AI-Generated Content and Trademarks

The rapid evolution of artificial intelligence has undeniably transformed the digital landscape, with AI-generated content becoming increasingly common. This shift has profound implications for brand owners introducing both challenges and opportunities.

One of the most pressing concerns is trademark infringement. In a recent example, the Walt Disney Company, a company fiercely protective of its intellectual property, raised concerns about AI-generated content potentially infringing on its trademarks.  Social media users were having fun using Microsoft’s Bing AI imaging tool, powered by DALL-E 3 technology, to create images of pets in a “Pixar” style.  However, Disney’s concern wasn’t the artwork itself, but the possibility of the AI inadvertently generating the iconic Disney-Pixar logo within the images, constituting a trademark infringement. This incident highlights the potential for AI-generated content to unintentionally infringe upon established trademarks, requiring brand owners to stay vigilant in protecting their intellectual property in the digital age.

Dilution of trademarks is another critical issue. A recent lawsuit filed by Getty Images against Stability AI sheds light on this concern. Getty Images, a leading provider of stock photos, accused Stability AI of using millions of its copyrighted images to train its AI image generation software. This alleged use, according to Getty Images, involved Stability AI’s incorporation of Getty Images’ marks into low-quality, unappealing, or offensive images which dilutes those marks in further violation of federal and state trademark laws. The lawsuit highlights the potential for AI, through the sheer volume of content it generates, to blur the lines between inspiration and infringement, weakening the association between a trademark and its source.

In addition, the ownership of copyrights in AI-generated marketing can cause problems. While AI tools can create impressive content, questions about who owns the intellectual property rights persist.  Recent disputes over AI-generated artwork and music have highlighted the challenges of determining ownership and copyright in this new digital frontier.

However, AI also presents opportunities for trademark owners. For example, AI can be employed to monitor online platforms for trademark infringements, providing an early warning system. Luxury brands have used AI to authenticate products and combat counterfeiting. For instance, Entrupy has developed a mobile device-based authentication system that uses AI and microscopy to analyze materials and detect subtle irregularities indicative of counterfeit products. Brands can integrate Entrupy’s technology into their retail stores or customer-facing apps.

Additionally, AI can be a powerful tool for brand building. By analyzing consumer data and preferences, AI can help create highly targeted marketing campaigns. For example, cosmetic brands have successfully leveraged AI to personalize product recommendations, enhancing customer engagement and loyalty.

The intersection of AI and trademarks is a dynamic and evolving landscape. As technology continues to advance, so too will the challenges and opportunities for trademark owners. Proactive measures, such as robust trademark portfolios, AI-powered monitoring tools, and clear internal guidelines, are essential for safeguarding brand integrity in this new era.

American Bar Association Issues Formal Opinion on Use of Generative AI Tools

On July 29, 2024, the American Bar Association issued ABA Formal Opinion 512 titled “Generative Artificial Intelligence Tools.”

The opinion addresses the ethical considerations lawyers are required to consider when using generative AI (GenAI) tools in the practice of law.

The opinion sets forth the ethical rules to consider, including the duties of competence, confidentiality, client communication, raising only meritorious claims, candor toward the tribunal, supervisory responsibilities of others, and setting of fees.

Competence

The opinion reiterates previous ABA opinions that lawyers are required to have a reasonable understanding of the capabilities and limitations of specific technologies used, including remaining “vigilant” about the benefits and risks of the use of technology, including GenAI tools. It specifically mentions that attorneys must be aware of the risk of inaccurate output or hallucinations of GenAI tools and that independent verification is necessary when using GenAI tools. According to the opinion, users must evaluate the tool being used, analyze the output, not solely rely on the tool’s conclusions, and cannot replace their judgment with that of the tool.

Confidentiality

The opinion reminds lawyers that they are ethically required to make reasonable efforts to prevent inadvertent or unauthorized access or disclosure of client information or their representation of a client. It suggests that, before inputting data into a GenAI tool, a lawyer must evaluate not only the risk of unauthorized disclosure outside the firm, but also possible internal unauthorized disclosure in violation of an ethical wall or access controls. The opinion stressed that if client information is uploaded to a GenAI tool within the firm, the client data may be disclosed to and used by other lawyers in the firm, without the client’s consent, to benefit other clients. The client data input into the GenAI tool may be used for self-learning or teaching an algorithm that then discloses the client data without the client’s consent.

The opinion suggests that before submitting client data to a GenAI tool, lawyers must review the tool’s privacy policy, terms of use, and all contractual terms to determine how the GenAI tool will collect and use the data in the context of the ethical duty of confidentiality with clients.

Further, the opinion suggests that if lawyers intend to use GenAI tools to provide legal services to clients, lawyers are required to obtain informed client consent before using the tool. The lawyer is required to inform the client of the use of the GenAI tool, the risk of use of the tool and then obtain the client’s informed consent prior to use. Importantly, the opinion states that “general, boiler-plate provisions [in an] engagement letter” are not sufficient” to meet this requirement.

Communication

With regard to lawyers’ duty to effectively communicate information that is in the best interest of their client, the opinion notes that—depending on the circumstances—it may be in the best interest of the client to disclose the use of GenAI tools, particularly if the use will affect the fee charged to the client, or the output of the GenAI tool will influence a significant decision in the representation of the client. This communication can be included in the engagement letter, though it may be appropriate to communicate directly with the client before including it in the engagement letter.

Meritorious Claims + Candor Toward Tribunal

Lawyers are officers of the court and have an ethical obligation to put forth meritorious claims and to be candid with the tribunal before which such claims are presented. In the context of the use of GenAI tools, as stated above, there is a risk that without appropriate evaluation and supervision (including the use of independent professional judgment), the output of a GenAI tool can sometimes be erroneous or considered a “hallucination.” Therefore, to reiterate the ethical duty of competence, lawyers are advised to independently evaluate any output provided by a GenAI tool.

In addition, some courts require that attorneys disclose whether GenAI tools have been used in court filings. It is important to research and follow local court rules and practices regarding disclosure of the use of GenAI tools before submitting filings.

Supervisory Responsibilities

Consistent with other ABA Opinions relevant to the use of technology, the opinion stresses that managerial responsibilities include providing clear policies to lawyers, non-lawyers, and staff about the use of GenAI in the practice of law. I think this is one of the most important messages of the opinion. Firms and law practices are required to develop and implement a GenAI governance program, evaluate the risk and benefit of the use of a GenAI tool, educate all individuals in the firm on the policies and guardrails put in place to use such tools, and supervise their use. This is a clear message that lawyers and law firms need to evaluate the use of GenAI tools and start working on developing and implementing their own AI governance program for all internal users.

Fees

The key takeaway of the fees section of Opinion 512 is that a lawyer can’t bill a client to learn how to use a GenAI tool. Consistent with other opinions relating to fees, only extraordinary costs associated with the use of GenAI tools are permitted to be billed to the client, with the client’s knowledge and consent. In addition, the opinion points out that any efficiencies gained by the use of GenAI tools, with the client’s consent, should benefit the client through reduced fees.

Conclusion

Although consistent with other ABA opinions related to the use of technology, an understanding of ABA Opinion 512 is important as GenAI tools become more ubiquitous. It is clear that there will be additional opinions related to the use of GenAI tools from the ABA as well as state bar associations and that it is a topic of interest in the context of adherence with ethical obligations. A clear message from Opinion 512 is that now is a good time to consider developing an AI governance program.