Pitfalls of Generative AI*

The use of artificial intelligence (AI) has quickly become mainstream for businesses of all sizes. AI assists businesses and their owners in communicating with customers and the public, promoting goods and services online, and streamlining internal processes by aggregating company data.  It’s no surprise that the technology has yet to be perfected, and the pitfalls go beyond AI images of six- and seven-fingered hands.  Here are some basic considerations for your commercial use of the technology.

Accuracy Matters

AI will certainly provide you with a product, but it may not be correct. A generator will pull information and data from many sources, and perhaps none from your own business. More than just proofreading, you should ensure that the end result is an accurate representation of the product or service that you offer. If customers are enticed by features that AI imputes to your product or service but do not exist, you risk claims of misrepresentation. It is also imperative to check that AI is not describing warranties or guarantees that you don’t offer customers.

Protect Your Data

If you use a platform that either pulls information from your business or has access to it, you may compromise that data. Many businesses go to great lengths to protect trade secrets and other information that become valuable business assets. To the extent that your business maintains secret or confidential information related to products, methods, pricing, market research or customers, the legal benefits of that confidentiality may be lost if it is made available to third parties, like an AI provider. Research the efforts (if any) used by the provider to protect your information and evaluate with your counsel whether you lose the benefits of trade secrets or confidential information by making it available.

Theft On Your Behalf

As stated above, AI pulls information from many sources.  Some of these sources may be protected by copyright or may otherwise be protected by law. Chances are you will never know whether the material generated for your business was stolen from a protected source.  But that source might, even through simple web searches, and that exposes you to liability for use of someone else’s intellectual property. If you are paying for your business’s AI services, be sure that your provider agrees to indemnify you for any legal action or threatened action against you for using someone else’s data.

Regardless of whether you are paying for AI services or not, consult your legal counsel and your insurance professionals to discuss your legal exposure and possible coverage for a loss.

* No artificial intelligence was used in the creation of this article.

Jeffrey R. Schmitt

Posted by Attorney Jeffrey R. Schmitt. Schmitt represents businesses and individuals in commercial litigation matters including banking and finance, real estate, condo and homeowners’ associations, professional liability defense, title disputes, transportation, and pension and retirement plans. https://www.dannamckitrick.com/jeffrey-r-schmitt/