In TNG's first bona fide classic, the nature of Data's existence becomes a fascinating philosophical debate and a basis for a crucial legal argument and Federation precedent. Commander Bruce Maddox (Brian Brophy), on behalf of Starfleet, orders Data to be reassigned and dismantled for scientific research in the hopes of finding a way to manufacture more androids with his physical and mental abilities. When Data says he would rather resign from Starfleet, Maddox insists that Data has no rights and takes it up with the region's newly created JAG office, headed by Capain Philipa Louvois (Amanda McBroom), who serves as judge. Picard takes on the role of Data's defender.
This episode plays like a rebuke to "The Schizoid Man," taking the themes that were intriguing in that episode and expanding upon them to much better effect. What rights does Data have under the law, and is that the same as what's morally right to grant him as a sentient machine? Of course, one of Maddox's arguments is that Data doesn't have sentience, but merely the appearance of such. The episode cleverly pits Riker against Picard; because the new JAG office has no staff yet, the role of prosecution is forced upon the first officer. Riker finds himself arguing a case he doesn't even believe in — but nevertheless ends up arguing it very well, including with a devastating theatrical courtroom maneuver where he turns Data off on the stand.
Picard's rebuttal is classic TNG ideology as put in a courtroom setting. The concept of manufacturing a race of artificial but sentient people has disturbing possibilities — "an entire generation of disposable people," as Guinan puts it. Picard's demand of an answer from Maddox, "What is he?" strips the situation down to its bare basics, and Picard answers Starfleet's mantra of seeking out new life by suggesting Data as the perfect example: "THERE IT SITS." Great stuff.
Still, what I perhaps love most about this episode is the way Data initially reacts to being told he has no rights. He takes what would for any man be a reason for outrage and instead approaches the situation purely with logic. He has strong opinions on the matter, but he doesn't get upset, because that's outside the scope of his ability to react. His reaction is based solely on the logical argument for his self-protection and his uniqueness. And at the end, after he has won, he holds no ill will toward Maddox. Indeed, he can sort of see where Maddox is coming from.
Trivia footnote: This is also the first episode of TNG to feature the poker game.