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.
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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.
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.
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..
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.
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.
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…
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...
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.
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.
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?’
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.
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.
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 here and thank our first sponsor of this episode of This Week in Law which is Blue Apron. I’ve been using this service, it is so awesome. You guys really need to check it out. Cooking and eating of course should be fun, it should be convenient, it should be easy and it should be delicious. Blue Apron hits it out of the ball park on all those fronts. It’s also health conscious just to make it even better for you. Or if you want to accomplish all those goals but you just don’t know you way around the kitchen – and I’m pretty close to that. Cooking can definitely be daunting and a chore and ordering out is expensive. You can’t eat out all the time and who knows how long the food in the grocery store or the restaurant has been sitting there. You’re not necessarily in control of how your food has been sourced in those circumstances but you can forget all of that because Blue Apron is going to make your cooking fresh and delicious and easy. I tell you guys I’ve been using this stuff and its really, really wonderful. Here’s how it works, you pay just $9.99 per person, per meal and then Blue Apron sends you a refrigerated box with the right high quality ingredients. I’ve made a few of these meals now and I can tell you I have not yet to find a wilted herb or piece of lettuce. Everything in there is something that I would have picked out at the grocery store if I liked to spend a lot of time at grocery stores which I do not. It also sends it to you in exactly the right proportions and gives you simple step by step recipe instructions and all of this comes right to your house in these wonderful little refrigerated cooler boxes. The ingredients all comes from local farms so you’ll be getting products that are currently in season and at their peak of freshness. The meals too are only about 500 – 700 calories a serving but you’d never be able to know that from how great they taste. Blue Apron will work around your schedule and your dietary preferences. Cooking each meal talks about ½ hour, shipping is always free and the menu always features new recipes so you’re not getting into a rut where “oh gee do I have to get Chicken Marsala again?” I really liked that but now I have to get it again. They’re constantly rotating and they’ll never send you the same meal twice unless you go ahead and ask for that. You’ll make meals like Salmon with lemon quinoa and curly tail or cabbage and char-stir fried rice with sweet potatoes and shiitake mushrooms. Recently we made – let’s see exactly what it was called here; it was chicken with…it has some seasonings in it that I’m not terribly familiar with so let me see if I can find the right meal. Uzu Koshu – glazed chicken drumsticks and we actually have some photos of that if you’d like to see what it looks like in your own home. This is after the preparation and it was already getting plated up. Let’s see what else we could show you from actual fun with food. This was the beginning when you’re laying out the ingredients and you get all the right portions. This was preparing the shiitake mushrooms and turnips that were involved in this dish and there’s the chicken cooking up in that great Uzu Koshu sauce which was just savory and delicious and here we are on the plate all getting ready to eat. In fact this particular meal I gave to my neighbor across the street so she could cook it and I could enjoy it with her and that brings up the fact that during the holidays you really want to be thinking about Blue Apron on your shopping list. They make incredible gifts if you know someone who like me loves to have all the convenience and deliciousness that Blue Apron can offer. You’ll cook incredible meals and be blown away by the quality and freshness. It’s fast, fresh and super affordable and best of all you’re going to cook like a gourmet chef; it makes you look really good. You can see what’s on the menu this week and get your first 2 meals free by going to Blueapron.com/twit. That’s right, 2 meals free just for going to Blueapron.com/twit. Thank you so much Blue Apron for your support of this week in law. I’ll give you 1 final Blue Apron tip on that Holiday gifting front – after you’ve gotten your own 2 Meals Free and you’re ready to give out gifts if you use your master’s card you’ll get a $25 credit on your own account. So it’s just win, win all around. Thank you so much Blue 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 they have to have their presents shipped to them too. If you are going to try and buy them a thoughtful gift you’ve got to think about Harry’s. Harry’s can help you in this time of need – just in time for the holidays. Harry’s has a limited edition Winter Winston set and its’ just $30. We’re showing it to you on the screen. I actually have one right here that I can show you live and in person. This is the Ice Blue model of the razor. They’re just beautiful. I’ve been shaving with Harry’s and so has my husband. Of course my shaving is somewhat different than my husbands but I tell you both of us love this product. Harry’s has a great look and feel, just the set itself, all the little components come boxed nicely, each individual thing- the blades come in their own box. Just a nice presentation when it comes to a gift. The price is incredible. Its half as much as the razors you find in the store – those Gillette fusion and other kinds of razors and the blades – there is just no touching them. They’re excellent quality blades and they’re just the fraction of the cost of what you’d pay in the store. They have all kinds of additional products too, they have a new aftershave moisturizer that protects and hydrates the skin. Harry’s absolutely guarantees that you’ll be satisfied. It’s razors are high quality and about half the price of those big brand blades. They make their razors in their own factory in Germany and they engineer them for high quality performance. There are no more dull blades when you’re a Harry’s shaver. That’s because they make and ship their own blades. It’s a more efficient company that way which means they can give us factory direct pricing and as a special holiday offer Harry’s is gifting all of our fans $5 off that limited edition Winter Winston set. That’s right, even those of you who like me are already loyal Harry’s users will still get $5 off that Winter Winston set. You’ll get the razor, 3 quality blades, a tube of their foaming shave gel or shave cream and free shipping just for $25. How could you beat that as a gift? Free shipping ends on December 10th so you’re going to want to get on this. Go to www.harrys.com and get $5 off the limited edition Winter Winston set with the code TWILHOLIDAY. All new and existing customers get $5 off their purchase with that code TWILHOLIDAY. That’s Harrys.com and enter TWILHOLIDAY at the checkout. Harry’s – a shave good enough to gift and thank you so much Harry’s for your 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.
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 and when it’s easy to convince your clients to pay you because then it goes on their books for this tax year which is a good thing that they don’t have to wait to put that expense on their taxes. So if you’re still using Word or Excel to create those invoices that you need to get yourself paid you’ve got to try FreshBooks. It’s the easiest way to invoice clients, organize expenses and track your time online with FreshBooks’ award winning mobile apps you can do it all from anywhere on your Android or iOS devices. Billing clients for the first time has never been easier. You just open the FreshBooks app on your phone, start the timer and go. 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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.