Construction Contracts and Augmented Reality: Ownership, Breaches, Allocation of Liability, Cyber Insurance

Description

AR and VR technology presents several potential legal issues when used in construction projects. First and foremost, the parties must determine the ownership, licensing, and use of AR and VR created Instruments of Service, as well as the ownership of the records created using these tools as an intellectual property issue. AR/VR-assisted plans may have multiple contributors and users, so disputes may arise regarding who is the author/owner of the plans and the right to use the programs with third-party contracts. For licensing of the tools themselves, consideration must be given to maintenance of the tools, patching where required, and claims for flaws in the tools themselves. Contracts must be well drafted to alleviate intellectual property and other issues. Still, counsel must consider and address these potential problems before using AR/VR platforms to avoid costly disputes.

In addition to issues of intellectual property ownership, when multiple parties can easily contribute to a singular design program file, assigning liability for design mistakes can be problematic. VR and AR can distort the division between designer, contractor, and end-user on a project, as each party may contribute to the design, shifting traditional risk allocation. As a project's dimensions change multiple times over the course of development, delays can arise in delivering supplies and labor. Contracts should clearly delineate the party(ies) responsible for version control, and ownership (and responsibility for) the Instruments of Service and changes thereto as the Project progresses.

Construction counsel must clarify what constitutes a breach in the contract, and which party(ies) are accountable when deviations from the AR/VR plans occur, including project revisions. Further, while AR and VR applications are used to increase project safety, careless use of the products, and improper maintenance of the underlying software, may increase the risk of injuries. Further, the information captured by these tools may be discoverable in a personal injury claim. The contract should allocate responsibility for preparing and enforcing safety guidelines for the use of AR and VR technology onsite, and who is responsible for maintaining the software. If the use of VR and AR is not addressed in the parties' agreements, but the technology is used anyway, all project team members involved expose themselves to risk.

AR and VR are also vulnerable to cybersecurity threats and hackers. The plans and programs typically store confidential or proprietary information, and a cyberattack threatens a user's security and confidential information. A cyber breach can also occur during changes to project specifications and lead to delays and mistakes, in both design and execution. While the risk at present may be speculative, parties to construction contracts should consider whether team members using AR or VR on the project should be required to carry cyber liability insurance to cover losses stemming from a data breach.

Listen as our expert panel examines the benefits of using AR/VR technology in conjunction with construction contracts and how to mitigate risks and allocate liability in a system created for multiple users and evolving design.