1. Internet of Things: Risks and Tips to Manage Team
September 2019
Kurt B. Gerstner

2. Product Liability
Privacy/Security Issues
Regulatory Issues
Intellectual Property

3. Product Liability Theories for IoT
Negligence, Strict Liability, Failure to Warn
Product didn’t function properly
Manufacturing or production defect
Product design defective
Failure to warn of product limitations
Didn’t inform purchaser of hidden dangers
Misrepresentation
Commercial class actions
Product susceptible to being hacked
Product Liability Cases Also Spreading Globally

4. Many Liability Issues What caused the failure? Who is responsible?
Hardware, software, both?
Allocation of fault issues
Does user bear any responsibility?
Didn’t inform purchaser of hidden danger
How do you evaluate programmed “choices” on who should be harmed?

5. Privacy/Security
Internet-connected devices are themselves computers that can access and harvest vast private data
Autonomous cars – where you went, who was with you, speed
Refrigerator – food you buy, where you shop, how much you drink
T.V. – what you watch, shopping, financial information
Who owns the data?
Internet-connected devices can be hacked
Dick Cheney removed pace maker
Thieves access financial information from smart appliances/car
Hackers take control of escalator
Hackers take control of industrial equipment

6. Regulatory Issues What role should government regulation play?
Technology moving faster than governments
Pushing government to make decisions to catch up
Federal role and local regulations
Possibly disjointed rules from different agencies
- FTC, NHTSA (cars), FDA (med devices), COPPA (toys)
Local government fills gap if no federal rules
Industry self-regulation
Standards Setting

7. Intellectual Property
Ownership Issues
Combined technology
Agreements to sort out ownership and rights
Protection of Intellectual Property
Estimated value of IoT intellectual property = $1.7 trillion by 2020
- Great incentives to steal technology
Need to properly protect it with registered patents, copyrights for software, protect trade secrets
Possible patent eligibility issues with some inventions

8. Managing the Risks Prevention (Technical Approaches) Legal Approaches
Insure against risks that can’t otherwise be prevented or managed

9. Legal Management - General
Develop good technical practices to identify and prevent risks
Have good facts to show company acted reasonably
Develop proper warnings about risks that cannot be prevented
Provide clear and detailed instructions for products
Processes in place to detect problems and correct them
Respond to complaints/incidents in timely and appropriate fashion – learn from them
Rein in marketing claims

10. Legal Management - Privacy
Develop a sound privacy policy and comply with it
Explain the privacy policy to consumer clearly and in detail
What data collected and how it will be used
Make policy available to consumers to read before buy the product
Give consumers access to data
Obtain consent of customers to use their data and to share their data

11. Legal Management - Industry Initiatives
Industry cooperation to protect manufacturer interests
Develop industry self-regulations and standards to stave off government regulation
Provide comments and input to government regulators to help educate and guide rulemaking
Consider voluntary sharing of information, including on incidents and lessons learned with industry peers

12. Legal Management - Contract Protection
Consider contractual requirements and obligations to ensure others in the component supply chain are not your “weak link”
Anticipate legal issues and decide how they will be resolved in advance
Indemnity and other risk allocation provisions
Dispute resolution provisions

13. Legal Management - IP Decide on form(s) of IP protection needed
Determine how to address shared technology with business partners
Transactional agreements address ownership and future improvements to technology by either company
Consider freedom to use the IP outside of the joint collaboration
Decide who should obtain the IP protection and defend it if attacked
Begin process of obtaining necessary registrations
Defend the IP when infringement and other attacks made

14. Thank You Kurt B. Gerstner Lee International IP & Law Group
Member of the Massachusetts, New York,
District of Columbia, New Mexico Bars
T , Mobile
78, Mobile
Lee International IP & Law Group
Poongsan Bldg., 23 Chungjeongro, Seodaemun-gu,
Seoul , Korea
Tel Fax