As the capabilities of artificial intelligence (AI) continue to grow, individuals and organizations are increasingly relying on AI to produce all kinds of content. AI-generated images are a huge subset within this field. AI-generated images are used for marketing, design, and even entertainment. But with new advancements in technology, come new legal questions.
When it comes to dealing with images, many business relationships depend on one party assuring another that they own (or can legally transfer) rights in an image. But when that image is generated by AI, those assurances may be misrepresentations.
In this post, the litigation lawyers at Walker Law will explore how misrepresentations about ownership of AI-generated images can create contract disputes and expose parties to costly litigation.
A Brief Overview of Canadian Copyright Law
The Copyright Act governs Copyright in Canada. Without digging too deep into the specifics of Copyright, the Act generally grants exclusive rights to the author of a work (such as an image), to use and share it as they see fit. The Copyright also allows the author to authorize others to use and share the work.
For a Copyright to exist, there must be an element of originality (meaning an exercise of skill and judgment)[i] and fixation (meaning the work must be fixed in a tangible format).[ii]
Copyright of AI-Generated Images
While the Copyright Act does not explicitly state that an author must be human, there is strong belief among legal scholars that Copyright can only be held by a human author.[iii] There is no undisputed conclusion to this question in Canadian law. Lawmakers,[iv] as well as the Federal Court,[v] are actively considering this question.
If Canadian law concludes that no Copyright exists in AI-generated images, the “creator” (which may be the developer of an AI system or the end-user that prompted the system) cannot claim ownership or assign rights.
Potential Contract Disputes: Misrepresentations About Copyright Ownership
Because Copyright determines who may legally use, license, and profit from an image, misrepresentations in this area can lead to significant damages and disputes.
If a person or organization were to sell the rights to the exclusive use of an AI-generated image, they would be misrepresenting the ownership of the image and unjustly enriching themselves. When an image is generated by AI, there is no Copyright attached to the image, no one owns the rights to its exclusive use, and it is therefore free to use by all. Therefore, selling exclusive rights to something that a party does not own (or that no one owns for that matter) can open the doors to civil and commercial litigation.
How Parties Can Protect Themselves
Parties (whether buying or selling images) can take practical steps to protect their legal interests in this developing area of law. For sellers, the safest approach is to avoid making promises about Copyright ownership or exclusive-use rights in AI-generated images. Because these images may not carry copyright protection, offering “exclusive rights” could unintentionally create legal exposure.
On the other side of the transaction, buyers should also take precautions, especially if they expect to receive exclusive rights to an image. Before completing a purchase, buyers can confirm whether AI was used in creating the image. This can be done by asking the seller to provide written confirmation that the image is not AI-generated. If AI was used, the buyer can ask the seller to clearly describe how and to what extent the technology contributed to the final image. Documenting these details helps ensure that buyers understand what rights they are actually receiving and reduces the risk of costly disputes later on.
Commercial Litigation at Walker Law
Disputes over the use and ownership of AI-generated images can quickly become complex, especially as the law continues to evolve. Understanding your rights and responsibilities early can help you avoid costly misunderstandings and protect your business interests.
The commercial litigation lawyers at Walker Law are experienced in resolving various kinds of complex contractual disputes. If you are uncertain about your rights in buying, selling, or using an AI-generated image, contact Walker Law for practical legal guidance.
[i] CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13 at para 16.
[ii] CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13 at para 8.
[iii] Statutory Review of the Copyright Act submitted by Myra Tawfik on behalf of Canadian intellectual property law scholars at page 2.
[iv] A Consultation on a Modern Copyright Framework for Artificial Intelligence and the Internet of Things at section 2.2.
[v] CIPPIC v Sahni: AI’s Role in Copyright Law.
Tags: contract disputes, commercial litigation law, civil litigation law.