With proceedings still on foot in several jurisdictions, there is currently significant uncertainty as to the legal position on IP infringement, which may also vary between jurisdictions. Unsurprisingly, this has caused users concern that they might inadvertently infringe a third party’s IP rights by using an AI tool—eg by publishing an AI output that reproduces a copyright work used in the tool’s underlying training data.

To allay those concerns, most major AI providers have publicly announced that they will indemnify their customers against liability for third party IP infringement claims. Based on our review of the relevant T&Cs, however, it is clear that the devil is in the detail—there are many circumstances in which users of AI tools will not be protected if they are found to infringe a third party’s IP rights.

Of the T&Cs for the AI tools that we reviewed, all of the paid tools included some form of IP indemnity. For providers that offer both free and paid versions of their AI tools, an indemnity is only offered to users of the paid version of the service. This means that, as a general proposition, users of the free versions of these tools remain exposed to the risk that their use of the AI tool may be found to infringe third party IP. Meta AI, which is only offered as a free tool, does not come with any indemnity as to AI outputs under its standard terms.

For the providers that do offer an IP indemnity for their paid tools, it is generally subject to several limitations, including the following.

  • The indemnities are subject to varying exclusions that apply regarding particular uses of the AI tool, such as claims resulting from:
    • the combination of the provider’s product with other third party products;
    • the user’s applications, products or services into which the AI tool has been integrated;
    • fine-tuning, customisation or other modification of the tool or output;
    • input or training data provided by users;
    • disabling or not implementing tools and filters offered by the provider to mitigate risk;
    • non-compliance with the applicable terms of use or with applicable laws, regulations or industry standards;
    • generating or using an output in a manner that the user knows or ought to know is likely to infringe third party rights; or
    • using an output after receiving notice of an infringement claim by the rights holder, or after being notified by the provider to stop using the tool.
  • In the case of three of the AI tools, the indemnity notably excludes claims based on trade mark or related rights.
  • In the case of two of the AI tools, the indemnity will only apply if the user gives the provider notice of the relevant claim and permits the provider to control the defence of the claim, among other things.

Businesses that use AI tools should be aware of these limitations—particularly those that intend to use AI outputs in external-facing materials, where the practical risk of an aggrieved third party identifying an infringement of their IP rights is higher.

It is also important to consider how the risk of infringing third party IP rights might vary between different products and providers. For example, using an AI tool that is trained exclusively on the provider’s proprietary and licensed-in data, or the user’s own data, carries a lower risk of infringing third party IP rights than using an AI tool that is trained on general third party data scraped from the internet.