The Struggle is Real: Managing the Risks to Privacy Posed by Drones

By virtue of their design, size, and flying capabilities, drones pose a unique threat to privacy that no other method of surveillance has ever been able to achieve – namely, a means for constant, persistent surveillance that is virtually undetectable in most urban and rural environments.

Drone usage has skyrocketed across many industries since August 2016 because they provide an effective, efficient, and low-cost alternative to many activities – completing tasks at a  much faster pace or otherwise reaching areas not readily accessible to people. Their use has ranged from the adjustment of insurance claims related to Hurricanes Harvey and Irma, to autonomous deliveries to retail customers, to inventory and facilities management, to name just a few. It is no surprise that commercial drone sales are now projected to reach 2.7 million by 2020.

Despite these benefits, the basic nature of drones is to capture aerial footage from no more than 400 feet above the ground. This implicates privacy concerns and may give rise to common law torts like “intrusion upon seclusion” and “publicity given to privacy life.” Though the elements vary slightly from state to state, a person is liable for “intrusion upon seclusion” if he or she knowingly intrudes upon the solitude or seclusion of another (or otherwise intrudes on that person’s private affairs or concerns). Likewise, someone is liable for “publicity given to privacy life” if he or she publicizes the private life of another. Both of these torts generally require the intrusion to be offensive to a reasonable person, while the burden of proof and damages exposure varies from state to state.

To help capture the insurance industry’s concerns relating to drones, Munich Reinsurance America, Inc. completed a 2017 survey of risk managers attending the Risk Management Society (RIMS) Annual Conference in Philadelphia, PA. The potential for the invasion of privacy topped the list, with 61% of risk managers concerned about liability for insureds posed by the use of drones. Other concerns included inadequate insurance (15%), personal injury (15%), and property damage (9%). These results are compounded by the fact that “most commercial insurance policies don’t cover or offer very limited liability protection for drones,” something insurers are starting to address with endorsements and/or separate drone policies.

Drones are here to stay, as evidenced by the sheer volume of drones taking to the skies. The struggle now is how best to regulate this new technology to address ever-increasing privacy concerns, among other issues. For example, the National Telecommunications and Information Administration published a guide in May 2016 for privacy-conscious drone use. Compliance with these guidelines is voluntary, not mandatory, thereby leaving privacy regulation mostly to the states.

In California, a person may be liable for a civil fine, punitive damages, and up to three times the amount of any general and special damages if he or she “attempts to capture . . . any type of visual image, sound recording, or other physical impression of the plaintiff engaging in a private, personal, or familial activity, through the use of any device, regardless of whether there is a physical trespass . . . .” The fact that no image, recording, or physical impression was ever captured or sold is not a defense.

Likewise, the Texas Privacy Act “generally criminalizes the use of a drone to capture images of another person on their private property or the property itself.” “It also provides a property owner with a civil right of action for injunctive or monetary relief against anyone who uses a drone to take these types of images.”

The exact line separating state and federal regulation of privacy relating to drones remains unknown, as the Electronic Privacy Information Center (EPIC), a public interest research center in Washington, D.C., has challenged the Federal Aviation Administration’s (FAA) failure to issue privacy regulations with the Court of Appeals for the D.C. Circuit. It argues that the FAA’s failure to address privacy hazards in its August 2016 commercial drone regulations (called “Part 107”) is unlawful and contrary to the FAA Modernization Act. Oral argument is expected to take place in late 2017 or early 2018. If EPIC succeeds, and the FAA later implements privacy regulations for drones, existing regulations by the states will be preempted to the extent they conflict.

The D.C. Circuit’s ruling in the EPIC lawsuit will be of particular interest to insurers issuing drone policies and those insurers who use drones for the adjustment of claims, as the Court’s decision, if held in EPIC’s favor, will dramatically alter the landscape of who regulates drones and to what extent on key liability issues for this brand new technology.