Legal and Regulatory Warnings for AR/VR Startups

Live-blogging from Augmented World Expo 2017

photo credit Mark Piszczor

Yesterday afternoon I had the pleasure of presenting with Captain Joe Rampolla on Legal and Regulatory Updates at AWE 2017. The full video will be posted on AWE’s YouTube channel, but in the meantime, here’s a short summary of our presentation.

Our three takeaways were (1) Disruption will be met with resistance; (2) Mo’ money, mo’ problems, and (3) A startup by any other name is still a startup.

Disruption will be met with resistance

AR sometimes drives human behavior in ways to which authorities aren’t accustomed. This can lead to knee-jerk overreactions. We saw this beginning in 2011 with police responses to Ingress players, and we saw it with the out-sized reactions to the swarms of Pokemon Go players–most notably in the form of the unconstitutional ordinance regulating AR games passed by Milwaukee County. This phenomenon was a large part of the reason Congress held its first hearing on AR last fall.

AR and VR are also disrupting our notions of privacy. Smart eyewear puts cameras in people’s faces, which many find invasive. Wearable devices will be tracking all sort of information about us, including our geolocation, facial features, eye movements, gaze, gestures, and more. Some of this recording activity may be considered an invasion of privacy, if courts and society deem it to be unreasonable. This information will also be stored somewhere, making it potentially discoverable in litigation and by hackers, if not adequately secured.

Mo’ money, mo’ problems

Anytime an emerging industry starts to mature to the point where people are making and investing money in it, the regulators start paying more attention, and the lawsuits come out of the woodwork. The Senate Transportation and Commerce Committee has already taken notice of AR, and more recently a group of legislators formed the Reality Caucus to examine AR/VR issues. In the absence of on-point laws and regulations, we can also expect agencies like the Federal Trade Commission to step in and regulate what it deems to be “unfair and deceptive trade practices” in AR/VR. Likely targets for such regulation include AR advertising (which is finally taking off, thanks to Snap World Lenses), accuracy in virtual representations of commercial objects, and product liability issues with AR/VR eyewear.

Joe also described what he believes is a spearfishing campaign targeting AR professionals.

A startup by any other name …

95% of the legal and regulatory issues faced by AR/VR startups are the same ones encountered by startups in all other industries. For example, you need to be careful who you go into business with and how well your foundational agreements are drafted–as evidenced by a lawsuit pending in New Jersey between two AR entrepreneurs. You need to protect your patents and other IP. You need solid, customized privacy policies and data security. And you should choose skilled lawyers and business advisors to guide you through the early challenges of getting your business off the ground.

Special shout-outs to Mitchell Kominsky, another lawyer who planned to join us but was unable to do so, and Mark Piszczor for moderating the room.