entry threshold that does not allow potential investors to be protected from fraud, illiquid assets and their theft. So, for example, to invest in an art fund that owns secretary assets, it is necessary to have not only an impressive amount of money, but also the status of a qualified investor.The requirements for such funds are also, as mentioned above, extremely high.To buy a conditional token of the alleged painting, you just need to poke a button and now you seem to already own a piece of Bryullov’s Pompeii. Needless to say,the appearance of fraudsters in such a market is a matter of time.It should also not be forgotten that the art market is already famous for regular scandals with the replication of paintings and their subsequent sale as originals.Secondly,while traditional financial instruments are used by professionals to estimate the cost of a painting and then divide it into «pieces»,which means that the par value of shares and bonds allows an objective assessment of the share of a particular person’s ownership of a certain piece of art,with blockchain everything is far from so simple. You simply own a certain number of coins of the issued token, but the Russian legal field does not recognize this ownership as the ownership of certain property,which means that you do not have rights to it.

Are you still sure that it is more difficultto buy a piece of the painting «Mona Lisa»?The lawyer will answer this question that there is no fundamental difference. Since the law imposes almost the same requirements on both transactions. Moreover,judicialpracticedoesnotexcludethepossibilityoftheemergenceofcommonsharedownershipofindivisible property at the will of the sole owner of the thing.A broad interpretation of the norm contained in Art.244 of the Civil Code of the Russian Federation,allows the owner to freely change both the legal and physical properties of the thing, to discover other ways to exercise his right1.The Order of the Federal Financial Markets Service of Russia of 10.11.2009 № 09-45 /pz n (as amended on 11.10.2017) is still valid, but it can hardly be called an act that keeps pace with the times—this order is very outdated,since the institution of investment funds is changing and improving literally every day, the 2017 edition is far behind the state of affairs for 2021. The order establishes the ability of management companies to attract shareholders’ funds for investments in art objects2.As practice shows, government regulation of collective investments is much more serious than regulation of individual transactions (that is, when buying a bond, which is based on artistic value,the investor is much more protected than when buying the value itself).

Thus, against the backdrop of a shortage of reliable and profitable investment items and in order to diversify the investment portfolio, more and more investors are seeking to enter the non-traditional asset market. This process contributes to the development of the institution of securitization of non-financial assets. Historically, investment in art has usually not had constant access to liquidity, but the second decade of the 21st century has shown that buying a stake in certain, often indivisible, objects is just as profitable as it is simple. In Russia, despite a certain number of transactions, the level of development of securitization is not high and has a significant potential for growth. The volume of securitization transactions in the US and EU is significantly higher than the Russian figures3.

Currently, there is a lack of legal mechanisms in the Russian financial market to properly ensure the fulfillment of financial obligations.For example,the basic model of securitization of financial assets assumes that the fulfillment of obligationsonissuedsecuritiesissecuredbythepledgeofrightsofclaims,whicharedirectlytheobjectofsecuritization. At the same time, the Russian legislation on the pledge of rights is fragmentary, and in some issues contradictory, which increases the risks of investors when using this type of property as a pledge when issuing securities.Thus, the authors of this scientific work see an urgent need for the adoption of the already existing bill № 249609 5 of the Federal Law «On the specifics of ensuring the fulfillment of financial obligations»4.

The experience of foreign countries testifies to the high investment value of the population’s savings and the need to develop mass investment, which is the main argument in favor of adopting this experience. Since most small investors are not inclined to risk, the investment object must be highly reliable. The prospects for the nonfinancial assets under consideration to become such an object are very high, and the inclusion of these assets in the securitization process will help them become available to a wide range of investors. Of course, such investment will

1 Гражданский кодекс Российской Федерации (ч.1) от 30.11.1994 № 51 ФЗ // СЗ РФ.1994.№ 32.Cт.3301.

2 ПриказФСФРРоссииот10.11.2009№09-45/пз н(вред.от11.10.2017)«ОбутвержденииПоложенияоснижении(ограничении) рисков,связанныхсдоверительнымуправлениемактивамиинвестиционныхфондов,размещениемсредствпенсионныхрезервов, инвестированиемсредствпенсионныхнакопленийинакопленийдляжилищногообеспечениявоеннослужащих,атакжеобутвержденииизмененийвнекоторыенормативныеправовыеактыФедеральнойслужбыпофинансовымрынкам»(зарегистрированов МинюстеРоссии20.01.2010№16030)//Бюллетеньнормативныхактовфедеральныхоргановисполнительнойвласти.2010.№10.

3 Орехова Е. Анализ секьюритизация в РФ как шанс для банков и тест для инфраструктуры / Reuters // URL: https://www. reuters.com/article/idRUL8N1OM1CO (дата обращения: 23.09.2021).

4 Проект № 249609 5 Федерального закона «Об особенностях обеспечения исполнения финансовых обязательств» // Официальный сайт Государственной Думы России www.duma.gov.ru.

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actually deprive them of the aesthetic pleasure of owning a valuable item,but it will enable market participants who do not own significant amounts of funds to diversify their portfolio by investing in non-traditional assets.

Пиворович Е.И.

Университет имени О.Е.Кутафина (МГЮА) Студент

The digital totalitarianism in the modern Internet space

The world has never faced such rapidly developing power which absorbs the society as cyber technology. Due to the «digital explosion,» geographical boundaries have vanished, people have found new ways of doing business, and genuine democracy has become available on the Internet. Modern Internet space promotes freedom in people’s actions. Cyber-technologies possess an extraordinary power that they are «technologies of liberation1». However, not everyone believes in genuine freedom of it. Cyber communication has made pervasive and influential forms of social control possible.

The first steps in digital control were taken in China. «The social loan program2» made the real rating system of citizens. The system allows law-abiding citizens to get some social privileges from the government as well as perpetrators get chastisements which can be expressed in the harshest way.(for example: if a citizen does not obeythe law,he or she will be refused to get a lone or to rent a flat).The Chinese government considers this system to be very easily composed,and it does not require any super-efforts—everyone has to obey the law.The information on citizens’ lives comes from government agencies and is processed with the help of big data3. One of the main problems is that the rules are very vague (in contrast to the rules for corporations4),and this disinformation may play a bad joke on the Chinese.However,Chinese society does not worry about such a lifestyle; from the very beginning,Chinese history was developing in this way.The created system of vertical management led to particular dilemmas in the state. «For this reason,emperors used their house eunuchs to oversee bureaucrats.

Nevertheless, how to govern the eunuchs? During the Ming Dynasty, an emperor set up a «eunuch remediation bureau» to oversee eunuchs.Today the Chinese Communist Party monitors the government; The party’s organizational department looks after the party…5».The breath of fresh air was given to China from 1987 to 2012 after the revolution when people were allowed to express their thoughts and be out of the governmental control.Afterward,the totalitarian mode was removed,and it began to develop,especially during the COVID-19.Due to digital development,surveillance was directly connected with the life of every person. The system violates all human rights, but, unfortunately, the Chinese can do nothing with it because all of China’s history has been imbued with the spirit of totalitarianism.

Against the background of propaganda of freedom, human rights, and other tendencies of the 21st century, the governments’ digital control raises many questions. The policy of digitalization forms digital inequality because «since the well-being of society, social groups, individuals increasingly depends on the ability to use information and communicationtechnologiestoaccessinformationandknowledge6».Forexample,noteverypersoncanusetheInternet due to age (pensioners) or some other circumstances directly related to the federal policy of the state (25 thousand settlements of Russia live without the Internet and telephony7). In the Russian Federation, the digitalization process is less powerful and has a lower propagation speed.However,I cannot say that people do not feel digital control from the government.The Yarovaya’s law8 was created to ensure safety in the Internet space; however, nobody knows how users’personal information is used and how long operators keep it.

Today the main government aim is to provide a new and sustainable form of legislation in the Internet area, which would control and make the digital communication safe.The inactive provisions of the sovereign Internet9 law come into force. The state and municipal unitary enterprises and institutions will be electronically obliged to follow

1 Larry Diamond,«Liberation Technology»,Journal of Democracy 21 (July 2010).

2 The State Council’s question on the creation of a social credit system (2014–2020),www.gov.cn.

3 Chunyu Jiang,Big data industry in China,China academy of Information and Communications Technology 19 (June 2018). 4 Key opinions on accelerating social credit construction State development (2016) № 33,www.gov.cn.

5 Peacekeeping war China-US relationships,IA Krasnaya Vesna 19 (May 2020).

6 A.R.Safiullin,O.A.Moiseeva,Digital Inequality: Russia and other countries in the fourth industrial revolution (2019). 7 Marta Litvinova,Izvestia 31 (July 2020).

8 Yuli The law about sovereign Internet 1 (November 2019), duma.gov.ru a Tishina, Yulia Stepanova, Dmitry Shestoperov, Kommersant 9 (October 2020).

9 The law about sovereign Internet 1 (November 2019),duma.gov.ru.

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special standards in the field of cryptographic information protection, during the online communication with citizens or organizations.What is more,the new amendments in the personal data protection law prohibits obtaining consent to the processing of personal data by default.However,there is still a lot of work to be done to implement and create a secure Internet space,where a new sustainable regulatory framework will operate.

In conclusion,I stronglybelieve,that due to the technological progress and development of social communications, the Government has an abilityto create a safe place in the Internet,where there’ll be no discrimination and people will fell protected and confident in their rights.

Хажуева А.М.

Университет имени О.Е.Кутафина (МГЮА) Студент

The Legal Status of Embryos in Modern World

Nowadays we are spectators of the transformation of the world. The rapid growth and intensive development of digital technologies,massive volume of information and new spheres of life are a significant ground for forming a new, «digital» society.

In the condition of digitalizing the primary goal of law is to maintain all the moral principles and include them in up-to-day realities.All changes must be undangerous and regulated by law.

Due to the fast technological progress lawyers do not manage to create some new legal aspects that would satisfy our reality. Unfortunately, many problems are still unsolved. When we are talking about Family Law, partly Civil Law, there is a big gap in questions connected with embryos.

Because of the progress manypeople have a chance to have a babybya relativelynew method—IVF (extracorporal fertilization). Nowadays there are many cases when parties cannot decide with whom their embryo will stay if one party has changed his mind,or should an embryo be saved in a medical hospital for clinical researches if both parties refused from this procedure.

In my work I am going to consider the problem of the legal status of embryos in modern world and create some possible decisions how to regulate this issue.

The right to life is a fundamental natural right,on which,as on the foundation,all other human rights are based.Life is the main prerequisite for their realization and implementation.But when does this right arise: from the moment of birth or earlier? Is it legal to carryout pregnancyreduction or sexselection during invitro fertilization (hereinafter IVF)? Is it possible to use human embryos in basic research, in therapeutic or commercial purposes?1 Is it even appropriate to talk about the right of an embryo to life and the right of a person to be born?

We can quote the Preamble of the Convention on the Rights of the Child,which states that «a child needs protection, including appropriate legal protection, both before and after birth». But from what moment do we need to protect embryos? In paragraph 1 of Article 4 of the American Convention on Human Rights, it establishes: «Everyone has the right to respect for his life. This right is protected by law and, as a rule, from the moment of conception». The UN Convention on the Rights of the Child of 1989 in Article 1 establishes that «every human being is a child until the age of 18». In 1987, The World Medical Association adopted a Statement on Artificial Insemination and Organ Transplantation, in which it called on all doctors to «act in compliance with ethical standards, showing due respect… to the embryo from its inception.»

There is a statement in paragraph 17 of the Constitution of the Russian Federation: «Fundamental human rights and freedoms are inalienable and belong to everyone from birth».In myopinion,it proves the uncertain position of the embryo.The question is: should the Constitution be amended by introducing embryos and fetus?

I suppose an embryo can be regarded as property from the position of civil law. Of course, parents who decided to conceive a child by in vitro fertilization, have ownership rights. In every case medical institution must act in the interests of parents.Only parents can decide what to do with their embryo.

But there are some conflicts between future parents very often. For instance, a man doesn’t want to have a baby after creating embryo.Should woman stop her desire to become a mother and do not save her fetus? I believe we need to have the presumption to act in embryo’s interests in such cases.

OnceAmerican court said that «as a rule,the interests of the partywho does not want to procreate should prevail,unless, of course,the other partyhas a real opportunityto become a parent without using the considered options.If there is no other real alternative,the arguments in favor of achieving pregnancy using these embryos should be considered».

1 URL: https://legalacademy.ru/sphere/post/zhivye-aktivy-problemy-i-perspektivy-regulirovaniya-biobankirovaniya.

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