Whether you are an individual or a business, you have likely used AI today without a second thought. AI is now everywhere in our daily lives, making things easier without us even noticing. From personal helpers to helping businesses, it is transforming how we work, shop, play, and conduct business.

Opportunities with AI

Some opportunities AI presents to businesses are: 

• Monetisation of AI innovations: AI systems, model and technical inventions can be protected where they meet the relevant IP criteria for patent, copyright in software, design, or database rights, which in turn helps turn AI innovations into businesses opportunities where businesses can commercialise through license, sale and presents investment opportunities. 
• Trade secrets: When patents are not appropriate, proprietary training datasets, know how, and technical methods behind the AI may be protected as trade secrets or contractual assets, helping businesses to have a competitive edge. 
• Efficiency and automation: AI can automate routine tasks leaving businesses with time to focus on higher value tasks and use resources for more value-add tasks.
• Speed up decision making: Predictive analytics spots trends and risks earlier, and decision making is quicker. 
• Enhancement of existing products and services: Create new products or services or use for service enhancement (AI features) leading to new revenue streams.

For businesses using AI, AI can also create legal issues around IP, data protection, liability, and regulatory compliance so companies need to be aware and manage these carefully. 

Key Risks 

Things to watch therefore: 

IP

• Copyright and training data: If the dataset used to train AI tools contains copyrighted work and such use does not fall under an exception under the law, use will require the rights holders’ permission. Failure to ascertain this can expose both model developers and users. 
• AI generated output: There is no simple answer to who owns the IP in the work created using AI. There are various options. It could be the user, the developer or vendor of the AI tool, the employer or party commissioning the work or sometimes no one gets copyright at all unless there is enough human authorship. The answer depends heavily on the country, platform terms and how much human input or creativity there was. Therefore, if you are using AI commercially, the most prudent approach is to start from the premise that you do not have ownership and check the law, the AI tool’s terms and any other contracts in place etc to determine who owns the output. 

Data Protection, privacy, and confidentiality risks

• Is AI processing personal data? If personal data is being processed, the UK GDPR and Data Protection Act must be complied with. Processing could mean collecting, training on, inferring from or making decisions based on information that can identify a living person or producing an output that contains personal data. 
• If AI is processing personal data: there must be a lawful basis for processing, processing must be transparent, proper security must be in place and minimisation principle should be adhered to, that is do not collect more personal data than is necessary. If high risk processing is taking place, then DPIAs must be conducted and if automated decision making is taking place, compliance with obligations around automated decision making. 

Liability

Who is responsible for AI: If as a business you are using AI, you would want to clarify who is responsible if an AI tool gives bad advice, causes harm, or makes an incorrect decision. Is it the developer of the AI tool or you? Ensure your contracts with AI developers address liability clearly. 

If the AI tool is making decisions, implement measures to ensure AI decisions are fair, transparent, and explainable. 

Regulatory Compliance

If you or your clients operate in a regulated sector such as healthcare, finance or deal with consumers then, depending on the use of the AI, additional rules may apply. 

Practical Tips

If you do not want your data to be used in training AI without discussing with you first:

• Consider updating your website terms and conditions to opt out of the text/data mining exception for copyrighted works to prevent AI from unauthorised data harvesting, particularly as AI training concerns arise. 
• Update your terms and conditions to make sure that your data is being protected and not being used to train AI. You should also consider adopting provisions on how the data can be used if such use is likely to be beneficial. 

If implementing AI within your organisation or using AI in your business or in your products and services, you should:

• review supplier terms, limitation of liability, data handling and data protection, performance, and service guarantees provisions before adopting a tool.
• make sure your customer contracts reflect use of AI and address any client concerns around use of confidential information, copyrighted information and personal data. If aggregating client data, be clear on how client concerns have been addressed. 
• Adopt internal policies, checking legal review before deployment, training staff on when AI can and cannot be used and keep internal records of how AI is used, who reviews outputs, and when human oversight is required.
• comply with industry specific regulations, and any UK laws. Monitor laws and sector rules since AI requirements are still evolving.
• seek advice when you want more certainty.

How can Moorcrofts LLP help

Using AI in your business offers numerous benefits, but it also presents significant legal challenges. At Moorcrofts, we specialise in helping businesses navigate the legal landscape of AI. Our team can provide expert advice on data protection, intellectual property, contract law, and more.

If you have any questions or need legal support, please contact Usha Gunness, Commercial and Tech Partner.