This Week in Law 284 (Transcript)
Denise Howell: When you play the game of Drones, you play to win or
you die. There is no middle ground. Now
I’m not Suresy Dronester. I’m Denise Howell, and you’re about to watch
a special drone episode of This Week in Law, with Terry Miller, Keith Strier and David Frankel.
Netcasts you love, from people you trust. This is TWIT! Bandwidth for This Week in Law is provided by Cachefly, at C-A-C-H-E-F-L-Y.com.
Denise: This is TWiL, This Week in
Law with Denise Howell, episode 284, recorded December 5th, 2014.
Game
of Drones!
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Denise: Hi Folks! I’m
Denise Howell, and you’re joining us for This Week in Law, and we are so
excited to have you here this week. We suggest that you, perhaps, grab a hat or
a helmet because low-flying unmanned objects might buzz through your neck of
the woods or mine at any moment and that’s what this show is going to be
primarily about. We’re going to talk all
about Drones, Drone law and policy. We
have an amazing panel of folks gathered together here to do that. Let me introduce you to them right now. Joining us is Terry Miller. Terry was once a Marine. He was in the
Signals Intelligence and Electronic Warfare Division of the Marines. He went to
Embry Riddle Aeronautical University with degrees in Professional Aeronautics,
Aviation Business Administration and Aviation Safety. For the last twenty years he has been in the
aviation insurance industry. So, Terry, you know just about everything there is
to know about the risks and hazards involved in using drones, both personally
and professionally, I would imagine, and we cannot tell you how grateful we are
that you are joining us here today.
Terry Miller: I certainly appreciate the opportunity to be here.
Right now we’re insuring about 2,500 drones for all uses, all around the world,
and [I am] looking forward to this discussion.
Denise: Me too. Very much so. Also
joining us is my friend, and sort of neighbor. A distant neighbor here in Orange County, California: Keith Strier. Keith is a partner at Ernstein Young, which all the cool kids are calling “E.Y.” these days. He advises companies on innovation and
digital strategy. And also relevant for our discussion today since we are here
on This Week in Law, is the fact that Keith graduated from The New York
University Law School, though he’s not a practicing lawyer. Keith,
great to have you.
Keith Strier: Thank you. It’s
really exciting. It’s such a great topic. It’s so timely. We’re going to probably run out of time with
all the different things going on and we’re looking forward to digging in.
Denise: So Keith has been focusing in his practice on drone
use in business settings and has been researching and following a lot of people
online who have smart things to say on the law and policy of drone use. And put
me together with both Terry and our next guest, David Frankel, who is a drone
lawyer, also an IP and technology lawyer.
Denise: Hello, David.
David Frankel: Hello. Well,
about a year ago I participated with some other lawyers who were concerned
about drones nationwide and we prepared a model form of drone law. There were
two sections: One was to advocate (not my position) for a ban on drones. And,
my position was to advocate for reasonable regulation of drones, with a focus
on protecting personal privacy. So, I’ve been active. Even though there are no
official drone regulations yet, my personal focus is on private property and
personal privacy rights, and how drones as a disruptive technology, might
change some of those things.
Denise: That is fantastic because that is, of course, a huge
issue in this area. What I thought we might do just to sort of kick things off
and set up the rest of the discussion, is get people thinking about, you know,
we all have seen at least, I think this is how most people become familiar with
drones, is the holiday season is upon us. If they’re not already a part of the
little people in your lives’ world, they’d probably be. Here’s the latest
edition to our drone collection recommendation from Padre S.J. This is the Sima X-5. We’re really enjoying this one. We’ve had a
Parrot AR drone in our family for awhile, and perhaps everyone is familiar with
the fun recreational uses of these technologies, but it goes much further than
that. Keith, why don’t you give us an
overview, and again, we only have a two-hour show [laughing], so you may have
to stop yourself at some point, of some of the various uses that may be
non-obvious.
David: Yeah, that’s great. Well, let’s start with what is the
definition of just a drone, and maybe go up a level and abstract it to discuss
the context for drones and why they’re so fascinating and becoming so timely.
Drones are just a device, right? I mean, they’re just a machine. For the
purposes of this conversation we’re going to talk about the aerial vehicles:
the ones with rotors and wings, and they’re flying around, and there’s a lot of
activity and interesting developments related to the FAA.
But drones do more than fly. Drones have wheels. Since you’re showing off
something, I’ll show off one too. So, you’ve got the little sumo jumper
here. You know, with the pretty, nice
little camera in the front? And drones also glide. There’s a lot of interesting
things going on in the marine world, with drone boats. And drones are even
starting to slither. Actually, I had read an article recently, about
Carnegie-Mellon, which is developing a robosnake,
essentially, which slithers through the passages in a nuclear power plant, for
example, looking at the wirings and other things that are very hard to get to.
And so there’s a lot of technologies that essentially
will be drone-like.
Interestingly enough, if you look up “drone” in the
Oxford English Dictionary, and I happen to have it open here, you have got a
number of definitions here like “making a low, continuous humming sound.” The
one I like most is “a male bee in a colony of social bees, which does no work”
and I think we could probably have a whole other show on that one.
Denise: [laughs]
David: But, you know, you eventually get to a remote control
pylon aircraft, and again, I think that’s a definition that probably needs to
be updated. And I think the concept of “drone” is going to expand, but it has
been essentially a military sector for a number of years, and it’s quite a
large, robust, 20-billion dollar sector. And then it has become toys, you know,
this very interesting consumer sector, and I don’t know the actual number. I’ve
seen various numbers quoted around—you know—a billion or something of that
nature. I’m not sure if that’s accurate or not, but there are a lot of
companies—some that we’ve never heard of and some that you have—that sell this
consumer sector. And what’s really interesting is that between the consumer
sector and military sector, there has been practically no commercial sector.
You know, the enterprise use of drones in a way that
solve business problems. At least, nothing meaningful until
recently. In the last year or two. At least in the US. And I think that’s really the
interesting story.
So, this technology kind of migrated—jumped from the
military right to the consumer side and skipped commercial, but that’s changing
rapidly. And what’s really interesting about it is that the volume of activity
and interest, really just in the past six months, to be frank, is about as long
as I have been looking at this space, has gone from moderate to crazy. And I
think that the level of innovation in the level of electronics—avionics as
well—connectivity, the actual infrastructure, as well as awareness levels on
how these devices can be used to solve specific problems, has changed the
landscape, really just in a matter of months. And you see that in a reflection
of the FAA going from being fairly silent on the topic to making several public
announcements, and then some regulations that are forthcoming. And I think that
David’s recognition earlier that is becoming a robust field, even in law, you
know—his field. I had read an article recently that a number of the top law
firms in Washington, D.C. that were active and
lobbying had established their own drone practices. They didn’t have thee
before, but now they do. I mean, these are large, established, well-known law
firms. They are now opening drone departments, and that kind of thing.
So it’s really interesting, but to get right down to
Brad’s Tax, you have this construct called “the internet of things,” or
“internet of everything”: the concept of everyday objects having network
connectivity and having the ability to send and transmit and receive data.
Drones are just one of those things: wearable computing, smart watches, smart
phones, tablets, cameras that are attached to your house. All of these things, you know, the
e-refrigerator, you could go down the list.
Denise: Right.
David: These are all devices, these are vectors on the grid,
and what makes drones so interesting is that these are vectors that move. You
don’t nail them to the wall, you don’t put them on
your wrist, although your wrist moves. But the fact that they could fly and
navigate and go from location A to B does introduce a tremendous amount of
commercial opportunity and commercial risk, and I think that’s what is so
interesting about the story.
Denise: It is. In prepping for this show I found a website
called dronespeak.com, which is fairly useful, has lots of overview kind of
information. In fact, they have a whole navigational tool on their site that
lists a whole bunch of different uses. You hit on a bunch of teeth. Using them… underwater. I hadn’t really thought about underwater drone use, but they talk about a whole
“aqua culture” utility for drones, agriculture, emergency response, the
environment, exploration (that one’s fairly obvious and interesting); of
course, infrastructure; media, real estate..
David: Yeah.
Denise: Security. Transportation. And
I guess that would take into account the whole pizza and taco and package
delivery arm of this.
Terry: I just wanted to add, Denise, that as were looking at
that website that lists the different kinds of activities that are impacted by
drones—whether it be rescue services, commercial activity—really, that website
should only have one big word on it: the word “everything.” What we’re dealing
with here is a major disruptive technology, and with due respect to Keith’s
comments, I have to disagree in the sense that I don’t feel this is just an
add-on of us living in the big internet world. I’m almost fifty years old
now. I’ve lived though, this is my third major disruptive technology. The first one was personal computers when I was back in high
school. The second one was the internet.
And this is the third one, and this is for real. There is no part of our life
as human beings on this planet that will remain untouched by the development
and evolution and adaptation of unmanned vehicles, unmanned boats, unmanned
helpers--everything. And whether you call them “drones” or “UAS” or “UAV,” it
doesn’t really matter, but most people call them drones. But I really want to
emphasize, this is not just an area of explosive growth. This is something that
is fundamentally changing our society from a technology standpoint, and just want to list off two or three items. It used to be very
expensive for the average person to fly. Helicopters and airplanes are
expensive. We’ve heard of the detailed requirements from Terry, talking about
the different certificates and requirements for insurance, and the like. But
what we have to realize now is that these things come in all shapes and sizes,
that it is no longer expensive to fly anywhere you want, that the old rule
about not having any privacy rights in your back yard if you could be viewed,
quote, “in plain sight,” well, that’s something that will need to be looked at.
A lot of fundamental rules need to be looked at because courts have decided in
the past that overflights were very expensive, and therefore; people shouldn’t
worry about their privacy rights in overflights. And now we need to re-examine
those.
Terry: So, I also want to mention one other thing before I
give the floor back.
Denise: Sure.
Terry: You were talking about military applications and how
that might impact people. I don’t know if people are aware of this phrase
called “spiffing,” I believe it is. That’s when a third party, without
authorization, hijacks the radio signal of a remote control vehicle or
aircraft. There have been at least two experiments from, I believe, the
University of New Mexico, if I’m not mistaken, where students were able to
commandeer a remote control flying UAV. And this gets into a lot issues, so I
just want to put it out there that everything in our society is affected—that
lawyers, businesspeople, insurance people, consumers, politicians, government
regulators—everyone needs to take a look. There’s often jokes about responsible droning. When people say, “Oh, well that’s
silly.” I say, ‘Well, what kind of droning are you in favor of?’
Denise: Yeah, absolutely. You certainly wouldn’t want a whole
lot of reckless droning going on, or you’d find yourself living in a Neil
Stevenson novel, which all of these discussions always put me in mind of. And
it is up to us, and the decisions that lawmakers and policymakers make right
now, whether the future of these technologies is utopian or dystopian, or at
least—who knows?—somewhere in between, we would hope. Also, the whole visual
arts is one that they would mention, so using them both personally and
commercially to capture video, and then I’m sure that there are other
applications that we’re not even hitting on here. There’s just so much that I
think we’re just now at the verge of that we could explore.
Before we go too much further I just want to make sure,
Terry I thought that this background tidbit of yours working in the signals
intelligence arm of the Marines in electronic warfare. I’m sure there’s not too
much that you could tell us about that [giggling] as we sit here today, but it
gives you a very fascinating background.
Terry: Well, that was a long time ago. Actually, I was
intercepting Russian communications: Morse code and language. Based in a naval security group in Adak, Alaska: The Aleutian
Islands. So it’s during the Cold War and most of our collection went to
NSA, but our background did deal with primarily, underwater submarines and
aircraft. It was also one of the primary locations that did the interceptive
Korean airliner 007 shoot down over the Bering Strait.
Denise: Wow. Well, it’s a good thing you’ve moved on from that,
because otherwise I would be concerned that something might be circling outside
and ready to get us as we’re doing the show, because as Keith was pointing out,
we have the military and consumer sectors of drone use well covered and in the
military arena, which is probably beyond the scope of where we’re going to go
today, but it just bears mentioning that it’s really a burgeoning area, as
well—the whole question of whether something that has attack capabilities is
capable of autonomous decision-making or not, and all of the abilities that
military technology is taking on today.
Before we start talking more about business, because I
think that’s what we’re going to mostly focus on today, is there anything on
the military front related to unmanned vehicles that you think it’s notable, or
any lawmaking developments that you think we should know about?
Terry: You know, we deal primarily with commercial
development and commercial use; however, we do insure a number of
developers—manufacturers that use military equipment, general automics, aero-environment equipment, but we’re insuring
right now that for research and development, and so I think there will
definitely be some of that technology, depending on bandwidth and what type of
bandwidth communication systems we have available, or available to us in the
commercial world. So we do deal with the different types of equipment. It’s the
uses primarily that determine what we’re handling in the US. Although we do do cross-over on the equipment, the uses are commercial, R
& D, law enforcement, municipality, industrial uses.
Denise: Right. David and Keith were talking about how the
whole area of drone use has led to this explosion of opportunity in the legal
field with law firms quickly adding a practice group in drone law—that kind of
thing. You said that you have over 2,500 drones that you’re insuring at this
point?
Terry: Yes—we started off—we’re one of the largest insurers
worldwide of aerial film production, and those would be manned aircraft used in
the production of major motion pictures, commercials, things like that. But
about two years ago some of our larger clients in the film industry came to us
and wanted some assistance, or indicated they wanted to start using drones for
film production. So, in order for us to insure the production company, or the
production in general, we needed to find a way to place some primary coverage
on those aircraft. So two years ago we began insuring those for very specific
uses in film production, and then over time we’ve evolved our aircraft and
aviation policy forms to cover drones of all sizes from DGI Phantoms right now
up to pilot-optional aircraft, dual crew pilot-optional aircraft. So because of
our knowledge of aviation and aircraft risk management, we’ve been able to revise
the policies. They fit very well just the way they are. We just had to remove
some things related to federal aviation regulations. Things like airworthiness.
Things like pilot medical requirements and airworthiness certificates.
Some of the biggest issues that we’ve had, frankly, are
that most of these aircraft that are built do not have serial numbers, so we’ve
essentially had to invent this industry from the ground up. We’ve had to
develop our own data plate. As far as aircraft go, we can insure a data plate,
which is just a small plate with a serial number on it. We can insure the data
plate without an aircraft but we can’t insure an aircraft without a data plate.
Denise: [laughing]
Terry: So we had to invent the data plate. We had to verify
the existence of the aircraft, try to come to some conclusion of whether or not
it’s airworthy, and since then we’ve developed it from one insurance company to
ten. We’re insuring 2,500 worldwide for all uses: commercial through industrial
in the energy industries. So it’s been an explosive growth in a very short
period of time.
Denise: Tell me about the pilot medical requirements that you
just mentioned. Do you have some minimum remote pilot competency and health
requirements involved in issuing your policies?
Terry: We don’t, no, but the aviation insurance policies and
aircraft insurance policy, in order to maintain a pilot certificate, you have
to have a medical certificate as well.
Denise: Mmm hmm.
Terry: And so ironically, or what most people don’t
understand about aviation insurance policies, is that
they do not and have never excluded FAR: Federal Aviation Regulations. In other
words, if you have a loss, and that results in a FAA
regulation violation, we would still cover the loss under the policy, provided
the loss occurred while the aircraft was being used for the approved uses under
the policy and operated by the pilots approved under the policy. And other than
that, the aircraft policies—we’ve had to remove certain sections like “must
have a current medical,” “must have airworthiness certificate,” because most
aircraft do not have them…
Denise: [chuckles]
Terry: And those were the only regulations addressed with an
aviation insurance policy, so we endorse them out of the policy and then arrange
it to fit the aircraft and the use, but we do collect pilot data. One of the
reasons is, over the past two years, we have a pilot experience form. We want
to know--we want to compare pilot experience, pilot background, pilot training to loss ratio—so, losses that occur—so that
hopefully we can develop some criteria to determine what makes a qualified
pilot and what doesn’t. And that’s something that we’re working towards. We’ll
take a lot more data than we have, but we do have a lot of it now. Two years.
Denise: Right. Well, you were mentioning the Hollywood
uses—the film production uses—of unmanned drones. And, as we know, it was just
a couple of months ago here when a number of production companies received the
first exemptions from the FAA to be able to operate drones commercially, so
that seems like a good transition to talk about that application. Let’s look at
Hollywood and drones.
And we may as well, while it’s on my mind, put our
first MCLE pass phrase into the show, and that will be Hollywood Drones. We put
these into the show. If you are listening for continuing legal or other
educational credit on the professional side you can find more information about
that at our wiki at wiki.twit.tv. If you are a lawyer, we have some resources
for you there about applying in various jurisdictions to receive CLE credit for
listening to the show, and we put these pass phrases in in case your oversight
body likes to see that you actually listen to the show, so you can show them,
‘Yes, I know both the pass phrases for Episode 284 of This Week in Law.’ We’ll
put another one on later on in the show.
Let’s look at how Hollywood is using its exemptions.
Actually, I have no idea who does productions for Okeiko,
and it looks quite possible that this particular video we’re going to watch was
filmed in Japan, so I’m not sure what sort of regulations, laws, licenses or
exemptions might apply. Although, I don’t know—they could have made it look
like it was filmed in Japan. But it’s a really fun—the new video from Okeiko is called “I won’t let you down.” And if you want to
see how entertainment might use drones, we’re going to start this kind of in
progress because you don’t rally realize that this video is being filmed by a
drone until right about now.
[Video plays, with music]: Lights out in Babylon. Baby, all you need is someone to trust, Baby,
all you need is someone. Baby all you need is someone to trust. Baby, all you
need is someone. And I won’t let you down. No, I won’t let you down…
Denise: So things get very aerial here for awhile, and they do
a great job of incorporating their drone cinematographer throughout this piece,
and it’s very seamless and very cool, and I’m sure we will see more kinds of
things like that in all sort entertainment environments.
Keith: And Denise, that’s a great video. I’ve seen that, and
I’m pretty sure and I’d like to ask Terry this because of his expertise in
particular in the Hollywood Space. I’m pretty sure that that band went to Japan
to film that video. For whatever reason they didn’t get approval, or didn’t
think they could, so they shot it outside the US. And Terry, I’d like you to
respond to that if you’re aware of the details of that, but that is great sort
of Segway to the conversation that the drone regulation environment is variable
across the world. And there’s a lot going on in the world. But there’s a lot
going on in Canada, in the UK, France, Australia and other countries, and there
is a migration of business opportunity—you know—outside the US, which is one of
the concerns that the investors, entrepreneurs have, where the regulations—I’m
not sure they’re looser as much as they’re more mature—and enterprises using
drones, and really the whole economy around drones. Not just the manufacturers,
but the service providers, and the cloud providers and the data companies.
They’re all sort of engaged. I mean, it’s a robust network of companies that
kind of come together to crate the value, in addition to the manufacturer. But
if you have to leave the county, if you have to do this outside the US, that has implications for business opportunities. But
Terry, could you comment? Do you have
any specific details on that band or why they went to Japan?
Terry: You know, that’s an
interesting question, Keith. I’m not familiar with this particular video, but
one thing with the insurance industry is that the FARs or the FAAs, the FAA
regulations have nothing to do with whether we insure or whether we do not
insure a particular risk. And in Europe, yes, it’s more widely accepted. There
are regulations in place. They are being used for commercial purposes. In the
US there are currently six 333-exempted film operators. We insure all six of
those. I have always insured them. And one of the biggest issues was that some
of these operators, such as Astraeus—David Weigreitious—one of the exempted
operators, he’s been a cinematographer on movies like Legends of the Fall, A
River Runs Through It—very well known. The biggest concern is hey—if I’m on a
film set and I shut down an entire production because I’m operating a drone—you
know, I’ll never work in that town again, as they say.
So what they did, were, this group got together with an
aviation attorney that we have worked with here at Transport Risk for many,
many years named John Hill in Washington, D.C. They got together as a group and
worked through the FAA to file for the exemptions, and eventually were awarded
those exemptions. There’s a total of seven of them.
Six of them are in the United States. One is based in Belgium. So now that
those exempted operators are out there, it has kind of opened up an avenue and
some opportunity, but interestingly, what we saw was the California Film
Commission instantly turned around, issued a notice to the film industry and
said that these operators are approved. There’s a list of standards that
basically runs down their 333 exemption, and also outlines an insurance
requirement.
Today in the United States you can fly an airplane or a
helicopter or anywhere you want--there’s no insurance requirement. In UAS we
anticipate that there is going to be an insurance requirement, and the fact
that the film industry—the film commission—has already put down that
requirement, is a “two million dollars move” today, as we call it. And so after
all this time of wanting to have regulation and regulated film operators, they
finally came through. It’s true they’re available. Instantly, the first three
film productions we saw presented to us moved across the border to Nevada so
that they could use non-exempted drone operators, and so we’re going to be
seeing these types of adjustments to very, very disruptive technology for a
period of time while we kind of get our arms around how to deal with it, both
from an insurance and an operational and financing standpoint.
Denise: Yeah, there’s so much to take into account there. Some
background on video: Wikipedia has a good post on it, and it was filmed in Japan.
They don’t say that it was done so to be clear of US regulatory or other
requirements. I was curious whether this was one of your insured 2500 or
several of your insured 2500 kit, Terry. It doesn’t sound like that’s the case.
They were careful, it says, to film it in a vacant warehouse area. So it wasn’t
something that was done in the middle of Tokyo, by any means. And they
ultimately have over 2300 participants in the video, however; so however vacant
it was they did have some safety issues that came into play. And David has been
pointing out, safety would be just one of the many law and policy issued
related to this disruptive technology. You know, I’m sort of on the fence
between what Keith said earlier about this being on the continuum of things that
are web-enabled and net-connected and moving around and collecting data in our
environment, and that it could be a disruption on the order of magnitude of the
PC and the internet themselves. I think you both have good points there.
And so now that we’ve looked at the Hollywood example
and talked about some of the concerns that are specific to that industry, let’s
zoom our drone out a bit and take the 10,000-foot or higher view and look at
some of those law and policy considerations [music plays].
Alright, David, tell us about the model law that you
authored or worked on, and what the purpose of that was, and whether anything
has become of it. Has it been adopted or used in an advisory capacity in
Washington?
David: Thanks, Denise. The model law was brought forward by a
civil rights group—working group—that I was invited to join. And, I was the
only business lawyer or private property privacy lawyer there, looking at it
from a business standpoint, and interested in regulation. Most of the other
members of the working group were interested in banning drones and I felt that
the cat was already out of the bag, so to speak, and I was not interested in
putting effort into that direction. So we ended up putting out two integrated
models. One based on a banning notion, and one based on a regulating notion.
And, you know—has it been taken up? No, not really. There were some local
activist groups that tried to use parts of it, but with so much of the
regulation up in the air because of the FAA first issuing some sort of
pronouncements, going back on some of them, and some of the litigation
happening, and the rules forthcoming, there’s been a sense that it may have
been a little premature for state and local bodies to be taking up drone
legislation. My personal feeling is that with the FAA expressly denying
jurisdiction, generally under 400 feet, and at the same time maintaining
jurisdiction over any flying thing because it’s a, quote, “aircraft,” we just
have a confusing situation. And at the same time, there are localities
purchasing drones. Law enforcement is purchasing drones. They have drones,
they’re using drones, and drones in combination with things like GoogleEarth really call into question peoples’ privacy
rights in a way that they never have before. The model legislation—the parts
that I inputted—had to do with getting personal responsibility associated with
the use of drones. In my view, if someone wanted to fly a drone—not on their
own property—outside their own property, then they should file locally. They
should show that they have—my suggestion was a $100,000 bond—which is very
common in commercial activities-to post some form of bond to cover the public
in case of an unexpected injury.
Similarly, when law enforcement uses drones, I wanted
some individual to have to sign an attestation that the drone would be flown
safely away from crowded areas and the like. These were ideas that percolated
to the top in working group discussions and it just was the beginning of a
discussion. I don’t know whether any of those concepts will make their way into
actual legislation, but at the same time just talking about them in a
professional way, putting them down in writing, and putting it on the internet
gave people a chance to use that as a model—[to] take some language if they
thought it was appropriate, or not.
So it was a very initial stab at things. There were
about fifteen of us that worked on it. It was published, and there was a
commentary with hundreds and hundreds of footnotes so that other interested
people could take advantage of the work. And since it was an entirely pro-bono
initiative, we feel like we got our money’s worth...
Denise: [laughs]
David: for that sampling.
Denise: That’s funny. I also loved that the regulations are up
in the air, because of course they are, in this area. It’s called the Bill of
Rights Defense Committee Group that David was working with. So that is out
there, and it’s certainly something that lawmakers in states and in Washington
can refer to as they’re grappling with these issues. Apparently the FAA, which
has been sort of back and forth, ‘Oh, we’ll have something for you by 2015,’
now they’re saying they’re going to release a small drone rule by the end of
the year.
Terry, do you have any insight on that?
Terry: Only what the FAA has released, and there’s been a lot
of pushback—even from members of Senate. New Zealand recently released what
their notice of proposed rulemaking is, and that’s one that just came up the
last couple of days. And we think that that one’s going to be closely related,
so we’re looking closely at that. But the FAA has already hinted to the fact
they’re going to require a pilot’s license under 400 feet, distances from
airports similar to what most people assume is proper operation right now, or within
the guidelines of the AMA—a Class G air space—but time will tell. We’ll see how
restrictive it is, how reasonable it is, and if it’s something it’s something
that will stifle an industry or help grow an industry.
Keith: Yeah, well..
Denise: Great, so… Go ahead, Keith.
Keith: Denise, one of the nuances of the regulations that I
think people are waiting to see is whether the FAA requires a line of sight to
the drone, and this is very important, because if there’s one pilot per drone,
and you need line of sight to that machine, that fundamentally lowers the order
of magnitude of impact. Is what it prevents is essentially a drone fleet. Now I
know when I say “drone fleet” it elicits images of drone armies and all sorts
of negative things, and ‘Wow, who wants drone fleets, anyway?’ But, actually,
what we do want, is we want to scale the adoption and
use of these disruptive technologies to create value, and it’s hard to do that
if you need one pilot per drone. And so some of the more interesting companies
that have come out in the last year or two that have been funded by very big
D.C. firms in Silicon Valley, which as it turns out, have been sort of ground
zero for a lot of innovation in the space in California, that is.
Some of these companies are focusing specifically on
building the infrastructure—the Cloud infrastructure—to manage fleets of drones
that enable you to sit here in a sort of command center. Some
kind of drone operating center. Some kind of central area where you
might have drones situated, say, up along an oil pipeline, or perhaps out on
various oil rigs on the Gulf of Mexico. You know, whatever the industrial
application is, and able to manage and operate those remotely, number one, and
through the cloud, say 4G-equipped drones, for example. As well as to have more
than one pilot or one operator, managing more than one at a time, which enables that scale. So that is only one of a number of
the line items that will be coming out in the regulations, but that line of
sight requirement does restrict the ability to survey larger pieces of land.
You know, in agriculture for example, if you have to physically see that drone,
then it can only go so far, right?
So there’s the black-and-white sort of binary
applications. You know—can you do this? Can you actually fly them? Which is a real positive development,
right? The good news is that any
regulations that come out start to provide certainty and clarity around what is
the art of the possible, and we don’t have that now. So it’s fundamentally all
banned, right? So, that’s good. But that line of sight requirement or that one
pilot, one drone requirement –that’s going to directly impact how quickly the
industry can scale all sorts of industrial uses. So it will be very interesting
to see how that plays out.
Denise: Yeah, maybe that will be area where the
consideration—David mentioned a minute ago, whether you’re on your own property
or not—would come into play. Of course pipelines and things go over lots of
property and the pipeline operator doesn’t necessarily own it. And I don’t know
if that would solve it, but it does seem like you could at minimum perhaps,
David, say that things like line of sight or one operator-one drone might have
less of a concern if somebody is operating on their own vast ranch or wherever
else you might have a bunch of land and want to be flying drones. Do you think
that could be the case?
David: What’s the concern with someone who’s a rancher or a
farmer flying their drone, or many of them, on their own property? To me, it’s
completely ridiculous that the federal government would assert that kind of
jurisdiction on someone’s own private property. Now if it comes a time where
farmer or rancher is flying a drone on their own property under 400 feet, and it’s responsible in my view, and the federal government gives
them a hard time, I’d be interested to take their case on a pro-bono basis
because it’s not right. It’s not fair. And we would have a lot of support in
that case. So, I’ll put the offer out there.
Denise: [laughing]
David: As far as I’m concerned, people are flying their own
drones on their own private property in a rural area, then that’s their right
to do so, and nothing about drones should ever change that. Now, when you’re
dealing with urban areas and it’s difficult to control a drone, possibly, from
smashing into a next-door apartment building, well I could not sign off on that
as being responsible use. Even if you own your condo, it doesn’t necessarily
mean you can fly your drone in it. But as we can see, just in the hypotheticals
we’re talking about incredibly varied and diverse situations, and they need to
be examined, more or less, on a case-by-case basis. The kinds of things Keith
was talking about where you night have a controller who’s operating drones, and
they’re doing those dirty and dangerous jobs, like checking high-voltage power
lines in Wyoming and Montana-Why hire one person to look at one drone when you
could have one person managing several of them, doing a simple task like flying
along high voltage power lines to find a problem?
So, I really feel it needs to be done on a case-by-case
basis. I think there needs to be a hypersensitivity to the private property
rights of people, so that they’re not restricted. The notion that someone needs
a pilot license to fly a drone over their own crops is just ludicrous, and I
can’t wait for that to come out as a legal ruling.
Denise: Right, we’ll have to see what does happen there.
Terry, we keep talking about this 400-foot requirement limit without really
explaining what that is or why that number is important to the FAA. Can you do
that for us? [Pause] Do we have Terry? [Pause]. Ooh, I
think you’re muted.
Terry: Sorry about that.
Denise: No problem.
Terry: So this Class G airspace involves separation: manned
aircraft from unmanned aircraft, so if manned aircraft are flying down to 500
feet—if we put a maximum 400 feet in Class G, which is uncontrolled airspace,
that ensures a separation. If we go above that, they could be mixing it up, and
that’s a safety issue.
Denise: Right. So, as things stand today—obviously we still
have a commercial drone ban in place with certain exemptions that we discussed
earlier that are slowly being issued, and the FAA promising, or telegraphing
that it’s going to have something out for small drones by the end of the year…
So you’re thinking, Terry, that what that will entails is that they must
operate in that Class G airspace, is there anything else that you can tell us
that may come our way before the end of the year?
Terry: That’s definitely one requirement, and it’s one that’s
reasonable, and I think that most operators abide by that. Most
responsible operators.
Denise: Mmm hmmm.
Terry: Some of the real issues that we see with it are the
requirement of a pilot’s license, or requiring line of sight at all
times—that’s an issue. And another thing is that they’re lumping small UAS in
under 55 and under pounds—that’s a big range when it comes to small UAS.
Denise: Yeah [laughing].
Terry: And a fifty-five pound drone is a big drone today as
compared to what you see behind me over here.
Denise: Uh-huh.
Terry: And so lumping all of those requirements and all uses
into a single category—almost onerous requirements—is going to be an issue, and
there’s a lot of pushback coming. Today, I would correct one thing: There is no
rule. The FAA pretends there’s a rule against commercial use, but in reality there’s no rules. That’s what’s creating the confusion and
the problems today. From our standpoint, we will insure all commerce, depending
upon the risk. Whether we insure First-Person View, FPV as it’s known, is determined by what kind of losses we’re
seeing. Autonomous or semi-autonomous systems for agriculture, if they’re
crashing all over the place, then that’s going to be a problem.
I mean, they may still be operating legally under the
FARs, but they wouldn’t be insurable. Likewise, insurability and regulations
are two completely different issues. So today we’re watching everything very,
very closely. We’re taking an opportunity to see where the losses are falling,
seeing where the flight controllers [are], what the pilot experience, what uses
maybe we should be involved with and not be involved with, and by aviation
insurance standards it’s a pretty cheap education. If we can go out and we’re
paying for fifteen or twenty thousand dollar drones as opposed to fifty or
sixty-million dollar airplanes, that’s a benefit. So, we could take advantage
of this period of time and this small UAS to learn where the lines of safety
are, and at the end of the day in insurance it’s profitability. And it just so happens that it’s
correlated with safety. So it’s an important laboratory, and we’re hoping that
the data we’re collecting today will be useful, both with the FAA and private
sector, to go out and say, ‘You know, this is reality. This is what we’ve seen.
Regardless of what everybody’s saying, these are the facts. This is empirical
evidence, and this is what we’re willing to insure, and what makes sense and
what doesn’t make sense.
Denise: So Terry, say I’m a customer. I have a company and I
want to use drones commercially, and let’s make it an easy case, where I’m not
going to be flying over somebody else’s property, although I’m sure you have
clients that you insure who do do that, right?
Terry: Absolutely! We insure every use that you can imagine.
And similar to manned helicopters, coverage is predicated upon use. Because a
helicopter is covered for part 135, which is commercial charter, carrying
passengers for hire doesn’t mean that they’re going to be insured for long line
or hauling logs out of a forest. So they have to have named uses under the
policy. We do the same thing. We have three primary criteria: aircraft type,
pilot experience, and use. If those three criteria all make sense, it’s
something we will probably insure. If it’s commercial use, it’s not a problem.
Going over somebody else’s property is not really something that is excluded under
an insurance policy. So we’re..the insurance industry is something that is separate from privcy laws. We’re separate from FAR regulations. We’re basing it upon, ‘Does it make
sense from an insurance standpoint?’
Denise: Right.
Terry: And you know, the good thing
about this from an underwriting standpoint is drone operators are pretty proud
of their work, so airplane operators-we can’t find out a lot about what they’re
doing. Drone operators, literally within twenty minutes of getting back onto
computers, on YouTube, or it’s up on our video site, and one of our
underwriters just came back today and said, ‘You know, this person says he
doesn’t fly over populated areas.’ Meanwhile we find all the YouTube videos of
him at a Poison Concert, flying over heads and it’s a very disruptive, very
accessible technology. That is something that we find very interesting. We’ll
insure it until the loss becomes unreasonable and it doesn’t make financial
sense.
Denise: Right. Drone operators are exhibitionists. The stories
are legions of people who are collecting healthcare benefits and then post
pictures of themselves running marathons, or what have you, despite their
supposedly debilitating workplace injury, and then getting in trouble for that.
So, I guess the drone operators have their own hazards along those lines, vis a vis insurance. So, let me ask you, I’m interested in
some coverage issues, because obviously there are different kinds of risks if
you’re going to operate a drone. Let’s look at the privacy. We’re going to talk
about privacy in detail in a moment here, but just from the insurance
standpoint, if you got sued for somebody’s privacy violation, is that something
that you will insure against Terry?
Terry: It depends on what the situation is. That’s a really
difficult issue for us in insurance. We have two different types of coverage
under an aviation insurance policy. One is bodily injury, which we describe as
blood, guts, gore and fire. And then you have personal injury, which is claimed
injury that doesn’t involve blood, guts, gore and fire, so: You hurt my feelings, libel, slander,
false arrest—things like that. Potential privacy violations,. The biggest problem that we have: we’re very careful when we insure a risk to
look at what they’re doing is because we’re state-regulated. We’re not
federally regulated grants. We have fifty different states with fifty different
sets of statutes that we have to somehow follow. And then we’ve got, within
those fifty states, we have municipalities as small as right here in Colorado:
Deer Trail, who want to go open up a hunting season on drones.
So suddenly we find ourselves in an impossible position
of potentially having to insure a privacy violation without knowing it because
you have so many different laws. So you do insure for it, but it’s on a very
selective and an individual basis. For example, the energy industry, the
pipeline and power line industries, the film industry. We’re careful about
that. Real estate obviously. So we just look at every
risk separately. That’s a long way of saying it depends upon the situation and
how the policy is written. If we include the coverage, it would be a covered
loss. If we feel that there’s too much exposure then we just won’t provide the
coverage within the policy.
Denise: All right, too tee up this next discussion I’ll go
ahead and put our second MCLE pass phrase in the show, and it’s going to be,
how do I say this in a pithy way? Guy Shot my Drone. [laughing].
That will be our second phrase for the show, and what I’m referring to, we’ve
been talking a lot about the requirements on drone operators in a commercial
setting, and we haven’t been talking so much about the requirements of the rest
of us when it comes to other people operating drones in our space, but there
have been tons of stories about people who have been upset about a drone either
looking into their property from outside of it, or doing a flyover, and
deciding to take justice into their own hands and shoot it down. I think,
David, you sent me a good Reddit link of a recent one
submitted four days ago. The headline on Reddit is
Neighbor shot down my hex with a shotgun, my hex was
over my property when downed. What are my options in California? So, certainly, [laughs] as Terry was just mentioning,
municipalities opening a hunting season on drones? That’s a new one on
me.
So, David, from the legal standpoint, what do you think
about the rules when it comes to drones for the rest of us?
David: Well, from a legal standpoint, there’s no law that says
you can just whip out your shogun anytime you’re pissed and start firing it off,
notwithstanding what Joe Biden said during the whole gun control comments. The
fact of the matter is there’s a lot of rules on when you can discharge a firearm. Whether you
can do it publicly or at all depends on whether you live in a rural place or
not. In most cases it can often be a crime to discharge a firearm in public unless you’re in
immediate jeopardy of your life. So these are serious issues. If your neighbor
flies your drone over, and you grab your shotgun as a matter of first recourse,
there’s a very good chance you, yourself, will be finding yourself charged with
a crime. Now, as for how drones affect
the rest of us, for me it comes back to the Golden Rule and being a good
neighbor. You’re not allowed to peep in
your neighbor’s windows with binoculars, and so you’re not allowed to fly a
peeping drone over to your neighbors.’ This should be self-explanatory.
Denise: [chuckles]
Terry: However, with the advent of drones that people can
play with or drones that are easy to fly around, there’s a temptation to see
what your neighbor’s doing. There’s a temptation to fly down the block and see
what’s going on. And in that moment of temptation, many people will forget to
respect their neighbors’ privacy right. So I think it really requires that
pilot, amateur hobbyist or commercial pilot, to look at what they’re doing and whose
rights might be affected and act accordingly. And that goes to education and
training and a whole host of issues.
Keith: And Denise, if I can layer on a commercial sort of
context for that.
Denise: Yes.
Keith: There is always the Peeping Tom drone. I’m not sure I
want to speak to that directly, but that also speaks to intent, and outside of intent in a corporate context, you know a lot of things happen
without intent, and that doesn’t necessarily excuse risk. So for example, there
was a story recently in Australia, which has a very robust drone economy, and
there was a story about a real estate company that was using a drone to survey
a certain neighborhood, and was flying over the neighborhood to capture a 3-D
image of them, and they just incidentally flew over someone’s back yard where a
grandma, who that’s what the headline said, anyway, was sunbathing naked. And
the machine captured the image, and I don’t think the operator had a first
person viewer, so they were sort of just flying the object in a path—a
pre-ordained navigational path—and did not realize that they captured this
woman undressed in her back yard until they had already published the picture.
And of course she’s now suing them, and so forth, for violating her privacy.
And so here’s an example of a really good use of a drone, and without intent,
violating someone’s privacy. We have other situations..
I was actually working with a company recently who owns
oil rigs and maintains them, and they wanted to use drones as part of their
infrastructure solution for monitoring the quality of the infrastructure and
that kind of thing. And one of the
concerns—real concerns—was basically privacy of the employees. You’ve got teams
and crews working on those oil rigs that don’t necessarily want to be filmed
all the time or want to know that they’re on film. There are again inadvertent
violations or risks to privacy in the work place but even with a good use case,
with good insurance and with good controls so I think there are 2 sides of that
equation.
Denise: And you’ve just made me think about the whole employment
law ramifications; if drones are going to be used by companies that the labor
and employment lawyers that work in these places are going to have to take
these things into account and possibly we’ll start to see employment agreements
and the various understandings between employers and employees reflect that the
kind of consideration that you just brought up that someone’s going to need to
sign off on you. Yes you can fly the drone over while working on the rig. Keith
I’m going to drive you crazy right now because you were mentioning to me and
lamenting the fact that here in California we record this show over lunch time.
I’m about to talk about some delicious food because we’re going to take a break
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Apron, we love your food. Sorry Keith, are you starving now?
Keith: I was about to run for the kitchen but…
Denise: Yes I know. We’ve been talking about how – as though it
were so easy to tell when we’ve got commercial use going on and private
recreational use going on of unmanned aircraft; but Terry I would think that
the line between those 2 things is fairly blurry wouldn’t you?
Terry: I think the FAA is applying the same thing they do to
mandated aircraft – are you flying the thing for compensation and if you are
they are viewing it as commercial. There is no rule and again it comes back to
it is very vague, it’s not clear by any stretch and so our policy from an
insurance standpoint only – if its commercial use we insure aerial filming for
higher and everything below that which would be non-commercial use and pleasure and business. So if the FAA does
violate or attempts to violate for commercial use violation we would still
cover the loss. So it doesn’t really impact us but it is a vague very blurry
line.
Denise: David what do you think lawmakers should do about that? I
can certainly think of situations where someone might be out privately flying
their non-commercial drone with a camera on it and capture something new-worthy
that winds up being valuable to new networks and they’re able to sell the
footage say. So that has all of a sudden become a commercial use. Can you think
of other situations where the line would be blurred and how do you think
lawmakers would handle it?
David: Well I think there are a lot of situations where the line
is blurred. You have photographers, you have realtors
where it’s become very common to include in a sales video a drone eye view so
to speak of the property. If the realtor or the realtors assistant wasn’t
compensated specifically for doing that drone flight – taking the photography
of the video – but at the same time it’s part of a
professional venture. What we have in the context as Terry mentioned – no rules
– we have a situation where people are possibly turned into federal criminals
or at the very minimum subject to federal fines for doing something that they
either didn’t know was against the law or didn’t think was against the law
because they were engaged in a hobby or their own recreation. The only case we
have right now was primarily this very issue where somebody had to face a 10000
FAA fine for flying his hobby drone so to speak and a lawyer in New York who’s
been making quite a name for himself – I’ve never met him but I’ve seen his
writing - Brendan Sholman, I believe his name is.
He’s on twitter @dronelaws. The guy has been fighting
tooth and nail – The FAA and the administrative process and through the appeals
and the FAA just ruled against his client. The lower decision ruled in favor of
the drone operator and the FAA appeal board ruled against. Well whether he’s
taking this pro-bono or not for the average person getting slapped with a 10000
FAA fine is – it can be a life altering experience and it’s just not fair to
have at the same time consumer purchasing of small mid-size – even up to a 55
pounder or greater drones. The fact as has been noted in the IR chat room on
the side these are not different than remote controlled aircraft which have
been used for many years without incident as I understand. People are facing a
situation where the government – the FAA isn’t being clear on what the rules
are except to say that you can be punished and you need to hire a lawyer to get
yourself out of that punishment. It’s a terribly unfair and I would suggest
unconstitutional framework to be operating it. Blurry lines, no clear rules but
a system of civil money penalties and possibly criminal penalties and of course
the whole weight of the federal government and its administration of
bureaucracy going against an individual is a David and Goliath situation.
Denise: So Terry bearing that in mind do you think that people’s
homeowners policies or some sort of separate policy might be necessary if
you’re going to give your kid the Sima under the
Christmas tree and hope to avoid the 10000 associated FAA fine. Do you think
that people need to be thinking about the risk involved in personal use?
Terry: As it stands right now Homeowners and most other CGL or
commercial general liability policies exclude aviation uses. If you don’t have
it included then it’s going to be excluded. The only way to know the answer to
that is to go out and have the loss. If the FAA determines that it isn’t it’s
an aviation exposure. I don’t know every policy but I would assume that your
insurer is going to deny coverage. That’s why even the Fortune 500 companies
that operate aircraft have to insure that aircraft under a specific aviation
policy. That’s what we do here.
Denise: Keith, any thoughts about the strange line between private
and commercial use of drones before we move on to some privacy considerations?
Keith: Well I just think that, as both David and Terry were
talking about the ambiguity and the lack of certainty in these things and it
does open up both individuals and companies to great risk and of course the
individual that David was referring to that’s fighting the defendant is trying
to avoid a $10,000 fine has limited resources
to shape and influence policy but there are many very big brand name companies
and I probably shouldn’t list them out but they are companies that we all know
and very big technology companies, social network companies, companies that are
members of the Fortune 100, not just Fortune 500 – that are actively lobbying
and investing in the ability to shape that policy and frankly are expecting and
anticipating that those rules will change in a way that will support. Not
change in terms of go away but in a way that will support a very clear set of
guidelines. So while I think individuals can’t probably defend themselves well
and that is a very real statement that David said – a $10,000 fine could be a
life changing event. I think there are plenty of Fortune 50 and 100 companies
that are investing heavily in a dissipation of clarity coming. Maybe not this
December but in the next say 1-2 years in a way that will meaningfully help
individuals – provide an environment which even individuals can probably understand
what the risks are and aren’t.
Denise: Alright, in a moment here we’re going to talk about
surveillance and stalking and intrusions and other privacy considerations but
before we do that we’re going to talk about something that you do in the
privacy of your own home and that is shaving. We’re going to thank our second
sponsor for this episode of This Week in Law and that is Harry’s. You no doubt
have someone on your shopping list that is impossible to shop for. I know I do.
I have several dozen of them; the guy or gal in your life that has everything.
We’re recording this show on December 5th here and I’m in full
holiday, got to line up get everything in place because most of our family and
friends that we exchange gifts with live far away so you have to build in that
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support of This Week in Law. Alright lets go stalk
some people with drones.
Keith: I was just going to say Denise, I don’t know what the protocol
is but that would make a very nice gift for panelists I think.
Denise: Oh it would make an awesome gift for panelists! Absolutely,
especially those I see frequently such as Mr. Schrier here. Let’s go stalking. You might want to have a drone following you around
like the drone in Destiny that Keith writes about in a great linked in piece on
drones and their considerations or you might not want one following you around.
Over at CNN there is a headline “Is this the world’s first stalker drone”? This
gadget is from the UK, actually it is from Shanghai it
looks like. Shanghai based startup air mind and they are funding themselves via “Kickstarter” and it has the ability to film and follow a
designated person or target. So if the one that your neighbor has with the
telephoto high definition lens weren’t bad enough now we can actually have our
targets followed around with intent. So all of this simply underscores the need
for privacy considerations as lawmakers not only think about how these things
are going to fly around safely but what everybody else’s rights are in addition
to not being injured by the quad-copter buzzing their front lawn. So David this
is really your pet topic here. Why don’t you tell us the status - if any for
privacy regulations for drones.
David: The status is we still have the same privacy rights that we
had before drones showed up. In technology I’m sure you’re familiar with this
word called porting; where we take one software and we
port it say to a different platform getting a different kind of software to
work on both PC platform and the Mac platform and the Linux platform etc. I’d
like to use this term porting when we talk about our privacy rights. We have
very well established and understood privacy rights. They’ve been part of the
development for our legal system for the whole time that we’ve been a country,
the constitution and many states have written right in – such as California – a
right to privacy. In the Federal Constitution of course we’re taught the
seminal case of Griswold vs Connecticut where the Supreme Court found our
rights of privacy and the quote numbers and eburnation’s coming out of the 4th,
5th, 9th and 8th amendment. So we have privacy
rights. What we haven’t done is to think through how to keep the benefits of
these privacy rights in the age of this new technology and again from my
perspective it’s a major disrupting technology that affects every facet of human
life. So to me it’s no surprise that stalking drones which could be looked at
as a person if they are themselves the target and it would be more of a
personal biography drone but if you call it a stalking drone it begs the
question, who are you stalking and why? That’s obviously not acceptable
conduct. We have ingrained privacy rights that include the right to not be
spied on, the right to enjoy the – it’s so hard to describe it using words
because usually we describe it in terms of what is an invasion of our privacy.
Clearly what we do in our homes the average person considers to be private.
Usually that extends to our backyards and often that extends to our daily
route. No one expects that they will be tracked on their walkways or their
driving path ways, their patterns of activity. We know that with big data and
data mining companies that may not have any bad intent but they can mine this
data and get to know more about us than we know about ourselves. These are all
privacy impacts on our privacy. So the state of the law is that we have the
same privacy rights we had before but just like any right it’s like a muscle
and if you don’t use that muscle it will atrophy and the same goes for privacy
rights. If you don’t assert your privacy rights then you will lose them after
they become weakened so it’s incumbent on everyone to push back against
intrusion of their privacy by everyone as far as I’m concerned – neighbors, the
government, anyone. It’s just your own personal responsibility. Lawyers are
there to help with that, state government officials, even Federal government
officials can react to invasions of privacy. So I really feel encouraged
because people are focused on their privacy and they’re not letting it slip
away but we have to balance those things against the countervailing interest
that people have also within their free rights to buy these drones, use them,
use them for as many different purposes as one can imagine. None of the rules
that relate to privacy have changed. The ability to violate those rules has
changed – has become much more easy and inexpensive but the basic rules have
not changed concerning privacy.
Denise: Right, this is why I love our chat room – Nedj10 in there
mentioned there might be something about this drone that we should pay
attention to – and I haven’t looked up the Kickstarter page and read their
stats. I’m going from CNN’s coverage but he says the drone in question – this
quote, unquote stalker drone is a follow me type remote camera and its intended
use is for action type camera settings and it requires the target to carry a
transmitter but here over on CNN its saying that what the drone operator needs
to do for this stalker drone is to open an Android app and choose the target –
its’ not saying how the target is chosen so I don’t see where the transmitter
comes in – to follow via the camera on their phone and hit start and then the
processor tracks the selected item for up to 20 meters, 65 feet above and at a
maximum distance of up to 50 meters – 164 feet behind using its auto pilot
feature and it can also respond to hand signals. Waving a right hand will
instruct the device to come closer; raising both hands will make it take a
picture, while pointing to the ground tells it to land. It sounds like a pretty
cool device but also laden with privacy violating capabilities as David was
discussing. Here in California David we have a technology privacy bill that was
signed recently. Can you tell us a bit about that?
David: Well it was an outgrowth of a year of attempted legislation
for drones. There was a bill, a pretty wide ranging bill that was debated in
the California State Legislature for a while. It didn’t go anywhere – it had
been opposed by both law enforcement and also private interests and that
started the legislatures thinking and what did come out was some protection –
mostly for celebrities. California does because of Hollywood have some very
specific rules that protect celebrities and that drone law that Governor Brown
signed was a very narrowly tailored law to reiterate that the privacy rights or
commercial privacy rights of celebrities are protected in California.
Denise: Alright, Keith we talked before about how this might – the
privacy ramifications of this might impact businesses; one way being that
employees might have to agree to waive some of their privacy rights when drones
are involved but what about considerations for people who are not your own
employees? Its seems like that would be the greater
risk don’t you think?
Keith: I think there’s just a litany of risks. Capturing data on
someone who worked for you without them knowing… There are cameras in most work
places. You walk into a retail place and you’re on camera. I don’t think you
could cross the street in London without being on 3-4 different cameras. So I
think we’ve given up this notion of not being on camera. I’m not sure that one
that’s flying 65 feet up makes it particularly riskier to you or that it
violates your rights any more. I don’t know and I can’t really venture to say
but there really are a number of risks for enterprises that go beyond just
violating privacy. For example you capture information and these are data
capture devices and the amount of data is phenominal.
One of the newer consumer drones coming out – this is a consumer drone, not an
industrial one – there is a consumer drone that weighs probably 2 pounds or
less coming out this Christmas. It has a 14 megapixel camera in it. So if its streaming a 14 megapixel video – back to something, this
is gigabytes and gigabytes of data right. So its capturing a lot of data and where does that data go? Do you have to store that
data? For how long do you have to store that data; is that data discoverable?
Recently I saw this fascinating article on Fitbit – the wearable fitness
computer; it was for the first time Fitbit was subpoenaed. The data on
someone’s Fitbit was subpoenaed as part of a law suit. It may or may not be the
first time but the article said it was the first time a wearable computer was
actually subpoenaed in litigation. So there is a question about data retention,
what you do with the data, if you find that you’ve snapped a picture of a
citizen half naked in their backyard – do you have an obligation to delete it
or report it to them? So again I think there is just a litany of risks that
enterprises have to cope with and the rules are what they are. Like David said
before drones came around these issues are true too but companies are going to
have to develop or update their policies and update their PR policies and how
they deal with the potential crisis that comes out of this. I think that’s one
of the important things we haven’t talked about which is; there is breaking the
law, there is a compliance issue – are you in compliance with the regulation.
There is; do you have insurance. So there are all those boxes to check and even
if you do that all right then there is just the perception, the optics and
there was right here in Southern California there was a lot of articles
recently on how the Police Department in LA had received as a gift a drone that
another police department had purchased but decided not to use. All they did
was take ownership of it and it caused such a huge outcry. They didn’t do
anything wrong, they didn’t violate any rules, I’m not sure they ever even
turned it on but just the sheer taking possession of a drone resulted in
protests and articles and all sorts of reactions and I think that speaks to the
PR and the optics and if you’re a large well known publically traded company
you’re going to be concerned or at least prepared to manage that as well as any
other legitimate risk.
Denise: Terry, recently the FAA declined to get involved on the
privacy side. There was a petition to the FAA to start a public rulemaking to
address privacy and civil liberties issues concerning domestic drones but the
agency said it’s not required to solicit public comments on the privacy
implication because privacy is not an immediate safety concern so that would
seem to make perfect sense. The FAA is saying not our job, not our department.
I’m not surprised by that but if it’s not the FAA’s department Terry then whose
is it?
Terry: The FAA is a safety organization. Privacy is something that
every response I’ve seen from the ACLU associated with UAS unmanned aircraft is
that their position and I think most peoples are as David pointed out is that
we have adequate laws – we have privacy laws in place. I can’t go to my
neighbor’s house and throw up a ladder and climb up there and look in their
bedroom window. Same thing with a drone and really privacy is not a pressing
safety issue and is not something the FAA should be involved with. I cannot
even imagine if we had the FAA involved with it. We feel the same way that the
privacy issues are adequately by current laws. A lot of it has to do with intent,
same thing our insurance policies as it relates to privacy laws so this notion
that people are not already being photographed every single day by a news
helicopter flying over – if you’re sitting in a traffic back up in LA while a
news helicopter is filming an accident then they are filming you. They’re
filming over your houses and the police are filming, they’ve got cameras and
stuff that makes something like this look like a toy which by and large are. So
the same thing as far as privacy goes, that our contention with the FAA – and
I’ve had this argument with several people there is that people are already
dying. From a safety stand point people are – pipeline, power line patrol
things like that. It’s not as though we don’t have those things occurring already.
So the FAA needs to focus on some common sense rule making, listen to the
industry and stay out of privacy. There you have my soap box.
Denise: Well I think that’s a good invitation as long as we’re on
these privacy considerations to kind of expand this out past the unmanned
aerial vehicles we’ve been focusing on for the show and into what Keith was
talking about early on – the fact that there are all kinds of drones and not
all of them fly and also the fact that just about everything in our lives is
going to become a data collection device if it’s not already there now. So
Keith I wanted you to kind of expound on that and give us your thoughts on the
internet of things in the context of what we’ve been discussing today and where
you think it’s going and what sort of both business and consumer concerns we
should be aware of.
Keith: First I wanted to spell this myth of disagreeability
between David and I. I know it makes good drama for TV
to have a disagreement and this is Orange County and we like drama but actually
I think David and I were making 2 somewhat compatible points but speaking of 2
different issues. Drones or unmanned aerial vehicles or whatever you want to
call them – they are definitely on a continuum of innovation and they’re just devices
that connect to something much larger and serve a purpose right. But that’s not
to say they’re not disruptive so they’re not mutually exclusive comments and I
don’t want to challenge David’s point because I’m a big fan of disruption when
it happens and we often don’t know it’s happening until its already happened. I
think that the ability to move things beyond your personal space – to fly an
object or capture an image, to do all these different functions that UAVs serve
that is very disruptive, that does enable us to do things. I think about one of
my sons friends, a 12 year old boy who’s very creative and received a high
definition camera some years ago for Christmas and was able to turn his love of
creating little Nerf movies into a Youtube channel that
now generates $2,000 a month for this kid who will clearly be able to put
himself through college just by posting silly little movies of Nerf wars in his
backyard. That’s pretty disruptive in a sense – to essentially turn into an entrepreneur
so I think the economics and the innovation around these vehicles and the
ability to capture and transmit data like they do will be very disruptive to
many industries. So I don’t actually think there is any disagreement at all but
to go further – the internet of things is just a cons tract; it’s just the
nature of where we’re going. It about making essentially, connecting up all
these everyday objects and the inspiration that creates. New industries, new
business models, new customer experiences and along with them a set of common
risks and liabilities to be dealt with but by large there are technical or
operational regulatory solutions to all of those – you need to know what they
are to identify them upfront. I think that what’s really interesting from my
vantage point at EY and working with many of the world’s largest companies is
seeing the appetite and the excitement level, at a very high level, at a c-sweet
level, of really big brand name companies who want to know what the impact is
for them. What is the impact for how they run their business operationally as
well as for their customers and the things they provide for the market place?
These are the conversations that are happening across every sector of the
economy and I think that its going to be a very good time to be an innovator and an investor and an
executive focused on these issues and no one is exempt from them. It doesn’t
matter if you sell refrigerators, whether you fly airplanes, whether you’re a
teacher in a school. It really doesn’t matter. The ability to leverage these
devices and all the data they provide and the ability to share and transmit, it
just takes it all to another level. I’m pretty excited about that and I think
my colleagues on the phone, on this call, on the panel also see the opportunity
to provide services and solve problems for our clients around the world. So
it’s a great new chapter.
Denise: Keith, at the c-sweet level with the folks that you’re
dealing with and advising and consulting with; you were talking about the
importance of knowing operationally how you might be able to deal with these
smart devices in an intelligent way. Do you think that companies are cognizant
enough to the fact that they’re going to need to train people how to turn off
their connect or their smart TV or whatever else might be watching them once
they’re built into the terms of service the warnings and advisories that that’s
what these devices do. That how’s we’re going to make it effective for you;
we’re going to gather all this information for you. We’re going to make it so
convenient for you, you’re going to love it and you’re agreeing to it by using
the device and of course people don’t read those things. Do you think they’re
also paying attention to the back lash and the PR problems they’ll have if
people wake up? There’s this good article over at Network World about a guy who
was quite terrified by his smart TV because he dove in and read the 46 page
privacy policy that came with it. His name was Michael Price. He is counsel in
the liberty and national security program at the Brannon Center for Justice…at
your alma matter the NY School of Law and yet he did a
detailed blog entry on what exactly his smart TV was giving itself permission
to do which made him quite terrified of the whole internet of things
phenomenon. So circling back to my question to you Keith; do you think that
executives in these companies are bearing in mind that they’re going to have to
show people how to turn these things off and use them in a way that makes sense
for the consumer.
Keith: This is definitely one of the less glamorous sides of
disruptive innovation. I remember when tablets, sort of the current generation
of tablet computing started to take off around 2010-2011. There were a lot of
big companies that ran out and bought 10 of thousands of these tablets and
started to hand them out to executives in the field long before they had
updated their privacy policies, their cyber security policies, they didn’t
really have any apps to put on the tablet, it was essentially just this really
cool device that they decided they needed to have and thought they’d figure out
its value after the fact. Frankly a lot of those programs failed. A lot of
those corporately purchased devices with in a year became personally owned
devices and you didn’t see a lot of that repeated until 2 years later when some
more sophistication came around. I think the same thing is true here; by and
large companies need to understand the value that they’re going to get before
they run out and acquire these devices or rather create these networks and
grids. Along with that is also the changed management, the training, the policy
upgrades; all the things that he was referring to. I think that large companies
are very sophisticated when it comes to deploying things like enterprise
earpiece systems and so forth. They spend months and months planning for these
things. They put business cases together and deploy very large teams mapped
against very significant project plans. I get it but when it comes to this I
think there is still a lot of awareness building, there is still a lot of just
understanding that this isn’t just about a device or a connection or a camera.
It’s about the magnitude of those things out there and its about the implications and I suspect that no they
won’t by and large they won’t. Most of my clients are excited and anticipating
and evaluating but because it’s so new unless you are an internet of things
company right now like one of the connected thermostats or something of that
nature; by and large you probably don’t have a full grasp of all the issues
you’re going to have to deal with but I think that’s part of the journey and
where we are today and they’re just going to have to get there one step at a
time.
Denise: Just like we get through this show one step at a time and
we have some resources and a tip to give you to round out the show but before
we do that we have one final sponsor to thank. That is FreshBooks;
this is a great time of year to be talking about FreshBooks at the end of the year when you need to get your accounts in and on your books
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about us. Thank you so much FreshBooks for your
support of This Week in Law. Alright per usual on the show we’re going to give
you a resource and a tip. The resource – we didn’t talk much about the
journalistic uses of drones except for that when you’re driving down a freeway
you’d better expect to be captured by either the helicopter or maybe someday
soon the drone following the freeway traffic jam that you’re in. I think that
is actually a really big area where we’re going to see legal development and
concern about the use of drones in journalism as we touched on when talking
about California’s new technology privacy law; following around celebrities or
others in order to do stories on them is just one way in which this comes up.
If you are a journalist or engaged in any sort of journalistic activity if that
is not your professional concern you might want to check out this resource. The
University of North Carolina’s center for Media Law and Policy has a great page
on drone journalism and the Law, including recent case law. There’s not much of
it. Information from the US government, an overview of drones and drone
journalism, some talk about the ethics of using drones in journalism and a
whole big section on privacy and the 1st amendment and the 4th amendment. It’ll also tell you other schools studying drone journalism so if
this is your thing this is a great resource for you to check out. And then our
tip; it’s sort of a tongue in cheek one but I thought this was just kind of
funny. Google of course is just one of many companies doing research on using
drone in their business and they have a research lab called GoogleX of course. It is as the Atlantic calls it the companies Woe inducing long range
research lab and our tip is: if you want to be the head of that very cool
program it helps if you’re named Astro because that’s his name – Astro Teller.
So if you want to learn more about Google’s research
lab head on over to that Atlantic article that we’ve included in the discussion
points. You can check out that and everything else we’ve talked about today at
delicious.com/thisweekinlaw/284 because that’s the
episode that we’ve done today and we’ve just had so much fun. I think we’re
going to fly this well manned non-flying drone on out of your lives and let
everyone get on with their weekend; but not before I thank our amazing panel.
Keith it’s been so fun having you on the show today. I’m so glad we were able
to put this together.
Keith: Thank you Denise. It was really a privilege to be on as
well as the other panelists – a really good show.
Denise: David Frankel – doing great work towards responsible
droning and one of many drone lawyers out there observing that this is a ground
zero kind of place for the practice of law right now. We’ve had so much fun
chatting with you David.
David: Thank you Denise. I should also mention Keith and I are
both from NYU Law School. We didn’t know that until this call.
Denise: There you go. Great place, I thought about going there.
Life would have been quite different I think if I’d spent 3 years in New York;
one of those paths not taken. And Terry Miller, such a great opportunity to
meet you; I love the work that you’re doing. I had no idea that drone insurance
was also undergoing a huge burgeoning time in our lives but clearly that makes
perfect sense to me now.
Terry: Yes most people don’t find insurance all that exciting. I’d
like to thank you Denise. This was a pleasure. Keith thanks for recommending me
and David it was a pleasure meeting you as well. I’ve seen a lot of the things
that you’ve written and it’s been a great experience. Thanks Denise.
Denise: I just want to say I so appreciate all the work that you
guys are doing. Obviously we’re talking about an issue that is very wide open
and there is much to come and it’s because of people like you and the great
thought and consideration that you’re giving to the hard issues of the kind
that we just discussed today that hopefully good things will happen without too
many bad things happening in this area. So I really want to thank you for your thought
and energies along these lines. I want to thank everyone who’s tuned in to join
us this week for this show. We hope you’ve enjoyed it. If you’ve been joining
us live that means you’ve joined us at 11 o’clock Pacific time and 1900 UTC
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see you next week on the show! We hope you fly safely. Until then take care.
