Budget 2023: AI and quantum drive raises legal questions

Cerys Wyn Davies, Gill Dennis, Luke Scanlon, and James Talbot were commenting after UK chancellor Jeremy Hunt delivered his spring 2023 Budget in the UK parliament on Wednesday. Enabling growth through promoting innovative uses of new technologies was a core theme of Hunt’s speech.

Among the technology-related announcements Hunt made was his confirmation that the government endorses all the recommendations made by Sir Patrick Vallance following his review of pro-innovation regulation of digital technologies (20-page / 235KB PDF). Sir Patrick’s recommendations include that the UK work with regulators to develop a multi-regulator sandbox for AI to be in operation within the next six months.

Recently, business group the Confederation of British Industry (CBI) said government plans for sectoral, principles-based regulation of the use of artificial intelligence (AI) systems by businesses in the UK should be supplemented with a centralised framework that helps ensure there is a coordinated approach to AI governance. The government is expected to set out its next steps for AI regulation before the end of this month. On Wednesday, the Information Commissioner’s Office (ICO) updated its existing guidance on AI and data protection.

Another of Sir Patrick’s recommendations concerns the interaction between generative AI and intellectual property (IP) law. He called on the government to “announce a clear policy position on the relationship between intellectual property law and generative AI to provide confidence to innovators and investors”.

Cerys Wyn Davies of Pinsent Masons, who specialises in IP law in the technology sector, said: “There is a fine line to tread between making development of AI easier, because of the volume of data that AI developers have to process to train AI tools, and recognising the intellectual property rights and investment of businesses in the creative industries. This has been brought into sharp focus recently with the legal action initiated by Getty Images against Stability AI.”

“It is clear from the government’s endorsement of Sir Patrick Vallance’s recommendation that it is seeking to deliver certainty around the relationship between intellectual property law and generative AI. This is key both to encourage the development of AI and to encourage the other creative industries. Certainty that pleases everyone, however, is going to be difficult to achieve as has been highlighted by the backlash against proposals from the UK Intellectual Property Office (IPO) to expand the scope of the text and data mining (TDM) exception that exists in copyright law to help AI developers train their systems,” she said.

Intellectual property law expert Gill Dennis of Pinsent Masons added: “The IPO landed on its proposals following a lengthy consultation exercise. Its papers provide a useful summary of how IP law applies to AI currently and, on the TDM exception specifically, highlight how a series of options for reform were considered. However, following the backlash from creative rights bodies, government minister Julia Lopez suggested in parliament in January that further news on the TDM exception policy would be detailed in a new ‘creative industries vision 2030’, which she said the government hopes to publish before Easter. All eyes will be on that document. It may be that the IPO revisits previous options for reform it had disregarded.”

Alongside the Budget (122-page / 3MB PDF) and Sir Patrick’s report, the government also published a new national quantum strategy (61-page / 523KB PDF) on Wednesday. The strategy contains a number of actions, including actions aimed at boosting quantum R&D in the UK, building skills in quantum technologies, scaling up investment, and providing a regulatory regime that supports innovative and ethical use of the technology.

Technology law expert James Talbot of Pinsent Masons said: Quantum computing technologies are still at a relatively new stage of development, arguably akin to where thinking and development of traditional computing was in the 1950s. This means that there are likely opportunities and challenges associated with the operation of quantum computing in the future that have not been imagined yet.”

“However, commonly cited opportunities include for enhancing and accelerating drug discovery and supporting the safe and efficient use of autonomous vehicles, while the sheer volume and speed of data processing is likely to raise fresh challenges for data protection law compliance and could render cryptography defunct as a security measure. Another issue for businesses, as more investment is poured into quantum computing, will be navigating the growing number of patents in this field,” he said.

“Quantum computing is new technology that will have to be operated within existing laws – today’s issues of how technology affects data rights and questions of liability are likely to be relevant to quantum too. It will be businesses that will drive innovation in quantum computing, so the government’s pledge to support innovative and ethical use of the technology through future UK regulation is welcome. In fast-moving technology markets, however, it is vital that regulatory frameworks are not too prescriptive and can be flexible, adaptable and technology-agnostic. The UK courts have already demonstrated a willingness to be pragmatic and business-friendly on matters of new technologies’ interaction with old law – that helps make the UK an attractive jurisdiction for investing in quantum computing,” he said.

Other technology-related measures announced in the Budget include plans to provide enhanced tax credit for R&D intensive businesses, such as those in the life sciences sector, and more detail on the UK’s intended shift in approach to medicines and medical technologies regulation. Further measures to support the scale-up of carbon capture use and storage technologies in response to the climate crisis were also announced by the chancellor.