Los Angeles is home to an array of tech-driven business enterprises, including companies that are at the forefront of Artificial Intelligence (AI) development and innovation. The recent advent of AI tools and applications is both exciting and concerning. Why concerning? Because AI is creating potentially new legal risks and/or revealing existing legal risks that need to be addressed by LA business owners.
Legal Implications of AI for Los Angeles Business Owners
AI tools and systems represent an incredible technological advancement for society, but such tools also introduce several legal challenges that Los Angeles business owners need to be prepared to navigate, including the following:
Concerns Over IP Protections
AI-generated content (e.g., text, images, or other content forms) can inadvertently infringe upon existing intellectual property (IP) rights. This might include patent, copyright, or trademark infringement. This is why Los Angeles businesses need to be cautious about generating AI-fueled content. Doing so could lead to IP legal disputes. If possible, try to determine the legal ownership of content or inventions created by a particular AI tool or application. This information may be accessible by contacting the owners of the AI and requesting general information about what data sets the AI system was trained on.
Business Contracts and Legal Liability
Contracts related to AI services need to include transparent terms, liability clauses, and dispute-resolution mechanisms. Failure to meet contractual obligations associated with AI services could lead to legal disputes.
For example, let’s say a boutique digital business enters into an agreement with a company offering an AI-powered chatbot service. If the AI chatbot provides incorrect responses to customers that causes a notable decline in customer satisfaction and sales, then the digital business could have grounds to assert a breach of contract. The outcome of such a dispute will likely depend on the specific terms and liability clauses within the contract. This example highlights the importance of business owners investing the time to thoroughly review such agreements. In addition, if you have an existing agreement with a service provider who approaches you about a new AI tool the provider is offering, this may warrant a review and update to an existing contract.
Data Privacy and Data Protection
Businesses in Los Angeles using AI tools and applications need to implement compliance protocols pertaining to the collection, storage, and processing of both customer data and employee data. Data breaches, which could result from AI systems, can lead to serious legal liability, along with regulatory penalties issued by the California Attorney General’s Office and/or the California Privacy Protection Agency. It is important to remember that businesses in Los Angeles, and throughout California, may be subject to the California Consumer Privacy Act, which is a regulatory framework governing how California businesses process and handle personal data.
AI Algorithmic Bias and Discrimination
AI tools and systems, particularly those involved in hiring, lending, or customer service, may inadvertently discriminate against certain individuals or groups. To avoid legal liability for algorithmic discrimination, business owners in Los Angeles need to ensure their AI systems and applications are designed to mitigate the risk of any known, or reasonably foreseeable biases.
Have Questions About the Impact of AI and Potential Legal Risks? Contact an Experienced Business Lawyer in Los Angeles
If you are interested in utilizing an AI tool or system for your business operations, then now is the time to contact the business attorneys at Hakim Law Group. We are a corporate law firm geared toward helping entrepreneurs and business owners tackle complex legal and regulatory issues, including novel issues related to AI. Our Los Angeles business law firm was founded on the premise that experience matters.
Our team of skilled and highly reputable business lawyers in Los Angeles have worked at top-tier international law firms and served as general counsel to major companies. This high level of diverse legal and business experience is paramount to our boutique approach.
For additional information or to schedule an appointment, please contact Hakim Law Group at 310-993-2203 or visit www.HakimLawGroup.comto learn more.
