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The rise of AI and Robotics in Retail - is it forging ahead of the law?

The rise of AI and Robotics in Retail - is it forging ahead of the law?
  • United Kingdom
  • Technology, Media and Telecoms - Disruptive Technology



Earlier this year, MEPs voted for a set of regulations to be drafted to govern the use and creation of robots and artificial intelligence (AI) in the EU, hot off the back of the UK government setting up a commission to look at the issues surrounding AI. Competition in the retail sphere is fierce and more brands are looking to use AI and robotics to draw in consumers and drive up sales. BUSINESSES THAT IGNORE THIS RISING TREND ARE LIKELY TO FIND THEMSELVES STRUGGLING IN THE EVER COMPETITIVE RACE TO BECOME INNOVATIVE – as many competitors already use or are beginning to adopt AI and use of robots to better understand, connect with, and create superior experiences for consumers. However, the law is yet to catch up with the technology; across continents, the law is unclear and differing and is likely to evolve. This article will primarily focus on addressing the position in the UK.

FIRSTLY, WHAT IS ARTIFICIAL INTELLIGENCE (AI)? AI IS THE SIMULATION OF HUMAN INTELLIGENCE PROCESSES BY COMPUTER SYSTEMS AND OTHER MACHINES. These processes include machine learning, reasoning and use of rules to reach conclusions as well as an element of self-correction.
As of 12th January, MEPs from the parliament’s legal affairs committee passed Mady Delvaux’s report into robotics and AI. As a result, the European Parliament will be pushing forwards for the creation of specific regulation around the use of robots and AI.


Perhaps one of the key issues both customers and suppliers are grappling with is intellectual property ownership and rights to use output of these technologies. In the UK, copyright law generally envisages there will be human intervention in creation, which is technically not always the case, making ownership far from clear cut. It is arguable that the organisation who has set up the rules for the system has made the arrangements necessary for the creation (and is therefore the owner) but this is not the definitive conclusion.

Patents are also relevant in the field of AI. The Patents Act 1977 expressly carves out from patent protection inventions which are implemented by computer programs if they “relate to that thing as such”. Traditionally, for the UK, that has meant that only certain types of patent applications which involve computer systems will be granted and these need to have a certain “technical” contribution. If this hurdle is overcome, the Act sets out that the inventor(s) is or are the devisor of the invention. So, potentially, certain types of AI inventions will be patentable. In other countries, it may be easier to patent certain AI/robotics and some countries have granted numerous patents already. The clear conclusion here is to think carefully about this aspect early on in the procurement process including any rights to use created output/content from the AI technology.

It is also important to consider how liability might be apportioned if things go wrong, whether AI or robotics is being used in back office systems or in a business’ own customer-facing solutions. The law is unclear in many territories in relation to an “owner”, manufacturer and/or user’s liability for acts and omissions by robots/AI. General principles around product and software liability are likely to be applied in the UK in the meantime. 2017 is the year in which many countries are seeking to generate legislation which will give at least some framework in these areas. For example, the 2017 report from Mady Delvaux examines if robots should have legal rights and be given legal status as an “electronic person” as well as whether a robot can be held liable for accidents. There is much talk about whether robots should have a ”kill switch” so they could be switched off if needs be. The EU report sets out some proposed principles which include robots not injuring humans and obeying human orders where it does not conflict with the earlier principle.

It should be noted that there are not yet any regulations which specifically address consumer or privacy and AI/robots in the UK but both consumer laws (where the AI/robots are for use by consumers) and data protection laws are relevant and current laws must be respected. In relation to use and collection of people’s personal data (including names and preferences), normal privacy laws need to be applied including (from 2018) the new European General Data Protection Regulation (the “GDPR”). The GDPR includes provisions that promote privacy by design, accountability, governance and includes an obligation to demonstrate compliance with these principles.

This will place a legal requirement on retailers using AI/robots which use personal data to add appropriate safeguard mechanisms throughout their data governance processes. Mady Delvaux’s report emphasises the need to ensure the security of data systems to prevent potential breaches, cyber-attacks or misuse of personal data and current and upcoming other laws are heavily focused in this area for technology. If AI/robots interact with consumers, consumer laws will need to be applied as with other technologies. It will be interesting to see which (if any) of these laws are updated by other regulations specifically for AI and robotics in the future.

In summary, it is expected that the UK will look to update their laws to deal more comprehensively with AI in 2017, probably via EU laws pre-Brexit. Current conclusions in relation to commercial arrangements where retailers are procuring AI systems or consultancy from a third party provider or are offering these services are that it is essential to seek to give clarity in the contract(s) to the parties’ intentions around ownership, licensing and exploitation as well as data protection, product and other potential liabilities.