Panorama of Embodied Intelligence Overseas Compliance: A Detailed Explanation of Four Defensive Lines Covering Export Control, Product Liability, Dat

Nowadays, a growing number of embodied intelligence enterprises are targeting overseas markets. When humanoid robots move out of factories and enter shopping malls, enterprises need to deal with far more than just product performance. Issues including whether chips and algorithms can be circulated in compliance, who shall bear the liability after a robot accidentally injures people, and what information cameras and microphones are allowed to collect may all affect product delivery and subsequent operations.

Compared with generative AI that mainly processes information such as text and images, embodied intelligence adds the risk of direct interaction with the physical environment. Taking the US market as an example, this article systematically sorts out the four lines of compliance defense that enterprises need to build firmly for "going global" from four dimensions: export control, product liability, data privacy and foreign-related contracts, so as to provide reference for embodied intelligence enterprises to expand their business overseas.

Technology Sources

Export Control Review Extends to Software, Hardware and Remote Services

01

Embodied intelligence products integrate sensors, control software, algorithm models and other components. Enterprises need to run export compliance reviews through the whole process of R&D, assembly, joint development and subsequent services from three levels: hardware, algorithm and remote interaction.

In terms of hardware, enterprises shall verify the origin, technical parameters and export control classification of key chips, sensors and control modules item by item, and obtain corresponding materials from suppliers. If the overseas robot uses perception modules included in the control list, the export of the complete machine will face license restrictions, and the obtained license also has the risk of being revoked.

At the level of software and algorithms, the U.S. Foreign Direct Product Rule (FDP) needs to be focused on. Generally speaking, even if the product is produced outside the United States, as long as it is a "direct product" of specific controlled U.S. technologies or software, and the destination of the transaction or the end user meets the conditions listed in the rules, it is still subject to the jurisdiction of EAR. If enterprises use such controlled components or algorithms in R&D, whether they assemble them on their own or jointly develop them with overseas partners, they may need to apply for licenses accordingly. The review scope shall cover all technologies and software used in the whole process of R&D, deployment and cooperative development.

The remote service level will also generate export behaviors. The OTA upgrade pushed by domestic R&D centers to end robots in the United States through the cloud is also a cross-border technology transmission, which may be recognized as re-export or software export under the jurisdiction of EAR, and needs to be declared in accordance with regulations.

Product Safety

Move Risk Prevention Forward to Design and After-sales

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Robots may accidentally collide with people during operation, or knock over shelves and damage goods. After causing personal injury or property loss, whether the product has defects and whether the defects cause damage are the key to liability investigation.

The criterion for judging whether there is a defect in design is whether there is an economically feasible alternative. If there is a safety design with equivalent cost that can significantly reduce risks but the enterprise does not adopt it, the product may be deemed to have a design defect.

For embodied intelligence products, enterprises shall evaluate the running speed, output force, operation range and human-robot distance when determining the motion scheme. Before the robot lifts its leg or swings its arm, it shall first identify surrounding people and obstacles through sensing components or algorithms; on the premise of meeting task requirements, configure measures such as speed and force limiting, collision detection, and emergency stop.

Substantial modification can constitute an important defense. For products that are safe when leaving the factory and cause damage due to substantial modification by a third party, the manufacturer can claim to be exempted from corresponding strict product liability and negligence liability accordingly. Enterprises can record the modification subject, modification content and its impact on safety functions through permission restriction and change trace.

After the product is sold, the manufacturer still has the obligation of continuous warning. If major safety defects are found through tests or market feedback, the buyer shall be notified in time, and measures such as warning, repair, deactivation or recall shall be taken.

Data Boundary

Implement Collection and Notification Requirements According to Usage Scenarios

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When robots collect and process audio and video through sensors such as cameras and microphones, they also need to comply with different authorization and notification rules.

Environmental Audio Recording

The State of New York implements the one-party consent rule for communication and dialogue recording, which means that recording is allowed as long as one of the dialogue participants consents. When a robot moves in places such as lobbies, if it automatically collects others' conversations without the consent of any dialogue participant, it may violate the illegal wiretapping regulations and bring the risk of criminal liability. Enterprises shall distinguish functions such as voice wake-up, command recognition, continuous recording and cloud storage, and clarify the enabling conditions of microphones.

Employee Monitoring

Robots in warehousing logistics and intelligent manufacturing production lines can be used to record employees' work trajectories and working hours, and serve attendance, working hour statistics and performance analysis. To deploy such functions in New York State, three procedures need to be implemented: written notification before employees are onboard, written confirmation signed by employees, and posting monitoring notices in prominent positions in the operation area. The content of the notification shall correspond to the actually collected data and its usage.

Biometric Identification

New York City introduced relevant legislation in 2021. When retail, catering and entertainment venues collect, store or share information such as facial features, iris and voiceprints used to identify customers through embodied intelligent devices, they need to post clear notices near all customer entrances; there are other prohibitive provisions on selling, leasing or trading biometric information for valuable consideration.

For overseas-oriented enterprises, data compliance needs to be implemented in delivery configuration: clarify which functions are enabled by default and which require additional configuration by customers; for processing that can be completed locally, minimize the upload of original audio and video; clear responsible persons shall also be designated for notification materials, retention period, deletion mechanism and security incident notification.

Contract Clauses

Risk Prevention and Dispute Resolution of Foreign-related Contracts

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In an embodied intelligence project, manufacturers, distributors, integrators and operators often participate at the same time, and equipment installation, site management and data processing may be undertaken by different subjects. Therefore, foreign-related contracts shall be drafted in accordance with local rules, and the responsibilities of all parties, compensation boundaries and dispute resolution methods shall be clearly specified in advance.

Anti-modification Clause

The first is the anti-modification clause. The product usage scenarios and modification mechanism shall be included in both the main body of the contract and the technical annex: which scenarios are allowed for use, who has the right to adjust safety parameters, access third-party models or implement modifications, and how to retest and accept after modification, all shall be clearly agreed. If the damage is caused by the customer's unauthorized modification, tampering with procedures or destroying safety settings, the exemption scope of the manufacturer and the responsibilities assumed by the customer shall also be specified.

Data Indemnity and Liability Limitation

The second is the indemnification and liability limitation for data compliance. Obligations such as obtaining authorization, posting notifications and handling security incidents shall be assigned to specific subjects; if the customer violates data protection regulations such as biometric identification and causes the manufacturer to be held liable or bear joint and several liability, the customer shall compensate the manufacturer. Meanwhile, within the scope permitted by law, explicitly exclude indirect loss compensation, set the maximum compensation limit, and align the compensation scope, liability amount with insurance arrangements.

Dispute Resolution

In terms of dispute resolution, on the premise that the other party accepts, priority can be given to arbitration institutions in Asia, which are closer in distance, similar in time zone, and easier to control the cost of language and procedures. More importantly, for the enforcement link, both China and the United States are contracting states of the New York Convention. After the award is made, the party can apply to the court of the contracting state at the other party's property location for recognition and enforcement, which is much more convenient than cross-border enforcement of court judgments.

Force Majeure

The force majeure clause shall also be specified in detail. Under U.S. law, the applicable situations shall be listed one by one as much as possible, including epidemics, wars, strikes, as well as export restrictions, supply interruption of key components, government orders, etc. New York courts interpret such clauses strictly: situations that are not specified and cannot be covered by existing clauses are usually difficult to be exempted accordingly. The notification period, derogation obligation, alternative performance and the handling method after termination shall also be included in the contract.

*The information and opinions contained in this article do not constitute any investment advice and are for reference only

This article is from the WeChat Official Account "Zhejiang Enterprises Overseas Integrated Service Port".