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Taboo or not, the combination of COVID-induced-loneliness and digitized-romance have made SexTech one of the fastest growing areas in tech in 2022. Worth over US$84 Billion in 2020 and forecasted to exceed US$125 Billion by 2026, questions arise as to whether unaddressed legal issues related to the SexTech businesses may clog the multi-billion-dollar industry.
Introduction
FinTech, LegalTech, HealthTech, RegTech… it seems that anything traditional can be upscaled with ‘tech’ (i.e. fusing technology with traditional products) and revamped into a new booming industry. Being one of the latest beneficiaries of the COVID induced tech-revolution, SexTech is no exception. However, taboo and stigma around the subject have led lawyers to shun away from advising SexTech companies/start-ups.
What is SexTech?
SexTech is the use of technology to enhance sexual experiences. Accordingly, SexTech products may include both hardware products (e.g., sex toys/enhancement tools) and software products (e.g., education/therapeutic applications).
Common products on the market such as ‘device+app’ products (which require attention to cybersecurity) and interactive products (e.g., ‘body response technologies’) all involve legal issues of data collection, retention and privacy that manufacturers must be aware of.
Cybersecurity Matters in SexTech!
Cybersecurity is one of the biggest challenges companies face when attempting to implement ‘tech’ into value chains. For instance, although lawyers are waking up to the need for tech in delivery of legal services, issues of cybersecurity are often left at the backburner until a breach occurs. This is further evidenced by the fact that risk management courses such as Cybersecurity and the Law Firm have yet to be made mandatory for lawyers as of 2022.
The SexTech industry is no different. Whilst adding web elements to a product may potentially increase user satisfaction, failure to take adequate cybersecurity precaution may result in loopholes for cybercriminals to exploit. In 2020, it was reported that a production company for internet connected chastity belts was forced to disclose a vulnerability when it was discovered the chastity cage was vulnerable to ransomware (due to a backdoor in their devices).
Physical injury was subsequently reported when the victim of one such ransomware attack, in panic, attempted to free himself with a hammer. Hence, manufacturers may become liable for personal injury and cybersecurity negligence for failure to take the necessary precautions and/or leaving a backdoor open and/or provide users with the necessary warnings.
Whilst backdoors are great for developers to patch and upgrade products, vendors may nonetheless find themselves blasted by fines and investigations if left unguarded.
Data Collection, Retention & Privacy
The maturing of artificial-intelligence (“AI”) technology has resulted in the creation of body response technologies where computers/algorithms are used to implement actions in response to a user’s bodily reaction. These ‘smart’ devices require a vast database as machine-learning and automated decision making cannot be achieved without sufficient data input. As such, manufacturers will compile databases from users’ past activities. Question thus arises as to whether manufacturers have implemented the relevant compliance protocols.
In Hong Kong, operators based in Hong Kong have to comply with the Personal Data (Privacy) Ordinance (Cap.486) (“PDPO”) and various Data Protection Principals (“DPP”). On the other hand, the General Data Protection Regulation (“GDPR”) has extraterritorial scope and will apply to operators targeting customers in Europe. As matter of best practices, the principle of data minimisation and consent should be implemented. To this end, it will be useful for operators to have a system in place where users can:
Indicate consent for data collection;
Make request for access to their data; and
Have a channel to request for deletion of their data.
Alternatively, Blockchain can serve as a solution for the sextech industry, providing security, empowerment, and protection through decentralized transactions, data privacy, and the ability to transact confidentially, addressing the industry's unique challenges and creating new opportunities via a tech solution.
Supply-Maintenance Agreements
Manufacturers that have promised (via advertisements/representations) that a product will function a certain way may have difficulty keeping such promise unless maintenance contracts are put in place.
Cybersecurity is a process; continuous patching in response to new threats is a must. Therefore, failure to put maintenance agreements in place may result in runaway costs and disputes under the Consumer Goods Safety Ordinance (Cap.456).
Intellectual Property & Consent
Back in April 2016, it was reported that a robot ‘enthusiast’ had created a robot in the likeness of Scarlett Johansson. Then in February 2022, Model Yael Cohen Aris claimed a sex doll company had made a doll with her name and in her likeness. This demonstrates how companies in the SexTech industry may be ill-informed of the potential legal repercussions of their actions and thus require proper legal advice.
Although a person cannot make a copyright claim for someone copying their appearance (unless the victim was making dolls themselves and brings a claim stating that the manufacturer is making rip-offs of such dolls), to avoid potential law suits (e.g., a claim in tort), consent should always be sought when modelling dolls after celebrities.
Conclusion
The SexTech industry is booming, and, as with any boom, novel legal issues (e.g. privacy, intellectual property, and cybersecurity) will rise. Whilst many lawyers in the field have hopped onto the blockchain bandwagon during the crypto boom (by calling themselves ‘Blockchain Lawyer’), will you be the one to break social stigma and brand yourself as the next ‘SexTech Lawyer’?
By: Joshua Allen Kiu Wah CHU, Director at China Information Technology Development Limited
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