In Claims Journal Article, Akin Gump Lawyers Discuss Contractual Liabilities for Autonomous Vehicles

Claims Journal has published the article “Autonomous Vehicles: Shifting Landscape of Contractual Liabilities Between OEMs and Tech Companies,” written by Akin Gump litigation partner Susan Lent, who leads the firm’s infrastructure and transportation practice, intellectual property partner Kevin Cadwell, public law and policy senior counsel Gregory Guice and intellectual property counsel Ashley Edison Brown and Jay Tatachar. The article examines the changes taking place as start-up technology companies enter the automotive industry.

The authors write that autonomous vehicles (AVs) are “changing the players involved in the development of vehicles.” The various components required to run the AVs will be provided by “a mix of software engineers employed by the automakers and external sources.” As a result, they write, either a Software as a Service (SaaS) Agreement or a Software Licensing Agreement will be needed—both of which employ indemnification and warranty provisions as a means for managing the risk exposure of the supplier in relation to the buyer.

In addition, the article suggests that “the entrance of technology companies into an industry formerly dominated by hardware component supplier relationships will likely cause both the supplier (technology companies) and automakers to evaluate and adjust their negotiation positions.” Lent, Cadwell, Guice and Brown write that each side’s traditional bargaining power may be eroding and companies will have to be willing to meet in the middle. With this in mind, risk management will continue to evolve.

The article then outlines some of the regulatory actions being taken at both the federal and state level with regard to liability. Several states, for example, “shield manufacturers from liability for damages resulting from a third party’s conversion of a vehicle into an autonomous vehicle, except where the damages are caused by a defect that was present in the vehicle as originally manufactured.”

Concluding, the authors write that it will be critical to ensure “appropriate liability assignment through contractual agreements.” They also observe that bargaining power will play an important role in negotiating liability in these agreements. Finally, they add, “it will be important for insurers and consumers to understand how liability is being allocated.”

To read the full article, please click here.