In our 'Contentious AI' insight series we unveil key facts about the development, adoption and use of AI and how it can become contentious.
AI tools are now embedded in the daily operations of Australian organisations — writing code, producing reports, supporting R&D and generating marketing content. While these uses bring great opportunities, they can also give rise to significant implications from an intellectual property perspective. Organisations face a heightened risk of inadvertent copyright infringement, as well as a risk that no copyright will subsist in AI-generated works.
This article highlights both risks and sets out some immediate practical steps that can be taken to address them.
IP infringement
AI-related copyright infringement is not a problem confined to large technology companies. Any use of third-party works (including newspaper articles, research reports, your competitor's product design, or third-party code) within AI tools carries risk. There is the obvious risk of copyright infringement by reproducing third party copyright materials as part of a prompt in an AI tool without a licence or exception under the Copyright Act on which you can rely. However, there is also the risk of inadvertent copyright infringement. Generative AI models are, by design, genuinely generative — that is, they are designed to create seemingly novelworks rather than copy material contained in their training data. However, uploading, or even referencing or linking to, third-party works creates the possibility that an AI output will infringe copyright by reproducing a substantial part of the copyright-protected material.
Copyright infringement is a strict liability tort. An absence of intention to infringe, or even lack of knowledge as to how the infringing work was created, is not a defence. Copyright owners and collecting societies are already seeking to license the use of copyright materials in connection with AI tools. Licence fees are being sought for activities including uploading copyright works in prompts.
It is important to be aware of what tools your business, and your employees, are actually using, how they are being used and to create policies and guidelines governing the use of materials within those tools. It is important to understand whether your business activities involve acts comprised in copyright that would require a licence from the rightsholder. Enterprise AI tools may have safeguards against inadvertent infringement, and such safeguards can also be negotiated in your agreement with the provider. We set out some more practical steps to mitigate this risk below.
Authorship
In Australia, AI-generated content does not attract copyright protection. Under Australian law, copyright subsists only in works created by a human author. An AI system cannot be the author of a copyright work, and works created entirely by AI without any human contribution are therefore unlikely to receive copyright protection.
Using AI tools in the creative process does not automatically preclude protection, but the human involved in the creation must contribute sufficient 'independent intellectual effort' for copyright to subsist. What that means in practice remains unsettled. Whether crafting detailed prompts, curating outputs, or making substantive edits to AI-generated material is enough to establish subsistence is yet to be determined by Australian courts. The US Copyright Office has refused copyright registration for AI-generated artworks created through extensive prompting. By contrast, a Chinese court found that prompt selection and parameter choices could constitute sufficient human input to qualify for protection.
The commercial consequences are material. Copyright protects all manner of business assets, not only creative works. It is important to understand how AI is used within your business to avoid a position in which your organisation is unable to establish ownership of what it believed to be valuable proprietary assets, and therefore unable to protect those assets. Ownership issues are particularly critical in M&A contexts, where IP compliance issues can affect valuations and deal structures.
Practical steps to mitigate risk when embedding AI in your organisation
- Audit existing workflows to identify where AI generates content that your organisation treats as a copyright asset, and assess whether sufficient human creative input exists to support a claim of authorship and if not, what steps need to be taken to ensure there is that input.
- Maintain contemporaneous records of human involvement, including prompts used, iterations reviewed, and substantive modifications made, to safeguard against any subsequent challenge to the subsistence or ownership of copyright.
- Where copyright protection is uncertain, consider alternative mechanisms such as treating AI-generated content as confidential information, implementing contractual restrictions on use, or relying on trade secret protections.
- Establish clear policies governing what staff may upload to AI tools or include in prompts, particularly third-party documents, and guidelines on ways to reduce the risk of copyright infringement (for example linking to a work on the internet rather than reproducing it in a prompt).
- Conduct due diligence on your AI providers to understand what measures they take to reduce the risk of copyright infringement and review contractual arrangements carefully.
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