The past few years have witnessed a significant surge in artificial intelligence (AI) development, transforming industries and business practices. AI's capability to create, design, and innovate presents unique challenges and opportunities for the traditional understanding and application of IPRs. This is especially true in consideration of the recent rise of the so-called ‘Generative AI’ (GenAI) and ‘General Purpose AI’ (GPAI, aka ‘Foundation Models’). Unlike traditional AI, which analyses existing data, GenAI models can create new content based on patterns they’ve learned. GPAI models rely on a broad set of unlabelled data for training and can fulfil different tasks with minimal fine-tuning. For this reason, they often serve as infrastructure for downstream developers, enabling them to create various services for end users.

For small businesses, AI's impact on existing Intellectual Property Rights (IPR) frameworks, particularly in determining authorship, ownership, and originality, poses unique challenges and opportunities.

Small businesses often rely on AI tools to enhance productivity, create content, and innovate. However, when AI generates content, the traditional concept of authorship becomes blurred. For a small business, it is crucial to establish who the author is: the AI, the developer, or the user within the business. This ambiguity can lead to potential disputes over who holds the rights to AI-generated works, complicating efforts to protect and leverage these assets. Small businesses, often lacking extensive legal resources, may find it particularly challenging to navigate these uncertainties and assert their rights.

Determining ownership of AI-generated creations is another critical issue. Small businesses typically invest in AI tools developed by third parties. Unclear ownership can hinder a small business’s ability to commercialize its innovations, secure funding, or protect its competitive edge. Ensuring clear contractual agreements and understanding the terms of AI tool usage becomes essential to avoid potential conflicts and secure ownership rights.

Moreover, originality is a key factor in securing IPR protections, particularly copyrights and patents. AI systems generate new works by processing and learning from existing data, which may result in outputs that are derivative rather than entirely original. This challenge is especially pertinent for small businesses that rely on unique products or creative content to distinguish themselves in the market. Assessing whether AI-generated works meet the originality criteria under current IPR laws can be complex and may require small businesses to seek expert legal advice, adding to their operational costs.

Small businesses must also consider the risks associated with AI-generated content potentially infringing on existing IPRs. If an AI tool inadvertently produces work that copies patented inventions or copyrighted materials, the small business using the tool could face legal challenges. Identifying and mitigating these risks requires careful management and possibly indemnification clauses in agreements with AI tool providers. For resource-constrained small businesses, managing such legal complexities can be daunting and costly.

While AI offers small businesses significant opportunities to innovate and compete with larger enterprises, the current IPR frameworks need to adapt to ensure they can effectively protect and benefit from their AI-driven innovations. This adaptation might include developing new legal standards that recognize AI-generated works and provide clear guidelines on authorship, ownership, and originality.

In the meantime, SMEs can use this checklist to set-up an effective IPR strategy for artificial intelligence generated content:

European DIGITALSME Alliance

This article is based on the chapter “The Impact of Artificial Intelligence” in the publication “The Competitive Advantage of Intellectual Property:  A Practical Guide for Digital Small and Medium Enterprises”. You can read more about it here: https://www.digitalsme.eu/ip-guidelines-for-smes/