Eversheds Sutherland Lawyers Share Insights on Data Privacy, Cybersecurity, Intellectual Property and other Challenges Raised by Autonomous and Connected Cars

On May 3, 2017, Eversheds Sutherland hosted Transportation Disrupted, a symposium featuring panels with a cross-section of experts in fields that are driving the development and adoption of autonomous cars, including AI and robotics, insurance, cybersecurity, and data privacy.

Eversheds Sutherland lawyers Mary Jane Wilson-Bilik, Charlotte Walker-Osborn, and Griff Griffin, as well as corporate counsel for Amazon Web Services, Rob Czarnecki, led a panel on the data and intellectual property challenges posed by autonomous cars. Here are some of the key themes and takeaways from that panel:

1. Connected and Autonomous Cars Are Information Hubs

Even today, connected cars are hubs for data generated by vehicle systems. GPS location information, biometric information about passengers, and vehicle telematics information are all generated and/or collected by vehicle systems. As cars become more highly autonomous, even more data will flow through car infotainment systems, sophisticated external and internal sensors, and V2X communications technologies.

Further, data from these multifaceted sources may flow between and among many different parties, including insurance companies, original equipment manufacturers (OEMs), data brokers, advertisers, payment systems, content providers, and other service providers. While this trove of data promises to increase vehicle safety and efficiency, and presents new monetization opportunities, there are also challenges facing companies trying to unlock the data’s potential.

As companies collect, share and use car occupants’ personal data in new and unique ways, data privacy risks associated with these new technologies likely will also arise. Whether in the US, UK, or EU, companies would do well to ensure that their collection, sharing, and use of occupant data is consistent with applicable data privacy laws. In the EU, this will include the strict new General Data Protection Regulation (GDPR), violations of which can result in penalties up to 4% of a company’s global revenue. In the United States, companies will have to contend with a patchwork of state laws, as well as Federal Trade Commission (FTC) oversight of compliance with privacy policies. The FTC takes privacy policies seriously—advertising company InMobi recently paid a nearly $1 million settlement to the FTC after allegations that it tracked users without consent, in violation of its privacy policy. There are also consumer law implications within Europe and beyond that need to be factored in. 

Legal consideration aside, companies expose themselves to significant brand risks if their data collection and sharing practices surprise consumers, even if those practices are legal and consistent with applicable privacy policies. A recent case in point is Unroll.Me, which faced public backlash and issued an apology after users discovered it collected information from their email accounts.

2. Connected and Autonomous Cars Present New Cybersecurity Risks

Cyber-threats to cars must be taken seriously because of the immediate threat to bodily safety they present—if a connected car is compromised at 80 mph, lives are on the line.

As cars become increasingly connected and automated, they will continue to face new cybersecurity risks. The numerous connected components that make up autonomous cars come from different manufacturers and producers, making it harder to thoroughly test the whole system for vulnerabilities pre-launch. Therefore, some security issues may not be evident until the vehicle is live and on the road.

Further, as cars are increasingly connected, the number of attack surfaces for hackers to exploit increases. Hackers have already demonstrated vulnerabilities in ubiquitous OBD-II ports, and V2V and other V2X technologies may create new openings for hackers.

As companies navigate these cyber-risks, panelists stressed the importance of staying informed about associated regulatory developments. National Highway Traffic Safety Administration (NHTSA) maintains evolving standards on automotive cybersecurity, an area that has also recently garnered attention from the FBI. Further, companies involved in the manufacture, programming, and services associated with autonomous cars are looking to their lawyers to be proactive about allocating liability for cyberattacks, including through carefully crafted contractual provisions and acquiring cyber-insurance. Companies should also provide for adequate penetration testing, as well testing and audit rights in relation to subcontractors and suppliers.

3. Autonomous Cars Bring “Strange Bedfellows” Together, and Contracting and IP Challenges Follow

As autonomous cars become commercially available, it is unclear whether OEMs will maintain sole control or ownership over the entire process. The software, algorithms, and other information technology driving the car will become just as important, if not more so, than who has manufactured the chassis and assembled the car. These interactions between technology providers and OEMS have taken a few forms. Some of it is cooperative—OEMs are acquiring AI companies, and partnerships are forming among various automakers, tech companies, and insurers.

But much of it is competitive—there is a race between tech and automotive companies to patent key technologies for autonomous cars. Some challenges in this space include the recent Supreme Court decision in Alice v. CLS Bank, which makes it harder for companies to patent certain types of software inventions. This may also lead to some regulatory arbitrage, putting, e.g., China in the lead for patenting autonomous car technologies with recently revised patent examination guidelines that make it easier to patent software and business methods. There are also more general challenges as to who owns copyright in AI systems and who owns the outputs. There are various country-specific laws emerging around AI and robotics, as well as use of autonomous vehicles, which will need to be factored in.

Companies should also stay informed about standards developments. For example, NHTSA is currently proposing that a V2V communications technology mandate include a standard for using dedicated short-range communications (DSRC), while Institute of Electrical and Electronics Engineers (IEEE) and certain other industry groups are advocating for a tech-neutral approach to the V2V mandate, or a 5G standard for the technology.

Another question that companies will contend with is: “who owns the data?” or, alternatively, has the customer given you the rights you need to use it? As discussed above, cars are becoming important information hubs, and understanding who owns the data, and who can use it for what purpose, will be an important part of effective monetization.

Eversheds Sutherland continues to closely track legal and regulatory developments related to autonomous cars and will continue to issue legal alerts on this subject as developments warrant. We will also be participating in FTC’s upcoming workshop on June 28, 2017: Connected Cars: Privacy, Security Issues Related to Connected, Automated Vehicles. We hope you will consider attending as well to stay abreast of developments in this rapidly evolving area.