IP Rights in AI Outputs: Who Owns AI-Generated Content

Artificial intelligence (AI) is changing the game for businesses, generating everything from artwork to legal documents. But when an AI tool produces something valuable, who owns it? The legal side of this is still evolving, and the answer depends on where you are and how much human input is involved. This article breaks down the key points under both EU and US law, focusing on copyright and contracts—without the legalese.

Copyright and AI

Copyright laws in the US and EU are based on human creativity, making AI-generated works a grey area.

In the European Union: Under EU copyright law, only works that show “human intellectual creation” can be protected. Courts and lawmakers have made it clear that AI, on its own, does not count as an author. If humans play a meaningful role in shaping the output, they may be able to claim copyright. The EU Copyright Directive (2019/790) reinforces this principle, requiring a work to reflect the author’s personality and free, creative choices.

In the US, the US Copyright Office takes a similar stance: If a work is entirely AI-generated, it is not eligible for copyright. The Office requires applicants to disclose AI-generated content in their applications and grants protection only to human-created elements. Courts have further upheld that copyright requires human authorship, though works with substantial human contributions—such as editing or curating AI outputs—may still qualify for protection.

Economic and Moral Rights

Copyright generates two distinct types of intellectual property rights: economic rights (patrimonial rights) and moral rights. Economic rights allow the copyright holder to control the financial benefits of their work. These rights include the right to reproduce, distribute, perform, display, and adapt the work, and the copyright holder can license or sell these rights to others.

Moral rights protect the connection between an author and their work, granting rights like attribution and preventing distortion. These rights are traditionally reserved for human creators. In the EU and US, even if an AI-generated work is eligible for copyright protection, moral rights remain with the human behind it. This means businesses must carefully consider attribution and authorship when using AI-assisted content.

Transferring intellectual property rights over AI-generated content

As artificial intelligence becomes an integral part of business operations, the question of transfer of intellectual property rights over AI-generated content is increasingly relevant, particularly in employment and B2B settings.

Just like traditional intellectual property, AI-generated copyrighted content can be assigned or licensed through a contract. However, it is essential to confirm that the entity transferring the rights actually owns the copyright.

In the employment context, businesses must ensure their employment agreements adequately address ownership of AI-generated content.

In the US, the work-for-hire doctrine applies, meaning that employers automatically own AI-assisted copyrighted work created by their employees in the course of their job duties. However, independent contractors retain copyright unless a contract states otherwise.

In the EU, employers also own AI-assisted copyrighted work created by their employees, but only if the employment contract explicitly provides for this. Some jurisdictions, however, apply specific rules to particular types of works. For example, in France, copyright on software created by an employee is owned by the employer, but the moral rights remain with the creator. In Germany, copyright itself is not transferable, employers may be granted exploitation rights through exclusive or non-exclusive licenses.

In B2B agreements, clearly defining IP ownership and transfer rights is essential. Businesses could consider the following contractual provisions:

• Ownership and Assignment: Clearly specify whether AI-generated content is owned by the creator, client, or another entity, and include a clause transferring rights where necessary.
• Scope of Rights: Outline whether the transfer is exclusive or non-exclusive, perpetual or time-limited, and whether there are territorial restrictions.
• Moral Rights and Waivers: In the EU, where moral rights cannot always be waived, specify how these will be managed.
• IP Registration: If the AI-generated content requires copyright registration, the contract should determine which party has the exclusive right to register it.
• Indemnification and Liability: Allocate risks relating to potential IP infringement claims, particularly if the AI-generated content is derived from copyrighted material.

Practical Steps for Businesses

To navigate the complexities surrounding AI-generated content and intellectual property rights, businesses should take proactive steps to ensure clarity and minimise legal risk. Here are some key considerations:

• Document Human Involvement: Where human creativity plays a role in the creation of AI-generated content, it is crucial to document and demonstrate the extent of that involvement. While full AI-generated works may not be eligible for copyright, content that includes substantial human input may still qualify for protection. Clear records of how human decisions, editing, or curation shaped the final output will be vital in establishing authorship.
• Use Clear Contractual Term: Contracts should explicitly define the ownership of any AI-generated content. Businesses should include clear ownership clauses that specify who holds the rights to the content, whether it is the company, the employee, or another party.
• Review Third-Party AI Service Terms: Many AI service providers include clauses in their terms and conditions that address the ownership of AI-generated content. Businesses should carefully review these terms before using AI tools to ensure that they understand who retains the rights to the generated content.
• Stay Ahead of Legal Changes: Intellectual property laws differ between jurisdictions, and these differences can have significant implications. Companies operating across borders should consider the variations in copyright laws and moral rights and monitor developments in AI and copyright law that may impact ownership rights.

HOW CAN LOGAN & PARTNERS HELP?

AI is a powerful tool, but when it comes to intellectual property, the rules are still catching up. Right now, if you want to protect your AI-generated content, the safest bet is to ensure there’s human involvement and to have watertight contracts. Need help drafting a contract to safeguard your IP and avoid costly disputes? Book a free 20-minute consultation with us — we will help you create a solid agreement that protects your rights and keeps your business secure.

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