the value of
your business?
the value of
your business?
Is AI eating the value of your business/IP?
(or: The challenges of AI to Intellectual Property)
For many businesses, Intellectual Property (IP) has grown into a core business asset. Copyright, trade marks, patents, designs, data rights and confidential know-how often underpin growth, differentiation and enterprise value.
Artificial Intelligence (AI) can help directly and indirectly in the processes of creating, analysing and commercialising products, services and content.
John Mawhood (right), Consultant Solicitor with PURPOSE, reports on the challenges of AI to Intellectual Property.
But AI can also weaken IP, for example in areas like ownership, exclusivity and enforceability. Those are risks that become significant in a fundraising, or preparing to grant a strategic licence, make international expansion or sale of the business. Then investors, buyers and commercial partners ask detailed questions about ownership, provenance, confidentiality and freedom to exploit key assets.
AI-related risk may also have become embedded in the business. Historic use of AI tools in development, content and branding may give rise to difficult due diligence questions later, especially where a business is seeking investment, licensing a key product internationally or preparing for an exit or divestment.
The Government has just released a Report on Copyright and Artificial Intelligence
SEE BELOW for more details and a link to download the document
Copyright infringement exposure
AI systems are often trained on very large volumes of material, including content that may be protected by copyright. AI-generated outputs from such systems carry potential infringement risk, for example with closely imitated original works.
Looking ahead, that may affect a business’s ability to scale or license business digital assets, or customer-facing material with confidence. Looking back, it may prompt investors or acquirers to ask how key assets were created, what safeguards were used and whether the business can stand behind its right to use them commercially.
Trade secret leakage and confidentiality loss
Many businesses derive significant value from confidential information such as product plans, source code, data sets, pricing strategy, customer information and internal know-how. That value may be put at risk of leakage if external AI systems have been engaged without proper controls.
Ahead of a transaction, insufficient evidence of sound AI governance may cast doubt on how far valuable know-how has remained proprietary. In due diligence, historic use of AI tools raises questions about what information was shared, on what terms, and whether the business’s confidentiality protections remain robust enough to support exclusivity, customer contract adherence and value.
Ownership uncertainty and non-protectable outputs
Businesses may assume that if they used or paid for an AI tool, they own the resulting output outright. That assumption is not always safe. Ownership, authorship and protectability may depend on the terms of the platform, the nature of the output and the extent of human contribution.
That can become important in any fundraising, licensing exercise or sale process. If a business cannot demonstrate clean ownership of key content, code, design materials or product assets, or if those assets do not attract the protection expected, valuation and deal confidence may be affected.
Erosion of originality, inventorship and protectability
AI can also make it harder to show that valuable business assets are sufficiently original, distinctive or otherwise protectable. It may encourage speed, but reduce discipline in recording human contribution, creative development and technical inventorship.
That creates risk both prospectively and retrospectively. A business may find it harder to build a robust IP position going forward, while historic gaps in record-keeping or over-reliance on AI-generated material may create unwelcome issues when its IP portfolio is scrutinised in due diligence.
Increased counterfeiting, brand misuse, and digital fraud
AI is making counterfeiting, brand misuse and digital fraud faster, cheaper and more convincing. Fake websites, imitation branding, false endorsements and other deceptive digital content can damage goodwill quickly, particularly for businesses trading online or across borders.
For businesses with growth or licensing ambitions, the issue is not simply whether trade marks are registered. It is whether the business has a credible strategy for monitoring, enforcing and protecting brand value in practice.
Why this matters
For ambitious businesses, AI governance and oversight is no longer just a technology or internal policy issue. It is increasingly part of IP protection, transaction readiness and value preservation.
Businesses that address these issues early are likely to be in a stronger position to raise capital, expand internationally, license valuable assets and pursue a sale without avoidable friction over the quality, ownership and defensibility of their intellectual property.
The Department for Science, Innovation and Technology, and the Department for Culture, Media and Sport have just published this document:
Report on Copyright and Artificial Intelligence
The report covers a wide range of issues including policy options on copyright and the training of artificial intelligence models, licensing and enforcement, rights and exceptions, digital replicas, and the enforcement of requirements and restrictions.
Subsequent sections consider transparency about the access to, and use of, copyright works by AI developers, and about the outputs of AI systems. In addition, it covers copyright law, covering original literary, dramatic, musical and artistic works, including illustration, photography, songs, plays, software, web content and databases.
It’s a mighty read at over 120 pages long, and subject to a considerable degree of scrutiny, but to download the document for future reference CLICK THE IMAGE.
How can Purpose Law help you?
Intellectual property rights can be legally enforced, with infringement cases pursued through legal proceedings when unauthorised use occurs.
By understanding and leveraging IP law, businesses and individuals can protect their ideas. Purpose Law can help. Click this link to find out more.
Find out more about purpose law...
