This document summarizes key due diligence issues for agriculture technology providers (ATPs) regarding customer data, data standards, drone use, regulations, and intellectual property. It discusses ensuring customer data is truly anonymized and accurate, developing common data standards, addressing safety, privacy and legal concerns over drone use, complying with evolving regulations, and properly handling intellectual property and customer contracts issues.

1. IRS Circular 230 Disclosure: To ensure compliance with the requirements imposed by the IRS, we inform you that any tax advice contained in this communication,
including any attachment to this communication, is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding penalties
under the Internal Revenue Code or (2) promoting, marketing or recommending to any other person any transaction or matter addressed herein.
Roger Royse
Royse Law Firm, PC
Palo Alto, San Francisco, Los Angeles
rroyse@rroyselaw.com
www.rogerroyse.com
www.rroyselaw.com
Skype: roger.royse
Twitter @rroyse00
IP, Big Data and Issues Surrounding
Tech in Agriculture

2. Recent Activity in AgTech Financings
• Source: AgFunder, AgTech Industry Takes in $1.04 Billion in Q1, available at
http://agfundernews.com/agtech-industry-takes-1-04-billion-q1.html

3. Select financings from 2015:
• Asilomar Bio
– $3 million series A
– Main product (not yet released) will increase drought tolerance in crops
• Hortau
– $5 million funding
– Product can determine the precise amount of water required for a particular crop or
orchard
• 3D Robotics
– $64 million series C
– Manufactures drones for mapping and technology
• Skyward
– $4.1 million series seed
– Develops software that maps and logs drone flight paths
• DroneDeploy
– $9 million series A
– Provides cloud-based software platforms for drone operations accessible through
tablets and smartphones
Recent Activity in AgTech Financings

4. • Customer data
– Is the data truly anonymized?
– Is the data accurate and presented in a useful way?
– Who owns the data?
• Data and privacy standards
• Use of drones
– Benefits/problems
– Legality
• Regulatory issues
• Market Issues
Overview of Due Diligence Issues

5. Anonymity of customer data
• Most agriculture technology providers (ATPs) collect data
– Data is used to provide info to farmers
– Data is sometimes monetized through aggregated data or
reports
• Data privacy laws
– Personal information or business information?
• Personal information usually gets higher degree of protection, but
line is often blurred with family-run farms
– Data often tagged with GPS information
• Has the data truly been anonymized?
– Could users guess who the data belongs to as a result of the
information provided? (Netflix)
Customer Data

6. Accuracy of the data
• Collected by humans or machines?
• Does the data rely on input by humans?
– Susceptible to errors and possible manipulation
– Some farmers provide their data to dealers who then
pass it on to the ATP
– Is all the data being uploaded or just select data?
• How reliable is the data collected by machines?
– Connectivity/network issues in the fields could cause
gaps in the data
Customer Data

7. Presentation of data
• Is the data presented in a format that is useful to
the end user?
– Many farmers collect data but don’t use it because it is
nor presented in an understandable format
• Are there multiple parties involved in collection and
presentation of data?
– Do all the parties understand the needs of the end user?
Customer Data

8. Ownership of data
• Farmers want to retain ownership of their data
– Can they take the data with them if they discontinue use
of the service?
• Do all the parties have the appropriate rights to use
the data?
• Farmers are concerned about who ends up with the
data
– Wall Street traders could manipulate market prices
– EPA could look for potential regulatory violations
– Retailers could use the information to sell new parts
when an existing part needs replacing or to set prices
Customer Data

9. • Farmers are becoming increasingly aware of the need
to protect their data and enforce their ownership rights
• Stakeholders are trying to implement a common set of
data and privacy standards to guide ATPs, farmers, and
other contracting parties on what are appropriate
contract terms
• Privacy and Security Principles for Farm Data released
in November 2014
– Prepared by groups representing farmers and ATPs, including
American Farm Bureau Federation, National Farmers Union, The
Climate Corporation (division of Monsanto), John Deere, and
DuPont Pioneer
Data and Privacy Standards

10. • Standards include the following key provisions that should
be incorporated into contracts:
– Easy to understand language
– Farmers should own information generated through their
farming activities and any use of that data by the ATP is only
with the explicit and affirmative consent of the farmer
– ATPs shall notify farmers how their data is to be used, with
whom it will be shared, and for what purpose
– Farmers should be able to retrieve their data for use with
other systems
– ATPs shall not sell or disclose a farmer’s data to other parties
without notifying the farmer and without that other party
agreeing to the same terms as the farmer
– ATPs shall use reasonable security safeguards to protect
against risk of loss or theft of data
Data and Privacy Standards

11. • The standards provide strong protections for farmers, but
may not be workable
– Many farmers are not able to negotiate terms and may feel like they
are in a “take it or leave it” position
– The business model of some ATPs is the collection and presentation
of data and a subscription model is common
• The ATP will not want to let farmers take this data with them once they
are no longer paying for the service
– The contract terms are necessarily complicated because of the
multiple agreements in place
• Not easy to reduce the terms down into something easily digestible
Data and Privacy Standards

12. • Use of drones for agriculture
– Monitor land for weeds and weather damage
– Collect data on land
• Concerns/problems with the use of drones
– Privacy issues
• Not a huge concern with farmland, but some farmers are
concerned that environmental groups will use drones to
monitor their farms
Drones

13. • Concerns/problems with the use of drones cont.
– Safety issues
• Possible collisions
– Pilots of small aircraft fly over farms to spread seeds
• National Agricultural Aviation Association wants drone users to
have to obtain a pilot’s license and mark drones with bright
colors
– Use problems
• Cost of entry
• Battery life
• Connectivity
• Presentation of data
Drones

14. • Legality
– Commercial use of drones is still illegal
• As with other disrupted industries (e.g. taxis, hotels, etc.)
technology is moving quicker than the law
• FAA has power to levy fines, but rarely does so
– FAA jurisdiction has been challenged
• FAA issued a fine of $10,000 on a photographer who was hired
to fly a drone over the University of Virginia
• Photographer claimed the FAA lacked jurisdiction
• Photographer and FAA settled at $1,100 fine
Drones

15. • Legality cont.
– FAA has granted some exemptions to permit specific
persons to fly drones
• Already a long waiting list for exemptions (>1,000)
• A farmer has obtained permission to fly drones over land to
determine measurements and health of crops
• Strict conditions on use imposed
Drones

16. • Legality cont.
– Proposed rules
• In early 2015, the FAA released proposed rules on the
commercial use of drones
• Rules are open for comments from the public and interested
parties
• Not likely to be finalized until 2016 at the earliest (more likely
2017 or later)
Drones

17. • Legality cont.
– Proposed rules cont.
• Operational limitations on drones
– Weigh less than 55lbs
– Remain in the operator’s line of sight at all times
– Maximum airspeed of 100mph
– Maximum altitude of 500 feet
• Operator limitations
– Pass an initial aeronautical knowledge test at an FAA-approved
testing center
– Be vetted by the Transportation Security Administration
– Obtain an unmanned aircraft operator certificate
– Pass a knowledge test every 24 months
Drones

18. • May be anti-trust issues with ATPs that collect and share
data on prices of products or inputs
• Knowledge of prices could reduce competition in the market
and stabilize prices which is often seen as bad for
consumers
Anti-Trust

19. • Contracts
– ATPs must balance complex contracts with the need to
provide farmers with straightforward information
– Lots of inherent complexity, especially when the ATP sells
combined hardware and software
• For example, there could be software on the hardware, separate
software sold to the farmer for use on a personal computer, and a SAAS
subscription all as part of one service
• All the software will have different terms of use
– Farmers often work with dealers
• Dealers sometimes collect and input the data
• Who has the relationship with the dealer? The farmer or the ATP?
• Need to ensure all the parties have the correct licenses
– ATPs should consider using FAQs on their website to answer
questions from farmers
• Need to ensure answers to FAQs are consistent with privacy policies,
end user agreements, etc.
IP Issues

20. • Monetization
– Sale of software and add-ons
– Patents
• Hardware and software
– Big Data
• Reports
• Aggregated data
• Must have rights to use the data in this way
– Subscription services
IP Issues

21. A business and tax law firm delivering Service, Value and Expertise
to its clients
A 6 month innovation network program matching AgTech
companies to markets and investors
The premier AgTech law practice in Silicon Valley
15
RoyseLaw AgTech
RoyseLaw AgTech Incubator
Royse Law Firm, PC
RoyseLaw Legal Wizard

22. www.rroyselaw.com
@RoyseLaw
PALO ALTO
1717 Embarcadero Road
Palo Alto, CA 94303
LOS ANGELES
11150 Santa Monica Blvd.
Suite 1200
Los Angeles, CA 90025
SAN FRANCISCO
135 Main Street
12th Floor
San Francisco, CA 94105
Palo Alto Office: 650-813-9700
Contact Us