In this article, Jill Bainbridge, Head of Intellectual Property at Harper James, discusses the risks inherent in using AI-generated material, explains how you can reduce those risks, and describes how to deal with any infringement allegations.

How is your business using generative AI?

To assess the risks posed to your business by generative AI tools, like ChatGPT and Midjourney, you must establish the extent to which you use AI-generated content in the business.

If you are a small owner-managed business, you will likely be heavily involved in all business areas, and you will already have an understanding of the extent to which you are using AI-generated content to create commercial assets such as brand names, logos, slogans, or marketing campaigns.

In larger businesses with dedicated branding and marketing teams, you are less likely to be directly involved in the development of key commercial assets, such as branding. So, you need to take steps to ensure you understand how your teams use AI, and which of your business’s assets are developed with AI input.

If you use external marketing or design agencies to create your branding or campaigns, you need to make sure your business is protected if any of the material they provide infringes someone else’s rights. You should carefully check your contracts with external agencies for any reference to AI usage and ensure the arrangements protect your position. For example, you might insist that any content they provide is entirely original and not AI-generated or require the agency to seek your approval for any AI use. 

Can AI-generated brand names, slogans, or logos be registered as trademarks?

You can register AI-generated content as trademarks provided it meets the legal requirements for trademark protection. The material you wish to register must not be descriptive of the goods and services you offer and must be capable of distinguishing your offerings from those of other businesses.

Just because branding can be registered as a trademark doesn’t mean you won’t encounter difficulties if it resembles existing marks. While the fact that a mark resembles one already registered won’t automatically prevent its registration, the owner of the existing mark may oppose your application. Even if you succeed in registering the branding, you may face a claim for trademark infringement if you decide to use it.

Unsurprisingly, AI sites expressly pass the burden of ensuring the material they create is lawful onto users. As things stand, you would have no recourse against the site for providing infringing material.

What are the trademark infringement risks from using AI generated content?

AI doesn’t check that its creations don’t infringe third-party rights. In fact, its systems are trained using third-party work, so the infringement risks are higher than if your employees or external agencies were to use their own skills to create original branding and marketing campaigns. Even lesser known brands will likely have registered their branding as trademarks, so unless you have systems in place to identify potential infringements, there is a risk of unintentionally infringing registered trademarks.

Trademark infringement can have severe consequences for your business, both financially and in terms of your reputation in the market. It is no defence to an infringement claim to say you were unaware of the earlier branding, if your use is infringing, you’re liable.

The main consequences for trademark infringement include the following:

• An injunction to stop you from using the branding in future. An injunction is a legal order that you must follow. If you ignore it, you could be held in contempt of court, which can lead to serious penalties, including prison in extreme cases. To comply, you would probably need to rebrand and destroy any materials containing the infringing branding
• Financial penalties, either damages or an account of profits. Damages are compensation for the losses the trademark owner has suffered because of your infringement. An account of profits means you pay them the profits you made from using the infringing branding

Most trademark disputes are settled before going to court. The trademark owner will usually insist that you agree to the same remedies you’d be ordered to give by a court as part of any settlement deal.

What steps can you take to limit the risk of trademark infringement?

If you use AI to assist you in creating branding or marketing materials, it’s important to have sensible processes in place to reduce the risk of infringement. The processes you’ll need will depend on a number of factors, including the nature and extent of your AI use, but might include the following:

• Conducting trademark clearance searches: trademark clearance searches identify any pre-existing trademarks that may impact your proposed use and enable you to make any necessary tweaks or abandon the branding entirely to avoid legal action. The scope of the required searches will depend on how you intend to use the branding, including the goods and services you wish to use it on and where you intend to market those goods and services
• Ensuring your contracts with external agencies protect your interests: you’ll need to decide your business’s stance on contractors using AI and negotiate terms that accurately mirror your decision and provide your business with legal recourse against the agency should it transpire that any material they produce for you infringes third-party rights
• Implementing an AI policy and training: your business is liable for the acts of its employees, so ensuring your workforce is alive to the risks inherent in using AI to produce assets and takes steps to mitigate those risks

You must decide on the extent to which you’re happy with your employees using AI-generated content and communicate your decision to them clearly through an AI-specific policy and accompanying training. Even if you’re happy with your staff using AI, you must ensure they do so within a strict framework, including keeping detailed notes of the prompts used and the extent to which they altered the AI material to produce the final result.

Given the pace at which AI is evolving and the uncertainties regarding the legal position of AI-generated content, it’s important to keep your policy under review and provide training at regular intervals to reflect any changes in both the technology and the law.

Summary

Trademark infringement is a strict liability issue, which means you can be held responsible even if you did not realise you were infringing someone else’s rights. When you use AI-generated branding or marketing materials, it is impossible to know exactly where the inspiration has come from. That makes it essential to check your branding properly before you use it. Simple steps like clearance searches, clear internal policies and carefully drafted contracts with agencies can make a big difference in reducing your risk.

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