The IoT Brings Risks As Well As Opportunities

Far ranging. That description certainly fits IoT devices, from technology deployed to support an IoT environment to the range of potential benefits consumers can expect from those devices.

But the phrase “far ranging” also fits the potential legal impact IoT might generate for an enterprise, especially when it comes to security for IoT networks. “Sensors are collecting from everything we use. Big data means we get a lot of information to create things but it also means some new ethical challenges,” said Daliah Saper, founder and principal of Saper Law, a Chicago law firm that specializes in issues regarding intellectual property, social media, and business. 

Saper was presenting a detailed look at IoT legal concerns that developers can regularly faceat the inaugural session of WindyCityThings, a two day conference in Chicago presented by WisdomGroup.

A key concept from Saper’s presentation is that ethics should be a focus right at the start of IoT device development. Saper notes that people are becoming accustomed to sensors collecting data from everything we use, giving us powerful insights from the data in exchange for ethical and new legal issues. “The first question is the ethical question. We’re basically creating things we never thought possible before,” she said.

Those things are unintentionally changing business models. “It is very important to decide for yourself if you are a vendor, or a company collecting information and selling it back to the customer.” Saper explains. “You have to figure out on the spectrum where you are…are you the platform provider or the owner of the content? Let’s say there is a security breach. I hire a company and something goes wrong. Who is responsible?  Is it the person who collected the data or is it me, because I hired you to acquire the data?” 

Indemnification is a statement in a contract relevant to who bears the costs in a negligence suit. As data breaches become more common, questions are being raised about who is responsible for any damage caused. “Before you agree to provide that service you need to read that boilerplate that says you may be responsible if third parties sue,” Saper explained.

Saper also emphasized that negligence cases, particularly in context of IoT and data breeches, can manifest as class action suits, brought by a group of plaintiffs. This has the potential to create greater complexity and cost when it comes to defending the suit than dealing with one disgruntled user.

All sorts of digital marketing services, from programmatic ad inventory buys to data analytics can be impacted by ethical concerns. For example, there were claims that Porsche opted out of installing Android Auto in its latest iteration of its Halo 911 vehicle, because it would give Google access to performance data that would expose the brand’s hallmark attributes. (Google denied the claims.)

The question who owns what data is worth taking time to answer. After all, more than half of internet users “stop buying products from unethical companies.” To develop marketing tactics that minimize legal risks, Saper suggested marketers consider the following:

1. Ensure capability matches statements when it comes to protecting customers. Selecting a privacy policy that your firm can actually enforce is important. “For privacy cases, it is not the breach that’s becomes the source of the complaint,” Saper explained. “It’s the idea that you said you would do something with my information, or you did not disclose what you would do with that information, and you went ahead and used it….So the basic standard is you need to disclose to the consumer what you plan to do with that information and you have to stick to that. If that changes, you need to update those terms and notify your customers of that change.” 

2. Maintain policies to discard data and to avoid keeping data longer than needed. Data should not be kept indefinitely.  

3. Be educated on industry best practices. Doing so can help defend a claim of negligence.

One way to learn about industry best practices is to attend conferences like WindyCityThings and find out what issues developers face. Aaccording to WisdomGroup President Raymond Hightower, the IoT in particular has had a big impact on marketplace perceptions of what is feasible when it comes to gathering and utilizing data. “The most successful conferences are those where you learn new questions that you didn’t even know enough to ask,” he said. “For example, how many of us would see a connection between IoT and food safety? IoT and real estate? In 1992, right before the web took off, we would never have envisioned an Amazon.com. It’s 1992 for IoT right now. And there’s still time to be an early adopter.”

Note: Pierre is not an attorney and nothing in this article should be taken to constitute legal advice or the creation, implication or confirmation of an attorney-client relationship with the author, or with anyone mentioned in the article.

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