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April 25, 2023

Generative AI and Copyright: How Businesses Can Mitigate Legal Risks

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As in many countries around the world, IP laws in Southeast Asia do not currently specify whether works generated by artificial intelligence (AI) are protected by copyright, and there is also uncertainty surrounding the issue of ownership with respect to works created by AI. While changes to the IP legal framework are expected to respond to the rapid development of AI technologies, existing copyright laws of most countries in Southeast Asia explicitly impose the requirement of a human author for copyright protection to arise.

AI-Generated Works and the Law

This is similar to the position in the United States, where the US Copyright Office issued a policy statement in March 2023 reiterating the US Copyright Act’s requirement of human authorship to register copyright works. The policy document states that when an AI technology determines the expressive elements of the output, the generated materials do not fulfil the human authorship requirement.

However, the US Copyright Office also clarified that certain works containing AI-generated materials may nonetheless contain sufficient human authorship for a copyright claim, such as when a human selects or arranges the AI-generated materials in a sufficiently creative way for the resulting work as a whole to constitute an original work of authorship, or when an artist modifies material originally generated by AI technology to a degree that meets the standard for copyright protection. This is distinguishable from the position in countries such as the UK and Hong Kong, where absent specific provisions addressing AI-generated works, such works may arguably be considered by some as computer-generated works, with authorship assigned to the person who arranges for creation of the work.

New Challenges from Generative AI

The ongoing legal uncertainties surrounding the ownership and protection of AI-generated works create practical challenges for businesses that use or develop generative AI tools. This includes infringement risks related to IP rights and other related rights, such as concerns about infringing third-party copyright through unauthorized reproduction of copyright works or unauthorized creation of derivative works. There are also risks of infringing on database rights or moral rights of authors.

Although the potential benefits of using generative AI technology are extensive, businesses must navigate the legal and regulatory landscape carefully to avoid potential legal issues arising from the use of generative AI. As a start, companies adopting third-party generative AI tools should carefully review the service providers’ terms of service and IP policies to determine whether content input by users is used to train the AI system, and who (i.e., the service provider or the user) owns the works generated by the AI system. Companies that use these AI tools in the provision of services should also consider disclosing this use to customers—and expressly specifying or disclaiming matters related to IP ownership and liability in their customer agreements.

Companies that commission third parties to develop customized generative AI tools should also be sure to conduct in-depth due diligence on any contracted developers and their practices. For example, companies should check whether the AI models were trained using licensed or other open-source content, or obtain confirmation from the developer that the training processes of the AI model did not involve the reproduction of copyright works in any material form that would infringe copyright laws.

Companies can also check whether the AI models’ text and data mining activities were carried out in a jurisdiction that has relevant exceptions for text and data mining. The commissioning agreements should contain relevant indemnities on IP infringement arising from use of third-party content in training the AI model.

Companies should also review and update their internal HR and procurement policy documents to prohibit employees and contractors from feeding confidential company information and trade secrets into text or image prompts of AI tools. As for companies that develop generative AI tools, they should ensure that their data is obtained from authorized sources or from proprietary data sets. To mitigate risks, AI developers should consider maintaining clear audit trails to track the provenance or keep a record of the material that “inspired” the AI-generated content. All companies, regardless of industry, should also ensure that all employees undergo regular IP awareness training, and should exercise clear supervision and control over the employees’ work-related activities.

Tackling Legal Risks from Generative AI

While the development and use of generative AI technology present significant advantages to businesses, it also brings with it a range of legal and regulatory challenges. By understanding these challenges and their complexity, businesses can proactively develop comprehensive strategies to mitigate legal risks and ensure that their use of generative AI aligns with existing IP laws and regulations.

One key aspect of this strategy is to work closely with legal advisors who specialize in IP and technology law, as they can provide tailored advice and guidance to address the specific challenges and risks that arise in this field. Businesses should also monitor regulatory and legal developments relevant to the field of AI on an ongoing basis, as changes in the legal landscape could have significant impacts on their operations and IP strategies. Ultimately, a proactive and comprehensive approach to navigating the legal and regulatory challenges surrounding generative AI will help businesses realize the full potential of this powerful technology while minimizing legal risks and protecting their valuable intellectual assets.

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