top of page

Understanding and Navigating Legal Compliance in the Global AI Sector: Key Insights and Strategies

As we reflect on the pivotal technological advancements of recent years, 2023 stands out as a landmark year for artificial intelligence (AI), particularly in the realm of generative AI. The launch of OpenAI's ChatGPT in late 2022 marked a significant turning point, leading to the seamless integration of AI into various aspects of our daily lives. However, this advancement brings forth complex legal challenges that necessitate a nuanced understanding and a proactive approach to AI regulation. 


For additional information regarding AI regulations, and to find out how this could impact your business, please contact our Head of Corporate Transaction, Fiona Xu, at fiona.xu@consultils.com 


Intellectual Property and AI: Navigating New Territories 

The integration of AI in creative processes poses significant intellectual property challenges. Industry disputes, such as those involving writers' and actors' strikes, have highlighted the complexities surrounding AI-generated content. These developments necessitate a reevaluation of contracts to include AI-specific clauses and address potential copyright and patent infringements. 

 

Data Privacy and Cybersecurity: Addressing Emerging Risks 

AI's reliance on large datasets amplifies data privacy and security risks. Compliance with stringent data protection regulations like the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA) is crucial. Moreover, the use of AI in cyberattacks presents novel threats, emphasizing the need for robust security measures to protect AI systems from exploitation. 

 

Ethical Considerations: Ensuring Fairness and Transparency 

The deployment of AI raises critical ethical issues, particularly regarding bias and fairness. AI systems trained on biased data can lead to discriminatory outcomes, making it imperative to ensure transparency and accountability in AI-driven decisions. This calls for a legal approach that addresses these concerns at the conceptual stages of AI development. 



Global AI Regulations Landscape 

United States 

In the United States, both federal and state governments are actively engaged in AI legislation. While there is no comprehensive federal regulation for AI in the private sector, initiatives like President Biden's Executive Order and the Office of Management and Budget's memorandum signal a growing focus on AI governance. At the state level, legislation varies significantly, reflecting diverse approaches to AI regulation, from Connecticut's inventory assessment of AI systems to North Dakota's prohibition of AI legal personhood.

 

European Union  

The European Union has taken a pioneering step with the AI Act (the “Act”). This act categorizes AI systems based on their risk level, imposing stricter controls on high-risk applications. It aims to protect fundamental rights and ensure that AI systems are safe, transparent, and accountable. 

 

China  

China's approach to AI regulation is characterized by a blend of aggressive technological development and stringent ethical standards. The Chinese government has implemented several AI-specific laws and provisions, such as the Algorithmic Recommendation Management Provisions and the Interim Measures for the Management of Generative Artificial Intelligence Services, reflecting a proactive stance in AI governance. 

 

Regulation Trend:  

The development and use of artificial intelligence (AI) is accelerating across the globe. As a result, governments worldwide are competing to establish effective AI regulations, each taking unique approaches reflective of their cultural attitudes towards both general and industry-specific regulatory practices. Despite these differences, a common goal unites them: mitigating AI risks while leveraging its benefits for societal and economic advancement. This shared objective has led to several overlapping regulatory trends: 

 

  1. Promoting Fairness: The EU Act identified fairness as one of its key principles, where AI must respect legal rights, avoid discrimination, and prevent unfair market practices. Similarly, in the US, concerns over AI bias have prompted key federal agencies to collectively tackle discrimination in automated systems. This has led to initiatives like New York's AEDT (Automated Employment Decision Tools) law, demanding bias audits for automated employment decision tools and transparency towards employees and job candidates. 

  2. Protecting Data Privacy and Security: The EU leads in this realm with extensive legislation. The Data Act ensures fair AI data access and use across sectors, while the GDPR tackles personal data use in AI decision-making. The Digital Services Act regulates AI in online content, and the Cyber Resilience Act strengthens defenses against AI-enabled cyber threats.  The US, through the Executive Order, is pushing for a national data privacy law. This order focuses on enhancing privacy techniques, using privacy-enhancing technologies (PETs), and establishing AI cybersecurity standards. It also requires identity verification for foreign users of US internet infrastructure services. 

  3. Increasing Transparency: Governments worldwide are increasingly requiring AI companies to play a larger role in guaranteeing the safety, security, and reliability of AI systems. For instance, EU regulations stipulate that generative AI applications, such as ChatGPT, must openly disclose when content is AI-generated, ensure the content is legal, and share summaries of the data used for training these systems. Similarly, in the United States, the Executive Order highlights the need for AI companies to provide detailed reports on safety tests and foundational model data. The Executive Order also mandates the development of standards and testing methods to enhance the overall safety and dependability of AI systems. Furthermore, it directs the Department of Commerce to create guidelines for authenticating and watermarking AI-generated content. This measure aims to shield the American public from the risks of AI-driven fraud and deception by ensuring clear identification of AI-produced materials. 

  4. International Collaboration: In November 2023, the UK government hosted the first global AI Safety Summit, gathering representatives from 28 countries, a multitude of tech firms, and academic experts to examining the risks associated with AI and how these risks could be addressed through international action. This event marks a significant step towards collaborative AI governance, acknowledging the global nature of AI risks and advocating for legal frameworks that can navigate the worldwide challenges of AI.  


Practical Advice for Navigating Legal Complexities 

As AI continues to revolutionize industries and reshape societal norms, staying informed about AI regulations is crucial for businesses and legal professionals. The interplay between AI advancements and legal frameworks will likely demand new legal specializations, blending traditional legal expertise with an understanding of AI technology and its global impacts. 

 


Here are some key pieces of advice for individuals, businesses, and legal professionals: 


  • Invest in Education and Training: Understanding the basics of AI technology and its applications can greatly enhance your ability to navigate the legal aspects. Consider workshops, online courses, or seminars that bridge the gap between technology and law. 

  • Develop AI Ethics Policies: Whether you're a startup using AI for data analysis or a multinational corporation implementing AI-driven processes, it's crucial to establish clear ethical guidelines. This includes policies on data usage, privacy, non-discrimination, and transparency. 

  • Seek Expert Counsel: The complexities of AI law may require specialized legal expertise. Don't hesitate to consult with attorneys who specialize in technology and intellectual property law, particularly those who keep pace with the latest in AI advancements. 

  • Prioritize Data Security and Privacy: With AI's heavy reliance on data, it's imperative to strengthen your cybersecurity measures. Ensure compliance with data protection laws like GDPR and CCPA, and regularly audit your AI systems for any potential vulnerabilities. 

  • Prepare for Future Challenges: AI is not just a current trend but a fixture of our future. Start planning now for how emerging AI technologies, like quantum computing or advanced neural networks, might impact your business or legal practice in the coming years. 

 


 

Fiona Xu, Esq. is the Partner and Head of Corporate Transaction of ILS. She works with clients in a wide range of industries and at all stages of their life cycles. She helps companies maximize the value of their strategic relationships and the return on their equity investments, both domestically and internationally.

Email: fiona.xu@consultils.com | Phone: 626-344-8949

*Disclaimer: This article does not constitute legal opinion and does not create any attorney-client relationship.

bottom of page