Legal considerations on the Internet of things: 2015 and beyond - part 5: New forms of liability

23 February 2015

Roberto Camilli

New players will enter the chain of liability when IOT connected devices and services are introduced on the market.

The more complex and articulated these services become, the more parties will have to share liability in case of accidents, malfunctions, defects and related recalls.

For example let's consider the case of a connected medical device that measures a certain health parameter of a patient and transmits it to a doctor for processing. Any malfunction of the device, the software, the connection protocols or the transmission services could trigger liability for a different stakeholder; be it the producer of the device, its components,  the device's operating system or of the applications that enable different functions. Each of these providers could be found liable in the case of a malfunction.

The liability of the provider of connection services to the receiving doctors, the software systems that enable the doctor to be alerted in case of problems, and even the programming of the specific settings that can detect adverse events and trigger responses customised for the specific patient is also an important consideration

It's clear that all these stakeholders will also likely involve their respective insurance companies, regulatory entities and standard providers, so that the line of potentially liable subjects can become even longer, all with a vested (and diverging) interest in accessing information and data coming from connected devices.

The same reasoning would apply to defects or accidents happening to automated vehicles, connected infrastructure, automated homes and in all the fields of IOT applications.

It is important to think about these aspects at the beginning of each IOT project, and to cover them contractually by using new or existing regulations and adapting relevant legal principles, always trying to plan additional flexible solutions in case new unpredictable situations occur.

Automated alert systems will be helpful and stakeholders will wish to be informed promptly, so that they can react and limit their exposure. Insurance companies will also want to be part of this system and be made aware of risks right after or even while they are happening to take the appropriate measures. 

All these digital traces will introduce a new level of risk and liability awareness which will revolutionise the way product liability is managed and attributed to the different players. Nobody will be able to hide defects or problems if these are automatically made known to the entire supply chain, and in principle, problems should be identifiable earlier and solved in a more efficient and safe way.

 

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