Do AI vendors indemnify customers for hallucinated output losses?
Usually no. Public AI contracts mostly cover third-party IP claims, while ordinary losses from false or inaccurate output usually remain with the customer.
The market answer, as of April 2026, is fairly crisp. Public AI contracts increasingly indemnify customers against third-party copyright or broader IP claims tied to model output, but they do not generally indemnify customers for hallucinations as such. The same contracts usually say output may be inaccurate, require review, and put accuracy evaluation on the customer.“solely responsible” for evaluating output; Google says models “may provide inaccurate or offensive Generated Output”; Anthropic warns outputs may be “false, incomplete, misleading”. So the important split is not AI indemnity versus no AI indemnity. It is third-party IP claim versus everything else. If the bad output triggers an infringement claim, coverage may exist. If the bad output causes a bad filing, a false customer promise, a defamation theory, or a compliance error, public terms usually leave that risk with the deployer.
Sources for this answer
Vendor documentation
A.1 OpenAI, Service terms and OpenAI Services AgreementOpenAI's Service Terms define the scope of indemnification for intellectual property claims, disclaim warranties for Beta Services, and clarify that the Services are not intended for medical diagnosis or treatment.
OpenAI’s indemnification obligations to API customers under the Agreement include any third party claim that Customer’s use or distribution of Output infringes a third party’s intellectual property right.
See OpenAI, Service terms and OpenAI Services Agreement.
Vendor documentation
A.2 Google Cloud, Service Specific TermsSupports the cited proposition. (Google Cloud, Service Specific Terms)
may provide inaccurate or offensive Generated Output
See Google Cloud, Service Specific Terms.
Vendor documentation
A.3 Anthropic on Bedrock, Commercial Terms of ServicePDFSupports the cited proposition. (Anthropic on Bedrock, Commercial Terms of Service)
false, incomplete, misleading
See Anthropic on Bedrock, Commercial Terms of Service.
Vendor documentation
A.4 Microsoft, Customer Copyright Commitment Required MitigationsTo maintain coverage under Microsoft's Customer Copyright Commitment, customers must implement specific, documented mitigations and demonstrate compliance with these requirements when tendering a claim for defense.
The Customer Copyright Commitment ("CCC") is a provision in the Microsoft Product Terms that describes Microsoft's obligation to defend customers against certain third-party intellectual property claims relating to Output Content.
See Microsoft, Customer Copyright Commitment Required Mitigations.
Vendor documentation
A.9 OpenAI, OpenAI Services AgreementSupports the cited proposition. (OpenAI, OpenAI Services Agreement)
solely responsible
See OpenAI, OpenAI Services Agreement.
Vendor documentation
A.5 Microsoft, Turn on AI Disclaimers in Microsoft 365 CopilotMicrosoft 365 administrators can enable AI disclaimer messages to assist with regulatory compliance and transparency regarding the potential inaccuracy of AI-generated content.
As the administrator of a Microsoft 365 organization, you can turn on Microsoft 365 Copilot AI disclaimer messages across supported applications.
See Microsoft, Turn on AI Disclaimers in Microsoft 365 Copilot.
Law-firm commentary
A.6 Wilson Sonsini commentaryGenerative AI providers are increasingly offering contractual indemnification to enterprise customers to mitigate potential copyright infringement liability associated with the use of their AI tools.
In response to the infringement fears, some generative AI providers are trying to get in front of the issue by offering to protect their customers from claims through indemnification.
See Wilson Sonsini, Will Indemnification Commitments Address Market Demands in AI?.
Law-firm commentary
A.7 Morgan Lewis commentaryDue to the lack of legislative clarity regarding intellectual property ownership and infringement risks associated with generative AI, parties to software supply agreements should explicitly address ownership, licensing, and indemnity provisions in their contracts.
it is important that contracts relating to the use of GenAI and its outputs address the ownership/licensing of such GenAI outputs in order to document the agreement of the parties in the absence of legislative protections.
See Morgan Lewis, Contract Corner: Ensuring IP Provisions Are Fit for GenAI.
Law-firm commentary
A.8 Cleary Gottlieb commentaryBusinesses deploying third-party AI tools remain legally accountable for compliance and oversight, necessitating robust governance to mitigate regulatory, security, and fiduciary risks.
Regulators have made clear that businesses deploying AI remain fully accountable for legal compliance, even where AI functionality is sourced from third-party vendors.
See Cleary Gottlieb, Managing AI Risk: Legal and Governance Imperatives for the Board.
What cases show who bears losses from AI hallucinations?
Unclear, but current public cases point to ordinary contract, tort, misrepresentation, defamation, and professional-duty rules. They do not create a default customer indemnity right against the AI vendor.
No statute or reported case in the source set creates a default rule that an AI vendor must indemnify a customer for hallucinated output. The governing law is still ordinary contract allocation, with tort, misrepresentation, defamation, and professional-responsibility doctrines in the background.
Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023) remains the clearest judicial statement of the baseline. Judge Castel wrote that “existing rules impose a gatekeeping role on attorneys” to ensure accuracy. That was not an indemnity case. But it is a strong signal that courts can assign hallucination loss to the user when verification duties are ignored.
The next cases point in the same direction, though more indirectly. Public reporting on Walters v. OpenAI, L.L.C. says a Georgia court granted summary judgment to OpenAI in a defamation suit over false ChatGPT output, with the reporting emphasizing the role of accuracy warnings and the plaintiff's difficulty proving defamation on those facts. Public commentary on Moffatt v. Air Canada reads the British Columbia tribunal decision the other way: the company remained responsible for a chatbot's incorrect statement about bereavement fares. Put together, those cases suggest a narrow but useful point. Courts have not used hallucination doctrine to create a new customer indemnity right. They are still allocating these disputes through older doctrines.
The more notable primary-law fact is the absence of precedent. The source set did not surface a published decision where a customer publicly invoked and litigated a hallucination-specific indemnity against a model provider. The field is being shaped in procurement and product terms, not yet in reported indemnity disputes.
Sources for this answer
Case law
B.1 Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023)Supports the cited proposition. (Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023))
existing rules impose a gatekeeping role on attorneys
See Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023).
Commentary
B.2 Reuters, OpenAI defeats radio host's lawsuit over allegations invented by ChatGPTA Georgia superior court judge dismissed a defamation lawsuit against OpenAI, ruling that the plaintiff failed to demonstrate actual malice given the company's disclaimers regarding the potential for AI-generated errors.
Judge Tracie Cason of Gwinnett County Superior Court ruled that plaintiff Mark Walters had not shown he was defamed and said OpenAI's chatbot ChatGPT puts users on notice that it can make errors.
See Reuters, OpenAI defeats radio host's lawsuit over allegations invented by ChatGPT.
Case law
B.3 McCarthy Tétrault, Moffatt v. Air Canada: A Misrepresentation by an AI ChatbotCompanies are legally liable for negligent misrepresentations made by their automated chatbots on commercial websites, as they are responsible for the information provided by the tools they employ.
The decision held that a company can be liable for negligent misrepresentations made by a chatbot on a publicly available commercial website.
See McCarthy Tétrault, Moffatt v. Air Canada: A Misrepresentation by an AI Chatbot.
Law-firm commentary
B.4 Quinn Emanuel, Artificial Intelligence Update - April 2026Courts are increasingly evaluating generative AI liability through traditional tort and product design frameworks rather than relying solely on Section 230 immunity, particularly when claims focus on system operation rather than the publication of third-party content.
the first wave of cases suggests that many disputes involving conversational AI are being litigated on theories that do not depend on Section 230 at all.
See Quinn Emanuel, Artificial Intelligence Update - April 2026.
Commentary
B.5 American Bar Association Business Law Today, BC Tribunal Confirms Companies Remain Liable for Information Provided by AI ChatbotCompanies may be held liable for negligent misrepresentation when their AI chatbots provide inaccurate information to consumers, as the entity remains responsible for all content hosted on its website.
the Tribunal found that Air Canada still bore responsibility for all the information on its website, whether it came from a static page or a chatbot.
See American Bar Association Business Law Today, BC Tribunal Confirms Companies Remain Liable for Information Provided by AI Chatbot.
What do law firms say about AI output indemnity coverage?
Usually, law firm commentary treats public AI output indemnity as a narrow and heavily conditioned market response. The coverage is most developed for IP claims, not for business losses caused by hallucinated output.
The firms are closer together than the marketing language makes it seem. Wilson Sonsini says providers are offering indemnification because customers demand it, but also says many remain hesitant because of training-data claims, prompt-driven infringement, and the unpredictability of general-purpose models. Morgan Lewis says output indemnities are becoming more common, especially after hyperscalers moved first, but stresses that their scope can vary greatly and arrive with heavy carve-outs.
Orrick and Baker McKenzie are useful because they treat the problem as commercial fit rather than as a new body of law. Orrick says AI providers will likely resist the warranties and indemnities customers expect in ordinary software deals, while also treating hallucinations as a separate challenge rather than a covered risk. Baker McKenzie makes a similar point from the buyer side: ownership, risk, and indemnification all become harder to allocate when the output itself can be flawed or biased and standard SaaS clauses do not fit neatly.
Cleary Gottlieb and Fisher Phillips are the bluntest. Cleary says typical AI vendor contracts often limit or exclude indemnification for AI-generated output, leaving the organization rather than the vendor responsible. Fisher Phillips says some vendor contracts leave businesses using AI with the risk of the chatbot's conduct, even when the underlying technology was supplied by someone else.
The interesting disagreement is not whether hallucination indemnity exists today. It is what sits in its place. Some firms focus on audit rights, testing records, and output controls. Others focus on human review and deployment limits. But none of the cited firms describes a public market where vendors routinely defend customers against losses caused by false output as such.
Sources for this answer
Law-firm commentary
C.1 Wilson Sonsini commentaryGenerative AI providers are increasingly offering contractual indemnification to enterprise customers to mitigate potential copyright infringement liability associated with the use of their AI tools.
In response to the infringement fears, some generative AI providers are trying to get in front of the issue by offering to protect their customers from claims through indemnification.
See Wilson Sonsini, Will Indemnification Commitments Address Market Demands in AI?.
Law-firm commentary
C.2 Morgan Lewis commentaryDue to the lack of legislative clarity regarding intellectual property ownership and infringement risks associated with generative AI, parties to software supply agreements should explicitly address ownership, licensing, and indemnity provisions in their contracts.
it is important that contracts relating to the use of GenAI and its outputs address the ownership/licensing of such GenAI outputs in order to document the agreement of the parties in the absence of legislative protections.
See Morgan Lewis, Contract Corner: Ensuring IP Provisions Are Fit for GenAI.
Law-firm commentary
C.3 Orrick commentaryWhen adopting generative AI tools, companies must proactively manage legal risks related to data privacy, intellectual property ownership, and contractual liability by negotiating specific terms with providers.
Companies are not immune from legal, regulatory and ethical concerns created by generative AI tools merely because they are a “user” and not the “developer.”
See Orrick, 8 Intellectual Property and Commercial Questions to Ask Your Generative AI Tool Provider.
Law-firm commentary
C.4 Baker McKenzie commentaryThe use of generative AI (GAI) presents significant legal risks to companies, including potential trade secret loss, intellectual property infringement, data privacy violations, and breach of third-party terms of service, necessitating robust internal governance and contractual protections.
A company that does not have proper safeguards around GAI and does not ensure that contractors or vendors with access to its data use safeguards, arguably is not making reasonable efforts to protect its information and reduce the risk of trade secret disclosure.
See Baker McKenzie, Innovation and Accountability: Asking Better Questions in Implementing Generative AI.
Law-firm commentary
C.5 Cleary Gottlieb commentaryBusinesses deploying third-party AI tools remain legally accountable for compliance and oversight, necessitating robust governance to mitigate regulatory, security, and fiduciary risks.
Regulators have made clear that businesses deploying AI remain fully accountable for legal compliance, even where AI functionality is sourced from third-party vendors.
See Cleary Gottlieb, Managing AI Risk: Legal and Governance Imperatives for the Board.
Law-firm commentary
C.6 Cleary Gottlieb, Generative AI: Practical Considerations for Companies and BoardsCorporate boards have a fiduciary duty to oversee the adoption and deployment of artificial intelligence, which requires implementing robust risk mitigation strategies to address the novel legal and operational risks associated with the technology.
At any depth of deployment, companies and boards need to be aware of key risks AI poses and areas of uncertainty in the laws governing its use.
See Cleary Gottlieb, Generative AI: Practical Considerations for Companies and Boards.
Law-firm commentary
C.7 Fisher Phillips commentaryBusinesses should implement human-in-the-loop workflows and avoid using generative AI for high-stakes documents to mitigate the legal and operational risks associated with AI hallucinations.
AI hallucinations are confidently incorrect outputs generated by large language models (LLMs). They happen because GenAI is designed to predict the most likely next word, not to verify facts.
See Fisher Phillips, AI Hallucinations Could Cause Nightmares for Your Business: 10 Steps You Can Take to Safeguard Your GenAI Use.
Law-firm commentary
C.8 Fisher Phillips, 10 Biggest Mistakes Businesses Make When Deploying AI Chatbots - And 10 Fixes You Can Make TodayBusinesses deploying AI chatbots face significant legal risks, including potential liability under state wiretapping laws, employment discrimination statutes, and evolving state-specific disclosure and compliance mandates.
Under every chatbot law enacted to date, the deploying business carries legal responsibility for what the chatbot does, regardless of who developed it.
See Fisher Phillips, 10 Biggest Mistakes Businesses Make When Deploying AI Chatbots - And 10 Fixes You Can Make Today.
How do AI contract exclusions narrow output indemnity coverage?
Usually through scope and conditions, not just liability caps. Public terms commonly narrow coverage by claim type, input and output handling, safety controls, service tier, and required mitigations.
Copyright shieldis narrower than it sounds. In public AI contracts it usually protects against third-party IP claims, not against first-party business loss from wrong output.The real allocation device is exclusions. Public terms tend to withdraw coverage for modified output, customer-provided or unlicensed inputs, failure to use citations, filters, or guardrails, trademark use, third-party offerings, or preview and free tiers.
For the largest vendors, the narrowing mechanism is often not a tiny fee cap. OpenAI says its service-term indemnity is not subject to any liability cap; Google classifies indemnification as an
Unlimited Liability; Anthropic says its fee cap does not apply to indemnification; Microsoft places defense obligations outside the ordinary cap structure. For top-tier public terms, the harder move is scoping and exclusion, not an obvious cap set at contract value.
Sources for this answer
Vendor documentation
D.1 OpenAI, Service terms and OpenAI Services AgreementOpenAI's Service Terms define the scope of indemnification for intellectual property claims, disclaim warranties for Beta Services, and clarify that the Services are not intended for medical diagnosis or treatment.
OpenAI’s indemnification obligations to API customers under the Agreement include any third party claim that Customer’s use or distribution of Output infringes a third party’s intellectual property right.
See OpenAI, Service terms and OpenAI Services Agreement.
Vendor documentation
D.2 Google Cloud, Generative AI Indemnified ServicesGoogle Cloud provides specific indemnification obligations for certain generative AI services and foundation models as outlined in their service terms.
The following Services are covered by the Additional Google Indemnification Obligations in the Service Specific Terms.
See Google Cloud, Generative AI Indemnified Services.
Vendor documentation
D.3 Anthropic on Bedrock, Commercial Terms of ServicePDFSupports the cited proposition. (Anthropic on Bedrock, Commercial Terms of Service)
false, incomplete, misleading
See Anthropic on Bedrock, Commercial Terms of Service.
Vendor documentation
D.4 Microsoft, Customer Copyright Commitment Required MitigationsTo maintain coverage under Microsoft's Customer Copyright Commitment, customers must implement specific, documented mitigations and demonstrate compliance with these requirements when tendering a claim for defense.
The Customer Copyright Commitment ("CCC") is a provision in the Microsoft Product Terms that describes Microsoft's obligation to defend customers against certain third-party intellectual property claims relating to Output Content.
See Microsoft, Customer Copyright Commitment Required Mitigations.
Vendor documentation
D.5 OpenAI, OpenAI Services AgreementSupports the cited proposition. (OpenAI, OpenAI Services Agreement)
solely responsible
See OpenAI, OpenAI Services Agreement.
Vendor documentation
D.6 Google Cloud Terms of ServiceThe Google Cloud Terms of Service constitute a binding agreement between Google and the customer that governs the customer's access to and use of Google Cloud services.
These Google Cloud Terms of Service (together, the "Agreement") are entered into by Google and the entity or person agreeing to these terms ("Customer") and govern Customer's access to and use of the Services.
See Google Cloud Terms of Service.
Vendor documentation
D.7 Microsoft, Online Subscription AgreementThe Microsoft Online Subscription Agreement establishes a comprehensive framework for liability limitations, indemnification waivers, governing law, and severability of contract terms.
The aggregate liability of each party for all claims under this agreement is limited to direct damages up to the amount paid under this agreement for the Online Service during the 12 months before the cause of action arose
See Microsoft, Online Subscription Agreement.
When can hallucinated AI output trigger an IP indemnity claim?
It depends on whether the false output also creates a third-party IP claim. A hallucination that causes a bad filing, customer promise, defamation allegation, or compliance error usually sits outside public IP indemnity language.
Accuracy language points the other direction. Google says its services are not designed for or intended to meet Customer's regulatory, legal, or other obligations. Microsoft now offers AI disclaimers rather than hallucination indemnity. The more the workflow touches legal, medical, regulatory, or customer-facing commitments, the more the contract paper reads as warning text rather than assurance.
The boundary case is when a hallucination also becomes an IP problem. If a model fabricates an answer by reproducing copyrighted text, code, or imagery closely enough to trigger an infringement claim, the dispute may enter the IP-indemnity lane. If the same answer causes a bad filing, a false marketing claim, a customer-service promise, a defamation allegation, or a compliance error, public terms usually do not move the loss back to the vendor.
Perhaps the main unresolved question is whether courts will eventually treat systemic hallucination as a product-defect or architectural-negligence issue rather than as ordinary user-side verification failure. The current public cases still sit mostly inside negligence, defamation, misrepresentation, and professional-duty frameworks.
It is still unsettled how much disclaimer language does.
Walterssuggests warnings may matter a great deal.Moffattsuggests a chatbot warning does not erase responsibility when the company itself is making a representation through the product.The contract vocabulary may matter less than people think. Public terms rarely use
hallucination; they speak ininaccurate,false,incomplete, ormisleadingoutput. That broader category could matter more than the label in future disputes.It is also unsettled whether broader output indemnity will appear as models become more agentic. The current movement is narrower: stronger IP shields, more conditions, more safety-tool requirements, and more explicit review obligations.
And no one has yet shown what a litigated hallucination indemnity looks like. Perhaps those disputes are happening in private procurement. They have not yet produced a visible body of precedent.
Sources for this answer
Vendor documentation
E.1 Google Cloud, Service Specific TermsSupports the cited proposition. (Google Cloud, Service Specific Terms)
may provide inaccurate or offensive Generated Output
See Google Cloud, Service Specific Terms.
Vendor documentation
E.2 Microsoft, Turn on AI Disclaimers in Microsoft 365 CopilotMicrosoft 365 administrators can enable AI disclaimer messages to assist with regulatory compliance and transparency regarding the potential inaccuracy of AI-generated content.
As the administrator of a Microsoft 365 organization, you can turn on Microsoft 365 Copilot AI disclaimer messages across supported applications.
See Microsoft, Turn on AI Disclaimers in Microsoft 365 Copilot.
Vendor documentation
E.3 OpenAI, Service terms and OpenAI Services AgreementOpenAI's Service Terms define the scope of indemnification for intellectual property claims, disclaim warranties for Beta Services, and clarify that the Services are not intended for medical diagnosis or treatment.
OpenAI’s indemnification obligations to API customers under the Agreement include any third party claim that Customer’s use or distribution of Output infringes a third party’s intellectual property right.
See OpenAI, Service terms and OpenAI Services Agreement.
Law-firm commentary
E.4 Fisher Phillips, 10 Biggest Mistakes Businesses Make When Deploying AI Chatbots - And 10 Fixes You Can Make TodayBusinesses deploying AI chatbots face significant legal risks, including potential liability under state wiretapping laws, employment discrimination statutes, and evolving state-specific disclosure and compliance mandates.
Under every chatbot law enacted to date, the deploying business carries legal responsibility for what the chatbot does, regardless of who developed it.
See Fisher Phillips, 10 Biggest Mistakes Businesses Make When Deploying AI Chatbots - And 10 Fixes You Can Make Today.
Vendor documentation
E.5 Google Cloud, Generative AI Indemnified ServicesGoogle Cloud provides specific indemnification obligations for certain generative AI services and foundation models as outlined in their service terms.
The following Services are covered by the Additional Google Indemnification Obligations in the Service Specific Terms.
See Google Cloud, Generative AI Indemnified Services.
Vendor documentation
E.6 Anthropic on Bedrock, Commercial Terms of ServicePDFSupports the cited proposition. (Anthropic on Bedrock, Commercial Terms of Service)
false, incomplete, misleading
See Anthropic on Bedrock, Commercial Terms of Service.
Vendor documentation
E.7 Microsoft, Customer Copyright Commitment Required MitigationsTo maintain coverage under Microsoft's Customer Copyright Commitment, customers must implement specific, documented mitigations and demonstrate compliance with these requirements when tendering a claim for defense.
The Customer Copyright Commitment ("CCC") is a provision in the Microsoft Product Terms that describes Microsoft's obligation to defend customers against certain third-party intellectual property claims relating to Output Content.
See Microsoft, Customer Copyright Commitment Required Mitigations.
Vendor documentation
E.12 Microsoft, Transparency Note for Azure OpenAIMicrosoft's transparency documentation for Azure OpenAI emphasizes that the models may produce inaccurate information, lack real-time knowledge, and require human oversight, particularly in high-stakes or legally consequential scenarios.
The service doesn't have information about events that occur after its training date, likely has missing knowledge about some topics, and may not always produce factually accurate information.
See Microsoft, Transparency Note for Azure OpenAI.
Case law
E.8 Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023)Supports the cited proposition. (Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023))
existing rules impose a gatekeeping role on attorneys
See Mata v. Avianca, Inc., 678 F. Supp. 3d 443 (S.D.N.Y. 2023).
Commentary
E.9 Reuters, OpenAI defeats radio host's lawsuit over allegations invented by ChatGPTA Georgia superior court judge dismissed a defamation lawsuit against OpenAI, ruling that the plaintiff failed to demonstrate actual malice given the company's disclaimers regarding the potential for AI-generated errors.
Judge Tracie Cason of Gwinnett County Superior Court ruled that plaintiff Mark Walters had not shown he was defamed and said OpenAI's chatbot ChatGPT puts users on notice that it can make errors.
See Reuters, OpenAI defeats radio host's lawsuit over allegations invented by ChatGPT.
Case law
E.10 McCarthy Tétrault, Moffatt v. Air Canada: A Misrepresentation by an AI ChatbotCompanies are legally liable for negligent misrepresentations made by their automated chatbots on commercial websites, as they are responsible for the information provided by the tools they employ.
The decision held that a company can be liable for negligent misrepresentations made by a chatbot on a publicly available commercial website.
See McCarthy Tétrault, Moffatt v. Air Canada: A Misrepresentation by an AI Chatbot.
Commentary
E.11 American Bar Association Business Law Today, BC Tribunal Confirms Companies Remain Liable for Information Provided by AI ChatbotCompanies may be held liable for negligent misrepresentation when their AI chatbots provide inaccurate information to consumers, as the entity remains responsible for all content hosted on its website.
the Tribunal found that Air Canada still bore responsibility for all the information on its website, whether it came from a static page or a chatbot.
See American Bar Association Business Law Today, BC Tribunal Confirms Companies Remain Liable for Information Provided by AI Chatbot.
Law-firm commentary
E.13 Wilson Sonsini commentaryGenerative AI providers are increasingly offering contractual indemnification to enterprise customers to mitigate potential copyright infringement liability associated with the use of their AI tools.
In response to the infringement fears, some generative AI providers are trying to get in front of the issue by offering to protect their customers from claims through indemnification.
See Wilson Sonsini, Will Indemnification Commitments Address Market Demands in AI?.
Law-firm commentary
E.14 Orrick commentaryWhen adopting generative AI tools, companies must proactively manage legal risks related to data privacy, intellectual property ownership, and contractual liability by negotiating specific terms with providers.
Companies are not immune from legal, regulatory and ethical concerns created by generative AI tools merely because they are a “user” and not the “developer.”
See Orrick, 8 Intellectual Property and Commercial Questions to Ask Your Generative AI Tool Provider.
Law-firm commentary
E.15 Morgan Lewis commentaryDue to the lack of legislative clarity regarding intellectual property ownership and infringement risks associated with generative AI, parties to software supply agreements should explicitly address ownership, licensing, and indemnity provisions in their contracts.
it is important that contracts relating to the use of GenAI and its outputs address the ownership/licensing of such GenAI outputs in order to document the agreement of the parties in the absence of legislative protections.
See Morgan Lewis, Contract Corner: Ensuring IP Provisions Are Fit for GenAI.