IoT trends for 2019 and the impact on product liability

Katie Chandler considers trends in technology for the year ahead, focusing on connected devices and the impact on the product liability regime.

From homes with smart doorbells, connected thermostats and AI assistants, advancements in medtech with wearable devices, medication monitoring devices and surgical robots to the continual growth of the automated driving market; the adoption of smart technology is growing at a rapid pace.

The intelligent home is expected to hit the main stream consumer market this year with more consumers purchasing smart products and those early adopters moving on to the hottest new gadgets on offer in 2019. PWC's Connected Home survey indicates that £10.8bn will be spent on smart home devices in 2019.

There is a host of connected home products on the market now including smart kitchen appliances, connected thermostats, personal assistants and other voice-controlled products. Personal assistants are set to get more comfortable in the home with the promise of meditation lamps, pianos, lawnmowers and other household products connecting to your smart speakers and following commands.

Smart tagging is another development which looks set to resolve some of those age old problems at home such as losing the TV remote (your smart speaker will tell you where to find it) and kitchen tech with food items being tagged to manage the "use by" expiry dates. The opportunities for connected home devices appear to be endless.

By 2020, IoT is expected to connect 28 billion devices. Consumers are increasingly in favour of the benefits that these products offer, enhancing our lives with heightened levels of convenience, home safety and personal monitoring, and with a general acceptance of any potential associated risks.

As exciting as this is, it also brings a number of challenges. With IoTs, software meets a 'physical' product against a legal backdrop that has not yet caught up with advancements in technology. IoTs collect, transmit and store a vast amount of consumer data some of which can amount to "personal" data under data protection regulations. Hacking and security issues related to IoTs are real risks. The challenges relating to product liability, security and privacy will continue to be a concern in the year ahead.

Devices connecting to each other have an impact on the traditional product liability regime where fault flows through the supply chain to the manufacturer which is ultimately responsible for the product. When a defective product causes damage, either personal injury or damage to property, a consumer usually seeks redress against the supplier under the contract for a failure to supply a product which meets the legal standards of satisfactory quality and/or being fit for purpose. The supplier then passes liability to the manufacturer.

Alternatively, redress can be sought directly against the manufacturer under negligence or as "producer" in the strict liability regime under the Consumer Protection Act 1987, whereby the claimant is not required to establish the reason for the defect nor detail it with any precision, only that a defect exists and caused (or was the material cause of) the damage suffered.

Who, then, is liable when a connected device fails and causes damage? It could be a number of parties relating to a number of different devices including the manufacturer, software developer, app designer or an unauthorised person (a hack may also cause a device to malfunction causing damage potentially putting liability at an unauthorised third party's door). The consumers themselves may also be liable, if they do not correctly follow instructions for use or fail to install the necessary software updates.

What is the defect? Is it a software failure or a product design fault? Are questions of component parts relevant? Under the CPA there's a defect if the safety of the product is not such as persons generally are entitled to expect. Compliance with safety standards assists in determining a product's safety but there is currently no universally accepted general safety standard to cover the IoTs. The application of existing safety standards to these products is not straightforward. How then will a defect be established under existing laws?

Last year's public consultation by the European Commission on the EU Product Liability Directive 85/374/EEC has for now concluded that this legislation is fit for purpose in covering liability scenarios arising from advancements in technology such as IoTs. It is, however, launching an expert group to explore the effect of technological developments. The group will assess whether the overall product liability regime is adequate to facilitate the uptake of new technologies, or whether the Directive needs to be changed. The Commission intends to report on this further in mid-2019 and we will follow this with interest.

Finally, a mention for automated vehicles. In 2019, we can expect more investment by OEM's in innovation and self-driving technologies as well as significant advancements in infotainment systems and the impact of 5G. Again, the law struggles to keep pace but safety is the key objective of the Law Commission's three-year consultation to prepare driving laws for self-driving vehicles.

The focus is on automated vehicles capable of "driving themselves" - operated in an automated mode and not controlled or monitored by an individual for at least part of a journey. This differs from driver assistance technology which needs to be monitored by a human driver. The distinction between assisted and automated driving is, however, key to the review. Responses are due from the automated cars industry next month.

The IoTs are not only impacting on how we live but also on traditional product liability regimes which continue to be re-examined in these changing times. We will continue to follow these developments with interest in the year ahead.