A worldwide market projected to exceed $1 trillion by 2025, the Internet of Things (IoT) offers tremendous benefits but also significant challenges. Benefits in that interconnected devices can lead to greater efficiency and higher quality. Challenges in that should such devices malfunction, civil liability can result.

“The IoT landscape is enormous,” says H. Michael O’Brien, a partner at Wilson Elser Moskowitz Edelman & Dicker LLP. “It runs the gamut from wearable devices, smart home technology, medical devices, autonomous vehicles, industrial internet, smart buildings, smart cities and infrastructure.” When such devices fail, however, the consequences can be severe.

“The failure of IoT devices is more likely to cause physical injury, property damage or death due to the nature of the products in question,” suggests Benjamin Dean, president of Iconoclast Tech LLC. “Strict product liability might apply, though its application will be context-dependent.”

At the same time, it is no easy matter to identify where culpability lies and which entities are liable for reparations. Should the finger of blame be pointed at product manufacturers, hardware providers, network providers, software providers, hackers, users or elsewhere?

Existing laws and regulations provide an answer, up to a point, but they are not IoT-specific. In Europe, for example, the most prominent liability law is the 33-year old Product Liability Directive (PLD). Other relevant directives include the Low Voltage Directive (LVD), although many IoT devices operate below the voltage limits specified by the LVD. In such cases the GPSD may apply or the Radio Equipment Directive (RED).

Oct-Dec 2018 issue

Fraser Tennant