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As Drones Take Off, Concerns Over Legality, Risk, Do Too

DroneGround

The increasing use of drones by media companies is one of the topics we’ll be discussing at the TVNewser Show April 29. This post’s author, attorney C. Andrew Keisner, will be among the guests discussing the issue.

From advertising of real estate and car dealerships to filming Hollywood blockbusters to media coverage of sporting events, examples of advertising & media companies using light-weight UAVs, or Drones, is all around. However, when it comes to using such light-weight UAVs in the United States, the legal risks are frequently misunderstood. And although a recent judge’s decision rejecting a $10,000 fine imposed by the FAA is a welcome outcome for UAV operators and the advertising & media companies that engage them, there are still several risks that advertising & media companies should address before engaging a UAV operator to capture aerial footage.

The recent decision by an Administrative Law Judge of the National Transportation Safety Board (NTSB) focused on two primary issues: (i) whether “model aircraft” is encompassed within the definition of “aircraft,” and (ii) whether the FAA’s policy statements concerning the illegality of commercial UAVs created a binding and enforceable rule.

If the definition of “aircraft” was determined to include “model aircraft,” UAVs such as that used by the fined UAV operator in this NTSB action would be subject to the Federal Aviation Regulations. This is critical because the fine imposed by the FAA was for endangering people or property by carelessly/recklessly operating an aircraft – a violation of § 91.13(a) of the Federal Aviation Regulations. But since the NTSB judge determined that “model aircraft” was outside the definition of “aircraft,” the FAA could not impose the fine using the Federal Aviation Regulations.

Second, the NTSB judge determined that the FAA had not followed the proper procedure for legally restricting the activity of light-weight UAVs considered to be model aircraft. This aspect of the decision is strictly a procedural question. Since at least 2007, the FAA has been saying that any commercial use of UAVs is illegal (with very limited exceptions). But the NTSB judge pointed out that the FAA never followed the proper procedural process under the Administrative Procedure Act for creating binding rules. Indeed, both of the FAA’s positions in this NTSB proceeding were undermined by its prior voluntary rules for remote control (RC) aircraft, which hobbyists have been flying for decades.

Implications Now And In The Future

While UAV enthusiasts and critics of the FAA welcomed the NTSB decision dismissing the FAA’s fine, many have overstated the implications of the decision. Although it is certainly beneficial to those in favor of legally using light-weight UAVs for commercial purposes, the decision does not close the door on this debate nor eliminate the risk to advertising & media companies engaging UAV operators.

The very next day after the NTSB decision, the FAA filed a notice of appeal. This timely appeal of the decision is critical because it “stays” the effectiveness of the NTSB judge’s March 6 decision. While a number of reports on the March 6 decision reported that commercial use of UAVs is now legal, that is a risky conclusion.

The appeal’s procedural effect of staying the March 6 decision means that, until the NTSB judge’s decision is reviewed by the entire NTSB Board, the FAA can (and will) continue to take the position that virtually all commercial use of UAVs is illegal. Thus, even after the March 6 decision, operating a UAV for commercial purposes might still result in a fine or cease & desist letter from the FAA. And although any such fines imposed by the FAA during the appeal might be unenforceable if the FAA loses its next appeal (and the one after that), operating a UAV for commercial purposes still comes with a risk of a fine by the FAA.

Moreover, even if the FAA loses its appeal to the full NTSB board (and its subsequent appeal to the relevant U.S. District Court or Court of Appeals), the FAA can – and likely will – proceed with creating binding rules for UAVs under the Administrative Procedure Act. Indeed, the recent NTSB decision only found that the FAA did not create binding rules through its prior policy statements – the NTSB judge did not determine the ultimate issue of whether the FAA has the power to create rules regulating light-weight UAVs operated under four hundred feet. Although that billion-dollar question may be decided by the NTSB at some point in the future, it is again risky for advertising & media companies engaging UAV operators to enter into any long-term contracts that assume the FAA will not proceed with making whatever binding rules it deems necessary to regulate UAVs.

Reducing Risk: Still Need Indemnification

For any advertising or media companies still considering the use of UAVs, it should be with the understanding that the FAA may send a cease & desist letter or impose a fine. Even if you have full confidence that the full NTSB board will ultimately uphold the decision, if the FAA imposes a fine in the interim, it may still be expensive for your company to contest such a fine while waiting for the decision of the full NTSB board.

It is also reasonable to assume that vendors offering the services of UAV operators will be better informed about this developing area of law, and therefore, advertising & media companies engaging UAV operators should require a representation of compliance with all laws, rules, and regulations, plus ensure that any indemnification provision extends to alleged breaches of such a representation. This will help shift the risk away from the advertising & media company, and allows the UAV operator to determine how to be in legal compliance. In fact, there are a few UAVs that the FAA has certified in the last few months, and although they are larger and far more expensive than most of the light-weight UAVs currently used for advertising & media purposes, a tailored representation & warranty clause – in combination with a robust indemnity clause – can shift this determination & risk away from your company.

Moreover, the risk of using light-weight UAVs for advertising and media is not solely limited to fines imposed by the FAA. Although experienced UAV operators may have great judgment and outstanding control of their UAVs, an inexperienced UAV operator with poor judgment might increase the risk of a lawsuit from damaged property or invasion of privacy. It is therefore prudent for any advertising or media company that is considering engaging a UAV operator to ensure that the underlying contract’s indemnification provision is robust and makes the UAV operator responsible for all of the potential risks associated with such activity. After all, light-weight UAVs are only a cheaper alternative for capturing aerial video footage until your company is responsible for paying a fine or defending a lawsuit.

C. Andrew Keisner, Esq. is an attorney in the Intellectual Property and Litigation Practice Groups at the law firm Davis & Gilbert LLP. He has extensive experience advising clients with contract, intellectual property and emerging legal issues arising from the use of new technology in the advertising, marketing, public relations, media, and robotics & automation industries.

(Image: Shutterstock)

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