As general interest and investment in AI has accelerated since the initial public launch of ChatGPT, so too has the U.S. federal government both increased its spending in the area[i] and the speed with which it adopted guidelines on the utilization of AI more generally.[ii] This tracks other actions outside the U.S.,[iii] and anticipates corresponding initiatives at the state and municipal levels.[iv]Continue Reading AI Considerations in Government Contract-Related M&A Transactions
As we stand on the cusp of transformation in the commercial real estate industry, one cannot help but recall the sage words: “With great power comes great responsibility.” In an era marked by technological advancements occurring at a blistering pace, the real estate industry (commercial, industrial, residential, office, hotel and every other class of real estate) stands on the brink of transformation and the seemingly limitless promise and power of generative artificial intelligence (AI) looms large as both a disruptor and a savior. There is no ignoring it, just like virtually every other industry, the real estate industry is changing rapidly through the use of AI, and if you aren’t adapting your business to account for those changes, you are putting your business at significant risk. Traditionally, change in the commercial real estate industry has been akin having an oil tanker make a 180-degree turn – slow, laborious and infrequent. The changes that have been brought upon by AI are more like making a 180-degree turn in a Ferrari – fast, easy and frequent. However, these competitive and rapid shifts, while alluring, come with increased risks and the need to proactively manage those risks. The questions on everyone’s mind are: (i) Can AI really predict the future success of a project, (ii) how trustworthy is AI, (iii) how is AI going to change my business and (iv) what do I need to be worried about? Every day, public and private organizations are working towards answering those questions, not only developing reliable tools, but regulating the use of those tools to insure an even playing field. Continue Reading AI is Changing the Real Estate Industry. How Will It Impact Your Business?
Is your M&A target a company that develops or uses artificial intelligence (“AI”) tools? AI, and generative AI technologies specifically, are powerful business tools but present novel legal issues in the context of M&A transactions. It is increasingly important to identify and understand the unique legal risks associated with the use of AI technologies, tailor your diligence to investigate them and include AI-specific reps and warranties in your deal documents. To effectively do this, it is important to have someone well-versed in AI technology and the associated legal issues on the deal team. Many subtle issues, if not properly understood and addressed, can lead to liability and/or loss of business value. The attached article addresses the expansion of due diligence, beyond standard tech diligence, to include the analysis of AI tools developed or used by the target. It covers some of the key AI-specific legal issues to consider in M&A, but the issues in each transaction will be unique depending on the target company’s involvement with AI. Once you understand the target company’s involvement with AI, it is important to consider the unique legal issues and the diligence needed beyond the standard diligence questions.Continue Reading M&A Transactions: Diligencing AI Issues with Target Companies
The United States Patent and Trademark Office (USPTO) is holding a roundtable discussion, on August 5, 2024, about the intersection of AI technology and legal protections for individuals’ reputations and name, image, voice, likeness (NIL), and other indicators of identity. These rights of publicity are currently protected by a patchwork of inconsistent laws and common law rights in dozens of states. In addition to addressing whether existing legal protections for individuals’ NIL and reputations are sufficient and how these legal protections intersect with other IP laws, the USPTO is specifically interested in how AI technology impacts existing legal protections for NIL and reputation. As the USPTO notes, AI technology enables new and efficient ways to create digital media, including images, audio, and video. AI can be used to generate digital media that incorporates individuals’ NIL or impacts individuals’ reputations, with or without appropriate authorization. The unauthorized use of AI-generated NIL content can implicate Federal trademark and copyright laws, as well as state NIL laws.Continue Reading USPTO Roundtable: AI and Right of Publicity
The USPTO has published updated patent eligibility guidance (effective July 17, 2024) for AI-related inventions to help determine subject matter eligibility under 35 § U.S.C. 101. This guidance is timely as roughly 20% of all recent patent filings are AI related. It is important to note that based on prior guidance from February 2024, if an AI tool itself invents something, that is not patentable. Only inventions with significant human contribution are patentable. Thus, this does not preclude AI-assisted inventions. This February guidance was supplemented in April 2024 with AI guidance for practitioners and a request for comments on the impact of AI on certain patentability considerations, including what qualifies as prior art and the assessment of the level of ordinary skills in the art. The period for comments remains open until July 29, 2024.Continue Reading USPTO Issues AI Subject Matter Eligibility Guidance
The battle between open source software developers and the leading AI code generators will rage on. Despite the Court dismissing Plaintiffs’ Digital Millennium Copyright Act (DMCA) Section 1202(b) claims with prejudice, it declined to dismiss Plaintiffs’ claims for breach of contract of open source license violations by Defendants. However, the Court also dismissed Plaintiffs’ request for of unjust enrichment and punitive damages.Continue Reading Court Rules in Landmark AI Code Generator Case – DMCA Claims Dismissed but Breach of Contract Claims Remain
The number of bar associations that have issued AI ethics guidance continues to grow, with NJ being the most recent. In its May 2024 report (Report), the NJ Task Force on Artificial Intelligence and the Law made a number of recommendations and findings as detailed below. With this Report, NJ joins the list of other bar associations that have issued AI ethics guidance, including Florida, California, New York, DC as well as the US Patent and Trademark Office. The Report notes that the practice of law is “poised for substantial transformation due to AI,” adding that while the full extent of this transformation remains to be seen, attorneys must keep abreast of and adapt to evolving technological landscapes and embrace opportunities for innovation and specialization in emerging AI-related legal domains.Continue Reading NJ Bar Association Warns the Practice of Law Is Poised for Substantial Transformation Due To AI
By now, most lawyers have heard of judges sanctioning lawyers for misuse of generative AI, typically for not fact checking the outputs. Other judges have issued local rules governing use of or prohibiting AI. These actions have become prevalent. What has not been prevalent is judges encouraging the possible use of AI in interpreting contracts. Perhaps that will change because of a very thoughtful concurring opinion in an appeal to the 11th Circuit Court of Appeals in insurance coverage dispute matter. In that opinion, Judge Newsom penned a 31-page concurrence which focused on whether and how AI-powered large language models should be “considered” to inform the interpretive analysis used in determining the “ordinary meaning” of contract terms.Continue Reading Appellate Judge Proposes Possible Use of GenAI for Contract Interpretation – Recognizes That AI Hallucinates but Flesh-And-Blood Lawyers Do Too!
Plaintiff’s attorneys have filed a wave of lawsuits against various AI tools under a variety of legal theories. Most have had no success so far. Many of the asserted claims have been dismissed for lack of sufficiently pleaded facts to state a claim or for being legally untenable claims. Some of these dismissals have been without prejudice, meaning the plaintiffs get another chance to properly plead a viable claim. In one of the most recent decisions, claims in a nearly 200 page amended complaint were dismissed without prejudice. In a terse decision, the Court excoriated Plaintiff’s rambling complaint’s unnecessary length and distracting allegations, which according to the Court made “it nearly impossible to determine the adequacy of the plaintiffs’ legal claims.” The Court called out rhetoric and policy grievances that are not suitable for resolution by federal courts, including comparing AI’s risks to humanity to the risks posed by the development of nuclear weapons.Continue Reading Lawsuits Against Web Scraping to Train AI
We recently posted about the Jobiak case which raises the interesting question of whether scraping an AI-generated database of job listings constitutes copyright infringement (among other claims). Plaintiff has submitted its opposition, in which it raises the substantive arguments to the copyright claim set forth below.Continue Reading Jobiak’s Opposition to Motion to Dismiss Copyright Infringement Claims on AI-Created Database
A pending lawsuit raises an interesting copyright infringement question – does scraping an AI-generated database of job listings constitute copyright infringement?
In Jobiak v. Botmakers, Jobiak is an AI-based recruitment platform that offers a service for quickly and directly publishing job postings online and leverages machine learning technology to optimize third party job descriptions in real-time and generate an automated database for its job postings. Jobiak alleges copyright infringement (among other claims) because Botmakers scraped Jobiak’s proprietary database and subsequently incorporated its contents directly into its own job listings.Continue Reading Court to Decide Whether AI-scraped Job Database Is Subject to Copyright Protection and Is Infringed?