What's the issue?
As the use of GenAI platforms becomes increasingly prevalent, understanding the legal implications of uploading content to GenAI platforms (inputs) and using content generated by GenAI platforms (outputs) is imperative for businesses.
Here, we provide a snapshot of the standard terms and conditions offered by the main GenAI platform providers in the absence of a bespoke agreement. We cover the position for individual users (with free subscriptions) and enterprise customers (with paid subscriptions).
Who owns inputs and outputs?
Irrespective of the type of subscription, the terms and conditions of many GenAI platforms (including ChatGPT and Stable Diffusion) stipulate that ownership of both inputs and outputs is retained by the user. This means that users retain any intellectual property (IP) rights over the texts, images, audio files and other materials/content they upload to or generate from GenAI platforms. In general, users also have to warrant that they have all the rights necessary to use the inputs and agree not to upload materials that infringe the IP rights of other parties.
However, this is not always the case. Some platforms like Midjourney stipulate that, if the user is a company or an employee of a company with more than a particular threshold of yearly revenue, then users will not own the inputs or outputs unless they hold an Enterprise subscription. Subsequent use of such content for commercial purposes could mean users are liable for IP infringement.
Who is liable if outputs infringe the IP rights of third parties?
If the content generated by GenAI platforms infringes the IP rights of third parties, liability rests with the user. This applies to individuals with free subscriptions and Enterprise customers. GenAI platforms typically also include disclaimers within their terms reiterating that responsibility for ensuring that inputs and outputs are not infringing lies with those who input the content and use the outputs commercially.
This means that all users must be vigilant about the content they create and use commercially on GenAI platforms - if outputs infringe any works protected by copyright, trade marks, designs or other IP rights, they might be held legally responsible.
Businesses must be proactive in establishing internal policies that provide guidance on how their employees use content generated through GenAI platforms for commercial purposes.
Are there any indemnities?
Standard terms and conditions for individual users with free subscriptions will typically include an indemnity from the user in favour of the GenAI platform provider. This includes a requirement to pay any costs and losses etc incurred by the platform arising from third party claims of IP infringement, or violation of any terms.
Conversely, some GenAI platforms (like OpenAI) offer indemnities to their Enterprise customers as part of the enhanced contractual protections provided under paid subscriptions. These indemnification provisions are designed to protect customers from IP infringement claims brought by third parties, although are typically very limited in scope and applicability. For example, they often do not apply where any modification of the output was made, or where the customer user should have known that the output was infringing. This is far from a blanket protection against all forms of IP infringement, and so such indemnification provisions should be treated with caution.
Can GenAI platforms use inputs and outputs of their customers?
For individual users with free subscriptions, they largely can. Under the terms and conditions of many GenAI platforms, the user grants the platform a non-exclusive licence back to use any inputs and outputs by default for a variety of purposes. These purposes often include displaying or distributing inputs and outputs, improving AI algorithms, and conducting research to enhance the platform's performance. For example, user inputs can often be used to contribute to training data that refines machine learning models, ensuring more accurate and sophisticated outputs over time.
Importantly, a lot of platforms provide that Enterprise users do not grant this licence to the platform and that the platform will not use any inputs or outputs. This allows Enterprise customers to retain more control over the content they upload or generate when compared to individual users.
Conclusion
As GenAI platforms are increasingly used by employees in commercial environments, it is clear that businesses must understand the terms and conditions being imposed upon them to assess their legal position.
Establishing internal acceptable use policies to guide employees when using GenAI content is imperative to avoid IP infringement and other legal risks. Look out for our next edition of Advertising Quarterly in September, where we will be covering drafting AI policies.
