DUDE, WHERE’S MY DRONE?

by Brant Hadaway on August 1, 2013

Photo courtesy of INCAKE

Photo courtesy of INCAKE

Have you wondered what it would be like to receive deliveries by drone?  In China, it’s already happening:  A private bakery in Shanghai began using small, four-rotor drones to deliver cakes to its customers.

The cake delivery service has been at least temporarily halted pending a regulatory review.  After all, using the airspace over a big city has implications for public safety and air traffic control, so it is reasonable to expect that the private use of drones will require some regulatory oversight.  The use of drones in the private sector is likely to cause similar regulatory headaches in the U.S.  You can bet, for example, that Dominoes Pizza won’t be delivering by drone until the U.S. Federal Aviation Administration – which licenses pilots, certifies aircraft, and regulates the use of airspace – has signed off on a set of rules and regulations governing the use of drones for such purposes.

But assuming that the FAA – and similar authorities in other countries – allow the use of drones to deliver services in urban areas, such as pizzas, dry cleaning or, in the case of this article, cakes, you can bet that lawyers, judges and insurers will be left to figure out the rest.

What happens, for example, if a drone falls out of the sky or drops its cargo, causing injury to people or property?  Will the drone’s owner be found negligent even if he took reasonable measures to make sure that the drone was in reasonable operating condition?  Or will the owner be held strictly liable – meaning regardless of whether he was negligent – in tort?  Is the drone like an employee or agent, or is it something else?

And what if a rival knocks down a competitor’s drone?  Would that constitute a tortious interference with a business relationship?  Maybe yes, because there’s never a justification for knocking down someone’s drone.  Maybe no, because a competitor is privileged to look out for his or her economic interests.

At the end of the day, the biggest hurdle to using drones like this won’t be regulatory, but rather whether the risks are deemed insurable by underwriters.  It will be interesting to see whether underwriters regard the risks of drones as being at least no greater than the risks associated with having a fleet of low-wage delivery drivers.

But if they are deemed an insurable risk, then a drone might well deliver your pizzas, one day.

Just be sure to have exact change.

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