Artificial Intelligence’s Impact on Intellectual Property & Legal Implications for Entrepreneurs

Soo Min Kang

EIC BC Law Student

October 20, 2023

What is Artificial Intelligence?

Artificial intelligence (“AI”) has been all the buzz lately. AI is the “theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.”[1] AI combines computer science and robust datasets to enable problem-solving and incorporates machine learning, natural language processing, speech processing, expert systems, robotics, and machine vision.[2] The AI market is booming and growing substantially, grossing $86.9 billion in revenue in 2022 and projected to reach a staggering $407 billion by 2027.[3]

AI can be especially desirable for entrepreneurs and small business owners who lack resources, funds, and information. They can improve their businesses by optimizing business processes, gaining insight through data analysis, engaging with employees and customers, and assisting in creation of innovative products and services.[4] In some respects, AI is “making entrepreneurship accessible to all.”[5]

AI and Intellectual Property

Intellectual property (“IP”) is one area that AI can facilitate for entrepreneurs. AI can automate tasks like patent searching, trademark monitoring, and copyright infringement detection and improve the accuracy and efficiency of IP due diligence.[6] For instance, business owners may utilize AI to search through large volumes of data and identify potential IP risks, such as conflicting trademarks and patents.[7]

However, the rapidly developing field of AI implicates legal concerns and uncertainties, which businesses should be aware of and seek to mitigate. For one, it is unclear who owns the content that the AI generates; it may be the person who created the AI algorithm, provided the training data, or commissioned the AI.[8] Also, it is uncertain if existing laws governing trademark, patent, and copyright infringement apply to AI creations and, if they do, to what extent.[9]

Currently, several cases at the intersection of AI and IP are being litigated for claims of infringing rights of use, ownership, and licensing.[10] In Andersen v. Stability AI et al.[11], artists filed a class action against multiple AI platforms alleging that the platforms used the artists’ original works to train the platforms’ AI without licenses. Similarly, in Getty Images v. Stability AI[12], an image licensing company sued the creators of an AI image-generation system on the basis of improper use of its photos and violation of copyright and trademark rights. Therefore, before entrepreneurs incorporate AI into their businesses, they must understand how to mitigate risks of infringing on others’ IP rights and protect their own IP assets.

AI and Copyright

Copyright is one area of IP impacted by AI. Copyright is the “legal ownership of the content and arrangement of a literary or artistic work (including computer software) in any medium, including the right to control its reproduction.”[13] Ultimately, the analysis of copyright falls on who is the author and owner of a creative expression.

Recently, the U.S. Copyright Office issued a statement outlining practices for considering works generated using AI for copyright registration.[14] According to the guidelines, works that are generated solely by AI cannot be copyrighted because copyright law only protects human-authored works.[15] However, if a human contributes to the work’s expressive elements, copyright protection may apply even if AI assisted in creating the work.[16] In these circumstances, the Copyright Office will determine whether the works created with AI assistance can be registered using a case-by-case inquiry, depending on how the AI tool operates and how it was used to create the final work.[17]

The implication for entrepreneurs and small business owners is that they should meticulously document and differentiate the contributions of AI versus human authors in creating any existing or future copyrighted works[18]. Also, they should clearly identify ownership and confidentiality of the copyright in a written agreement, especially if they hire or work with third parties.[19] Moreover, businesses creating and using their own data sets or algorithms should consider copyrighting these assets and specifying their permitted uses in end-user and third-party agreements.

AI and Trademark

Trademark is another area of IP affected by AI. Trademark is a legally registered name, symbol, or design that a company uses for its products or services, which cannot be used by anyone else.[20] As trademark largely considers how consumers buy products and interact with brands, the analysis of trademark relies on how likely relevant consumers may confuse the trademark with an already-existing mark.[21]

Using AI to create distinguishable marks can lead to trademark issues because AI relies on pre-existing information and, thus, may inadvertently copy trademarked material. If entrepreneurs blindly use AI to generate logos, slogans, or names, they run the risk of unintentionally infringing on trademarks of other businesses or original content of independent artists or authors. Furthermore, AI-generated content may lack uniqueness, making them too generic for trademark protection.[22]

Thus, if business owners choose to utilize AI to generate names, taglines, and designs associated with their companies, they should do their due diligence and check that their marks are distinctive from other existing marks and meet federal and state trademark registration requirements. Also, entrepreneurs should avoid inputting confidential company data into an AI platform and check they are complying with data protection regulations to safeguard sensitive company information.[23]

Conclusion

AI can provide enormous benefits for entrepreneurs by facilitating tedious tasks, increasing efficiency, and improving operations, especially for startups or small businesses lacking sufficient resources. However, entrepreneurs should not integrate AI into their businesses without considering the risks involved with protecting their own IP assets and not infringing on others’ IP rights.

[1] https://www.oxfordreference.com/display/10.1093/oi/authority.20110803095426960

[2] https://www.ibm.com/topics/artificial-intelligence; https://www.financierworldwide.com/artificial-intelligence-and-intellectual-property-considerations

[3] https://www.forbes.com/advisor/business/ai-statistics/

[4] https://hbr.org/2018/01/artificial-intelligence-for-the-real-world; https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-generative-ai

[5] https://www.forbes.com/sites/forbestechcouncil/2023/08/21/how-ai-is-opening-doors-and-making-entrepreneurship-accessible-for-all/?sh=672ca70a3c06

[6] https://www.chicagobusiness.com/crains-content-studio/ai-and-ip-leveraging-opportunities-your-business#:~:text=AI%20can%20help%20automate%20tasks,efficiency%20of%20IP%20due%20diligence.

[7] https://www.chicagobusiness.com/crains-content-studio/ai-and-ip-leveraging-opportunities-your-business#:~:text=AI%20can%20help%20automate%20tasks,efficiency%20of%20IP%20due%20diligence.

[8] https://hbr.org/2023/04/generative-ai-has-an-intellectual-property-problem; https://www.chicagobusiness.com/crains-content-studio/ai-and-ip-leveraging-opportunities-your-business#:~:text=AI%20can%20help%20automate%20tasks,efficiency%20of%20IP%20due%20diligence.

[9] https://hbr.org/2023/04/generative-ai-has-an-intellectual-property-problem

[10] https://hbr.org/2023/04/generative-ai-has-an-intellectual-property-problem

[11] Andersen v. Stability AI Ltd., 3:23-cv-00201, (N.D. Cal.).

[12] Getty Images (US), Inc. v. Stability AI, Inc., 1:23-cv-00135, (D. Del.); https://www.reuters.com/legal/getty-images-lawsuit-says-stability-ai-misused-photos-train-ai-2023-02-06/