Privacy and Trade Secret Law Applied to Drones An Economic Analysis

Abstract

The growing number of commercial and consumer drones, combined with their ability to fly quietly at low altitudes with cameras and other monitoring equipment, raises concerns about privacy and property rights. How will the balancing of privacy concerns and the interests of drone operators influence the emergence of new rules governing minimum drone operating altitudes above private property? And, once those new rules are set, how will the large volume of drone operations affect privacy? An economic analysis of intrusion upon seclusion and trade secret law helps answer these questions. The FAA is expected to establish a drone “public highway” that effectively reduces landowners’ vertical property rights. So long as the altitude is set high enough, drone operations will not impose significant privacy costs on landowners. However, low altitude drone operations will be restricted to minimize intrusion upon seclusion and trade secret law violations. Less clear is whether the courts will adopt simple rules regarding drone operations which if violated would establish a presumption of intrusion. Given the volume of drone operations, doing so, instead of relying on the standards-based approach in place today, would conserve economic resources. Apart from this change, new laws are not needed to protect individuals or firms against aerial surveillance by non-government drones. The current laws are economically efficient and will remain so in the era of drones. Regardless of the law, the lower acquisition and operating costs of drones mean that drone owners will launch many more surveillance flights. As a result, the drone era will bring with it some loss of privacy regarding activities that are visible from drones. This will have a chilling effect especially on unfettered backyard activities.