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Data ownership proposals are widely misunderstood, aim at the wrong goal, and would be self-defeating if implemented. The Article shows, first, that data ownership proposals do not argue for the bundle of ownership rights that exists over property at common law. Instead, they focus on transferring rights over personal information through consent.
Second, the Article shows that understanding data ownership for what it truly is highlights its deficiencies. These are magnifying pre-existing problems of relying on consent in privacy, and producing a fatal flaw: a moral hazard problem where corporations lack incentives to take care ex-post, driving up harm. Recognizing these deficiencies entails abandoning the idea that property can achieve control over personal information. This Article is the first to take a law and economics approach to discussing data ownership, identifying such moral hazard problem that makes data ownership self-defeating.
The Article, then, develops proposals for privacy law reform amidst a national discussion on how to formulate federal and state privacy statutes. These involve including in states’ privacy statutes being discussed across the country a combination of what the Calabresi-Melamed framework calls property and liability rules. This mixed rule system is essential because property rules alone unequivocally fail to protect data subjects from the risks of future uses and abuses of personal information. This problem can only be remedied through ongoing use restrictions over personal data.
The Article matches its reform proposals with two doctrinal recommendations. First, reinforcing the purpose limitation principle, a key and underutilized ongoing use restriction in American law. This can be implemented at the enforcement level by the Federal Trade Commission. Second, bolstering private rights of actions in for privacy harm irrespective of whether such harm was coupled with a statutory breach. This can be implemented by the judiciary within current statutory provisions. In so doing, it informs two current privacy enforcement debates that can benefit from a law and economics approach
Ignacio Cofone ('18 JSD) is an Assistant Professor of Law and Norton Rose Fulbright Faculty Scholar at McGill University, where he teaches Privacy Law, Business Associations, and Artificial Intelligence Law. He's interested in how the law should adapt to technological change, and his research focuses on privacy law and algorithmic decision-making. His publications and working drafts are available on SSRN.