Canada: Brave New World: Some Legal Considerations In Using AI And IoT Systems

Last Updated: June 19 2018
Article by Lisa R. Lifshitz

Artificial intelligence and the Internet of Things are hot subjects (and buzzwords) for lawyers in 2018. Beyond the hype, however, lies a plethora of legal and business issues. From Alexa, Amazon’s smart home hub, to the speech recognition capabilities of Siri, Apple’s voice assistant, to “smart” thermostats, self-driving cars and interactive sex toys, consumer and business’ dependence on these technologies show no signs of waning. 

And there is no question that Canada is actively trying to position itself as world leader in these technologies rather than just a nation of consumers.

The year 2017 was a banner year for AI investment in Canada. In March 2017, the federal government committed $125 million to launch the Pan-Canadian Artificial Intelligence Strategy, delivered through the Canadian Institute for Advanced Research. Intended to promote collaboration among centres of expertise in Toronto, Waterloo, Montreal and Edmonton, the initiative actively promotes Canada as a world-leading destination for companies wishing to invest in AI and innovation. Funding will be flowed to the newly formed Vector Institute in Toronto, an independent research facility for AI, the Alberta Machine Intelligence Institute in Edmonton and the Montreal Institute for Learning Algorithms, which specializes in deep learning and machine learning for AI. Major players, including Google, Microsoft, Facebook and Samsung Electronics, have invested millions of dollars in artificial intelligence labs across Montreal, helping to make the city a global leader in machine-learning development. Facebook alone invested more than US$7 million in the AI ecosystem in Montreal in 2017, including establishing the Facebook Artificial Intelligence Research and launching new partnerships with Université de Montréal, CIFAR and McGill University.

Additionally, through its innovation superclusters initiative, which also began in 2017, the federal government is also investing up to $950 million over five years to support business-led innovation superclusters with the greatest potential to build innovation ecosystems and accelerate economic growth. Notably, one of the winners, the SCALE.AI Supercluster (an industry consortium incorporated as Supply Chains and Logistics Excellence.AI, based in Quebec) is focusing on making Canada a world-leading exporter by building intelligent supply chains through artificial intelligence and robotics.

However, while AI research is accelerating, the law in Canada regarding AI/IoT systems is arguably not keeping pace. Questions abound. The following is a non-exhaustive list of issues that should be considered by any developer/user of AI/IoT systems and, to the extent possible, be proactively addressed in the contract that governs such relationship.

Liability

Who is responsible if something goes wrong as a result of the AI/IoT system? The manufacturer? The distributor? The original programmer or researcher? The consumer or end user? Is a provider liable under contract of supply? What about IoT systems and devices that are not provided under contract and that are accessible by internet users generally? What is a reasonable standard of care for an IoT system?  What if imperfections in the AI/IoT system are more subtle? How can we hold the developer/creator of the AI system liable if we do not understand how a black box algorithm makes decisions? Machine-learning techniques generally cannot tell us their reasoning, and even when they can, the results are often too complex for average individuals to understand.

If there are flaws built into the algorithms themselves or if regulation fails to ensure that algorithms are high quality, then the developers of algorithms (or technologies that rely on them) might also become liable under tort law, although they have been reluctant to extend or apply product liability theories to software developers.

Other damage claims include: negligence, strict liability, warranty (express or implied), fraud, product liability, false or misleading representations and deceptive marketing practices under the Competition Act, data monopoly/abuse of dominance, price collusion, fixing or anti-competitive behaviour privacy breaches, personal injury and property damages.

What are the due diligence obligations of users or buyers that want to use an AI/IoT system? Is the obligation on the buyer or user to perform evaluations at the outset? If so, how often? If machines buy and sell from one another, will consumer laws apply and in which jurisdiction? Any AI/IoT contract should carefully consider and document in detail ownership of data, limitation of liability, governing law and jurisdiction.

Intellectual property issues

If a company invests in creating algorithms, how can they protect their investment? Can it be done through patents, copyrights or trade secret protections? Who owns the IP or data generated by AI/IoT systems? Who owns what when IoT devices interact with one another? Who decides how it can be used? Is opt-out possible? How well do current Canadian and other foreign IP laws protect AI/IoT products and systems? What are some of the current IP limitations?

Privacy and data considerations 

These are critical issues in any AI/IoT product or system. AI requires the gathering of immense amounts of data and the sharing of data to oversee it. Did the AI developer have sufficient rights to collect the original data? Did the developer have the rights to use the data collected, create derivative works using the data and disclose the data? Did the data come with “strings attached” on how it could be used, i.e., patient data under Ontario’s PHIPA, the GDPR or other laws? Who owns the data generated by the device or system? How anonymized or de-identified is such data and how easily can individuals be re-identified following the anonymization of such data? How can one meaningfully consent to the collection, use and disclosure of data obtained through use of the AI/IoT system? What is meaningful consent in the context of a decision made by an AI? Consider the sensitivity of users using the devices, such as patients and their medical devices or children and IoT toys, where surreptitious data collection has been used in the past in downright creepy ways. Different jurisdictions treat these matters in distinct ways, so one may also be obligated to consider the intersection of various privacy laws in Canada, the U.S., Singapore and the European Union under the GDPR. Is existing legislation sufficient to truly protect privacy rights or is specialized legislation focused on AI/IoT required?

Additionally, IoT systems may require increased direct collection of sensitive personal information by such devices as precise geo-location co-ordinates, financial account numbers and health information. This can lead to a lack of anonymity, increased opportunities for businesses to monitor consumers and monetize data. Consider the fact that we now have to face such realities as: content recording (spending habits, behaviours, voice patterns, daily activities) and audio and video recording including voice patterns. Existing smartphone sensors can be used to infer a user’s mood (stress levels, personality types, bipolar disorders), demographics (gender, marital status, job status, age), smoking habits, overall well-being, progression of Parkinson’s disease, sleep patterns, happiness, levels of exercises and types of physical activity or movement. Such inferences can be used benevolently to provide helpful services to consumers, but they can also be misused, i.e., by companies to make biased credit, insurance and employment decisions, by using fitness tracker data to price health or life insurance or to infer the user’s suitability for credit or employment.

Security issues 

Of great concern to many critics and users are issues relating to security. What are the minimum security requirements for AI/IoT systems? This is a trick question, as unfortunately there are no minimum standards for security for AI/IoT systems right now. How do you build privacy by design into an AI/IoT system when security is often an afterthought, there can be multiple systems in one IoT device and many IoT systems/devices use open-source software?

Moreover, how can one ensure that security can be kept current in an IoT system, as the low cost of many IoT devices may be a disincentive for IoT producers to issue security patches? How can a consumer get an update even if she wants one? IoT companies should continue to monitor products throughout their life cycle and, to the extent feasible, patch known vulnerabilities. Unfortunately, many IoT devices have limited lifecycles, resulting in a risk that consumers will be left with obsolete products that are vulnerable to critical, publicly known security or privacy bugs. Companies should be forthright in their representations about providing ongoing security updates and software patches. Companies that provide ongoing support should notify consumers about security risks and updates.

Also, how do you prevent malware and hacking of AI/IoT systems? What happens if a company that produces AI-enabled systems then goes out of business? Who bears the burden of security and safety? Will automakers be required to maintain the AI software throughout the lifetime of the car and multiple owners?

Companies should ensure they retain service providers that are capable of maintaining reasonable security and provide adequate oversight to ensure that those service providers do so. For example, such organizations should implement for systems with significant risk a “defence-in-depth” approach where security measures are considered at several levels. They should also consider implementing reasonable access controls to limit the ability of an unauthorized person to access a consumer’s device, data or even the consumer’s network — including employing strong authentication, restricting access privileges, etc.

Regulatory issues 

Areas of concern for regulators abound, including unfair or deceptive trade practices. How can regulators ensure that black box algorithms are high quality —that is, that they do what they say they’re going to do and that they do it well and safely? How can manufacturers defend themselves against AI audits from regulators? How much must be/should be disclosed to a regulator? Who should regulate AI/IoT systems, the AI/IoT companies themselves (i.e., IBM’s ethical use guidelines/Partnership on AI), federal regulators, not-for-profits such as AI Global, IEEE, British Standard for Robots and Robotic Devices, provincial or state laws or global treaties?

Insurance issues 

Does standard insurance cover risks associated with AI/IoT issues?  What is being insured?

Employment issues 

Where an AI system is deployed in the performance of an HR function, is the employer sufficiently aware of issues regarding built-in bias? How much due diligence should be conducted before deploying such a system? Which human rights laws (Canadian federal, provincial human rights acts and codes) apply when a company relies on AI systems for any level of candidate review and recruitment?

Ethical issues

Last but not least, concerns over ethics, including bias, continue to put the brakes on the adoption of AI systems by some organizations. Given the black box nature of AI, can a user ever be certain that the AI system is based on sufficient volume and variety of data to avoid biased results? Has the AI software developer sufficiently validated the reliability of the software? Are results consistent and correct? Can one understand the AI system sufficiently to audit it and understand how the results were achieved? Can we verify that the AI system is trustworthy? How do we concretely address concerns about bias? What steps are being taken to reduce bias? How can a developer or user mitigate against inappropriate conclusions if results are not validated?

In the absence of specific and tangible black-letter law answers, some academics are taking the initiative to search for answers. Seeking to address the difficult ethical issues of AI, in November 2017, the Université de Montréal spearheaded the Forum on the Socially Responsible Development of Artificial Intelligence, which ultimately announced “the montreal declaration for a responsible development of artificial intelligence” at the conclusion of the forum. The principles and recommendations contained in the declaration are intended to be the basis for ethical guidelines for the development of AI. The declaration currently identifies seven values: well-being, autonomy, justice, personal privacy, knowledge, democracy and responsibility, each of which have principles. These include the following:

Well-being: The development of AI should ultimately promote the well-being of all sentient creatures. Autonomy: The development of AI should promote the autonomy of all human beings and control, in a responsible way, the autonomy of computer systems. Justice: The development of AI should promote justice and seek to eliminate all types of discrimination, notably those linked to gender, age, mental/physical abilities, sexual orientation, ethnic/social origins and religious beliefs. Privacy: The development of AI should offer guarantees respecting personal privacy and allowing people who use it to access their personal data as well as the kinds of information that any algorithm might use. Knowledge: The development of AI should promote critical thinking and protect us from propaganda and manipulation. Democracy: The development of AI should promote informed participation in public life, co-operation and democratic debate. Responsibility: The various players in the development of AI should assume their responsibility by working against the risks arising from their technological innovations.

Individuals were also invited to contribute to the drafting of the declaration by answering the questionnaire or by submitting a recommendation (a brief up to five pages) before March 31 of this year. The final version of the declaration is expected later this year. In order to ensure that the declaration is representative, the university will also solicit input from various workshops that will be held with experts and citizen groups, including the Quebec Commission on Ethics of Science and Technology, the Quebec Bar Association, the City of Montreal and others as well as “philosophy workshops” in Quebec primary, secondary schools and secondary institutions (cégeps) and “citizens meetings” in cafes and public spaces. Vive le Quebec!

Originally published in Canadian Lawyer Online - IT Girl Column

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Lisa R. Lifshitz
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions