Left-Right: Bert Rasmussen, Christian Scali, Melanie Cliff

Left-Right: Bert Rasmussen, Christian Scali, Melanie Cliff

As in any area of rapidly developing technology, car manufacturers and suppliers are competing to secure intellectual property rights, not only in hopes of securing a dominant position in existing markets, but to license the technology to others.

Another area of legal risk associated with connected cars is product liability. The issues here are complex and, given the sea of technologies and suppliers involved, will surely bring even more players into the fray than was previously the case.

Many of the legal issues will be novel. For example, with connectivity to the cloud comes the collection of data, but who owns the data? Will manufacturers seek to create agreements with vehicle owners to license or take ownership of some of the data, but not all? How can data protected by existing privacy law be segregated from data that is not?

What are the legal and regulatory implications of over-the-air repairs, where signals are sent to the connected car to improve or repair a software flaw, or even to correct a mechanical problem by sending a signal that will change operating parameters? Manufacturers are incentivized to download updates over-the-air, and not at the dealership. IHS Automotive projects that automakers will save $35 billion from overthe- air updates in 2022, up from $2.7 billion in 2015. Those savings would come from 10.9 million map updates, plus 42.5 million telematics updates, 34.4 million infotainment updates and 13.2 million updates to safety-critical control units. It can only be hoped that this upside does not detract from key safety, security, and consumer satisfaction issues. Many manufacturers and consultants believe over-the-air updates for vehicle operation and safety issues should be considered only for extraordinary situations and only after the utmost care is taken to ensure the update is protected against any possible compromise, including hacking, with such fixes only performed by a trained technician and proper diagnostic equipment and tools necessary to ensure the utmost safety and security.

Of all the looming societal and legal concerns over connected cars, none is more pressing than security – cyber security, to be precise. Most of the underlying architecture of even new vehicles was designed at a time when it was easy to assume the vehicle would never be connected to anything other than a technician’s scanner. This includes not only the ODB2 port, but the hub used by the vehicle to connect all in-vehicle equipment (e.g., parking sensors, airbag, active safety system) and systems (infotainment), allowing them to communicate – the so-called Controller Area Network, or CAN. Therefore, before any systems are made accessible through connected car technology, it is essential that security against intentional and unintentional compromise be robust and verified as operational. The vehicle, electronics, and computer industries are all players in this space, and each has a different outlook on security. As much as regulations are bemoaned by industries generally, with the stakes so high, industry players, as well as the public at large, may welcome legal and regulatory guidance in this area.

Bert Rasmussen is a Partner with The Scali Law Firm, Christian Scali is Founder and Managing Partner of the firm and Melanie Cliff is a Partner with the firm. Recognized as California’s top boutique automotive law firm, The Scali Law Firm’s clients range from small, family-owned businesses to publicly held global companies and high net worth individuals. Its team of attorneys has decades experience in a number of practice areas, with a high degree of specialization in serving the auto dealer industry. To learn more, visit scalilaw.com.

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