Virginia and West Virginia Adopt Laws Regulating Over-the-Air Updates

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With over-the-air (OTA) updates for motor vehicles becoming increasingly prevalent in the United States, consumers will be able to receive and install updates to vehicle firmware and software.  Some updates might simply provide improved software code for basic vehicle functions, while other updates might provide enhanced performance features. Virginia and West Virginia have taken an early lead in regulating these OTA updates, with both states adopting laws that require OEMs to compensate dealers for helping customers who vehicles are “subjected” to an OTA update and also require that OEMs make certain disclosures to potential buyers concerning the OTA update capabilities of new vehicles.

In Virginia, effective July 1, 2022, Va. Code Ann. § 46.2-1571(B)(5) will provide that failure by a manufacturer to “provide compensation . . . to a dealer for assistance requested by a customer whose vehicle was subjected to an over the air or remote change, repair, or update to any part, system, accessory, or function by the vehicle manufacturer or distributor and performed at the dealership to satisfy the customer” shall be unlawful. Subdivision (10) of that statute also will require that manufacturers provide to dealers “a written disclosure that may be provided to a potential buyer of the vehicle of each accessory or function of the vehicle that may be initiated, updated, changed, or maintained by the manufacturer . . . through over the air or remote means, and the charge to the customer for such initiation, update, change, or maintenance.” OEMs can comply with this requirement by notifying dealers that this information is available on a website or by other digital means.  Id.

West Virginia enacted virtually identical amendments to its dealer statute effective June 10, 2022.  Under W. Va. Code § 17A-6A-8a(a)(4), manufacturers must “[p]rovide compensation to a new motor vehicle dealer for assistance requested by a customer whose vehicle was subjected to an over the air or remote change, repair, or update to any part, system, accessory, or function by the vehicle manufacturer or distributor and performed at the dealership to satisfy the customer.” And W. Va. Code § 17A-6A-10(f) declares unlawful the failure by any manufacturer to provide to dealers “a written disclosure that may be provided to a potential buyer . . . of each accessory or function of the vehicle that may be initiated, updated, changed, or maintained by the manufacturer . . . through over the air or remote means, and the charge to the customer for the initiation, update, change, or maintenance that is known at the time of sale.” Like Virginia, OEMs can comply with this requirement by notifying dealers that this information is available on a website or by other digital means. Id.

These amendments at least implicitly confirm the right of OEMs to transmit OTA updates directly to vehicle owners without the involvement of dealers. The question of whether OEMs would be able to do so was not free from doubt; for example, the initial version of the legislation proposed in the West Virginia Legislature in February 2022, House Bill 4560, would have prohibited any entity other than a dealer from providing “post-sale software and hardware upgrades or changes to vehicle function and features.” In this regard, the recent amendments to the Virginia and West Virginia dealer statutes constitute significant and positive developments for consumer convenience and safety; a contrary rule forcing vehicle owners to bring their vehicles to dealers for even routine software updates could only serve to delay the dissemination of updated software code and interfere with OEM intellectual property rights.

These amendments are not models of clarity and are not necessarily consistent with the way in which OTA updates works. The verb “subject” means “to cause or force to undergo,” but OEMs do not “subject” vehicles to OTA updates; rather, manufacturers typically transmit OTA updates to vehicles via cellular technology and vehicle owner then decide for themselves whether to install a particular OTA update through a user interface. Moreover, these amendments do not appear to contain any temporal limitation. If a “customer” can simply “request” assistance from a dealer any time after an OEM makes an OTA update available, regardless of how long after the vehicle was sold, these amendments may dramatically impair the terms and conditions on which OEMs license installed vehicles firmware and software, impose additional costs on OEMs, and inadvertently serve to discourage OEMs from making OTA updates available to consumers, particularly for older vehicle models whose warranty coverage has long since lapsed.

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.

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