Hidden Intellectual Property Risks and Indemnification Limits in AI Contracts
Generative AI providers' intellectual property indemnification provisions may leave companies facing unexpected exceptions and coverage gaps regarding copyright infringement lawsuits.
Companies using generative AI technologies often assume that the intellectual property indemnification provisions offered by providers guarantee complete protection against potential infringement claims, but exceptions in contracts can create significant coverage gaps.
Gaps in AI Indemnification Provisions
Companies assume that intellectual property indemnification clauses offered by model providers will protect them against potential copyright infringements. However, the scope of protection often depends on the exceptions that follow rather than the indemnification itself. Processes such as customer inputs, integrations, and modifications increase these risks.
Copyright Lawsuits and Industry Reflections
Recent lawsuits in the field of copyrights show that indemnification has become a critical component in AI contracts. Unlike traditional software, generative AI systems are probabilistic and distribute responsibility among multiple participants. This situation complicates the management of legal risks.
Indemnification Policies of Major Providers
Major model providers like Anthropic and OpenAI offer intellectual property indemnification in certain forms. In contrast, these providers apply exclusion exceptions for modifications, combinations with third-party technologies, and customer data. It is vital for organizations to carefully review contract language across the AI stack.