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Navigating the law of things

According to Gartner there will be nearly 26 billion devices connected on the Internet of Things by 2020. As a result of this increased connectivity, businesses will be able to collect vastly more data and gain deeper insight into users' lives as they move between devices.

Navigating the law when it comes to the Internet of Things (IoT) in its own specific context is going to be challenging for many, if not all, businesses. This cannot be ignored, but simply making a start is challenging. Here are four things that will help businesses wanting to take the first step.

Data protection and privacy

Data is the lifeblood of IoT so it's no surprise that Ofcom has identified data privacy as the biggest risk. The huge quantities of data collected by IoT devices provides users with a personalised service and convenient solutions such as fitness monitoring, but these data processing practices can be intrusive to privacy.

IoT devices are inside our homes, on our bodies and carried by us, so the data being collected can be highly personal and sensitive. By law, businesses that collect and use personal data must tell individuals what they're doing with it, and this is normally achieved through a privacy policy. However, existing privacy policies may not be appropriate for IoT or keep the data secure. Where would you place a privacy policy on a smart kettle?

Aside from fines for non-compliance with data protection laws, which are due to dramatically increase under current proposals, negative publicity and damage to customer trust are also likely consequences of misuse of personal data and compromising customer privacy.

Monetising data

A major difference between IoT and other internet technology is that many such devices don't have screens. As a result one of the key monetisation models, namely advertising, may be lost. Another way of monetising data for businesses is to sell the data. Data can be sold to other businesses to offer customers a complementary service, such as sharing information about a customer with a hotel booking website, once the customer has booked their flights.

This commercialisation of data can only be done with the knowledge and consent of the individuals whose data is being sold. Given the earlier points about privacy policies, it is not easy for IoT businesses to provide users with the required information about how their data may be used. So if collaborations are envisaged that would involve sharing personal data, businesses must ensure that they have informed their customers and if appropriate, obtained their clear consent.

Intellectual property (IP)

When thinking about intellectual property, businesses need to consider both how to protect any new intellectual property created and also how to ensure they are not infringing anyone else's rights. Failure to do this could mean that competitors can copy your IoT technology and take the benefit of your investment, or even that your business could be subject to expensive and time consuming litigation for infringement.

Liability and commercial contracts

Contracts are crucial to the apportionment of liability between parties. Given the number of different stakeholders involved in IoT, including customers, app developers, distributors and device manufacturers, it is important that the contracts are explicit about each party's role and responsibilities. In addition to data protection and intellectual property, the contract may also need to cover issues like device malfunctions, personal injury, product liability and regulatory compliance.

Many IoT businesses are so focused on speed-to-market that they do not always consider the legal implications of their own business model. However this approach could also bring speedy litigation and limit the commercial potential or even future of the business.

For further information please contact Nicola Fulford.

This article first appeared in Network Computing, September/October print edition (Vol 24, No 5).