How to Navigate Legal Issues of Using Generative AI to Create Content


By Ben Oelsner and Chris Achatz
Koenig, Oelsner, Taylor, Schoenfeld & Gaddis PC

The use of generative artificial intelligence systems are becoming increasingly popular for developing new products, services and software and creating content. While the potential benefits of using this technology are extensive, the legal ownership of intellectual property created by generative AI can be complex and may create ownership and protection problems for companies that use it.

Generative AI uses machine learning algorithms to generate content, such as software, images, music, artwork and text. While this technology has the potential to create unique and innovative content that is not possible with traditional methods, its usage raises questions about the copyrightability of such creations. The questions of whether the IP can be protected under existing intellectual property laws and who owns the IP generated by this technology can be complicated.

Under U.S. copyright law, the person that creates the content is the author of the work and owner of the rights. “Human authorship” is necessary for copyright protection and, usually, it assumed that humans are somewhat involved in the creation of any work. However, a majority of copyright laws globally do not explicitly address Al-generated content. With generative AI, it is not always clear who the creator is or how much involvement a human has in the creation of the work. Since the AI algorithm is generating the content with very little human intervention (e.g., a prompt of the desired content), the line between the creator and the tool can be blurry.

Additionally, there are concerns that in the process of using generative AI to create content, a generative AI tool may inadvertently plagiarize or infringe someone else’s content because generative AI uses others’ content — typically, in the form of training data — to learn to do what it does and it may deliver content that incorporates the works of others. The developers of generative AI may not have the rights to use or deliver these sources of the content on which the AI is based.

Is Content Created Using Generative AI Protectable under Copyright Law?

The copyrightability debate has been ongoing, but a recent decision by the U.S. Copyright Office regarding Zarya of the Dawn, a comic book authored by Kristine Kashtanova, has shed some light on the issue.

The book includes images created by AI platform Midjourney based on Kashtanova’s prompts. A copyright registration was initially obtained for the comic book but the office later learned that the author used AI to create part of the comic book. The office then rejected the registration on the grounds that the work lacked a human author.

After further consideration based on input from the author, the office reversed its decision and issued a new decision on Feb. 21 that granted registration to the work as a whole but narrowed the registration to exclude material generated by AI technology which were the images generated by Midjourney through Kashtanova’s prompts. The new registration only covers the original authorship that Kashtanova contributed to the comic book, namely, the “text” and the “selection, coordination, and arrangement of text created by the author and artwork generated by artificial intelligence.” The images generated by Midjourney were not protectable.

One of the key factors in the decision was the level of human involvement in the creation process. Kashtanova provided the AI system with prompts and parameters that Midjourney used to generate the artwork. The office concluded that Kashtanova’s selection of prompts did not demonstrate sufficient control over the output to qualify her as an author (or co-author) of the AI-generated artwork, and determined that because the images generated by the AI are not the visual representation of creative, human-authored prompts, the artwork was not entitled to copyright protection. The office rejected the argument that use of human-authored text prompts allows for copyright protection of the resulting images and found that a user of these AI systems does not have the human involvement or control over the creation of an image like a photographer would when using a camera; thus it was insufficient to establish copyrightability.

Ramifications of Lack of Ownership

If a company cannot claim ownership rights in AI-generated content, the company will not be able to rely on the protectability of such AI-generated content under copyright law. If critical IP of the company is software or other content created using generative AI, there may be significant business and legal ramifications, including:

  • Limited rights to AI-generated content created by an employee or contractor
  • Use of company data to train AI systems
  • Enforcement, infringement and overpromising risks
  • Inability to monetize the content
  • Inability to assign intellectual property rights to a customer and to transfer intellectual property rights
  • Due diligence issues
  • Algorithmic disgorgement

Practical Guidance to Avoid IP Ownership Problems

Users of generative AI platforms should be mindful of the U.S. Copyright Office’s decision around protection of AI-assisted works other than as components of a compilation, and the risk that such works may be deemed unprotectable.

To avoid these risks, companies should ensure that they have proper IP ownership and control over the AI-generated content they create by taking the following steps:

  • Document creative process, including the steps undertaken to dictate the specific contents of the work, and the extent of any expressive contributions added to AI-generated output.
  • Set a company policy about employee use of generative AI, and whether any company proprietary content can be used to train the AI system.
  • Enter into written contractor agreements that outline the ownership of IP generated using the technology and include provisions that require the contractor to defend and indemnify the company against any IP infringement claims.
  • Review IP ownership, including your current IP portfolio for assets that were developed using generative AI;
    • IP ownership provisions in your contracts, including those with employees, contractors, and collaborators, to ensure that they include specific provisions relating to generative AI-generated content;
    • the data usage provisions in your contracts.
  • Register your IP, including trademarks, copyrights and patents.
  • Do not publish AI-generated images or video until the legal issues are more settled.
  • Use generative AI platforms that have been trained on proprietary data sets, where the development process has been carefully documented, and appropriate licenses or assignments of IP rights have been secured from third-party contributors or collaborators.
  • Determine whether you have the necessary licenses or agreements in place with the owners of the generative AI technology that you are using to clearly outline ownership of any IP generated using the technology.
  • Conduct due diligence on the datasets used in the AI process; verify that they were obtained lawfully and do not infringe on the IP rights of others.
  • Develop quarantine procedures for tainted materials, and plan for any business disruption that would result from the company’s inability to use such materials.

KO partners Ben Oelsner and Chris Achatz represent companies ranging from startups to Fortune 500 companies in IP, technology and data-related transactions.

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