On October 26, 2015, the European Commission published the Policy Report of Working Group 4 (WG4) of the Alliance for Internet of Things Innovation (AIOTI). The AIOTI is a group of ICT industry stakeholders advising the Commission’s Directorate General for Communications Networks, Content and Technology (DG Connect) on policy and regulatory matters relating to the Internet of Things (IoT).
The Policy Report makes recommendations to the Commission in relation to the IoT in four key areas: privacy, security, liability and net neutrality. It is the outcome of six months of intensive work by the 200 plus members of WG4. WG4’s focus is to identify existing or potential market barriers that prevent the take-up of the IoT in the context of the Commission’s Digital Single Market strategy.
A major theme of the Policy Report is that, broadly speaking, the emergence of IoT does not necessitate new regulation. While IoT use is increasing rapidly, it is still in its nascent stages and the related technologies, business models and polices will undoubtedly evolve over a number of years. In such an environment, WG4’s recommendation is that it is better to rely on existing law and self-regulatory measures, with intervention only where there are clearly-defined market failures.
Hogan Lovells is proud to have assisted WG4 in preparing the chapter of the Policy Report that explores the issue of liability in the context of the IoT. Members of our product liability and TMT teams collaborated to advise our client Vodafone (who chairs WG4) as well as ARM (who led the liability workstream) to present a detailed analysis of how the rapid development of IoT technology may raise product compliance, product liability and insurance-related issues in the future. In doing so, we drew upon a considerable breadth of experience in advising clients on a range of IoT products and services, both in the EU and in the U.S.
The AIOTI was set up in March 2015 by the Commission and various key IoT players. Its aim is to make the EU a leader in the field of IoT, creating a dynamic European IoT ecosystem. It comprises of eleven working groups. Their reports published October 26, 2015 encompass a wide range of issues relating to the IoT, including the preparation of future IoT research, smart cities, wearables and the development of common standards and interoperability for IoT devices.
Some key recommendations of the Policy Report relating to liability are:
- The existing legal and regulatory framework is, broadly speaking, adequate
- Key to the development of IoT is striking the balance between ensuring consumer safety and promoting good innovation
- Many of the product liability risks highlighted with regard to existing IoT products are not unique to these products and platforms
- Issues arise around the distinction between a “product” and a “service”, and some clarification in that area may be needed to avoid uncertainty
- Ensuring that development of regulatory policy is sufficiently flexible to deal with the needs of an industry that is constantly evolving is key