Drone delivery: An update for retailers

12th February 2020

As retailers started to consider the possibility of drone deliveries, Walker Morris reported last year on some of the legal issues of which drone operators should be aware.  Technology and dispute resolution specialist Sally Mewies provides an update as food for thought for retailers.

Retail drone delivery is a reality

All indications are that retail drone delivery is becoming a reality:

• Amazon and Walmart have registered patents in the US which address various challenges associated with drone delivery, such as how parcels can be dropped or deposited without damage; lighting and communications issues; component faults and battery-life, and so on.
• The Federal Aviation Administration (FAA) has granted UPS a certificate which permits the company to fly an unlimited number of drones and which permits a cargo of up to 55 pounds (nearly 25 kg). By way of example, that would be sufficient for a relatively significant grocery order.
• Uber is testing drone delivery, which it expects to have up-and-flying for its food-delivery service by the end of 2020.

… And not just for the retail giants:

• In Iceland, a small group of technology entrepreneurs are operating ‘Aha.is’, an open market delivery service that allows a wide variety of local retailers and restaurants to supply to customers via online orders and drone delivery.

What do retailers need to know?

Reviewing international patent registrations and monitoring the outcome of schemes such as the FAA’s Unmanned Aircraft Systems Integration Pilot Program will help retailers to keep abreast of technical advancements and practical innovations in drone delivery development.

If and when any individual retailer decides that the time is right for it to launch drone delivery, the following is a (non-exhaustive) list of legal issues to consider:

• Whether a retailer will operate its own fleet or contract with third-party drone delivery providers (and, if the latter, on what terms?).
• Compliance with applicable drone regulation/legislation. In our earlier article we explained the key provisions of the Civil Aviation Act 1982 and the Air Navigation Order 2016 SI 2016/765 (the Order), which regulate and place obligations on drone operators and pilots.  In addition, updated UK drone regulations came into force on 30 November 2019, implementing a new strict regime of registration and competency requirements in relation to drones weighing between 250 g and 20 kg; and new EU regulations [1], which replace national regulations in all Member States, entered into force on 1 July 2019 and will become applicable on 1 July 2020 (i.e. during the Brexit transition period).
• Flying with care.
  • If an operator or pilot intentionally or recklessly hits someone with a drone, liability for battery could arise, which carries both criminal and civil sanctions.
  • Intentional or reckless damage to someone else’s property occasioned by a drone could amount to criminal damage.
  • Flying a drone without exercising a reasonable standard of care could cause injury to persons or damage to property, giving rise to civil liability in negligence and necessitating the payment of financial compensation.
• Flying a drone over someone’s land without their permission could constitute a trespass, nuisance or, potentially, an invasion of privacy.
• Data protection and privacy. Where a drone has a camera or any other recording/data collection device or capability, compliance with the General Data Protection Regulation will be essential and operators/pilots will need to ensure that any data collection does not amount to an invasion of privacy or harassment.
• Fulfilment and supply chain issues. Where it is envisaged that drone delivery will be used either direct to customers or elsewhere within the supply chain, consideration will need to be given to appropriate terms and exclusions in all relevant contractual arrangements.  Matters to take into account will (non-exhaustively) include:  delivery failures due to mechanical, technical or communication faults; damage to goods; delays; and so on.

Retailers might therefore wish to start thinking now about what practices, policies and precedent contracts might provide a feasible framework within which they could operate drone delivery.

WM Comment

There is no doubt that technological advances and automation are becoming increasingly prevalent throughout all aspects of the retail industry – from the point of a consumer ordering online, to products being selected and collected by robots and taken from warehouse or store to drone; and from automated stock control/replenishment and artificial intelligence-informed marketing and promotions to the tech-driven smart contracts of the future which may govern the whole of the supply chain and retail delivery process with minimal human involvement.  While some of that may be a way off yet, drone delivery already seems set to play an integral part in the retailer of the very near future.  If you would like further advice or assistance in relation to the legalities and practicalities involved, please do not hesitate to contact any of Walker Morris’ technology or retail specialists.

 [1] (EU) 2019/947 and (EU) 2019/945