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Wrongful Improvers as a Guiding Principle for Application of the FTC’s IP Deletion Requirement

By December 1, 2022January 17th, 2023No Comments

Abstract: The 2021 Federal Trade Commission (FTC) investigation into cloud storage app developer Everalbum resulted in a consent decree that required Everalbum to delete not only unlawfully collected data, but also algorithms created using that data. The FTC had imposed this kind of penalty only once before. Questions remain about how the FTC will apply this so-called intellectual property (IP) deletion requirement in the future. This Comment argues that situations where companies develop intellectual property from misappropriated consumer data are analogous to cases where courts seek to apply the property law rule of the wrongful improver, i.e., where one party knowingly improves another’s property. The rule requires that courts grant title to the owner of the original property regardless of how much the value of the property has increased. Applying the wrongful improver rule can guide the FTC’s future application of the IP deletion requirement in two ways. First, application of the rule suggests that the IP deletion requirement should apply regardless of what type of data (biometric or non-biometric) has been misappropriated. Second, the rule indicates that a company must forfeit not only rights to their particular copy of their IP, but also all the IP rights that attach to it. Application of this rule will thereby strengthen the FTC’s power to punish offenders and more significantly deter companies from unlawfully collecting consumer data.

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