Referred to as “drones” by hobbyists, unmanned aerial systems/vehicles (UAS or UAV) have significantly evolved from their early days as military equipment to today's commercial applications. With the advent of certain technologies at reasonable prices, UAVs are now typically equipped with sophisticated satellite global positioning systems, high-resolution cameras, real-time surveillance, obstacle avoidance technologies, and robotics.

The information gathered by UAVs, however, is not selective—their sensors and cameras capture information about the entire area inspected, regardless of its relation to the UAV's primary purpose. Thus a host of issues may arise when data is incidentally collected.

This article focuses on the ownership of that data and the liabilities companies may face when capturing, storing, and transmitting such data.

Potential Liability

The collecting, retaining, and using of large amounts of information by UAVs may pose liability issues that fall under traditional torts (like negligence, duty-to-warn, and strict liability). The software on UAVs allows them to fly over a site, record imagery, find defects, and potentially (with artificial intelligence) make decisions on the data collected. If a company's UAV finds, records, and stores data related to a defect in a third party's assets, the company may be liable to the third party for negligence.

To find negligence, courts weigh whether a company conducted itself according to a duty of care to others, and whether it took adequate safeguards in carrying out activities, all according to the standard of care as defined by prevailing professional practice. Plaintiffs can establish the requisite level of care through expert testimony, published literature, professional guidance documents, and the nature of the relationship between plaintiff and defendant.

An invitee relationship could pose liability for negligence, such as where one company invites another onto its property for business dealings. Liability exists if the company owning the property knew or should have discovered a dangerous condition but did not. For example, an electrical company owning land may permit a telephone company to run phone lines on its land. As the telephone company is an invitee onto the electrical company's property, the electrical company may owe a duty to the telephone company to warn it of a dangerous condition that is hidden or unknown, or to protect it against a foreseeable dangerous condition. Accordingly, an electrical company that hires a UAV to inspect its lines but does not report the existence of a defect that was incidentally found by the UAV to the telephone company may be negligent, even if no one at the electrical company reviewed the part of the UAV's recording with the line's defect.

A licensee relationship could also pose liability for negligence, such as where a person is permitted to enter property by the owner but does not provide a material benefit to the property owner. Liability exists if the property owner knows of a hidden danger but does not disclose it to the licensee. No liability exists, however, if the property owner does not know of the danger. For example, if a person is allowed to farm on a piece of a neighbor's land and the neighbor's UAV records a dangerous defect in the farmer's land, the neighbor may not be required to report the defect to the farmer if it does not view the recording of the dangerous defect. The neighbor would only have to report the dangerous defect to the farmer if it views the recording and knows of it.

Liability for negligence or negligent disclosure may also be established if there is a contractual duty between companies that specifies a duty to warn third parties. For a company to avoid liability for a negligent disclosure claim, it should disclose defects it finds to the third party in a way consistent with standard practice.

Potentially, states could classify UAVs under a strict liability standard if states view UAVs as an abnormally dangerous activity. Under this standard, a company flying a UAV that records and stores dangerous defects on another company's assets, no matter the other company's status, would have a duty to warn the other company of the defect.

Use of UAVs Everywhere—Will Liability Follow?

Used to Inspect Power Lines

Power and utility companies use UAVs when inspecting power lines to create 3D-maps and stream inspections in real-time. UAVs can also provide thermal imagery, check against blueprints, and calculate growth rates of foliage near power lines to analyze future damage risk. Issues arise, however, when different services run their lines next to or near each other. Jonathan Vanian, “GE is using drones to inspect the power grid,” Fortune (Oct. 23, 2015).

If a UAV inspecting electrical lines discovers another company's faulty phone line, does the electrical company have an obligation to report the defect to the phone company? As described above, the electrical company has an obligation to report the defect to the phone company if the phone company leased the land for its phone lines from the electrical company. By virtue of the lease, the phone company is an invitee onto the electrical company's land. As the landowner, the electrical company may owe a duty of care to inform the phone company of any dangerous defect on its property, and thus may incur liability for negligence if it records the defect and does not disclose it, even if it never views the recording of the defect.

However, if the phone company runs its lines on its own property next to the electrical company's, the companies have no special relationship. Here, if the electrical company records a defect on its property, it would likely not be negligent for not disclosing the defect.

Used for Home Inspection

When assessing a property for real estate purposes, inspectors can use UAVs to inspect roofs, asbestos, and other deficiencies. Will Knight, “Drones and robots are Taking Over Aerial Inspection,” MIT Tech. Review (Sept. 7, 2017). Small UAVs that are camera-equipped can fly over buildings to capture imagery, then use the imagery to make a high-resolution map or 3D model of the building for inspection. Id. Some UAVs can also stream their observations in real time. While the benefits of increased information obtained faster are numerous, complications may arise from the excess data.

What if the UAV captures a dangerous defect in a property used by a neighbor to hunt on—is the buyer required to tell their neighbor of the defect? If the buyer already owns the home, then the neighbor is a licensee. Thus the home owner has a duty to warn the neighbor of any defects observed when watching the UAV's recordings. However, if a defect is on a portion of the recording that the home owner does not view, then the home owner does not personally know of the defect and thus would not be liable to the neighbor for not reporting the defect.

Used to Inspect Railroads

UAVs can be used to inspect train tracks for weather damage, HAZMAT issues, and maintenance needs. Typically, inspections are done manually, but in the future, UAVs will be able to make 360 degree inspections of bridges and record areas made unstable due to tornados or hurricanes. Legal issues arise if in the data collected, the train company misses a defect and an accident later occurs.

Are train companies liable for missing a HAZMAT issue? A UAV inspecting a railroad for a HAZMAT issue would likely fall under strict liability. Here, if a UAV recorded a dangerous defect, then the company would likely be strictly liable for not reporting the dangerous defect to the correct authority. In this scenario, it is critical to limit recordings to the necessary location and time frame and have an employee view all recordings made.

What if a UAV records a defect after a hurricane or tornado? Such a scenario is dependent on timing and what is recorded. A railroad company could defend itself from a negligence claim by contending that the weather was an intervening cause that prevents it from being the cause of the defect.

Have a Plan to Curb Potential Liability

Because the law on UAV use is still sparse, companies should consider the use of UAVs carefully. The should consider whether to clearly set out the scope of responsibility and liability (and indemnity) when conducting an inspection, a study of a site, or a monitoring effort in the relevant contracts. Additionally, you should have appropriate insurance coverage to protect your company from liability.

Companies must also be cognizant of the way data is collected and stored. Companies should add to their data retention plans information about data collected by UAVs and create a timeline for any unrequested or unused information, like an imagery recording to be discarded, to avoid liability beyond any contractual obligations. Furthermore, the vast amount of data collected must be stored and retained in a safe and secure way, especially if the data contains personally identifiable information (e.g., license plate or registration number). State laws that govern data security and data breaches need to be considered, and remember that many states require users to be notified of a breach if one occurs.

Paul B. Keller is a partner at Norton Rose Fulbright.