The technical and legal landscapes for connected vehicles, advanced driver assistance systems and autonomous vehicles are undergoing rapid change. Perhaps most spectacularly, fully autonomous - and driverless - vehicles are no longer just a vision but a realistic scenario. By replacing the human driver, the fully autonomous vehicle will eliminate the biggest risk factor in navigating traffic, which promises sustainable improvements in road safety. Automated functions will also increase user comfort and leisure time by enabling them to focus on other activities. Until this time comes, however, the automotive industry will need to overcome not only technological challenges but also legal ones. This overview takes a brief look at some of these challenges.
The permitted use of automated functions in road traffic is not just a question of national law, but is also subject to regulations at the international level. The most important of these is the Vienna Convention on Road Traffic, which regulates the admission of vehicles in international traffic and harmonises traffic rules across countries. The Vienna Convention urgently needs further adjustments, since amendments which took effect in March 2016 do not remove all barriers to automated vehicles, and they completely leave out driverless cars. In addition, international vehicle specifications (ECE Regulations) are being developed to enable the type approval of automated driving components on a global basis.
Liability law - accidents
Liability and coverage under insurance laws in case of an accident involving a semi or fully autonomous vehicle will need to be regulated particularly urgently. With regard to damage caused by the malfunctioning of an automation product, a paradigm shift is already emerging from liability on the part of the driver towards product and manufacturer liability. Because automation functions are so new, manufacturers for example will have to provide extensive information about the performance and limitations of their systems. They will also have to take into account the increasing risk of cyberattacks and their potentially life-threatening risks for passengers. Inadequate instruction manuals or insufficient danger warnings could lead to claims against the manufacturer.
Liability law – recourse in the supply chain
With an increased focus on manufacturer liability, seeking recourse in the supply chain will become more of an issue, for example if a laser sensor installed by the car manufacturer or software procured from a third party were to cause damage. With numerous players involved in the operation of semi or fully autonomous vehicles, which in addition to IT suppliers might include mobile communications, cloud and navigation system suppliers, complex liability and recourse questions are likely to arise.
Liability law – contractual allocation of risk
The large number of players in the supply chain make a clear description of the various interfaces indispensable, not only from a technical but also a legal perspective. Likewise it is important to choose the most suitable contract model for the given circumstances. One needs to distinguish between “all-party contracts” and a web of multiple individual contracts.
Data protection law
Connected vehicles generate huge volumes of data. Manufacturers, mobile communications suppliers, insurers or even the suppliers of infotainment services can use this data to gain comprehensive insight into the vehicle’s location, condition and routes, driving style, internet habits and other preferences of the driver. In practice this raises totally new legal issues concerning the permissible access to vehicle data and its use and commercialisation. In many legal systems there is a principle that all data that can be linked to an individual enjoys special data privacy protection. Although obtaining the driver’s explicit consent can help clear the legal hurdle for suppliers and users to take full advantage of the opportunities of connected systems, in many cases the driver will not be the original buyer of the car. This significantly complicates obtaining consent to process personal data. In this case “privacy by design” solutions are recommended, which take data privacy requirements into account in the development of automation systems. Once the fundamental concept of a system has been developed, data privacy shortcomings can often be resolved only with great difficulty.
Increased M&A activity and joint ventures
Technology advances are having a lasting effect on the value chain in the automotive industry. The interconnectivity and automation of vehicle systems has drastically increased the importance of software suppliers, internet service providers and technology companies in the equation. Traditional suppliers and OEMs are increasingly responding by pursuing takeovers and mergers, as well as by entering into joint ventures with companies in the technology and telecoms industries.
To be successful, these kinds of transactions require not only sound corporate law advice but a deep understanding of the technical, commercial and legal challenges that these new disruptive technologies present, as well as an understanding of how best to protect and exploit existing and future intellectual property and know how.
A change in traditional business models
With the convergence between the automotive and technology industries, conventional business models are being put to the test. Alongside the traditional car purchase – geared toward a one-time transaction - increasingly we are seeing connected car services offered as discrete elements which are more like a license agreement or subscription with a continuous obligation. Embedded connectivity solutions enable manufacturers technical access to the streams of data and the possibility to offer innovative, lucrative additional services and functionalities, and hence the possibility to optimise and monetise their relationship with the end consumer. From a regulatory perspective however, the manufacturer risks being classified as a supplier of telecommunications services by the relevant government agency, subjecting them to a considerable range of legal obligations under telecommunications law.
Finally, the automotive industry is also coming to terms with changing mobility habits and concepts. Car manufacturers no longer see themselves only as car sellers, but increasingly as providers of multimodal mobility services. Accordingly, car sharing solutions and ride hailing concepts are gaining in importance. Such business models also create the opportunity, for example, to introduce users to environmentally friendly and resource-conserving electric vehicles, which currently still lag behind conventional cars in terms of range and cost.
We hope this overview of some of the legal issues associated with autonomous driving, assisted driving and connected vehicles is helpful. We would be very happy to discuss any aspects of it with you further.
Bird & Bird & Automotive
Our team of Automotive experts in all major jurisdictions in Europe, Asia-Pacific and the Middle East have years of experience and recognised expertise advising clients on the legal aspects of autonomous driving and other developments that are transforming the automotive industry, and we continuously monitor the rapidly changing legal frameworks.
Using our deep knowledge of the Automotive and Technology & Communications sectors, and our understanding of the business relationships that drive it, we advise our clients on the legal aspects of all relevant issues that are affecting and transforming the industry, including:
- Product liability and product safety: Assessing product liability risks, handling dispute resolution, recalls and field actions and advising on how to minimise product liability risk
- Drafting and negotiating commercial contracts and agreements, including cooperation, supply, development, logistics and distribution agreements
- Mergers, acquisitions and joint ventures
- Vienna Convention on Road Traffic
- Protecting and exploiting intellectual property
- Data privacy and data protection, including Big Data and data ownership
- Telecoms and regulatory aspects relevant to connected vehicles, assisted driving systems and autonomous driving.
For further information or advice, contact the head of our German and international Automotive sector group Dr. Christian Kessel
, or the head of our autonomous driving task force Prof. Dr. Benjamin von Bodungen
any time. We would be very pleased to hear from you!