The Legal Risks of Using AI-Generated Content in Your Business

Artificial intelligence has rapidly transformed from a futuristic concept into a daily business tool. From drafting marketing emails to generating code, AI-generated content offers speed and efficiency that was unimaginable just a decade ago. However, as adoption rates soar, so do the complexities surrounding the legality of AI.

While these tools can supercharge productivity, they also introduce a minefield of potential liabilities. Understanding the legal landscape is no longer optional for business owners; it is a necessity to protect your brand, your data, and your intellectual property, and the intellectual property attorneys at Emerson Thomson Bennett can help.

Navigating Copyright and Ownership Issues

One of the most significant gray areas in the legality of AI involves copyright infringement. AI models are trained on massive datasets that often include copyrighted material. If an AI tool generates an output that is “substantially similar” to a protected work in its training data, your business could face infringement claims.

This risk is compounded by the issue of user liability. Even if the infringement was unintentional, you — not the AI platform — are often liable for the content you publish.

Furthermore, there is the question of ownership. Current legal frameworks generally require human authorship for copyright protection. This means that purely AI-generated content often sits in the public domain, leaving your business with a significant gap in protection. If you generate a logo or a unique article using AI, you may find yourself unable to stop competitors from using it.

Privacy and Data Protection Violations

The intersection of AI and data privacy is another critical risk area. When employees input data into generative AI tools, they may inadvertently expose sensitive information.

If your AI tools incorporate personal data without proper consent or disclosure, you could violate major privacy laws such as the GDPR (General Data Protection Regulation) or the CCPA (California Consumer Privacy Act). Additionally, confidential business strategies or trade secrets entered into unsecured AI platforms risk being retained by the model and potentially exposed to others, including competitors.

Liability for Harmful or False Content

AI is not infallible. It is prone to “hallucinations,” where the model confidently generates false information. Publishing such content can lead to serious legal consequences, including lawsuits for defamation or product disparagement.

Beyond misinformation, there are risks associated with bias. If AI is used in hiring or HR processes, biased training data can lead to discriminatory results that violate anti-discrimination laws. In more severe cases, the generation of deepfakes or nonconsensual imagery can lead to criminal liability and severe reputational damage.

Best Practices for Compliance

To harness the power of AI while minimizing risk, businesses must take proactive steps.

1. Implement Clear Policies

Develop internal guidelines that dictate how employees can use AI. Define what data is safe to input and what outputs require verification.

2. Human Oversight is Mandatory

Never publish AI-generated content without rigorous human review. This vetting process is crucial for catching potential copyright issues, factual errors, or biases before they go public.

3. Understand Your Tools

Conduct due diligence on your vendors. Review the terms of service for platforms like OpenAI or Midjourney to understand how they handle your data and who owns the commercial rights to the outputs.

4. Protect Your Intellectual Property with Expert Help

The landscape of IP law is shifting beneath our feet. If you are a business owner or IP holder looking to integrate AI into your workflow, you need a legal strategy that accounts for these new risks.

Moving Forward with Caution

The integration of AI-generated content into business operations is inevitable, but it must be done with eyes wide open. From copyright infringement and data privacy violations to the risks of defamation and discrimination, the legal stakes are high. By implementing strong internal policies and seeking professional legal counsel, you can leverage the benefits of AI without exposing your business to unnecessary liability.

Contact ETB Law today. We can help you navigate the complexities of creating legal IP with AI, ensuring your assets are protected and your business remains compliant.