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Executive Summaries Aug 22, 2019

Legal Issues Surrounding the Industrial Revolution 4.0

The manufacturing sector is currently undergoing a significant transformation, which is commonly referred to as the Industrial Revolution 4.0. 

This would be this sector's the fourth revolution, following the arrival of mechanisation around 1760, the internal combustion engine around 1870 and electronics from 1969. This current industrial revolution relates to the digital revolution and combines several technologies, thus blurring the lines between the physical, digital and biological spheres. 

The main challenge for the Industrial Revolution 4.0 is to actually manage the convergence of these spheres, while remaining aware of the many issues, including any legal ones that this entails. In light of this, we have therefore attempted to identify some of these issues and emerging trends, particularly in the areas of data protection, civil liability and intellectual property.

No Revolution Without Data 

One of the pillars of Industry 4.0 is artificial intelligence. Thanks to AI, we should see greater optimisation of the supply chain, maintenance facilitation, and should be able to anticipate customer requests. However, the use of artificial intelligence requires a large amount of data, some of which is obtained through smart objects. Data protection issues are therefore central to the Industrial Revolution 4.0, including business data and technical information, but also data that relates to customers, individuals and their purchasing preferences. 

Governments are increasingly focused on protecting this resource that has become data. In recent years, particularly in Europe, we have seen significant changes in the laws designed to protect personal data. We should also see such changes in Canada. In the United States, a record $5 billion fine was recently levied against Facebook for data privacy violations. Other recent cases in the newspapers highlight the real risks surrounding data leaks. 

Governments: Increasingly Aware of the Value of Data

Governments are also more aware of the economic and strategic value placed on data. Many people are unaware of this, however export controls could apply to the export of technical data (and even electronic transfers), as well as certain products, including those that use cryptography. Similarly, the fifth-generation standard for mobile networks (5G) raises questions due to the ability to transmit data at a very high rate. It is likely the United States authorities will continue to strictly enforce their export laws and economic sanctions, which target strategic technologies or specific countries, individuals or entities, and which sometimes have extraterritorial significance. 

The increasing use of cloud technologies does nothing to simplify the management of data transfers, so we can expect to see an increase in inadvertent violations if the rules are not clarified or simplified. 

Business data from companies must be protected through technology solutions, contracts and business processes. In doing so, it is essential that companies are well equipped and advised in this regard. IT solution and system providers must therefore offer appropriate guarantees and compensation, in addition to applying standards that ensure the availability, integrity and confidentiality of the data entrusted to them.

Robots’ Responsibility – Beyond Science Fiction

Revolution 4.0 also relies on the use of robots, some of which will use artificial intelligence. However, the Civil Code of Québec provides certain responsibilities of the custodian, manufacturer and distributor of a property for the autonomous act or lack of security of that property. What will be the impact of artificial intelligence on this liability regime? Of course, robots cannot be held responsible for the decisions they make, nor can they compensate victims! It will therefore be necessary to adapt the civil liability regime to take into account this new reality. For example, a compensation program such as the Quebec Automobile Insurance Plan could be put in place.

3D Printing Is Also Central to Industry 4.0 

Not only does 3D printing allow for greater customisation of objects, it also reduces the need for inventories, the cost of logistics and lead times. However, companies must ensure that they do not infringe on any intellectual property held by third parties, for example in the form of patents or industrial designs on printed objects. In return, it will probably be very difficult to control and to prevent counterfeiting. Will new control mechanisms emerge? In our opinion, this will probably have to wait until 3D printing has a significant impact on the sale of spare parts.  

An Industrial Revolution at Its Full Potential?

To reach its full potential and make our companies smarter, more efficient and more profitable, the Industrial Revolution 4.0 must involve a number of stakeholders who, historically speaking, have not been traditional partners. The rules to be implemented should foster a climate of trust and predictability, and be relatively standardised across most countries in order to promote the abolition of silos as well as the use of the best technologies. 

The expected benefits of Industry 4.0 are worth the investment needed to create this climate of trust. In 2018, the manufacturing sector represented nearly 14% of Quebec's GDP and more than 89% of its exports.1 However, the transition to Industry 4.0 is essential to the survival of manufacturing companies, and Quebec is lagging behind. By way of comparison, in 2017, 25% of manufacturers in Quebec identified them as 4.0 businesses, while this percentage was 55% in the United States and 75% in Germany.2 A dynamic adaptation of rules and practices in the field should not only support, but also promote the inevitable shift that is essential to the survival of the manufacturing sector.

 

1Baromètre industriel du Québec, STIQ, 10th edition
2Case study published by the Canadian Advanced Technology Alliance « Le secteur manufacturier avancé – Enquête sur l’automatisation du secteur manufacturier au Québec ».

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