Working with a software licensing attorney can help developers navigate the intellectual property and other legal issues when using artificial intelligence to build software. Every day, artificial intelligence (AI) plays a more significant role in our day-to-day work. Some very prominent examples of this include ChatGPT (Musk/ Microsoft), Bard (Google), and Midjourney. Every day in this new era, AI technology creates novel legal and regulatory issues that companies must recognize and contend with. Businesses using AI software development tools, such as GitHub Copilot, Tabnine, and Mintlify, to generate code and develop software need to understand the potential legal risks in their work and how to avoid them.

Critical Issues to Raise with a Software Licensing Attorney

Here are some critical legal issues businesses using AI to develop software may want to raise with a software licensing attorney.

1. Understanding the legal framework surrounding the use of AI

The laws and regulations that apply to using AI are still evolving. That means businesses must stay aware of how existing and proposed intellectual property and data privacy laws may affect their use of this technology. AI may also implicate ethical considerations that businesses must consider.

A few of the most important include intellectual property laws, data privacy laws, and ethical considerations.

Intellectual property laws

AI systems are based on algorithms and software, and copyright law often protects these systems. Additionally, companies may seek patents to protect their AI inventions. Ensuring the AI tools used are licensed, and the generated content is original or properly licensed is essential. Businesses need to understand the different types of intellectual property protection available for their creations — especially if they use machine learning algorithms or other AI tools to generate their software. Human authorship is required to obtain protection under U.S. copyright law at present. To be protectable, a human must creatively arrange the AI-generated material or modify the AI-generated content.

There is a risk that AI tools may generate code or other content that infringes on existing patents, trademarks, or copyrights. Copyright laws in the United States protect software automatically upon creation. A tool using AI to generate software may unintentionally infringe on someone else’s copyright because AI learns from other content and may incorporate that content into the code it writes.

A software licensing attorney can help businesses determine whether their IP is protectable and, if so, choose the most strategic approach to protect their AI-generated assets. They can also help determine whether all licenses and assignments of intellectual property rights have been procured from third parties and owners of generative AI platforms.

Data privacy laws

AI tools can collect and analyze vast amounts of data to train their algorithms and make predictions. Some of that data may come from data aggregated by consumer use of products or services. Companies must comply with applicable data privacy laws when they collect and use data. For example, the European Union’s General Data Protection Regulation (GDPR) governs the collection and use of personal data of EU residents. The California Consumer Privacy Act (CCPA) covers businesses that collect and use the personally identifiable information of California residents. Companies must comply with privacy laws such as the GDPR and the CCPA and ensure that personal data is collected, processed, and stored in a way that meets legal requirements.

A software licensing attorney can help businesses understand what data privacy laws and other contractual data usage requirements apply and how to meet their compliance obligations cost-effectively.

Ethical considerations

Using AI raises ethical considerations, such as potential bias or discrimination against protected groups, transparency, accountability, and potential impact on employment. For example, facial recognition technology has been criticized for potentially discriminating against certain racial or ethnic groups. If the AI tools are trained on biased data sets, they may produce software discriminating against certain groups. These circumstances can result in legal challenges under anti-discrimination laws, such as Title VII of the Civil Rights Act. One glaring recent example is the use of an AI system called COMPAS (Correctional Offender Management Profiling for Alternative Sanctions) which used an algorithm to predict the likelihood that a criminal defendant would become a recidivist. Based on biased data, the chosen predictive model, and the algorithm employed, the COMPAS AI predicted twice as many false positives for black recidivist offenders (45%) over white offenders (23%).

Ensuring that the AI-generated software is simultaneously transparent, explainable, and accountable for ethical concerns is essential. A software licensing attorney can help clients avoid running afoul of practical ethical considerations relating to the use of AI.

2. Drafting and negotiating contracts

Another critical role of a software licensing attorney in helping clients understand their AI-related obligations is drafting and negotiating contracts related to the use of AI. Contracts are essential in the AI context because they can define the scope of use, ownership rights, and liability for AI-based systems.

Scope of use

A software licensing attorney can help clients define the scope of use for their AI system in the contracts they sign. The scope of use can include:

• The specific purposes the AI system will be used for.
• The data used to train the AI system.
• Any limitations on the use of the AI system.

Defining the scope of use can ensure that the AI system is used only for its intended purpose and that the client does not breach any legal or ethical obligations.

Ownership rights

Ownership issues relating to AI-generated intellectual property can be complex. For example, if a business cannot claim ownership over AI-generated software, it may not be able to monetize its products, assign intellectual property rights in a product to customers, or transfer intellectual property rights to a third-party acquirer. These issues can pose risks to transactions and the valuation of a company’s intellectual property portfolio. A software licensing attorney can help clients define ownership rights in the contracts they sign and ensure that employees and contractors take steps to notify the company if they use AI to create any content to avoid future ownership and infringement risks.

Liability issues

If an AI system causes harm, there may be questions about who is liable. A software licensing attorney can help clients define liability in their contracts, ensuring they do not experience undue risk exposure. For example, a software licensing lawyer may negotiate indemnification clauses or limitations on liability in the contract. Tesla’s autonomous vehicle issues exemplify the potential for product liability involving AI-powered decision-making. In 2018, an accident was attributed to a design defect in the vehicle’s autopilot system when a Tesla crashed into a highway barrier, killing the driver.

3. Ensuring regulatory compliance

AI is subject to various regulations, including industry-specific rules, data protection regulations (as discussed above), and consumer protection regulations. A software licensing attorney can help clients navigate these regulations and develop strategies for compliance.

Industry-specific regulations

Different industries may have specific regulations that apply to the use of AI. For example, in the healthcare industry, AI-based software may be subject to rules related to patient privacy, such as regulations stemming from the Health Information Portability and Accountability Act (HIPAA). A software licensing attorney with experience in a specific industry can highlight particular laws and regulations that apply to the use of AI in that industry and determine how to meet their obligations

Consumer protection regulations

AI is also subject to regulation by consumer protection agencies. If a company uses AI to generate software, it may need to be able to conduct sufficient testing to ensure it is fit for purpose. Essentially, AI-generated software may become a “black box” that makes it difficult for the company to make any representations about its efficacy.

To mitigate legal risk, consulting with software licensing legal experts and adopting best practices for developing AI-generated software is paramount. These practices should include robust testing, transparency, accountability practices, and ethical and unbiased data sets. A software licensing attorney can help businesses recognize what consumer protection regulations apply to their use of AI and decide how to address them.

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