Drone Privacy Claims on the Horizon


The headlines these days have focused on revelations that the government has conducted telecommunication dragnets from domestic networks on a regular basis. The issue has garnered attention because of sensitivity to constitutional protections governing an individual’s right to privacy. Fortunately for private companies complying with records subpoenas issued pursuant to the Patriot Act, they enjoy statutory immunity from lawsuits. Enter unmanned aircraft systems, commonly referred to as drones. Not the ones flying military missions in faraway places, but the drones that will be operating in your own backyard. They are waiting in the wings, and bring with them high-risk exposures for insurers providing personal injury coverage to manufacturers, distributors, owners, operators, consultants and their customers who are looking to enter the market.

Unmanned aircraft systems (UAS) consist of the unmanned aerial vehicles (UAV) and all of the associated support equipment, control station, data links, telemetry, and communications and navigation equipment. They can range in size from as big as a 737 such as the Israeli-made Eitan, to small fixed-wing aircraft such as Boeing’s ScanEagle, to so-called “Nano Hummingbirds” measuring in at a few inches and weighing less than 20 grams. UAS can be used for a variety of purposes such as firefighting, search and rescue, traffic spotting, disaster relief, real estate advertising, border patrol, fisheries protection, weather and environmental monitoring, pipeline surveys, news and sports events coverage, aerial photography, crime scene documentation and agricultural operations. Their principal benefit is to allow human operators to remain safely on the ground, where they can swap out at periodic intervals while allowing the UAS to conduct long-duration operations, often more inexpensively and efficiently than manned operations.

With some drones costing as little as $300, the potential for economic growth in this field is huge, and the commercial UAS market is projected to grow to $12 billion per year by 2018. Presently, commercial use of UAS is restricted to flight tests, demonstrations and training, for which operators must receive a special airworthiness certificate. But by 2020, it has been estimated there could be as many as 30,000 licensed UAV in the sky. In that spirit, the Federal Aviation Administration Modernization and Reform Act of 2012 (FMRA) authorized the FAA to develop a plan for the safe integration of UAS into the National Airspace System (NAS) by September 2015. As part of that process, the FAA will enter into contracts with operators at six test ranges to gather safety and technical information necessary for the safe and efficient integration of UAS.

The FAA is aware that the integration into domestic airspace raises privacy issues and thus will require the test site operators to have privacy policies in place and ensure that data handling procedures comply with federal, state and other laws regarding the protection of an individual’s right to privacy. Beyond that, however, it is unclear what rulemaking authority the FAA would have to address privacy concerns on a long-term basis. The Drone Aircraft Privacy and Transparency Act of 2013 was introduced in Congress to amend FMRA, by creating a comprehensive scheme to regulate the private use of drones, including data collection requirements and enforcement mechanisms. The bill would prohibit the FAA from issuing an operator license unless a data collection statement is provided, detailing information about the use of the UAS and the possible impact on privacy protections. Another bill, the Preserving American Act of 2013, would prohibit the use of UAS to capture images of personal or familial activity in circumstances showing a reasonable expectation of privacy.

Leaving aside whether the FAA is best qualified to oversee privacy protections (at least for the test site phase of UAS integration), it is clear that privacy is a paramount issue. There is significant potential for UAS technology to enable invasive and pervasive surveillance without adequate privacy protections. Insurers of companies that seek to develop commercial applications of UAS need to be aware of the risks. Policies often include coverage for personal injury, which typically consists of enumerated “ground-up” offenses. These include coverage for publication of material in violation of an individual’s right of privacy and the invasion of the right of private occupancy. Given increasing concerns about the potential for UAS encroachment on privacy rights, tort claims are nearly inevitable. To anticipate what might result from aerial activity, insurers need only take note of what has happened on the ground to Google. Earlier this year, Google agreed to pay $7 million to settle privacy litigation with 37 states arising from the inadvertent collection of personal data from unencrypted wireless networks through its StreetView project during 2008-2010. And it is still battling multiple class actions arising from that data collection in the U.S. Court of Appeals for the Ninth Circuit. Operations arising from UAS activity may be more pernicious than Google’s StreetView. UAS can include high-power zoom lenses, infrared and ultraviolet imaging, license plate readers, and may eventually feature video analytics that allow facial recognition. Individual data collected from these devices will probably elicit an even more vigorous debate with privacy advocates than StreetView, since this “eye in the sky” intrusion seems more direct and physical.

Should personal tort claims arise – and they no doubt they will – the typical policy wording will likely be construed as broad enough to trigger at least a defense obligation. While personal injury coverage is not necessarily limited to common law tort definitions, with regard to the covered offense of invasion of private occupancy, the term invasion could refer to a trespass, nuisance or some form of encroachment. The trespass may not need to be physical and need not involve an appreciable and tangible interference with the physical property itself. Thus, loud noise, an invasive odor or even a bright light might be sufficient to trigger coverage. The privacy element simply refers to the characterization of a place or activity intended or restricted to the use of a particular person, away from general observation and secluded from sight, presence or intrusion of others. Traditionally, aviation-type trespass claims emphasize the impact of the aircraft on the use and enjoyment of the surface property. Thus, considerations might include noise, vibrations or dust disturbances. Given the more discrete characteristics of drones, it remains to be seen how a trespass claim might be alleged. On the other hand, UAV are able to fly at much lower altitudes than fixed-wing aircraft, which could lead to more property-based claims. How the FAA defines navigable airspace for UAV may also have an impact on these claims.

With respect to the invasion of privacy offense, common law claims generally fall into four categories: intrusion upon seclusion; public disclosure of private facts; false light publicity; and appropriation of likeness. Coverage is therefore not limited to exotic or commercial-type torts, such as the appropriation of another’s name or likeness, or unreasonable publicity. For coverage purposes, covered claims may only need to essentially assert that the plaintiff’s right to be left alone was invaded in some manner (regardless of any notion of secrecy). That has been the rationale courts use to find personal injury coverage for claims arising from unsolicited fax advertisements. Furthermore, policies may contain no requirement that the offending material be communicated to a third party, i.e., a publication to “others.” But even if they did, there is always a possibility, in this age, that any material collected might be viewable by a third party. Coverage will probably be triggered if a court ultimately determines that the operation of a UAS has resulted in an intrusion upon an individual’s seclusion, where most UAS-related personal tort claims would likely fall. Thus, companies that intend operate UAS to collect data – whether a real estate company doing an aerial survey of land, an oil company inspecting a pipeline, a news organization capturing images for a story – have potential exposure. Absent an exclusion of coverage for these types of claims relating to UAS (the risk of bodily injury or property damage claims would probably not raise any unusual challenges from an underwriting perspective), insurers extending this coverage would have an interest in reviewing the prospect’s data collection and data minimization procedures. Since mass licensing won’t occur until late 2015, there is still time to further research and prepare for insuring these risks.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sedgwick LLP | Attorney Advertising

Written by:


Sedgwick LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.