This holiday, my siblings and I received a very nice gift from our sister, a dentist. It was an electronic toothbrush with multiple sensors that collect data related to the usage of the toothbrush. The sensors then send the measurements they obtain to a smartphone, which tracks the individual’s particular usage of the toothbrush. My sister asked us to test the product to see if she should recommend it to her patients. As a technology lawyer who concentrates on the Internet of Things (“IoT”), it was a stark reminder that the IoT is here and is beginning to more pervasively intertwine into the daily fabric of our lives.
As I inspected the product, my lawyer brain started to identify the legal issues involved with offering even a simple “smart” device, such as this electronic toothbrush. It became quickly evident that the IoT and “smartification” of consumer electronics will involve the intersection and coordination of multiple legal specialties, including at least the following:
- Patents: In many cases, the incorporation of sensors into the operation and functionality of an existing device, like a toothbrush, may qualify for patent protection. In addition, before launching a new “smart” product, it would be beneficial to clear the product through a freedom-to-operate prior art search in order to reduce the risk of a patent infringement claim.
- Technology transfer/co-development/licensing agreements: Most consumer goods manufacturers do not have proprietary sensor or communication technology/components that can be implemented into their products to allow for the collection and transfer of usage data. Thus, the smart device manufacturer must often license and/or co-develop necessary sensor and communication components that optimally fit into and support the operation of the smart device. Ownership and usage rights in this technology and any future developments must be established contractually so that each party’s interests are defined and protected.
- Software/copyright: Most consumer goods manufacturers are not also software companies. Therefore, third-party software/application developers often build the internal firmware and mobile applications that control and monitor the operation of the smart device. Thus, an agreement that defines the deliverables and assigns ownership of such deliverables to the manufacturer or service provider is important for protecting the manufacturer’s investment in the software components of the smart device and system.
- E-commerce: Like many smart devices, one feature of the smart toothbrush is to monitor the wear of the toothbrush head and notify the user when a new brush head is needed. The smartphone application has the ability to automatically purchase replacement brush heads when needed or, alternatively, allows the user to purchase replacement brush heads manually through the application. Having e-commerce components in the smart device require defining the terms that govern the transaction in order to avoid risk exposure under default commercial terms.
- Data privacy: Because the toothbrush and application collect data related to the usage of the device, the manufacturer is required to categorize the information and must also notify the user about what information is being collected and how it is being used. Personal care devices, like this toothbrush, may allow users to input medical conditions or identify problem areas. In some cases, the collection and storage of this information may be considered “personal health information” and could be governed by HIPAA. Moreover, if the smart system provides the ability to automatically purchase failing or worn out components, then data privacy obligations related to the collection and storage of financial information must also be considered.
- Data security: The device manufacturer must also set up a data infrastructure to store the collected information and implement necessary security procedures based upon the type of information that is being collected. Sensitive personal information, personal health information, and financial information all require a higher standard of care than just basic contact information. However, any data breach can quickly become a black eye on a manufacturer and can result in the loss of customers. Thus, a good data security policy and diligent adherence to that policy must also be implemented.
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As shown on the previous page, instead of just making and selling a regular toothbrush, the manufacturer of the smart toothbrush must now be in the “data” business. Product manufacturers have always looked for ways to obtain consumer feedback on their products and, at a fundamental level, the “smart” toothbrush involves consumers trading usage data from a device for a tangible benefit, such as improving the outcome of the product. In my case, this benefit will hopefully be cleaner teeth, improved oral health, and long-term reduction in dental fees. Further, these smart devices provide a much more comprehensive and effective way to collect consumer data than ever before, as most consumers do not take the time to complete product surveys or provide feedback, but seemingly have no problem allowing a product to collect data while it is in use.
This data is invaluable to the toothbrush manufacturer as they are able to offer improved and individualized results using real-time data collected through the consumer’s actual use of the smart product. However, it may be the data collected from all users collectively that is the most valuable to the manufacturer, as they will have the ability to use this user data to continually innovate and improve the product. This broad and active collection, review, and analysis of usage data will most definitely increase the speed of innovation and progress, not only in the toothbrush industry, but also across all industries as the expansion of smart consumer products continues throughout the world.
The evolution of traditional consumer electronics or devices into smart devices offers numerous benefits to manufacturers and consumers, but will also result in the assumption of additional overhead, legal obligations, and risk on the manufacturers, as well as loss of privacy to the user. Thus, it is important to seek out advisors who have a grasp on how all of these issues work together in order to make the transition into smart devices successful, while exposing the manufacturer to as little additional risk as possible.
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