The rise of Artificial Intelligence (AI) – Intellectual Property Law

By Truman Zhang

Human fascination with artificial intelligence (AI) has been prevalent since the inception of computer science  and pop culture films such as 2001: A Space Odyssey (1968), Terminator (1984) and, more recently, Ex Machina (2014). Now, this pursuit for high functioning AI has never been more attainable in modern society.

AI has garnered the concern of many within the public sphere, especially in the realm of intellectual property law (IP Law). This is due to AI being a medium  for replicating human creativity and creating works in which copyright may subsist. This article will explore the growing implications of AI development within the Australia’s current legal framework for IP.

What is AI?

The fundamental purpose of AI is for technology to simulate human cognitive abilities. These characteristics include the ability to reason, learn and make decisions, but more effectively and efficiently than humans. For example, generative AI such as ChatGPT is capable of writing essays, music, coding and more. The AI creations are a concoction of mixing and matching archives of information and data.

What is Intellectual Property Law?

Intellectual Property (IP) law is an area of law responsible for regulating patents, copyrights, trademarks, and trade secrets. The basis of intellectual property is to protect creators, their business assets and their control over how their work is used and distributed.

Accordingly, an infringement is the unauthorised use of another individual or commercial entity’s intellectual property. Since AI output is often formed from pre-existing work which may resemble another copyrighted work, a question arises as to whether generative AI creations are an infringement on copyright, patent, and trademarks. Further, it is contentious to assess who would be liable for the infringement. It is for these reasons businesses need to understand the legal risks associated with AI and how to protect themselves.

Case Study 1: Andersen v. Stability AI et al (2022)

In this US case, three artists commenced proceedings against multiple forms of generative AI platforms on the claim that these AI tools were making infringements by using their original works in their style and allowing users to generate work which were not sufficiently different from their original protected works. If a court finds that the AI’s works are unauthorized and derivative, substantial infringement penalties can apply.

The Court is asked to consider what the limit of derivative work is under the intellectual property laws. It has become apparent that this case’s outcome will be largely reliant on the fair-use doctrine, which acts as an exception to using copyrighted work without the owner’s permission.

Fair Use and Fair Dealing

Australian Laws have historically been influenced by the decisions of US Courts. However, it’s important to note that Australia does not implement the principle of fair use but rather fair-dealing pursuant to the Copyright Act 1968 (Cth). Without diving into the intricacies, the core difference between the two principles is that fair dealing subjects the use of copyrighted work to a vastly stricter threshold. The following categories to be considered for fair dealing are:

  • Research or study
  • Criticism or review
  • Parody or satire
  • Reporting the news
  • Reproduction for professional advice or judicial proceedings
  • Enabling a person with a disability to access material

When using the copyrighted work, there must be acknowledgement of the original creators and there is an obligation to make the dealings fair. Whereas, the American counterpart of fair use is a broader application, which is open to more interpretation and less limitations. Thus, Australia’s international contemporaries are able to take advantage of AI to a greater degree.

Next step for developers

AI developers must have regard for compliance with IP laws and form methodology for preserving the originality of AI generated content. This may be done through an avenue of compensating the creators who own the IP. Alternatively, customers of AI platforms should make enquiries about whether the AI program has been trained with any protected content, review the terms of service, privacy policies and avoid those who cannot confirm that the data is either licensed or subject to open-source license. Furthermore, developing audit trails would also ensure companies are prepared for the possibility that Australian customers may demand some form of insurance. Looking further into the future, insurance companies may require these reports in order to extend traditional insurance coverage to business users whose assets include AI-generated works.

Next step for businesses

As AI’s involvement grows greater within the workplace, it will call for companies to take an initiative to protect themselves from both the short- and long-term issues. Businesses should consider including protections to their transaction terms of the contracts. Particularly, a demand of terms of service should be made against these generative AI programs. These terms of service should relate to proper licensure of the training data implemented for AI. Moreover, a demand of indemnification from infringements for any failure of the AI businesses to license data input or implementation of self-reporting by the AI for potential infringements.


Given Australia’s current position of IP law and fair dealing, businesses and content creators must be aware that regardless of whether infringements are direct or unintentional. Whilst AI is a real threat to the livelihood of members of the creative class, it also carries a risk of compromising brands which have intensively built their identity based on certain styles. Conversely, restricting the use of AI can also have detrimental consequences on the opportunities created by AI and inhibit creative and corporate interests in Australia, especially if the foreign businesses are able to capitalise on AI. It is foreseeable that the implementation of AI will reach a state that is far more complex than the current IP Laws in place. In such a scenario, Australian lawmakers must reconsider their position on IP law.

Foulsham and Geddes notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Foulsham and Geddes are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.