Artificial intelligence is now part of everyday business life. Whether it’s drafting emails, generating marketing copy, analysing contracts or powering customer-facing tools, AI is moving quickly from novelty to necessity.
But as its use grows, so does the potential for legal disputes. Megan Jefferies and Darcy Lilley from our Commercial Dispute Resolution team look at some areas that business leaders should be thinking about
How businesses are using AI today
The range of business applications for AI is expanding rapidly. Generative AI tools are being used to produce written content, summarise documents, write code and conduct research. In customer service, AI-driven chatbots handle queries around the clock, while marketing teams use AI to personalise campaigns and create advertising assets at speed.
This isn’t a trend reserved for large corporations. Businesses of all sizes are finding practical uses for AI, and the pace of adoption isn’t slowing. The benefits are real but so are the risks, particularly when disputes arise.
Putting confidential legal advice into AI
Many businesses are now routinely feeding documents into free, publicly accessible AI tools to summarise them and generate responses. This is potentially risky, particularly where legal correspondence is concerned.
Normally, your opponent in a legal dispute can’t force you to disclose confidential advice provided by your lawyers . However, following a recent decision in the Upper Tribunal, it is now considered by the courts that uploading confidential documents into an open-source AI tool amounts to placing information into the public domain, shedding their cloak of confidentiality and potentially waiving legal privilege in the process.
The practical consequences are serious. Opponents could apply to the court seeking disclosure of documents on the basis they have already been shared with a public AI tool, or potentially extract privileged information from these tools to use against you – without you even knowing.
Either way, privilege, one of the strongest protections a business has when managing litigation, could be lost.
The clear advice here is to not upload privileged legal advice or confidential documents to free, publicly available AI tools and seek professional guidance on secure options for using AI in a legal context to ensure your data is genuinely protected.
AI in advertising and the copyright question
Creativity sits at the heart of advertising, and the Copyright, Designs and Patents Act 1988 is the framework that protects it. That legislation was written long before AI developed the capability to generate text, images and video at scale, and it does not account for computer programs being autonomous or capable of self-learning.
There are two vital questions for any business using AI to create advertising content:
- Can AI-generated material be protected by copyright at all?
The current view among intellectual property lawyers is that content produced purely by AI, without meaningful human creative input, is unlikely to qualify for copyright protection in the UK. That means a competitor could potentially copy your AI-generated campaign without infringing your rights.
- As copyright subsists, who owns copyright in works created or assisted by AI?
AI tools learn from vast datasets that may include third-party copyrighted material. Businesses using AI-generated content in advertising face potential claims from the owners of that underlying material.
Until the law catches up, it’s important that you document creative processes carefully, understand the terms of the AI tools you use, and take advice before assuming AI-generated content is either protected or free from third-party claims.
Contracting for AI: read the small print
If your business is procuring AI services, the contract terms require close attention. Until recently, AI service agreements tended to be heavily weighted in favour of the provider. That is beginning to change, but there are still traps for the unwary.
Key issues to watch include supply chain dependency – AI services often rely on a chain of third-party providers you have no direct contract with, so disruption further down the chain can leave you without a remedy.
Also consider what happens to the data your business feeds in. Does it get used to train the provider’s models or end up in a database accessible to others?
Some providers also seek indemnities from customers for copyright claims arising from use of the service – understand what you are agreeing to before you sign.
Finally, scrutinise the liability caps carefully and keep a close eye on regulatory change – AI rules are shifting quickly.
What this means for your business
AI creates real commercial opportunities, but also new legal vulnerabilities that many businesses are not yet managing effectively. The disputes arising from AI use are only going to grow in frequency and complexity.
If you are involved in or anticipating litigation, using AI in a way that could affect your intellectual property, or considering signing up to AI services in a more structured way, make sure you are seeking robust legal advice to ensure the risks to your business and its assets are minimised.
The Thrings Commercial Dispute Resolution team has an outstanding track record in achieving success in court, also offering expertise in mediation, pre-action work, settlement negotiations and arbitration to deliver commercially focused solutions to minimise disruption to your business. Contact us to find out more.
