Autonomous and Connected Vehicles: Top 4 Legal Issues

06/06/2019

The rapid emergence of increasingly automated and connected vehicles promises to upend the automotive industry and revolutionize mobility and transportation. Some forecasts project that there could be as many as 21 million driverless cars in the United States and 27 million in Europe over the coming decade, and by 2050 the autonomous vehicle (AV) industry could be worth $7 trillion.

This mobility revolution will bring a range of benefits, from increased road safety to greater fuel efficiency and reduced traffic congestion. But the rise of autonomous and connected vehicles also raises a host of novel legal issues that will need to be resolved before the new order fully takes hold. As one legal commentator put it, “the development of driverless cars threatens to tear up the rule book.”

In the U.S., federal legislation will eventually be required before autonomous vehicles can truly go mainstream. However, until now the federal government has left it largely to the states to work things out, with the National Highway Traffic Safety Administration, a division of the Department limiting itself to issuing guidelines. Laws and regulations remain fragmented and to some degree inconsistent across a patchwork of state directives and voluntary guidelines. The challenge for governments is how to find a balance between over-regulating an emerging market and impeding its growth and adoption, or not sufficiently protecting the consumer.

Here’s a look at four of the most pressing legal and regulatory issues that will need to be addressed before autonomous and connected mobility becomes truly mainstream.

1.       Liability

Who is ultimately responsible if a car crashes? Traditionally, it’s the driver, except in cases where a product defect is the cause of the accident. However, as cars become increasingly autonomous, it’s likely (and logical) that responsibility will shift toward the manufacturer, since the manufacturer’s product – that is, the car – is “driving” itself. If the vehicle makes a bad “decision” whether due to a product defect or the inherent limitations of the technology, can the driver be held responsible?

A major complication, however, is that for the foreseeable future the extent to which a given vehicle is “autonomous” and this the degree of engagement expected of the driver, will vary. There are five levels of automation established by experts in the field, ranging from No. 1, “No Automation” (the human driver performs all the driving tasks), at one end to No. 5, “Fully Autonomous” (the vehicle is capable of performing all driving functions in all conditions), at the other. For the levels 2-4, the human driver has progressively less need to take over from the automated system. But should drivers be expected to take over in certain situations? And can they be expected to know that?

Adding another layer of complexity, which parties in the AV supply chain (carmakers, tier 1 manufacturers, software companies, etc.) should be held responsible?

A related question has to do with criminal culpability. For example, if a driver of an autonomous vehicle is found to be intoxicated at the “wheel,” can they be held criminally culpable in case of an accident even though they are not actually “driving” the vehicle?

2.       Insurance

The issue of liability inevitably raises questions around insurance. Currently, the driver/operator of the vehicle is required to have insurance under the “user-liability model.” But again, if a vehicle is being controlled by a computer or automated system, it makes sense to extend that requirement to the carmaker. But to what degree?

It’s likely that insurance law will broaden requirements beyond the driver, with multiple parties contributing to the insurance. Questions to be resolved include whether car owners will still be required to have third-party liability insurance, whether carmakers will be required to have product liability coverage.

3.       Data Security and Protection

Increasingly autonomous and “connected” vehicles will operate in the context of the “Internet of Things” where data is continuously shared among a web of connections. In order to function effectively, the vehicles will need to gather large quantities of data (for example through cameras, radar, and ultrasonic detections) and share that data with the larger mobility infrastructure. Vehicles may record data on how, when, and where individuals drive, which could raise privacy concerns if the information is stolen or improperly handled.

With more data comes greater risk of hacking, so cyber security becomes increasingly important. Hacking in many jurisdictions constitutes a criminal action, so responsibility lies with the hacker. However, a responsibility will undoubtedly also rest with the car manufacturers to make sure adequate precautions have been taken to prohibit unauthorized access or use. And perhaps with drivers, if they are shown to have failed to, for example, apply a needed software “patch” or upgrade.

4.       Intellectual Property

The development of autonomous vehicles is leading car makers and suppliers to develop, purchase, or license many types of technology outside the traditional scope of the automotive industry, and the volume of patent applications filed by these companies for technologies  (including radar/LIDAR, telematics, collision, avoidance technologies, artificial intelligence and machine learning) has surged in recent years.

 One concern arising from these developments is that current patent laws are inadequate to protect AI systems. Patents cannot be used to protect data compilations, such as AI training sets, or a programmer’s particular expression of source code, and because the machine learning process and iterative/incremental evolution of the underlying algorithms, it can be difficult to specifically describe the methods or functions of an AI system as required for a patent grant. Moreover, to the extent that the technology is “self-learning,” the question of who the “inventor” is becomes complicated. A further challenge is that the field may be evolving so rapidly that a patent, which can take years to fully prosecute from application to issuance, may be useless or antiquated before it issues, if allowed at all.

Given these concerns, most autonomous vehicle developers lean on trade secret laws to protect their intellectual property. But this approach has a significant downside in that it raises the barriers to entry for new companies seeking to break into the field. Rather than being able to rely on the publicly disclosed information available in patent applications, would-be new entrants would essentially have to reinvent the wheel. The effect would be to stifle innovation and reduce competition and consumer choice.

These are just some of the legal issues raised by the emergence of autonomous and connected vehicle technology. As with any new technology, innovation has largely outpaced the law, and the legal and regulatory landscape remains murky. As self-driving vehicle technology continues to evolve, the industry and society at large will look to the courts, regulatory authorities, and legislatures to resolve these issues.