SankerIP Founder David Sanker Explores the Legal Risks Associated with AI Use and Content Generation for Businesses

The applications of artificial intelligence (AI) are increasing daily. The advantages of AI are clear, but industries should use AI in ways that limit the downside risks. SankerIP founder and attorney David Sanker understands the benefits and risks of AI tools more than most, given his earlier careers in software engineering and mathematics. He strives to caution companies about the potential professional and legal repercussions for intellectual property rights and business practices when using AI. 

Business Risks When Using Artificial Intelligence 

While artificial intelligence is a widely applicable and beneficial tool of the modern world, there are several potential risks waiting down the pipeline. The downside risks of AI have been discussed most often in the context of intellectual property, but there are other business risks as well. Fortunately, there are several steps that businesses of all sizes can take to mitigate these risks. 

Reduced Training and Investment in Employees 

Entry-level positions provide an incremental approach to becoming established in a chosen career. Already, however, AI tools have proven competency with many of the basic tasks currently managed by entry-level employees. “AI systems cost less than hiring new staff and can work more quickly, effortlessly managing tasks that would otherwise be left to a first- or second-year associate in the legal field, for example,” says SankerIP founder David Sanker.  It is clear what companies have to gain, but companies must also consider what they can lose, according to Sanker. 

When junior employees tackle simple tasks around the office, they are not just completing work–they are also gaining essential skills. If companies assign these tasks to AI, rather than hiring and training entry-level employees, the pipeline for trained professionals who are familiar with their industry is likely to dry up. Rather than replacing workers with AI, companies should aim to recruit workers who can work with these tools, leveraging the efficiencies inherent in AI while also developing their professional workforce.  

AI Systems Are Not Always Accurate 

While humans can and do make errors, errors made by AI systems can be very large and unexpected, leading to costly expenses for companies. AI can perform research at a speed that is simply not achievable by humans using conventional means, but humans often have two things AI doesn’t have: judgment and critical thinking.  

Reports of widespread problems associated with AI are already visible in the media, from fatal accidents in self-driving cars to legal briefs that include non-existent legal citations. One infamous unemployment insurance scandal led to tens of thousands of invalid fraud accusations; in the majority of these cases, the system was allowed to run from start to finish without human oversight for over two years.  

Due to how genuine AI appears, people tend to believe everything AI generates. But these systems are known to “hallucinate,” creating content with no basis in reality. To overcome this, the processes behind AI must become more transparent, and systems—as well as the humans who oversee them—should be able to explain their reasoning, real-world sources, and biases. Human review of all AI-generated content can go a long way in supporting better accuracy. 

Commoditization of Business 

The urge to adapt to changing technologies for fear of being left behind is all too common for business in the age of AI. The benefits of AI can make it a tempting investment, but it is important for companies to avoid overhauling their practices so aggressively that they lose sight of their existing corporate strengths and values, putting both their credibility and the goodwill of their customers at risk.  

In particular, overuse of AI can lead businesses to lose sight of their own distinctive qualities, making the company more like other companies that are using similar AI systems. According to Sanker, companies should leverage AI to enhance their existing advantages and strengths. 

Intellectual Property Risks When Using AI 

Standard artificial intelligence systems, as well as generative AI, are currently a legal gray zone because AI is evolving more rapidly than laws. Businesses should consider the potential intellectual property (IP) risks that come with these tools, which Sanker explores in greater detail in his chapter “Practical guidelines for the use of generative AI,” in GLI’s AI, Machine Learning & Big Data 2024. 

Loss of Confidential Information 

AI systems require input to operate, and businesses should know that those inputs may lead to significant losses of confidential information and/or intellectual property (e.g., trade secrets). Entering confidential information into an AI system does not guarantee that information will remain confidential. Because of the power of AI to make inferences, an AI system may be able to infer trade secrets or confidential information based on partial human input. 

Infringing on the Rights of Others 

For businesses, infringing on the rights of other companies or individuals is a significant legal concern. Because the output of a generative AI system is rarely similar to any specific training content, lawsuits for copyright infringement are generally unlikely to succeed. However, “as more content creators highlight the many ways their works have been used to train AI without permission, ethics are being called into question,” says Sanker, before adding, “AI training is turning into a battle between content creators and technology companies who are allegedly using their work without payment, while making money for themselves.”  

Potential Inability to Secure Intellectual Property Protection 

Property rights are critical for businesses, but AI-generated materials may not be protectable at all. Content generated solely by these tools is not currently eligible for copyright or patent protection, and this will remain true unless laws are changed. To maintain control of any creations, companies should follow the recommendations outlined in the Inventorship Guidance for AI-Assisted Inventions. Sanker is preparing further inventorship guidance, to be published later this year in the Daily Journal. In short, each creation should have at least one human inventor who has made a “significant” contribution to the invention. 

The integration of AI into business practices in every industry is inevitable, but it is the responsibility of companies to ease into these changes while keeping human judgment, critical thinking, and oversight at the center.