Artificial Intelligence Update: Medical Software and Preemption

In light of the rapidly expanding field of medical software technology, and its recognition that traditional approval mechanisms for hardware-based medical devices may not be well suited to regulating such technology, FDA is piloting a new, streamlined regulatory approach for digital health technologies. The initiative, currently a “working model” and known as the Software Precertification Program, is meant to encourage the development of health and medical software, including potentially software using artificial intelligence.

As currently envisioned, the Precertification Program creates a voluntary, organization-based approach to FDA review of digital health software. FDA will pre-certify organizations as having a “culture of quality” based on FDA’s review of the software developer’s R&D and monitoring systems. Under the working model, pre-certified organizations could submit less information in premarket submissions to FDA than currently required or may qualify for an exemption from premarket review by FDA.

Although it is unknown what specific metrics will be assessed in FDA’s review of organizations in the Precertification Program, the agency has asserted that it will seek to measure Product Quality, Patient Safety, Clinical Responsibility, Cybersecurity Responsibility, and Proactive Culture. Each of these elements will be evaluated in an evidence-based manner and FDA will make a determination regarding certification. Certification status will also be subject to monitoring and revision based on real-world performance data.

FDA’s intent to certify or pre-clear organizations rather than individual products on these safety and effectiveness elements opens a new potential arena for product liability litigation surrounding medical devices. In particular, medical devices are currently governed by an express preemption scheme under which federal law preempts certain state laws that are “different from, or in addition to, any requirement” of federal law. Under that standard, certain lawsuits concerning the safety of a medical device may be preempted, including (1) state-law claims premised on an allegation of fraud on the FDA, and (2) state-law claims involving devices that require pre-market approval, except to the extent those claims simply argue for design or warning requirements that “parallel” federal mandates.

To the extent that lawsuits alleging injury from medical device software (e.g., misdiagnosis) are brought against software developers, resolution of those tort claims will almost invariably involve evaluation by finders of fact of the very elements that FDA intends to examine and pre-certify:  whether the software developer has developed, tested, and maintained the software in a fashion that will provide safe and effective patient care. Such suits may, therefore, seek to impose under state law requirements for a particular product that are “different from, or in addition to,” the requirements that FDA has imposed on the development organization as a whole in the pre-certification process. And although courts have not yet considered the applicability of organizational requirements versus product-level requirements in this context, imposing tort liability on software developers who have met FDA’s requirements and are compliant with ongoing oversight programs may disrupt the federal regulatory scheme in the same way that tort lawsuits regarding premarket approved medical devices would. The Supreme Court has previously recognized that such disruption is impermissible.

The outcome of this legal issue will likely depend in part on the methods by which FDA implements the Precertification Program — which are yet to be determined — and on the specificity of its evaluation of individual organizations. Nevertheless, developers should be aware that compliance with the Precertification Program, if and when it is implemented, may have benefits not only in the regulatory setting but also in future litigation down the road.

 

AI Update: Equal Justice Under Bots—Artificial Intelligence and Legal Practice

Artificial Intelligence (“AI”) is quickly becoming a part of everyday life.  As AI-based technologies advance, even law firms are harnessing them to improve the efficiency and caliber of their work – despite law firms’ reputations for being old-fashioned, traditional, and perhaps a tinge out-of-date.  The reasons are obvious: AI-based tools can help reduce lawyer time spent on routine tasks that would otherwise add greatly to the expense of increasingly complex matters (thereby enabling lawyers to deliver more value at less cost to their clients).  In addition, these tools can help attorneys meet the increased discovery and research demands wrought by the digitization of communications, documents, and other pieces of information. Continue Reading

IoT Update: Scotland and Australia’s Gold Coast announce IoT network initiatives

As a sign of increasing localised investment in IoT networks, in recent days both the Scottish Government and Australia’s City of the Gold Coast have announced IoT networks using low power technology solutions.  The Scottish Government’s plan is part of a wider initiative to promote IoT services across the Scottish economy whereas the Gold Coast City Council’s approached is more focused on the immediate delivery of public services.  The contrasting approaches highlight the wide potential for IoT deployments whether as major platforms of technology and telecommunications projects or as localised responses to improving defined problems.  As both projects show, the successful delivery of an IoT network project requires an end-to-end view of potential legal issues that may arise, e.g., vendor/RFP management, network rollout agreements, spectrum licensing, security, interoperability and privacy.

 

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IoT Update: U.S. Wireless Industry Establishes IoT Security Certification Program

CTIA, the U.S. wireless industry’s trade association, recently announced the creation of a cybersecurity certification program for Internet of Things (IoT) devices that connect to the internet via LTE or Wi-Fi.  The program permits device makers to submit such IoT devices for testing by CTIA-authorized labs in order to obtain a certification of compliance with respect to cybersecurity.

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Covington AI/IoT Update: Product Liability Risks for AI-Facilitated Shopping

Algorithms define online shopping, allowing for individualized product recommendations driven by customer data. To date, this technology has spurred little litigation. Few if any courts have explicitly ruled on responsibilities related to AI-driven product recommendation software.

Still, developers should be aware of potential legal risks from this novel technology. For example: What happens if AI recommends a product to a shopper and the product injures the shopper because of a defect? Can the shopper bring a product liability claim — such as for strict liability or negligence — against the algorithm’s developer? Although there is limited precedent on this issue, the risk appears limited. Continue Reading

Covington AI/IoT Update: EPA and NHTSA Seek Comment on Autonomous and Connected Vehicles

On Friday August 24, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) published a proposed rule in the Federal Register: The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks (“Proposed Rule”).  83 Fed. Reg. 42817.

The long-anticipated rulemaking has garnered media attention for its proposed measures to indefinitely freeze fuel economy and greenhouse gas emissions standards, and to strip California’s long-held authority under the Clean Air Act to set its own tailpipe emissions rules.  EPA’s decision to reconsider its own determination that the previous standards were appropriate as set through the year 2025 has been challenged in court by eighteen states, private parties, and environmental NGOs.

But another set of stakeholders may be interested in the rule: autonomous and connected vehicles manufacturers and parts suppliers.

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IoT Update: The European Electronic Communications Code – Developing the Future of IoT in the EU

The European Commission estimates that the global market for the Internet of Things (“IoT”) will grow to 75.4 billion devices by 2023. It also estimates that the economic value of spectrum enabled services is at present worth €500 billion per year. This is expected to increase by 200% – up to €1 trillion a year by 2023 – making the availability of spectrum (needed to send and receive data) and the development of 5G technology increasingly significant.

The European Electronic Communications Code, part of the Commission’s Digital Single Market (“DSM”) Strategy, is nearing the end of the legislative process. It contains a range of safeguards aimed at European-level harmonization for 5G and spectrum management, high-speed broadband technology, and seeks to level the regulatory playing field for “Over the Top” (“OTT”) services with that of traditional telecoms services.

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Covington IoT Update: Best Practices for Outsmarting Common Pitfalls in Smart City Projects

City leaders across the globe are predicted to spend upwards of $41 trillion by 2020 to deploy smart city technologies within their locales. From Toronto to Tokyo, cities are vying to harness the benefits of the Internet of Things (“IOT”) in order to help make their streets safer, transportation more efficient, and their environments greener. While exciting, there are a number of challenges facing cities on their quest to get smart. Resources are scarce, building the required infrastructure is expensive and obtaining the necessary consensus and cooperation amongst municipal stakeholders can be downright impossible. For vendors looking to capitalize on this momentum, learning from successful smart city projects and planning around the common conflicts that tend to arise is crucial. Below are a number of best practices gleaned from the strategies and progress of a number of cities who have found success in implementing smart city solutions. Continue Reading

Covington Artificial Intelligence/IoT Update: The Future of Accident Compensation in a Driverless World

Self-driving cars are here.  And although these so-called autonomous vehicles (AVs) are expected to reduce the overall number of auto accidents significantly, some accidents are still statistically inevitable.  This raises an important question for AV industry stakeholders: when human beings aren’t in the driver’s seat, what accident-compensation mechanisms should come into play?

Earlier this month, the Travelers Institute, a unit of the major auto insurer, issued a white paper on insurance for AVs, “Insuring Autonomy: How auto insurance can adapt to changing risks.”  Though some have called AVs an existential threat to the auto insurance industry, the Travelers study sees opportunities.  Among its recommendations: that the existing auto insurance infrastructure should be extended to AVs; that AV auto insurance should be mandatory; and that mandatory policy limits should be increased to account for more expensive technology in AVs.  The Travelers study weighs auto insurance against the product liability regime as alternative accident compensation schemes and concludes that auto insurance is the preferred first-instance solution. Continue Reading

The European Parliament publishes a study on financial technology and competition law

On 9 July 2018, the Economic Affairs Committee of the European Parliament (the “EP”) published a study identifying potential competition law concerns in the financial technology (“FinTech”) sector (the “Study”). Continue Reading

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