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The ever-increasing reliance of content producers on artificial intelligence apps to generate content for online use begs the question of what legal obligations and liability risks arise from the use of that content.

The statutory and regulatory requirements governing the use of AI to generate online content varies widely by jurisdiction. While there is no universal set of laws, certain general legal principles apply across the spectrum.

1. Copyright and Intellectual Property Rights

When an AI bot generates content, the first questions that arise are: “Where did it obtain this content? Is it original or was it derived from an existing source? If it is derivative, who holds the copyright to that material? Who should be credited as the author?”

Is the “author” the AI bot, the human who programmed or trained it, the human who provided the input data, or the human who edited or published the output? Different jurisdictions may have different criteria for determining authorship and ownership of AI-generated works, and some may not recognize AI as a legal entity or a “creator” at all.

It is important to determine whether the AI is creating “original work” or if the content is derivative of existing copyrighted material. Additionally, the use of AI to replicate copyrighted content without permission may infringe on the copyright holder’s rights.

AI-generated content may fall under the doctrine of fair use or transformative use, which allows the use of copyrighted material for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. However, this is not a clear-cut rule and depends on factors such as the purpose and character of the use, the nature of the original work, the amount and substantive nature of the portion used, and the effect of that use on the potential market.

2. Liability and Accountability

AI-generated content may also entail legal risks and responsibilities for the parties involved in its creation and distribution. For example, who is liable if the AI-generated content infringes on someone’s rights, causes harm, or violates laws or regulations? How can the AI bot be held accountable for its actions and decisions? How can the human users or beneficiaries of the AI-generated content ensure its quality, accuracy, and reliability?

3. Privacy and Data Protection

AI-generated content may involve the use of personal data, such as names, images, or biographical information, to create realistic or personalized content. This could violate any number of privacy and data protection laws that regulate how personal data can be collected, processed, and shared online.

If the AI uses personal data to generate content, it must comply with data protection laws such as the General Data Protection Regulation (GDPR) in the European Union, the California Consumer Privacy Act (CCPA), the Personal Information Protection and Electronic Documents Act (PIPEDA) of Canada, and other similar regulations. These laws require obtaining consent from individuals before processing their personal data and ensuring the protection of that data.

4. Transparency and Disclosure

Depending on the jurisdiction, there may be requirements to disclose to your site visitors that content has been generated by AI, especially in cases where the content might be mistaken for human-generated content. This is particularly relevant in advertising, news articles, and other media where trust and authenticity are important.

AI-generated content may pose ethical challenges, such as opportunities to mislead or deceive the audience, harm the reputation or dignity of individuals, or undermine the credibility or diversity of information sources. From an ethical standpoint, it is important for content developers to disclose the use of AI to generate content and provide clear and accurate information about the source, purpose, and quality of the content. It’s also important to avoid creating content that is harmful, offensive, or discriminatory.

5. Consumer Protection Laws

AI-generated content must not mislead consumers. This falls under broader consumer protection laws that prohibit deceptive practices. Content that is designed to deceive or mislead users may result in legal action and penalties.

6. Liability for Harmful Content

If AI-generated content is defamatory, discriminatory, or otherwise harmful, there may be legal consequences. The entity responsible for the AI may be held liable for the content it produces, depending on the legal framework governing speech and publication in the relevant jurisdiction.

7. Accessibility

Laws such as the Americans with Disabilities Act (ADA) in the United States may require that online content, including AI-generated content, be accessible to individuals with disabilities. This includes ensuring that content is compatible with screen readers and other assistive technologies.

8. Platform-Specific Rules

Online platforms (such as X, Facebook, Instagram, etc.) have their own terms of service and/or community guidelines that govern the use of AI to generate content. These rules may go beyond legal requirements and can result in content being removed or accounts being banned for non-compliance.

9. Export Controls and Sanctions

In some cases, AI technologies are subject to export control laws and sanctions, guidelines and requirements for disclosing AI generated content.

TAKEAWAYS

Full Disclosure. Always disclose which content is AI-generated and clearly label it as such. This can be done through disclaimers or specific mentions within the content that it was generated or assisted by AI.

Quality Assurance. Regardless of whether content is AI-generated or human-written, the focus should always be on producing high-quality, original content that provides value to the audience. 

Compliance with Laws and Regulations. The very nature of the worldwide web means that content on your website is accessible anywhere in the world. Be aware of any legal requirements or industry standards – both within your own jurisdiction and globally - that may apply to AI-generated content, and ensure that your content is compliant.

Image by Gerd Altmann from Pixabay

Image courtesy Pixabay.Com. Content partially researched using Microsoft Copilot AI.

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Many web developers prefer to create their own Website Development Agreements for clients. Do you know if your agreement template addresses all of the key issues it should? This article provides a checklist of the provisions that you should be including in your standard form agreement. At the very least, you need to include clauses covering:

• who owns the website and content after completion,
• protection of intellectual property rights for any software or resources used in building the site,
• the development phases (what constitutes completion of a phase),
• functionality testing,
• resolution of problems that arise during the process,
• covenants, warranties and undertakings given by each party,
• confidentiality and non-disclosure provisions to protect the parties, and
• what level of ongoing support will be provided.

1. Clearly outline the project specifications and development phases.

• Provide detailed specifications for the design of the website, which will then serve as criteria for final testing of the website to determine if the specifications have been met and if acceptance of the website is warranted. The specifications must be approved or modified by the client before work commences on the development of the site.

• Clearly define the developer's performance obligations to avoid any ambiguity between the parties. Clarify how extra work will be approved and billed.

• If the project warrants it, the Agreement should contemplate appointing a project manager to oversee and coordinate the development and to be the point of contact with the client.

• Set out a timetable for development / performance milestones and for progress meetings at key points in the timetable, and include the payment schedule attached to those milestones and key points.

• List all deliverables and resources required from the client and the times at which these are required. Include provisions which cover the implications if the client is late in delivering these items, i.e. how it will affect the timetable and completion date. Clarify what happens if a milestone is not met or the completion date is missed through no fault of the client.

• Ensure that the Agreement allows you to subcontract any part of the development services if necessary.

• The developer's performance obligations should include providing documentation and source code for all software used during the process.

• The Agreement must be flexible enough to allow for changes to the site specifications, and must also clarify how those changes will affect the timetable and development costs.

2. Make sure all parties agree on what is included in the contract price and how payments are to be made.

• Include everything that is included in the price, such as software licensing fees and applicable taxes.

• Payment should be tied to performance milestones. At least 1/3 of payment should be held back until the website has been thoroughly developed, delivered, tested and accepted by the client, and the website is ready to go live.

• There should also be a further holdback (10%-15%) for a reasonable period following acceptance to ensure that all defects have been detected and fixed.

3. Specify who owns the website and the elements.

• Unless otherwise agreed to with the client, the Agreement should expressly provide that the work done under the Agreement is a work-made-for-hire, and that all content, graphics, domain names, files and the look-and-feel of the site (together with all underlying code, software, digital programming) are the sole property of the client. A copyright notice should be displayed on the website.

• For greater certainty, the developer should sign over all proprietary rights in the work to the client under an assignment provision. Unless the developer is an employee of the client, the developer must convey copyright ownership to the client in writing in order for the client to acquire all rights reserved to the author under the copyright laws.

• Clarify whether the developer retains any rights to use any materials or software created during the development.

4. Hardware and software considerations.

• If the developer is providing any of the hardware, are any manufacturer's warranties being provided?

• If the developer is using any proprietary software in the development of the website, include provisions for the client to be able to license the software and access the source code in the event that the relationship between the parties is terminated or the developer goes out of business or becomes otherwise unavailable. The license granted to the client should be perpetual, royalty-free, irrevocable and worldwide, and should be transferable.

• Is any third party software or material (such as graphics) being used in the development? Have the required licenses / consents been obtained? Who is responsible for, and who pays the costs for, obtaining them? And who is liable for the performance of that software?

5. Clarify how third party infringement claims will be dealt with.

• Each of the parties should provide warranties that none of the material they provided infringes any intellectual property rights or other proprietary rights of any third party.

• There should also be mutual indemnification by each party of the other party.

• The developer should carry adequate liability insurance coverage to protect against third party claims.

6. Confidentiality and non-solicitation provisions.

• The Agreement should contain confidentiality clauses to protect each party's confidential information and proprietary data.

• The Agreement should also contain a non-solicitation provision barring either party from soliciting the other's employees during and for a reasonable period of time following completion of the project.

• If either party wishes to refer to the relationship in its marketing materials (including putting the developer's name and/or link on the website), this should be agreed to in the contract.

7. Compliance with laws and regulations.

• If the website collects any personal information from site visitors, all applicable local and international privacy and data security laws must be complied with.

• If the website is an e-commerce site which will be processing payment transactions, PCI compliance must be included in the scope of services.

• The website must contain all the required notices and disclosures for users (privacy, use of personal information, cookies, copyright, etc.)

8. Liability provisions.

• Each party should indemnify the other for any loss or damages arising as a result of such party's breach of its obligations. The liability should be limited to the total of the fees paid by the client under the Agreement.

• Each party should indemnify the other against third party infringement claims with respect to content, material or resources supplied by that party.

9. Functionality testing.

• The Development Agreement should clearly specify the anticipated functionality of the website, including page load times, connection speed, mobile friendliness, download speed, number of simultaneous connections and response times for user requests, compatibility with all Internet browsers, security protocols, checkout and payment systems.

• The functionality provisions should also cover integration of the site with the client's existing data server structure.

• The client must be able to make changes to the website without interfering with the site's operation or functionality.

• Website functionality should also include the procedure for accessing, recording and compiling user data and analytics.

10. Provisions governing installation and acceptance testing.

• The developer is responsible for transferring and installing the site and all associated software and files on the client's web server.

• The Agreement must address the following questions:

• Who will take responsibility for acceptance testing?

• Who will determine whether the testing has been successful?

• Will acceptance testing occur in stages?

• The client should have the right to reject the site if the site fails to meet designated specifications and does not pass the acceptance tests.

11. Warranties of the parties.

• In addition to the developer's warranty that there are no infringing materials, the developer should also warrant that the website will be delivered free from all known viruses and material defects, and will conform to the specifications. There should be a reasonable period of time allotted to resolve any defects or shortcomings.

• The client should provide a warranty that it has complied with all legal, financial and data protection matters.

• Determine how long the developer's warranty should be in effect, and set out the start date and end date.

12. Specify the types of ongoing support that will be provided.

• Determine whether the client will require training (e.g. html, CMS functionality, etc.) and if so, whether and for how long the developer will provide that training, and at what cost.

• Will the developer be providing support and maintenance after completion? Is this tied to a warranty period? If not, then consider signing a separate support and maintenance agreement.

• Determine the service level requirements, the costs to be billed to the customer, and billing and payment schedules.

Image courtesy of Pixabay.com