“I read that ChatGPT will compensate me if someone sues me for something it produced”. Is this true?
The short answer is “Yes”. The longer answer is “Yes, but …”. Although this is a more concrete question than the vast majority of legal issues surrounding the use of artificial intelligence for a business, it does potentially open up a number of related concerns regarding legal guarantees and intellectual property claims offered by the major AI providers. Many factors, such as the provider chosen, the package subscribed to, as well as the use made of the AI or the data (“inputs”) provided, can influence eligibility for indemnification.
This article is not intended as an exhaustive review of the factors that can influence the applicability of indemnification for third-party claims of intellectual property infringement. Rather, it aims to highlight the main aspects that companies should bear in mind when considering this new area of indemnification.
At the end of the article, you’ll find a non-exhaustive checklist of a few things to keep in mind.
Indemnification, subject to the terms contained in the contracts, involves the supplier assuming the costs of your defense against a third-party claim and, in the event of judgment or out-of-court settlement, will pay you the amount of damages awarded.
Compensation for outputs
Some people, familiar with the usual warranties in software service contracts, might legitimately point out that indemnities for third-party claims relating to possible infringement of intellectual property rights when using software are commonplace.
However, the new intellectual property compensation is aimed at the “outputs” generated by AI, not just the use of AI itself. Outputs are the elements produced by AI, such as texts, images or other content, when you use it.
To simplify the idea, imagine that the AI is a Thermomix food preparation appliance. These warranties do not seek to simply indemnify in situations where the use of the Thermomix infringes a patent or trade secret, but rather if the final product, such as a chicken dish, infringes the intellectual property rights of a third party.
The chosen subscription (Commercial subscription)
From the outset, the warranty should apply to the service to which you subscribe. This may seem obvious, but for some services, it’s crucial to distinguish between a subscription intended for commercial (or professional) use and one intended for personal use. For example, the indemnities offered by OpenAI for the ChatGPT service, and by Microsoft for Copilote, are targeted at commercial accounts.
In the case of Open AI, the “Service terms” dealing with compensation for “outputs” generated by ChatGPT expressly refer to “ChatGPT Enterprise”. [1]
The same applies to Microsoft, where the indemnity only applies to “paid versions of Microsoft’s commercial Copilot services (including Windows Copilot when logged in using a business ID) and Bing Chat Enterprise”. [2] Last November, Microsoft also extended this protection to commercial customers using Azure Open AI services [3]
Thus, a company that has opted for a ChatGPT subscription other than “Enterprise”, or that has not subscribed to Windows Commercial Services, does not benefit from “output” coverage.
The terms on which suppliers agree to indemnify
You then need to look at the conditions under which your supplier agrees to compensate you. Let’s take the case of Microsoft and Open AI.
Microsoft
In Microsoft’s case, the indemnity clause entitled “Customer Copyright Commitment” is found in the “Universal License Terms” for online services. [4]
Despite this title, indemnification is not limited exclusively to copyright, but also covers third-party claims relating to copyrights, patents, trademarks, trade secrets or image rights. Claims alleging that the output, as used in commerce, infringes a third party’s trademark or related rights are excluded.
It’s crucial to note that compensation is conditional on you owning the rights to the “inputs” you provide to the AI. This nuance is particularly important with Copilot, as this program can extract information from a document without direct intervention, simply by learning from the content as it assists you in writing. It is therefore essential to check that you own the rights to the information used by your Copilot assistant, or that this information is royalty-free.
Unlike ChatGPT, Microsoft’s indemnity also covers situations where you modify AI-generated content. However, this coverage is subject to the condition that you do not modify, use or distribute the output in question in a way that you know, or ought to know, is likely to infringe or misappropriate the intellectual property rights of a third party. In other words, you must not bury your head in the sand and use AI-generated content in a way that you know, or ought to know, is likely to infringe the intellectual property rights of a third party.
Finally, it is imperative that you have not disabled, bypassed, disrupted or interfered with any security measures built into the service, such as content filters or metaprompt restrictions.
Users of Azure OpenAI service are also subject to additional obligations. [5]
OpenAI (ChatGPT)
In the case of ChatGPT, the indemnity also covers all intellectual property rights, with the exception of trademarks when the claim is based on the use of the output in commerce.
This compensation also depends on whether you own the rights to the inputs or whether they are royalty-free.
It is crucial to note that for ChatGPT, compensation does not apply if you have modified the output provided by the AI. This differs from the approach taken by Microsoft with its AI.
Again, you must not have disabled or ignored any citation, filtering or security features or restrictions provided by OpenAI. Indemnification is also inapplicable if you use the output knowing, or should know, that it may infringe the intellectual property rights of a third party.
Indemnification Checklist
In summary, from the examples of the tools provided by OpenAI and Microsoft, it is possible to deduce some basic points to watch out for. These points can help you determine whether you are covered by indemnification for third-party claims concerning their intellectual property. Here are these points in the form of a short checklist:
- Does your supplier offer such compensation?
- Have you subscribed to a package giving access to this indemnity (e.g. commercial accounts)?
- Do you own the rights to the inputs you provide to the AI, or are they royalty-free?
- Does the output generated seem likely to infringe the intellectual property rights of a third party?
- Have you modified the output generated? Does the compensation offered by your supplier cover these modifications?
- Do you plan to use the output generated as a logo, trademark, or other distinctive element in a commercial context?
It should be noted that this text aims to popularize the information contained in the various legal texts relating to these programs, and omits certain more complex considerations, such as the use of AI in integration or in combination with other third-party services. For more detailed information, please do not hesitate to contact the Propulsio 360 team.
Sources:
[1] OpenAI. (2024). Service terms. Retrieved April 14, 2024, from https://openai.com/policies/service-terms.
[2] Microsoft. (2024). Microsoft Copilot Copyright Commitment. Retrieved April 14, 2024, from https://www.microsoft.com/en-us/licensing/news/microsoft-copilot-copyright-commitment.
[3] Microsoft. (2023). Copilot Copyright Commitment: AI Legal Concerns. Retrieved April 14, 2024, from https://blogs.microsoft.com/on-the-issues/2023/09/07/copilot-copyright-commitment-ai-legal-concerns/.
[4] Microsoft. (2024). Licensing terms for online services. Retrieved April 14, 2024, from https://www.microsoft.com/licensing/terms/product/ForOnlineServices/all.
[5] Microsoft. (2024). Copyright commitment for OpenAI cognitive services customers. Retrieved April 14, 2024, from https://learn.microsoft.com/fr-ca/legal/cognitive-services/openai/customer-copyright-commitment.