FRAND stands for Fair, Reasonable And Non-Discriminatory. Art. 8 EU Data Act specifies the conditions to which the data holder provides data to a third party recipient.
Fairness
The Model Contractual Terms take into account the prohibition of unfair contract terms enshrined in Article 13 of the Data Act. This is a fundamental fairness protection in the B2B sector: clauses that are imposed unilaterally by one party and that constitute a gross deviation from good business practice or violate good faith are not binding. Practical examples of unfair terms include:
- Unilateral exclusions or limitations of liability for intentional or grossly negligent acts
- Exclusive right of the data owner to determine whether data is in accordance with the contract
- Unreasonably short notice periods or changes to essential terms without the right to terminate
Reasonable
- The EU Data Act and the Model Contractual Terms stipulate that data holders may charge reasonable compensation that covers the direct costs for making the data available, including investments in all steps before that. Compensation must be based on objective factors such as the effort involved in extracting and providing data, quality assurance, technical infrastructure, the complexity of the data, and any necessary anonymization or pseudonymization measures.
- SME’s and certain other entities shall not pay more than the above cost compensation. From other entities the data holder can include a margin but may not constitute excessive or unreasonable fees.
Prohibition of discrimination
Article 8(3) of the EU Data Act prohibits data controllers from discriminating between comparable categories of data recipients. This means that if a data controller has already provided data to a competitor or partner under certain conditions, it may not arbitrarily tighten these conditions for other comparable recipients. Non-discriminatory also means that the conditions must not hinge upon the size of the data recipient and that, in general, the same clauses are used.
In the event of a dispute, it is required that the data holder proves that there are ojective reasons for different rules by providing information to justify its actions. Hence, the data holder should collect evidence for objective differences re. the licensing situation to justify different clauses.