As we all know, AI is the hot topic in the entrepreneurial industry, but what legal effects can it have on our businesses? As we are being swept up in the excitement, are we missing anything right in front of us? Or, have we even asked ourselves that question?

Before we get started: I’m not here to tell you to be scared of AI. Quite the opposite. Instead, we’re going to take a look at how to leverage it legally and strategically, so that we can create businesses that endure.

Here’s what I want you to keep in mind:

• AI hamstrings creators’ ability to own intellectual property 
• If you don’t own the rights to your intellectual property, it can be difficult, if not impossible to stop infringement (copycats) 
• The inability to shut down copycats is incredibly damaging to any company 
• Your subcontractor agreements now needs certain AI language 

My favorite law professor once told me, any lawyer can walk into a cocktail party and network with the people in the room. It’s the best lawyers, however, who walk into that same room, and can also  see the ghosts in the room. 

Now, we’re not here to talk about cocktail parties (or lawyers), of course, but the overarching lesson is precisely what we need to keep in mind as we navigate novel terrain as visionary entrepreneurs. How can we utilize the assets available to us, while also keeping an eye on the larger, unseen picture?

In other words, how can we hold a loose grip on exciting new advancements in our businesses, while remaining visionary and strategic? It’s asking, and executing on this question that separates out the good from the great entrepreneurs.

The good news: AI can allow us to do just that. And below is a guide on how to do so strategically, without opening ourselves up to liability in the process.

The intersection of intellectual property and AI

As a business owner, every single day, you are creating intellectual property assets- knowingly or unknowingly. The creation of these assets has a significant, often overlooked, direct impact on the value of your business- these are assets you can license out for a profit, sell, and that add actual value to your business’ bottom line. 

Intellectual Property (IP) generally falls into 3 categories: 

• Copyrights (any tangible work of authorship)
  • For example: photographs, books, bourses, etc
• Trademarks (“brand identifiers”)
  • Business name, logo, or slogan
• Patents (inventions)

Today we’re going to focus on copyrights. If you ever want to own your IP (ie, not be forced to give them up, or worse, sued for them), or if you want to be able to actually stop someone from copying your work without an expensive legal battle, you must register these pieces of IP. For example, if someone purchases your course, then replicates it and sells it for themselves, you must own the registration before the copying occurs. IE, you can’t find out about the copying, and then copyright the work, to shut down the infringer. 
The threat that AI potentially poses to entrepreneurs; particularly creative entrepreneurs, isn’t its ability to potentially replace their job. Instead, the risk lies in AI’s ability to potentially strip entrepreneurs of the ownership of the work they create.

The wild west of IP ownership in the world of AI

Picture this: you spend months pouring time, energy, and so much effort into creating and launching a course. It’s a gamble. After all, every entrepreneur’s time spent creating passive income naturally takes time away from client work-so of course; we hope it’s a gamble that pays off! 

Launch day comes, and a few days later, you see someone selling a course that looks exactly like your own. They’ve obviously, blatantly copied you, and are selling it just low enough to get a market advantage while they’re at it. It’s obviously unjust, and you immediately want to stop them, of course. Can you?

This is an exact scenario that one of my own clients encountered recently, and my first two questions for her:

1. Did you create the course? (Or, did you use AI for part of it?)
2. Do you own the course (ie, did you copyright it?)

As novel as the advent of AI is in the world of intellectual property, there is a historical parallel: the camera. Pre- 1800’s, artists could generally only portray what was around them through sculptures, paintings, drawings, etc. But with the invention of the camera, suddenly art was presented with a new medium. As asinine as it may seem today, at the time of its inception, many argued that photography was “void of artistic merit”. In 1884, the Supreme Court (SCOTUS) determined that, like an artist with a paintbrush, cameras were similarly a creative tool; a photographer could create enough novel outcomes with his or her camera that they could be considered the mastermind behind the artistry.  

The difference, of course, between cameras and today’s novel idea of AI, is that AI possesses the capability to convert basic instruction into a myriad of works. The term itself is suggestive of “self aware” capabilities the technology may possess, whereas a camera is an inanimate object, leading some to wonder whether AI systems itself could be an “owner.” 

The U.S. Copyright Office has provided our first legal guidance, unequivocally stating that only humans can hold copyrights. If you try to register something AI created, you’ll fail. A very interesting example of this conundrum occurred in 2022, when an AI-generated work of art won the Colorado State Fair art competition. The artist spent more than 80 hours, and created more than 900 iterations of his work… so was his work actually artistry? Or, at some point, did it pass to the point of being “automated”? Right now, we don’t have a clear legal answer. 

What do you actually own that AI creates? 

For instance, if a creator uses ChatGPT to draft part of their content, who owns the final course? The creator who chose the prompts, or the system that arguably transformed the prompt into the content? 

And while we’re down this line of questioning, when artists pull inspiration from past works to educate or “inform” their work”, at what point is this different from the way that AI relies on data to produce outputs, which consists of prior artworks?

When copyrighting or trademarking any element of IP, the registrant (or their lawyer) has to ensure the owner owns every element of the work. For example, when copyrighting a course, I have to ensure that every collaborator my client worked with assigned ownership of their IP to the course creator (ie, photography, copy, etc).  Word to the wise, when creating any asset for your business that you intend to register, make sure the creative collaborator assigns you copyright ownership in your contract. 

Where, in the terms and conditions of ChatGPT (or other AI tool you’re using), do they assign you ownership of the IP created? This is the heart of the question, and unfortunately, I’ve yet to see any AI platform that does so. Frankly, I don’t know how it could- the genius behind AI is its ability to comb through the internet and combine results. When courts are examining who actually owns a work, they must look at “other relevant factors”. 

However, we do have one guideline: 

US copyright laws require “meaningful creative input”(even outside of AI discussions). If a creator can prove that they’ve used part of a copyrighted work without the permission of the copyright owner, they can be covered by something called the “Fair Use Doctrine”. 

Fair Use is any use of copyrighted material done for a limited and “transformative” purpose, such as to comment upon, criticize, or parody that work. In other words, fair use is a defense against a claim of copyright infringement. If you’ve ever used a meme or gif in a blog post, you’ve benefited from fair use. Interestingly, SCOTUS just recently clarified this question, ruling that Andy Warhol’s drawing of a photograph was not permitted by fair use. In short, using AI just to change the style of the work (ie, from a drawing to an illustration) isn’t enough to claim ownership. But what is?

Harvard Law School is taking a stab at defining this for us- asking, should the courts consider AI just another creative tool, like Photoshop? The real question to be answered: with AI, creative contributions are harder to trace (for example, how much of your blog post written by ChatGPT was the result of the creativity of your prompt, and how much was it ChatGPT’s scraping of the internet?). These questions will have a deep impact on creative expression, and creators’ rights. 

The Takeaways:

I know this has been a lot, and the guidelines aren’t clear (yet) but arguably, we as entrepreneurs are the pioneers paving the way for many of these novel questions. We must strategically navigate how to use this tool to propel our businesses, without hamstringing them. And, we can. Here’s what I tell my own clients: 

1. Use AI to be productive, but don’t use it to replace your own creativity. Do not use it for the creation of any asset you want to own in the future. 
2. Think of “ownership” from the perspective of what you’d want to legally protect if copied (paid goods, your logo, etc). Build your business to be sellable, no matter what you intend for the future. 
3. When you hire subcontractors to assist with the creation of anything within your business, include language in the IP provision and Representations and Warranties provision of the contracts, not just assigning you their IP rights, but promising their contribution was a human creation (note: these updates are automatically included in the “lifetime updates” of our Creative Law Shop® contracts!)
4. Never rely on AI for legal advice or knockout searches. Tools like ChatGPT are making headlines for the fake “laws” and legal “advice” it produces.
5. Only “human-made” works may be copyrighted. 
6. Finally, never forget: AI won’t replace you, or your role in the creative industry. Only you can create something for your clients that they can actually own in the future. Ownership of IP significantly raises the value of a company, which means that only you will be able to provide true value to your clients through your work.  

Bio:

Paige Hulse received her Juris Doctorate from The University of Tulsa and is the owner and lead attorney of Paige Hulse Law, the founder of The Creative Law Shop® (CLS), Co-Founder of the Special Forces Support Fund™ and the owner of Fairway Stables®.  Boasting a 98.6% success rate with the United States Patent and Trademark Office, she is an experienced intellectual property attorney who thrives when assisting her clients not only with protecting their intellectual property, but acting as an advocate working alongside them to strategically build businesses that endure. As a trusted speaker,  she’s been immersed in the creative business field for more than a decade, and is able to impart her immense knowledge with each client. A passionate serial entrepreneur herself, Paige fosters the tension between ambition and contentment; equipping diligent entrepreneurs to embrace their seachange, build an enduring business, and experience their own version of The American Dream. During her treasured off hours, she’s likely spending time in the barn with her husband, 2 horses, and 2 dogs. To collaborate, connect, or work with Paige, get in touch at paigehulselaw.com, or find her on Instagram at @paige.hulse.