The firm was contacted by a generative AI startup with a team originating from some of the leading tech companies in the AI sector. 

The client needed legal advice in advance of its debut of an AI tool that would create videos in response to user prompts and enhance existing still images to animate them and turn them into video. The tool would be accessible on a desktop via a website and via an app for mobile devices. 

Challenge

We’ve previously covered how the use of AI can present relatively unique considerations in various legal areas. The most important considerations typically involve (1) intellectual property, (2) contractual liability and (3) data protection (not necessarily in that order!). 

In other ways, however, deploying an AI tool is not necessarily any different to launching a new SaaS product. 

So on the one hand, we had to consider all the usual legal issues around SaaS and the unique legal points around AI to ensure that the client was aware of all the relevant risks. 

In addition, this client was different in that it was a mix of B2B and B2C deployments. B2C and the supply of digital products at a distance has to comply with consumer law; so our advice had to take those points into account as well.

Finally, the AI tool would enable user to user interaction. This potentially brought the tool within the onerous Online Safety Act 2023. This is a novel area of law that presented another unique challenge that we had to address. 

Process and Insight

We started by having a detailed call with the client to understand how the AI works on a technical level, the commercials and what the client was looking to achieve. 

The focus of that call concentrated on intellectual property and data protection.

Intellectual property rights in the output of a generative AI (e.g. images) is not fully settled law. One of the most important future developments in this sector will be around who is the first owner of a generated output (if there are any intellectual property rights in the output at all). So it was important to fully explore these issues with the client. However, regardless of the ownership position, a contract will likely still be able to deal with the transfer of intellectual property rights of AI output and therefore the point can still be addressed to some extent. We needed to understand the client’s preferred position so that we could cater to it. 

The AI tool enabled users to upload images of themselves and other people – a potential source of personal data that the client would process. Whilst the client’s AI tool would not be training itself on data inputted into it, it would potentially be trained on images of individuals – another source of personal data. There is nothing inherently problematic in doing this from a legal perspective, but with increased regulatory scrutiny on AI it is crucial to do things right from the start. 

Solution

We took a phased approach to drafting the documentation, as the client indicated that it initially wanted to put in place the key set of documentation to get the AI tool launched (the Apple and Google Play stores require the submission of terms and conditions of access and a privacy policy) and then follow up with additional documentation post launch.

Once we were able to put in place the phase 1 documentation, we used the knowledge of the client’s business to rapidly address phase 2. 

The client had a successful launch and is expanding rapidly.

If you need help with launching a new business or AI more generally – please don’t hesitate to contact us.