Exploring Contractual Issues in AI Transactions

Morgan Lewis partners Mike Pierides and Don Shelkey discussed negotiating contracts for artificial intelligence (AI) tools and services. They focused on identifying new issues, or new twists on old issues, that are involved when entering into commercial agreements concerning AI, such as ensuring your organization’s data is protected, ensuring that work product is appropriately generated and validated, and including the appropriate disclosures so that your organization can react to future developments in the AI landscape.

Key Takeaways

AI is not just making news—it is also impacting the way companies do business and will continue to do so moving forward. When negotiating contracts for AI tools and services, it is helpful for companies to understand the AI issues they could face.

• Initial considerations:
  • Context is that AI is increasingly prevalent and needs to be addressed contractually and is increasingly under regulatory scrutiny
  • Disclosure and understanding of use cases are essential
• Key contract provisions include:
  • Testing of the AI
  • Compliance with law
  • Protection of intellectual property (including input data and generated data)
  • Portability and/or retention of data and license rights on expiry/termination
• AI-use policies must extend to third-party arrangements
• Regulatory considerations, including in respect of cyber and privacy issues

QUESTIONS?

Please contact Annette Barket. For CLE questions, please email CLE Credit Request.