As we move deeper into the 2000s, “smart” devices are only getting smarter. From phones to homes, vehicles, and fitness devices, we are surrounded by a veritable web of constantly engaged devices. While a decade ago, these devices simply provided us with new levels of convenience, now, they can do even more: they can connect and “talk” with each other, unlocking entirely new levels of efficiency. Consumers and businesses alike rely on this connectivity for convenience, accessibility, and automation across platforms.
Enter: the “Internet of Things (IoT),” a virtual web of the devices that connect and communicate with each other via the Internet. From data storage and retrieval methods to remote workspace management and corporate process improvement, the IoT increases efficiency in all aspects of life.
Understandably, this can all seem extremely vague. What, exactly, is the IoT? Who (other than maybe Al Gore) invented it? Is it safe? And who, if anyone, regulates it? In the paragraphs that follow, we provide a basic overview of the IoT, from what it does, to who regulates it and the legal issues it can generate.
What, Exactly, Is the IoT?
While it seems like a nebulous concept, the IoT is nothing other than a network of devices that are equipped to exchange data. Once upon a time, the IoT was limited to computers, fax machines, and eventually cell phones. But now, kitchen appliances, cars, light fixtures, thermostats, cameras, and televisions can communicate through the Internet.
Current estimates suggest that the IoT is made up of more than seven billion devices. However, with new devices introduced to the market constantly, the IoT is expected to grow by more than twenty billion in just five years. Several companies, like Amazon and Google, have developed hubs for consumers to manage and control all their connected devices in one place.
For consumers, cell phones are the most common access point to the IoT. Currently, the IoT is the avenue by which smartphones connect and provide remote access to the Internet, household appliances, personal computers, vehicles, and more.
Other examples of how consumers interact with the IoT are:
- Vehicle-to-vehicle communication
- Municipal grids designed to increase energy efficiency and reduce waste
- Insurance companies seeking to record location and operation data in real-time
- Smart home connectivity
- The use of health and fitness devices
- Cloud storage methods like the G-suite and Dropbox
Legal Concerns
The IoT presents legal risks, however. With this level of connectivity, privacy, data security, and intellectual property concerns are inevitable. Such an extensive and ever-expanding web of devices will likely generate unforeseen legal issues in the coming years and decades. Currently, however, some of the most common legal issues are:
Security Breaches
The IoT allows data to be shared with minimal human interaction (a convenience factor, especially in the corporate context). However, because these devices are almost constantly switched “on,” there are risks associated with recording sensitive personal information, security breaches, data scraping, and hacking.
Issues for Manufacturers
The creators of devices that work within the IoT can face liability if the devices lack adequate safety measures, most especially, data security capabilities.
Intellectual Property (IP) Disputes
When data is freely shared and exchanged, issues of ownership can become murky. In many cases, companies may struggle to claim ownership over information that is shared across devices and platforms.
Antitrust Violations
Should information be shared between competitors to create market power or other illegal market conduct, an aggrieved party can raise an antitrust violation claim.
Who Regulates the IoT?
The issue of regulation can be murky. Generally, the IoT sees minimal government regulation, as the FTC has declined to issue overarching guidance on its use. Some international laws, like the European General Data Protection Regulation (GDPR) and the ePrivacy regulation, impact the IoT by speaking to data privacy and the protection of personal information. Additionally, the FCC does regulate the Internet and issues recommendations for companies that provide home, wearable, or other personal devices. However, the agency asks device manufacturers to incorporate security features into their designs.
However, even the best security is not risk-free. Privacy and cybersecurity concerns, particularly data breaches and intellectual property (IP) issues, continue to plague the IoT. Rather than relying on built-in safety tools and user settings, businesses and consumers must incorporate additional safety measures to ensure their information is secure and their devices are safe.
The Significance of the IoT
The IoT is not just making consumer lives easier by connecting every device they need with remote access in one place. Industries from healthcare to manufacturing rely on the IoT for improving efficiency for better productivity. And while there are risks inherent in having so much technology connected as it is through the IoT, the continued advancements, economic benefits, and reduced need for human involvement provided by the IoT connections are saving companies money, increasing efficiency, and improving quality of life.
Nonetheless, the IoT is still new terrain and as such, there are still numerous unresolved issues regarding its use and regulation. In all cases, consumers and businesses alike should take caution in choosing to share or disseminate sensitive information.
At Wilson Ratledge, we assist business founders in taking steps that keep their businesses – and their personal assets – safe. In our digital age, this inevitably includes the Internet of Things. We help our clients in setting up appropriate legal protections for the IP they develop and help structure their businesses to address potential pitfalls down the road. For assistance or to learn more, contact one of our experienced North Carolina business attorneys today at 919-980-4082 or via our contact form below.