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Jim Gatto is a partner in the Intellectual Property Practice Group in the firm’s Washington, D.C. office. He is Co-Leader of the Artificial Intelligence Team, the Blockchain & Fintech Team, and Leader of the Open Source Team.

The SEC has charged and settled claims with two Investment advisers with making false and misleading statements about their use of artificial intelligence (AI). The SEC found that Delphia (USA) Inc. and Global Predictions Inc. marketed to their clients and prospective clients that they were using AI in certain ways when, in fact, they were not. SEC chair Gensler noted that when new technologies come along, they create buzz from investors and false claims by those purporting to use those new technologies. He admonished investment advisers to not mislead the public by saying they are using an AI model when they are not and that such “AI washing” hurts investors. The companies paid $400,000 in civil penalties.Continue Reading SEC Cracks Down on Over-Hyped AI Claims – Director Says This is Just the Beginning

In a prior article Training AI Models – Just Because It’s “Your” Data Doesn’t Mean You Can Use It, we addressed how many companies are sitting on a trove of customer data and are realizing that this data can be valuable to train AI models. We noted, however, that the use of customer data in a manner that exceeds or otherwise is not permitted by the privacy policy in effect at the time the data was collected could be problematic. As companies think through these issues, some have (or will) update their Terms of Service (TOS) and/or privacy policy to address this. Before companies do this, it is critical to make sure they do not jump out of the frying pan and into the fire.Continue Reading FTC Warns About Changing Terms of Service or Privacy Policy to Train AI on Previously Collected Data

The Florida State Bar recently adopted an advisory opinion meant to provide attorneys with guidance on how to use generative artificial intelligence (“GenAI”) without running afoul of ethics rules. In doing so, Florida becomes one of the first state bars to issue formal guidance on this topic—second only to California.Continue Reading Florida Joins California in Adopting Ethical Guidelines for Attorney’s Use of Generative AI

The launch of ChatGPT 3.5 in November 2022 set up 2023 as a year for rapid growth and early adoption of this transformative technology. It reached 100 million users within 2 months of launch – setting a record for the fastest growing user base of a technology tool. As of November 2023, the platform boasted an estimated 100 million weekly active users and roughly 1.7 billion users. Notably, ChatGPT is just one of the growing number of generative AI tools on the market. The pace of technical development and user adoption is unprecedented.Continue Reading Artificial Intelligence Legal Issues – 2023 Year in Review and Areas to Watch in 2024

On November 21, 2023, the Federal Trade Commission (“the FTC”) announced its approval of an omnibus resolution authorizing the use of compulsory process for nonpublic investigations concerning products or services that use artificial intelligence (“AI”). Compulsory process refers to information or document requests, such as subpoenas or civil investigative demands, for which compliance is enforceable by courts. Recipients who fail to comply with compulsory process may face contempt charges.Continue Reading AI Enforcement Update: FTC Authorizes Compulsory Process for AI Investigations

A UK court has ruled that Getty Image’s lawsuit against Stability AI for copyright infringement over generative AI technology can proceed. Stability had sought to have the case dismissed, alleging in part, that the AI models were trained in the US. However, the court relied on seemingly contradictory public statements by Stability’s CEO, including that Stability helped “fast track” UK residency applications of Russian and Ukrainian developers working on Stable Diffusion. This suggests that at least some development occurred in the UK. A similar case involving the parties is pending in the US. One significance of where the case is heard is that in the US, fair use can be a defense to copyright infringement. But not in the UK. This is just one example of where disparate country laws relating to AI may cause AI developers to forum shop to develop AI where the laws are most favorable. For example, Japan has announced that it will not enforce copyrights on data used in AI training. If such activity is found to be infringing in the UK, US or elsewhere, it is conceivable that some companies will move their AI training activities to Japan.Continue Reading Getty Image’s AI Model Training Lawsuit in UK Against Stability to Proceed 

The White House’s Executive Order On The Safe Secure And Trustworthy Development And Use Of Artificial-Intelligence (“EO”) addresses many equity and civil rights issues with AI and mandates certain actions to ensure that AI advances equity and civil rights. The Fact Sheet accompanying the EO summarizes some issues and actions directing various agencies to:Continue Reading Equity and Civil Rights Issues in the White House Executive Order on AI

On October 30, 2023, the White House issued an Executive Order focusing on safe, secure and trustworthy AI and laying out a national policy on AI. In stark contrast to the EU, which through the soon to be enacted AI Act is focused primarily on regulating uses of AI that are unacceptable or high risk, the Executive Order focuses on responsible use of AI as well as developers, the data they use and the tools they create. The goal is to ensure that AI systems used by government and the private sector are safe, secure, and trustworthy. The Executive Order seeks to enhance federal government use and deployment of AI, including to improve cybersecurity and U.S. defenses, and to promote innovation and competition to allow the U.S. to maintain its position as a global leader on AI issues. It also emphasizes the importance of protections for various groups including consumers, patients, students, workers and kids.Continue Reading Flash Briefing on White House Executive Order on AI Regulation and Policy

The White House Executive Order on AI (“EO”) is comprehensive and covers a wide range of topics. We provided a summary here. It addresses many of the risks and problems that can arise with AI. One of the topics which raises many legal issues, particularly with generative AI (“genAI”), is intellectual property. Some of the IP issues include: i) whether training AI models on copyrighted content constitutes infringement; ii) whether the output of genAI that is based on copyright-protected training material constitutes infringement; iii) what level of human authorship/inventorship is required for copyright/patent protection of genAI-assisted works; iv) whether genAI tools that create art “in the style of” particular artists constitutes copyright infringement and/or violate the right of publicity; v) whether genAI tools that are trained on copyright-protected materials must maintain copyright management information; and vi) whether genAI tools, such as AI code generators, that are trained on open source software, must comply with the terms of the open source licenses.Continue Reading White House Executive Order on AI Punts on IP Issues

The US just catapulted into being the world leader on regulating AI. Bypassing Congress, the White house issued an Executive Order focusing on safe, secure and trustworthy AI and laying out a national policy on AI. In stark contrast to the EU, which through the soon to be enacted AI Act is focused primarily on regulating uses of AI that are unacceptable or high risk, the Executive Order focuses primarily on the developers, the data they use and the tools they create. The goal is to ensure that AI systems are safe, secure, and trustworthy before companies make them public. It also focuses on protection of various groups including consumers, patients, students, workers and kids. Continue Reading White House Executive Order Ramps Up US Regulation of and Policy Toward AI