The Intellectual Property Risks of GenAI
Generative AI’s wildfire adoption is both a blessing and a curse. On one hand, many people are using GenAI to work more efficiently, and businesses are trying to scale it in an enterprise-class way. Meanwhile, the courts and regulators aren’t moving at warp speed, so companies need to be very smart about what they’re doing or risk intellectual property (IP) infringement, leakage, misuse and abuse.  “The law is certainly behind the business and technology adoptions right now, so a lot of our clients are entering into the space, adopting AI, and creating their own AI tools without a lot of guidance from the courts, in particular around copyright law,” says Sarah Bro, a partner at law firm McDermott Will & Emery. “I’ve been really encouraged to see business and legal directives help mitigate risks or manage relationships around the technology and use, and parties really trying to be proactively thinking about how to address things when we don’t have clear-cut legal guidance on every issue at this point.” Why C-Suites and Boards Need to Get Ahead of This Now GenAI can lead to four types of IP infringement: copyright, trademark, patent, and trade secrets. Thus far, there’s been more attention paid to the business competitiveness aspect of GenAI than the potential risks of its usage, which means that companies are not managing risks as adeptly as they should. Related:IT Pros Love, Fear, and Revere AI: The 2024 State of AI Report “The C-suite needs to think about how employees are using confidential and proprietary data. What gives us a competitive advantage?” says Brad Chin, IP partner at the Bracewell law firm. “Are they using it in marketing for branding a new product or process? Are they using generative AI to create reports? Is the accounting department using generative AI to analyze data they might get from a third party?”  Historically, intellectual property protection has involved non-disclosure agreements (NDAs), and that has not changed. In fact, NDAs should cover GenAI. However, according to Chin, using the company’s data, and perhaps others’ data, in a GenAI tool raises the question of whether the company’s trade secrets are still protected. “We don’t have a lot of court precedent on that yet, but that’s one of the considerations courts look at in a company’s management of its trade secrets: what procedures, protocols, practices they put in place, so it’s important for C-suite executives to understand that risk is not only of the information their employees are putting into AI, but also the AI tools that their employees may be using with respect to someone else’s information or data,” says Chin. “Most company NDAs and general corporate agreements don’t have provisions that account for the use of generative AI or AI tools.” Related:Keynote Sneak Peek: Forrester Analyst Details Align by Design and AI Explainability Some features of AI development make GenAI a risk from a copyright and confidentiality standpoint. “To train machine learning models properly, you need a lot of data. Most savvy AI developers cut their teeth in academic environments, where they weren’t trained to consider copyright or privacy. They were simply provided public datasets to play with,” says Kirk Sigmon, an intellectual property lawyer and partner at the Banner Witcoff law firm, in an email interview. “As a result, AI developers inside and outside the company aren ’t being limited in terms of what they can use to train and test models, and they’re very tempted to grab whatever they can to improve their models. This can be dangerous: It means that, perhaps more than other developers they might be tempted to overlook or not even think about copyright or confidentiality issues.” Similarly, the art and other visual elements used in generative AI, such as Gemini and DALL-E, may be copyright protected, and logos may be trademark protected. GenAI could also result in patent-related issues, according to Bracewell’s Chin.  Related:Sidney Madison Prescott Discusses GenAI’s Potential to Transform Enterprise Operations “A third party could get access to information inputted into generative AI, which comes up with five different solutions,” says Chin. “If the company that has the information then files patents on that technology, it could exclude or preclude that original company from getting that part of the market.” Boards and C-Suites Need to Prioritize GenAI Discussions Boards and C-suites that have not yet had discussions about the potential risks of GenAI need to start now. “Employees can use and abuse generative AI even when it is not available to them as an official company tool. It can be really tempting for a junior employee to rely on ChatGPT to help them draft formal-sounding emails, generate creative art for a PowerPoint presentation and the like. Similarly, some employees might find it too tempting to use their phone to query a chatbot regarding questions that would otherwise require intense research,” says Banner Witcoff’s Sigmon. “Since such uses don’t necessarily make themselves obvious, you can’t really figure out if, for example, an employee used generative AI to write an email, much less if they provided confidential information when doing so. This means that companies can be exposed to AI-related risk even when, on an official level, they may not have adopted any AI.” Emily Poler, founding partner at Poler Legal, wonders what would happen if the GenAI platform a company uses becomes unavailable. “Nobody knows what’s going to happen in the various cases that have been brought against companies offering AI platforms, but one possible scenario is that OpenAI and other companies in the space have to destroy the LLM they’ve created because the LLMs and/or the output from those LLMs amounts to copyright infringement on a massive scale,” says Poler in an email interview. “Relatedly, what happens to your company’s data if the generative AI platform you’re using goes bankrupt? Another company could buy up this data in a bankruptcy proceeding and your company might not have a say.” Another point to consider is whether the generative AI platform can use a company’s data
The Intellectual Property Risks of GenAI Read More »
