Unraveling the Legal and Regulatory Maze of Generative AI: 10 Areas to Watch

During the ANA Advertising Law One Day Conference at Katten’s New York office on March 20, Intellectual Property Partners Kristin Achterhof and Michael Justus, who leads the firm’s Artificial Intelligence (AI) Working Group, hosted a panel discussion about the legal and regulatory challenges of generative AI (GenAI), particularly as it relates to marketing and advertising. Kristin and Mike — along with Laura Brett, Vice President of the National Advertising Division (NAD) at BBB National Programs, and Seth Litwack, Senior Counsel, Global Privacy for Interpublic Group — noted that many issues are emerging in litigation while regulators grapple with providing guidance and legislators struggle to propose laws to meet the challenges for those who advertise and conduct business across myriad industries. There are several numerous developing areas that they are keeping an eye on in this space, including: 

1. GenAI and Legal Challenges: GenAI, a subset of AI that creates new content like text, images, videos and computer code, poses unique legal and regulatory issues. The most prominent among these are copyright, confidentiality, privacy, and the right of publicity. 
2. Rapid Development of GenAI: The technology has seen significant progress in a short period. For instance, GPT-4, an AI model developed by OpenAI, was shown to pass the bar exam near the 90th percentile after initially failing the exam the year before. This rapid development underscores the need for legal frameworks to keep pace with technological advancements.
3. Widespread Use Across Industries: Industries ranging from marketing and advertising to software development are increasingly using GenAI. Applications in marketing and advertising include content creation, SEO, sentiment analysis and more. However, each use case has the potential to raise different legal and regulatory issues, such as copyright infringement or privacy violations.
4. Legal Issues Across AI Phases: Legal and regulatory issues can arise at different stages of AI usage. For instance, the training phase could involve potential copyright infringement if the data used for training was not legally obtained. The use of confidential or personal information as prompts could jeopardize IP protections or violate privacy laws. The ownership of IP rights in outputs generated by AI is another critical issue.
5. Litigation: There are numerous ongoing lawsuits related to GenAI. These include high-profile cases involving photo scraping, book copying, scraping of news article archives, legal research repositories, and the use of GenAI to create deep fakes or unauthorized celebrity soundalikes.  Major court decisions may be coming in 2024, given the procedural posture of some of the GenAI copyright infringement cases.
6. Copyright Protection for AI-Generated Content: In the United States, there is ongoing debate about whether AI-generated content should be protected under copyright laws. The US Copyright Office currently does not grant copyright protection for entirely AI-created work, a stance that was highlighted in the recent refusal to grant copyright for AI-generated artwork.
7. EU's AI Act: The European Union Artificial Intelligence Act represents a comprehensive approach to regulating AI. The act classifies AI systems by their level of risk and mandates human oversight and data governance. It also bans AI systems posing an unacceptable risk, such as those used for social scoring or indiscriminate surveillance.
8. FTC's Role in Regulating AI: The Federal Trade Commission (FTC) has been active in regulating AI, focusing on protecting consumers from potential harm. Recent FTC actions include prohibiting the impersonation of businesses or governments in matters affecting commerce, as seen in the case against Automaters, which was accused of misrepresenting the capabilities of AI. The NAD is likely to follow in FTC’s footsteps regarding truth-in-advertising issues surrounding AI.
9. State and Local Legislation: Several US states and local governments have proposed or implemented legislation addressing a wide range of AI issues. California's Consumer Privacy Act (CCPA), for instance, focuses on privacy rights and data protection, while Illinois' Artificial Intelligence Video Interview Act requires employers to obtain consent before using AI in video interviews. Connecticut’s recent state AI Act is likely to become a model for other states.
10. Global AI Legislation: Other countries, including China and Canada, have also passed or proposed legislation related to AI. China's new measures on the management of AI services focus on regulating deep fakes, while Canada's proposed Artificial Intelligence and Data Act aims to protect privacy and ensure the ethical use of data. These laws demonstrate the global trend towards greater regulation of AI. Most recently, the EU has chosen to regulate AI models on the basis of their potential risk.

As GenAI continues to evolve and become more integrated into various industries, understanding the legal and regulatory landscape is crucial. Ongoing litigation and emerging legislation will likely shape the future of how we use and regulate this transformative technology.