Robotics and AI: A Solid Contract Is the Best Shield

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The rise of robotics and AI has led to a number of ethical and social questions making the headlines lately. Many countries—Finland included—have announced plans to take the lead in automation and robotics in the coming years.   

What has received less attention, however, is the fact that there is little to no legislation specifically concerning robotics and AI, which currently have to be fit into existing legal frameworks. So, what is the deal with robots and AI from a contractual perspective?

Is This Sale of Tangibles, Too?

When buying a robot vacuum for their home or a toy robot for their children, the laws that would probably first come to your mind in Finland—assuming  you think about those sorts of things—would be the Sale of Goods Act and the Consumer Protection Act. These acts state that goods must be fit for the purpose such goods are usually used for.

While the Sale of Goods Act does also apply in B2B sales, there is more freedom of contract than in consumer sales, giving the parties a great deal of leeway to agree on their responsibilities and obligations. 

AI in Business Operations

What about when a company buys robotic or AI systems as part of its business operations? Despite all the hype surrounding AI, it is still essentially a procurement of software like any other, and AI contracts struggle with the same kinds of issues as traditional software procurements.

 There are many issues that need to be agreed, such as:

We can get the answer to the issue of the purpose of an algorithm by applying the Sale of Goods Act. The supplier cannot reasonably be made liable for actions that do not conform to the limitations set for the algorithm. However, the supplier could be thought to be liable for the flawless functioning of the algorithm within the original parameters set for it.

Here is where we come to the really interesting question: where does the supplier’s liability end if a robot or AI system is able to independently develop and alter its own code?  

Who Owns Data?

The raw material for an AI is usually data. The current saying is that data is the new oil, though it would be more accurate to say that data is the new operating environment. No matter how you phrase it, though, data is certainly a new currency.

So, how does current legislation account for the ownership of data? Can anyone own data from a legal standpoint?

With the exception of personal data, there is often no legal owner of data. Of course, exclusive rights to data can be obtained in certain situations, such as the protection of catalogues. Data can also be defined as being confidential through an agreement.

In certain situations in Finland, data can be protected as business secrets under the Criminal Code, the Employment Contracts Act or the Unfair Business Practices Act. There is also an EU directive concerning the protection of business secrets.

If you are entering an agreement on business partnership that will result in data being created—either as a by-product or the main product—and that data is not personal data, you and your business partner should agree on who owns that data, how it can be used and how you can access it during and after the joint project. You should also agree on the format the data is to be handed over in. Reaching an agreement after the fact can be difficult, as there may not be an applicable norm to guide business partners in that situation.

New Technology Highlights the Importance of Contracts

One thing, at least, is clear: the importance of contracts is set to increase as novel and existing technologies are used more and more.

When drafting contracts for procurements of or services involving robotic or AI systems, make sure that you know what contractual terms and conditions are best suited to the deal. When leveraging new technology, you need to be able to look into the future and try to predict the potential benefits and risks.