This article was originally published in the February 7 issue of the Portland Business Journal.
While Artificial Intelligence (AI) is a current hot topic, it is far from new. Most current focus on AI has been on generative AI or “gen AI,” which powers large language models like ChatGPT. Gen AI can autonomously generate new content by learning from existing data patterns. To do that, it needs to ingest huge quantities of data.
While AI has many different business uses, there are also risks in using AI. This article focuses on two of those risks: intellectual property and privacy.
IP Considerations
Intellectual property includes patents, trademarks, copyrights, and trade secrets. Roughly speaking, patents protect inventions; trademarks protect brands; copyrights protect creative expression; and trade secrets protect proprietary, secret information. Every intellectual property right is potentially implicated when it comes to AI. And intellectual property rights can conceivably be lost through less-than-careful use of AI.
Several lawsuits are pending against various AI platforms for their alleged infringement of copyright via ingestion of copyrighted works during the training process. What has yet to weave its way through the courts are suits for infringement of copyright by AI output, but those suits are surely coming.
As to trademarks, even very basic AI platforms can generate convincing brand dupes with just a few user prompts. Via cheap print-on-demand services, a less-than-scrupulous person could turn a seemingly authentic design into unauthorized merch with little to no capital, diverting customers and devaluing the brand in the process.
When it comes to patents and trade secrets, both of which depend on secrecy to some extent, intellectual property rights could be lost through imprudent use of AI. Not every AI platform keeps the information input into it secret; input could be used for further platform training, and it could be used in eventual future output to others. Big dollars are at play in patent litigation, so it is likely that at some point defendants will claim a plaintiff’s patent is barred by public disclosure or proprietary information is no longer a trade secret because an employee input too much information into the wrong AI.
Privacy Considerations
There is a substantial overlap between privacy governance and AI governance. In both fields, there is a balance between what is strictly legally required, how generally applicable laws may impact compliance, and best practices. Contractual obligations also play a role.
While training data is one of several IP concerns, this is the primary concern for privacy compliance. State comprehensive privacy laws and international data protection laws apply to the processing of personal data, whether through AI or any other computer program. Under existing law, businesses that sell AI products (or AI-enhanced products) and businesses that use these products must protect personal data and disclose all uses and sharing of that personal data.
Some states have passed AI-specific laws. Other states are trying to pass AI-specific laws, yet there is no consistency between state standards and even what subjects those laws are attempting to cover. Colorado’s Artificial Intelligence Act is the most overarching, with requirements that are similar to those found in the state comprehensive privacy laws.
On the federal level, on January 23, 2025, President Trump revoked President Biden’s Artificial Intelligence Executive Order. Under Biden’s Executive Order, federal agencies were directed to, among other things, use privacy-enhancing technologies where appropriate to protect their constituents’ privacy and publish reports, guidance, and rulemaking for businesses. Federal agencies promulgated guidance ranging from safety and security standards to transparency requirements to prohibitions against discrimination and bias. The implications of President Trump’s Executive Order remain to be seen.
With rapidly changing legal constructs at the state, federal, and international levels, businesses need to try to anticipate what their obligations to customers and employees may be over the coming months and years. Integrating AI governance with privacy governance helps businesses assess risk and apply appropriate frameworks to manage compliance challenges.
Key Takeaways
AI is a productivity tool. It is not a substitute for human judgment and intervention. The legal landscape around AI is constantly shifting. Check in with legal counsel on the latest developments, review your contracts, and train your employees.
This article is provided for informational purposes only—it does not constitute legal advice and does not create an attorney-client relationship between the firm and the reader. Readers should consult legal counsel before taking action relating to the subject matter of this article.
