Ryan Calo, a Stanford law professor who specializes in the legal implications of new technologies, published an article the Stanford Law Review in December that I've only just now read. It's very interesting and worth reading the whole thing (it's not very long), but here's an excerpt:
There is very little in our privacy law that would prohibit the use of drones within our borders. Citizens do not generally enjoy a reasonable expectation of privacy in public, nor even in the portions of their property visible from a public vantage. In 1986, the Supreme Court found no search where local police flew over the defendant’s backyard with a private plane. A few years later, the Court admitted evidence spotted by an officer in a helicopter looking through two missing roof panels in a greenhouse. Neither the Constitution nor common law appears to prohibit police or the media from routinely operating surveillance drones in urban and other environments.
If anything, observations by drones may occasion less scrutiny than manned aerial vehicles. Several prominent cases, and a significant body of scholarship, reflect the view that no privacy violation has occurred unless and until a human observes a person, object, or attribute. Just as a dog might sniff packages and alert an officer only in the presence of contraband, so might a drone scan for various chemicals or heat signatures and alert an officer only upon spotting the telltale signs of drug production.
In short, drones like those in widespread military use today will tomorrow be used by police, scientists, newspapers, hobbyists, and others here at home. And privacy law will not have much to say about it. Privacy advocates will. As with previous emerging technologies, advocates will argue that drones threaten our dwindling individual and collective privacy. But unlike the debates of recent decades, I think these arguments will gain serious traction among courts, regulators, and the general public.
You can also read his related essay in the Huffington Post, which also adds the following:
One contributing factor here may be the impossibility of visualizing privacy violations in the modern age. What does a privacy violation even look like? Maybe somewhere, in some distant server farm, the government correlates two pieces of disparate information. Maybe one online advertiser you have never heard of merges with another to share email lists. At most one can picture the occasional harmful outcome; its mechanism remains obscure. This lack of a mental model for contemporary privacy harm makes it hard to inspire judges or spur legislative action.
The introduction of government and private drones into our cities will feel very different to the public and perhaps to the courts. What data there is suggests that Americans are nervous around robots. They may associate drones in particular with violence and the theater of war. The proliferation of drones in our skies could lead to a privacy moment, all of our amorphous fears about new technology watching us suddenly corporeal and immediate.
It is for this reason that I believe drones could end up being good for privacy law. The backlash against their use could unravel long-standing doctrinal presumptions against privacy in public, supporting a mosaic theory of privacy such as that on appeal to the Supreme Court from the D.C. Circuit in United States v. Jones. Moreover, it could cut against the argument that people have no privacy interest in contraband or that there has been no privacy violation as long as a person does not see anything s/he should not. These would become itchy-shirt arguments, no longer feeling quite right.