Legal obligations When Using AI in Your business

Get in touch: 1800 770 780

How can we help?

In a business world that is ever changing with the increasing use of automation, Artificial Intelligence is rapidly becoming the fastest way to streamline your business needs. Using AI can reduce costs, increase productivity, and enhance your ability to communicate effectively with your customers. However, there are legal implications to using AI that are necessary to understand so that your company’s use of AI is within legal and ethical bounds.

Protection of Data

The use of artificial intelligence allows businesses to gather an unprecedented amount of personal data about their customers. This data has the potential to be beneficial to customers or if misused, detrimental and dangerous. When collecting customer data, it is important to have the following safety precautions in place;

  • Keep all personal information confidential
  • Do your best to disconnect or de-identify the information from the person’s actual identity
  • Install proper programs to prevent or minimize data breaches
  • Take steps to reduce the risk of unauthorized disclosure of personal information
  • Do not use actual customer data to train your AI model

If these are procedures or processes that you do not know how to install yourself, contact a business consultant with expertise in these various areas to help you set up these protections and monitor them regularly.

Authorized Use of AI

There are two closely connected concerns regarding the proper use of AI. The first concern is that you do not use copyrighted material to train your AI model. The second is that your AI model generates its output in a manner that is as authentic as possible. This means that you must make sure that the information the AI is using to generate a product, is gleaned only from using its sources for guidance when generating its own output.


When using AI platforms, you will have the ability to input information. In doing so, your company and the information you are loading will have to comply with the terms of the agreement. Be sure to familiarize yourself with the terms of the input and be careful to select the settings that are appropriate for your use of the AI software. In some instances, the terms will include a business agreeing to allow the AI platform to use its input to refine and train the AI model. You might not want to allow for this and can elect not to have your Input made available to the AI company for this use.

Generate Output

The ownership of the output of an automated Artificial Intelligence system may not be fully settled, legally. However, it is important to note that generally, AI does not meet the requirements of copyright law. Therefore, if you generate and disseminate AI information and someone else decides to use it, you probably will not have a legal right under the copyright laws. If you desire to copyright the information generated via AI, then it is recommended that some form of independent human skill or talent or intellect be a discernable part of the generated product.

Risks of AI

While AI can be an efficient process that can enhance your business, the use of AI also has known risks. Those risks include;

  • Generating incorrect information
  • Generating fake information
  • The loss of human oversight
  • Creating discrimination in information review; i.e. job applications
  • Profiling based upon information provided to the AI System


When the risks of AI are not taken seriously and something goes wrong, the issue of liability will arise. At the moment this area of law is not clearly defined because liability involves some form of human failure. This failure to act or take action to prevent harm has not yet been fully applied to the risks of AI use. There are several unanswered questions surrounding liability.

Two of these very important unanswered questions are;

  1.  Will the person who inputs the information into the AI system be responsible for the system providing or producing a faulty response?
  2. Will the business using the AI platform be held liable, overall, for any mistakes made by employees who work with the system? These questions have not been thoroughly reviewed or decided by our Court systems. Hence, caution is advised with regard to the liability issues of using AI in your business setting.

While these are only a couple of general concerns with AI failure, there are many more which may not have been identified or considered.

Using AI can be very exciting and produce new and profitable outcomes for your business. However, when using AI, it is strongly recommended that you consult with professionals in your area of expertise as well as those who are well-informed about the appropriate legal and ethical uses of AI.

If you find yourself in need of assistance, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.


Just ask us a question

We are always ready to help you.