Walker Morris: Legal Risks of the Factory of the Future

Tell us a bit about yourself and your role

My name is Alan Harper and I'm a Partner and Head of Intellectual Property at Walker Morris. I’m a specialist IP solicitor advising across the full spectrum of IP rights in relation to contentious and non-contentious matters.

Why does the factory of the future present new legal challenges for manufacturers?

Technological advancements impact all areas, not least manufacturing. In many ways, manufacturing today is unrecognisable from manufacturing decades ago.

As times goes on, we can expect that increased use of technology will change manufacturing yet again – making the factory of the future look unrecognisable from today.

Many manufacturers are already deploying smart processes and innovative solutions to improve efficiency and results in their own processes, whereas others are at the outset of their technological expansion.

There are many legal challenges for those beginning, or continuing on, this journey. Many of these challenges are new as they involve new, potentially untested technology. Therefore, ensuring a legal framework is in place, which can accommodate this uncertainty, is key.

New technology, such as AI, which has also potentially outpaced the law, creates challenges for manufacturers to navigate with their advisors.           

How can manufacturers respond to these legal challenges and find success?

While this doesn't eliminate all risk, a solid starting point is picking the right partners. This includes your technology supplier and legal support.

By working with the right people, they will have experience of the challenges before they arise and will be able to ensure these issues are anticipated in advance. It's also important to seek legal advice at an early stage.

This will ensure headline legal issues can be addressed before the project gets going – making sure there is a clear understanding between the parties on how the project is to unfold.

Both of these elements will greatly help with the success of your project.

Why have many manufacturers been slower to embrace digital transformation opportunities than other sectors?

There are many different reasons for this, ranging from cost, availability, awareness and use case.

Risk aversion and a traditional approach may also play a role.

However, those who invest and take the leap will benefit from first-mover advantage and the benefits that improved capability and efficiency can bring.

Emerging technology is creating a need for new legal frameworks and approaches. How can AI’s legal risks be addressed?

AI is already being used in several ways and new use cases are being devised and implemented frequently.

There is a mix of concern and excitement around the implementation of AI and this is understandable.

There’s been a number of reported examples of AI bias and there are fears the implementation of AI in employee relations, for example, could give rise to a significant employment law issue.

An example of this is the implementation of AI in performance management, whereby businesses have monitored staff on a production line or in a warehouse.

Given the complex requirements of employment law, it's key to get this right and ensure you seek legal input along every step of the way.

The nature of digital technologies makes defining intellectual property rights more difficult. What do manufacturers need to do and understand in this regard moving forward?

This isn't the first time intellectual property law has had to play catch-up with technology, although the rate of change with AI is remarkable.

While there are some uncertainties when it comes to AI and IP, as with the implementation of any new technology, you should start from core principles.

This involves being mindful of what intellectual property you're dealing with, what intellectual property is likely to be created, who will own that intellectual property and what rights the parties have to use it.

Enshrining these core principles in an agreement with your suppliers and counterparties will go a long way to addressing any issues regardless of the current uncertainties with the law.

Upskilling the existing workforce is essential to making the factory of the future a success. What legal considerations must manufacturers consider when training staff in emerging technologies?

Upskilling employees as part of any technology onboarding is key as, without this, implementation is likely to struggle.

However, the introduction of new technology likely means change to the roles of these employees, in which case, standard principles apply.

Care must be given to ensure employees are consulted and if there is a union in the workforce, then it will need to be taken into consideration. It's important to consider how this upskilling is to be selected if not all employees will be asked to participate as this selection, or lack of, may result in redundancies in due course.

On a more practical level, it's important to make sure all employees are given adequate training so they are able to use the new technology safely.

What does effective legal protection for manufacturers pursuing the factory of the future look like? 

It's likely that any manufacturer pursuing technological improvements will need to engage third parties. Having a contract in place to govern this is very important.

This contract will need to deal with many issues, but key considerations will include a clear scope of work, a timetable for delivery and a project plan, clear details on continuing support (both maintenance and training), costs, duration, liability and responsibility.

There are several points which need to be addressed so it's advisable to have a heads of terms agreed before progressing to a full contract, as this should hopefully make the contracting process more efficient.

What advice would you give to manufacturers about the factory of the future?

While you should approach with caution, don't be afraid. The advantages of getting this right can’t be overstated and, provided you enlist support from the right partners, there’s no need to fear the change.

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