Using AI – Key Considerations
Third-party generative artificial intelligence systems (AI) are rapidly transforming creative work, introducing new opportunities and real legal and business risks. Many contracts do not yet address how AI tools are used, who owns the resulting intellectual property, or what happens if errors or unlicensed materials are incorporated into your final product. Creative professionals should strongly consider reviewing their contracts and adding provisions for AI use to address evolving risks and responsibilities for your industry. This article looks at contractual issues affected by the use of AI tools and suggests specific terms to consider. While not exhaustive, the topics in this article target major areas for attention.
Copyright & Intellectual Property (IP) Rights
AI-generated work can pose challenges for copyright protection, licensing, and third-party rights. Many platforms and tools have uncertain or shifting approaches to ownership and proper licensing.
Copyright Ownership
Some recent court decisions have addressed how copyright rights in creative works can be affected by AI. For example, in Thaler v. Perlmutter (D.D.C. 2023), the court addressed the "original creative authorship" requirement for copyright. The court held that AI-generated artwork created autonomously by a machine is not eligible for copyright protection under the Copyright Act, reaffirming that only human authorship meets the statutory requirements for copyright claims.
In a case addressing exclusivity of copyright rights, the court in Andersen v. Stability AI (N.D. Cal. 2024) allowed claims for direct and induced copyright infringement against developers of an AI image generator. This case illustrates that use and output of copyrighted materials in AI models can create significant legal exposure for both IP infringement and distribution.
Accuracy & Reliability
Outputs from AI tools may include mistakes, artifacts, or unanticipated results that could impact the work's quality or suitability. Contract disclaimers and liability waivers protect professionals against claims for these errors. For example, in the case of Mobley v. Workday (N.D. Cal. 2025), the court expanded liability to AI vendors, ruling that vendors whose automated hiring tools lead to discriminatory outcomes can be held directly accountable, especially when such systems act as agents for employers in decision-making. This sets important precedent for liability allocation and agency principles in contracts for creative professionals deploying third-party AI systems.
Confidentiality concern
Use of third-party AI platforms can expose client confidential information. Clear contracts can limit the scope of disclosure and require that AI vendors treat client data securely and only as required for creative work. Keep in my drafting explicitly permitted uses of confidential information with AI tools.
Indemnification and liability
Indemnification and limitations on liability can be tricky and require precise drafting. Contracts should allocate responsibility for claims arising from faulty AI usage, IP infringement, or privacy violations back to the appropriate party. This is especially important if clients provide their own AI-generated materials or platforms.
Limitations and Disclaimers
Provisions can cap total damages and clarify that creative professionals are not liable for incidents outside their control, such as model updates or vendor downtime.
Provisions to Consider
Keeping in mind that your specific needs may differ, the following list of provisions should be considered when choosing to incorporate AI tools or AI-generated work product.
- Disclosure of AI usage and associated risks in every engagement
- IP ownership and licensing for AI-generated materials
- Disclaimers for accuracy and fitness for purpose of AI-assisted outputs
- Strict limits on liability and consequential damages related to AI use
- Confidentiality safeguards for client data shared with or processed by AI tools
- Indemnification for misuses of client-provided AI content
Action Steps for Creatives
- Dust off your standard contracts and look for AI-related gaps.
- Update agreements to clarify rights, responsibilities, and protections for both designer and client when using AI.
- Discuss key risks and recommended contract language with legal counsel or review new standard addenda focused on AI integration in creative workflows.
AI is changing the creative services landscape. Make sure your contracts keep up to protect your work, your clients, and your business reputation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
