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Blue Sky Thinking: Legal implications of the Commercialisation of Drones in the UK – Part 2/2

Posted on 30 July 2020

Read Blue Sky Thinking: Legal implications of the Commercialisation of Drones in the UK – Part 1/2 here.

Mapping a new legal landscape

"We predict that, over the next decade, the UK will see a convergence of technology, societal acceptance and regulation which will unlock the full economic potential of drones." (PwC Report 2018: "Skys Without Limits")

With a rise in venture capital and private equity investment in the UAV sector will come a complex array of legal issues which all stakeholders – from private user to institutional investor - will need to navigate.

The evolution of drones, and the associated explosion in their usage and applicability, has been accompanied by an inevitable growth in related law and, as the industry grows, so too will the applicable law and regulation across all associated sectors. Most obviously, this can be seen in the guidelines which relate to the vehicles themselves and the applicable aviation/operational regulations. Weight limitations, flight path restrictions, pilot qualification, line-of sight requirements – much has been written on the evolving rules (and sanctions) which apply directly to the use of UAVs. The publicity surrounding the closure of Gatwick Airport in December 2018 served only to heighten public and political awareness as to the concerns – and potential opportunities – of this nascent industry.

The aviation rules:

The rules relating directly to the vehicles and their operational use are complicated, residing in a range of primary and secondary legislation (both UK and EU). The rules are also very much in a state of flux, with the European Commission having delayed (as of June 2020) the applicability date of the European Union Unmanned Aircraft Systems Implementing Regulation 2019/947 (EU UAS IR 2019/947) until the 31 December 2020. This will remove the current primary licencing system - Permission for Commerical Operations (PfCO) - but, at the same time, has the potential to unlock more flying opportunities for more people. The changes are designed to align with the European Aviation Safety Agency (EASA) and build on the recently-introduced Drone and Model Aircraft Registration Scheme in the UK but, with Brexit scheduled to take effect on the same date, quite how this will play out in the UK remains to be seen.

There has been considerable analysis and comment regarding these aviation and operational regulations, and they do of course provide the canvas on which the industry will continue to evolve, but the purpose of this article is to focus on the wider, and perhaps more nuanced, legal issues which are central to the UAV sector and which will lie at the heart of the commercialisation of the market.

The wider legal themes and regulations:                                                                                                       

Beyond the aviation and operational rules which govern the industry lies a complex matrix of statute and regulation which spans many areas of law and policy. The free flight of drones in the physical sense - unfettered and high above the congestion below – is very much in contrast with the web of legal issues to which the industry is subject. "Drone Law" is now multifaceted, complex and evolving. It pervades many areas of legal practice – old and new - and demands expertise across a wide (and ever-expanding) number of fields:

Technology (including mobility and automotive):

Innovative technologies lie at the heart of the UAV industry and fuel its evolution and growth. Developments in aeronautics, battery technology, new materials, software, micro-processors and wireless communications – all are integral to the explosion in UAV products and the proliferation in their private and commercial use. There are a myriad of legal issues which regulate and protect the ideas and investments which propel these technological developments. From IP protection of innovative drone (and counter-drone) products and methodologies to the numerous licencing and ownership contracts which commercialise the technology – these legal arrangements are key to the regulating and growth of the sector.

As regards IP Protection, it is important that a holistic approach is taken when it comes to devising an appropriate IP protection strategy. Fundamental to this is ensuring that the UAV operator either owns or at least has sufficiently broad rights to use any IP that is required in order to operate. However, considering whether barriers to entry can be erected through the use of other registered IP rights, such as patents, would also be a prudent initial step – albeit, the operator will need to be sensitive to the differing legal requirements that apply around the globe and should be aware of the risks associated with applying for any such protections.

The use of open source software has become increasingly prevalent – and once again, those involved in writing any code must ensure that they are aware of any licensing restrictions that may apply to such use in any products. There is an added risk if the relevant business were to make such products available to the general public. Even where open source software is not being used, the small print of other third party software licences may also be problematic – particularly where the relevant third party seeks to heavily restrict its own liability and the relevant licence itself may provide the third party with wide rights to terminate. The risk of insolvency of such third party suppliers should also not be underestimated and, therefore, potential escrow arrangements to ensure any required source code can be automatically provided in such circumstances is often an important discussion point.

Drone technology is also increasingly being paired with other emerging technologies such as artificial intelligence/machine learning and distributed ledger technologies such as blockchain. These combined systems require careful analysis and must be developed in a compliant and ethically sound manner, with robust governance and cyber security mechanisms at their heart.

Regulatory (including Data, Privacy and Operational):

The UAV sector is, quite understandably, one which is heavily regulated and monitored. That detailed regulation stands only to increase over the coming years. Commercial and private users will need to be conversant in the comparative licencing and regulatory frameworks of different jurisdictions - rules regarding beyond visual line of sight (BVLOS), population overflight and/or altitude waivers. Furthermore, due to the complex regulatory landscape in which the industry operates, there can exist a tension between many of these regulations. Understanding and navigating the interplay between these, sometimes competing, regimes will be key to the successful operation and commercialisation of the industry for the future. For example, whereas it is heavily regulated industries which themselves present the greatest opportunities for the sector (e.g. infrastructure inspection, construction monitoring, planning enforcement, etc.), the operational requirements for overflying private property and data-capture presents the risk of abuse of the technology (e.g. data protection and privacy). Even in the context of lawful activity, navigating these legitimate and conflicting interests is complex and will require careful management. Add to the mix, parties with more malicious intent (from overstepping planning regulations and non-compliance with construction regulations to unlawful photography/publishing and the "buzzing" of aircraft and airports), and we have an industry which could become mired in policy debate, interest lobbying and regulatory dispute.

Real Estate (including Planning and Construction):

Drones are already a part of this sector, albeit peripheral and largely unseen. They are used in mapping sites, architectural design and inspecting difficult to access areas. Drones are also already used in certain aspects of physical construction – identifying faults and employing remedial measures (e.g. applying adhesives to micro-fissures in structures). But picture a future, perhaps not so far off, where drones are used for the delivery of heavier construction materials – fewer cranes, less scaffold cladding, easier access to remote sites and less congested streets below. Then imagine the future cities, where drones deliver to rooftops and goods are delivered in a downward direction as part of complex "just-in-time" supply chains. Transport routes could evolve to facilitate drones over rivers, canals and roads, alleviating congestion and facilitating night-time delivery. Planning and architecture would, quite literally, be turned on their heads – street delivery bays swapped for rooftop landing pads, with drones becoming an integral part of the real estate industry, both as a service and a product.

Product liability:

With the development and increased use of any technology comes teething problems and, from a legal perspective, potential liability. That liability can be either directly related to the product itself (i.e. faulty goods) or can be indirect which, in respect of drones, could potentially be significant – from failed diagnostics and lost deliveries through to aircraft interference and personal injury. The Matternet incident – an uncontrolled crash of a 12kg delivery drone in July 2019, very close to a group of children – served to illustrate just how badly wrong things could potentially go. The Civil Aviation Act 1982 (CAA 1982) regulates the liability of drone operators for damage/harm to ground-based third parties, with a regime of strict liability applying to the drone owner where material loss or damage (including personal injury) is caused to any person or property. In relation to mid-air collisions, this is not covered by CAA 1982 and liability will be governed by common law principles of negligence. In relation to loss of cargo, the rules of The Montreal Convention 1999 (and associated secondary legislation) applies a regime of strict liability to the drone operator, subject to certain limited exceptions.

Public policy:

There are many public policy and constitutional issues which arise in relation to the use of drones: public safety versus privacy; new autonomous technologies versus redundancy of traditional human capital; efficacy of delivery versus safety of ground-based population; reactive human decision-making versus predetermined programmed responses. As drone technology advances and the use of UAVs becomes embedded in our societies and cultures, the competing interests which will emerge from these new technologies will give rise to key questions. The rule of law – increasingly at the centre of modern discourse – and the prioritisation of competing private, commercial and political interests, will create the backdrop for vital discussion and debate. The analysis and resolution of these issues will shape the future of transport, media, retail and indeed the shape of our cities, environment and, ultimately, behaviours. Not only will drones be the news, but they will be capturing and broadcasting it as it unfolds.

The law as it relates to UAVs is complex, covering many disciplines and sectors. As the use of drones grows, so too will the application of relevant law and regulation. All stakeholders in this dynamic industry will require to know and navigate the rules in order to make a success of their activity - whether that be the trouble-free enjoyment of drones as a hobby or the successful and sustainable commercialisation of the sector.

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