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Do you use AI (artificial intelligence) in your business? Given its uses from marketing and getting to know your customers or clients all the way through to the day-to-day administration of various business tasks, the answer is likely to be yes. But whilst AI brings many benefits (often saving time and money), it comes with its own legal issues.

The first step is understanding how you use (or want to use) AI and for what purpose(s). You can then identify the relevant legal considerations that you will need to address. For example, if you are wanting to use AI for data analysis, consideration should be sought around data protection laws. Similarly, if AI is important for you in generating reports or marketing content, consideration would need to be given to areas such as intellectual property, disclosure, accuracy and consumer legislation.

Below, we highlight a few potential considerations, but this is not an exhaustive list (we have not for example covered the use of AI in recruitment and employment) and the impact of AI from a legal perspective will vary from one company to the next.

Data protection and privacy

Businesses are required to handle and process personal data with transparency, and accountability, processing the data only where necessary. Where AI relies on large amounts of personal data to optimise its effectiveness this in turn can raise the risk of data breaches. If you can limit the amount of data being stored to what is absolutely necessary can always be a first practical step. When data I stored, consideration should also be given as to where, and who it will be shared with. You may therefore need to put in place proper policies, documentation or protocols to ensure compliance with data protection legislation and privacy legislation and consequences where there are breaches You may also need to update your privacy notices, training practices and security measures.

Intellectual property

If your business is using AI to help generate images or materials, then one big question to consider and answer is – who owns the intellectual property rights to that content and do you need to action anything to protect your business? Is it created by a third party, and have they licensed it to the AI provider? If so, you could be infringing someone else’s intellectual property by using it. Are you familiar with the terms and conditions around the use of that material? Are you assigned any rights in the material, or does it remain with the AI provider? Are the rights to use it exclusive, or shared with others? To avoid inadvertently infringing intellectual property rights or using material that you do not own the necessary rights in, it is best to check the terms and conditions of the AI provider before using them and to seek legal advice about any further steps you may need to take if you are unsure.

Risks associated with AI outputs

AI is not always accurate, which can lead to legal issues if these mistakes go unnoticed. If for example critical information is missing from a product description, this could put your business at risk and out of compliance with legislation such as the Consumer Rights Act 2015, where businesses are under an obligation to provide accurate information. Even if it is not a legal issue, mistakes can be embarrassing or cause damage to your reputation.

AI may also generate content that inadvertently contains wording, phrases or even opinions that have the potential to cause offence, be culturally inappropriate or out of alignment with the values of your business.

It is therefore still imperative that AI generated content is checked before it is relied upon.

Transparency

Failure to disclose the use of AI in your business can lead to very serious ramifications.

Under the EU AI Act for example, there are strict parameters around transparency and disclosure of the use of AI. While the UK does not have this in AI-specific legislation , it may well do in the future and in any event it is sensible to put protocols in place around disclosure and transparency to help protect your reputation.

How we can help

Our team of commercial solicitors can help you navigate this fast-evolving area  to ensure your business can benefit from AI integration while remaining compliant and pro-active. We offer tailored advice and can help you understand  how the law impacts the way in which you can use AI in your business, review the terms of your AI provider to help you understand your rights and obligations. We can also review your legal documentation to determine whether these need to be amended  to address the way in which you use AI and prepare any legal documentation that you may currently be missing.

For further information, please contact one of our Company and Commercial experts.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.