McGinnis: Intellectual property in the age of privacy laws and AI

At the center of the rapidly evolving intersection of the law and technology, the field of intellectual property is undergoing significant transformations.

Laws regarding privacy, data protection, and cybersecurity are evolving, and artificial intelligence is challenging established norms of IP creation, protection, and enforcement.

Within this dynamic environment, IP lawyers play a crucial role as clients seek comprehensive legal guidance on navigating technology-related matters.

This article explores the intricate impact of privacy laws and AI developments on intellectual property law, examining the practical implications and strategic considerations for IP professionals in today’s digital era.

Privacy laws

The last several years have brought a dramatic shift to the privacy legal landscape in the United States and the regulation of the collection, use, and sharing of personal information.

The legal frameworks governing privacy in this country have become increasingly pertinent to the practice of IP law, highlighted by the enactment of privacy regulations such as Europe’s General Data Protection Regulation; state laws like the California Consumer Privacy Act and its update, the California Privacy Rights Act; and an increased focus on the protection of individuals’ data at the federal level by regulators, including the Federal Trade Commission.

The broad extraterritorial reach of Europe’s data protection regulations affects U.S. businesses, requiring them to navigate many issues related to their collection of data, including ownership and sharing complexities. Its requirements for consent, data minimization, and the right to erasure, for instance, have far-reaching implications for companies that process the personal data of EU citizens, regardless of the company’s location.

For IP owners, this means ensuring that any personal data being shared from the organization or embedded in intellectual property and its related technologies—be it software, databases, or digital content—is handled in compliance with Europe’s mandates. This affects how IP is developed, managed, and commercialized, especially for products and services provided to EU citizens.

In the U.S., California statutes and the growing list of similar state laws have raised the stakes for privacy compliance nationwide. IP lawyers are working with clients to ensure IP strategies are transparent and compliant in how personal information is collected and used. The emphasis provided within these U.S. state laws regarding consumer rights to access, delete, or opt-out of data selling introduces additional layers to IP management, particularly obligations on how companies disclose their data practices.

Indiana Consumer Data Protection Act

Indiana has continued to position itself at the forefront of consumer data privacy protections, becoming the seventh state to pass a comprehensive privacy law last April.

The Indiana Consumer Data Protection Act, set to take effect Jan. 1, 2026, targets entities that control or process personal data on 100,000 consumers or derive 50% of revenue from selling the data of more than 25,000 consumers. The Indiana law introduces rights similar to those found in the Europe and other state laws, such as the rights to access, correction, deletion of personal data, and the right to opt-out of certain data processing activities.

The law also mandates data protection impact evaluations, encompasses stipulations for handling de-identified or pseudonymized data, provides for user opt-outs regarding targeted advertising and the sale of data, and includes a provision for a 30-day remediation period.

These mandates will further demand IP professionals–especially those with clients collecting personally identifying information about Indiana individuals–be familiar with the new law’s requirements and how development of new IP, such as that associated with technology and software, is effected by these forthcoming privacy obligations.

This necessitates a strategic assessment of IP management practices ahead of the law’s effective date to ensure those entities not only comply with these privacy laws, but also protect and leverage IP assets effectively.

For IP lawyers, these privacy laws demand a nuanced understanding of both privacy and IP law, emphasizing the need for integrated strategies that accommodate the protection of personal data within the broader IP management framework.

Advising clients now often requires a proactive approach to privacy compliance, intertwining with the creation, protection, and commercialization of IP in a way that accounts for evolving privacy requirements.

AI regulation and intellectual property

The advent of artificial intelligence has brought about transformative changes in the realm of IP, challenging traditional notions of IP creation, protection, and enforcement.

AI’s application across various domains, from generating music and literature to assisting in legal analyses and identifying potential IP infringements, underscores a growing influence that is only set to increase. This technological evolution prompts critical questions regarding the ownership of IP related to AI-generated works.

A key debate centers on whether a creator of an AI algorithm should be recognized as an author, or if the AI itself could hold such a status, especially in cases like AI-generated novels or songs.

The U.S. Patent and Trademark Office has asserted that both patents and copyrights are reserved for human creators, explicitly excluding AI systems from being recognized as inventors on patent applications and from qualifying for copyright protection on AI-generated works without human creative contribution. These considerations highlight the intricate issues surrounding IP ownership in the age of AI-generated content.

In response to these challenges, AI regulations are emerging as critical tools.

The EU Artificial Intelligence Act exemplifies legislative efforts to navigate the complexities introduced by AI, aiming to safeguard fundamental rights, safety, and ethical standards in AI use.

By categorizing AI systems according to risk and mandating transparency, the act seeks to promote a landscape of trustworthy AI. This involves ensuring human oversight and responsible AI application, all while fostering innovation and providing support for small and medium-sized enterprises through regulatory sandboxes and real-world trials.

The EU AI Act stands out globally as a pioneering and comprehensive regulatory framework. Approved by the European Parliament on March 13, 2024, it is considered the world’s first comprehensive AI law, setting stringent standards to safeguard fundamental rights, safety, and ethical standards in AI use.

By categorizing AI systems based on risk levels, mandating transparency, and emphasizing human oversight, this new law aims to promote trustworthy AI while fostering innovation. Additionally, the legislation supports small and medium-sized enterprises through regulatory sandboxes and real-world trials, positioning itself as a leading and advanced regulation in the field of AI governance.

In the United States, federal and state initiatives continue to evolve. Much like the development of privacy laws, the U.S. AI legal landscape reflects a patchwork of regulations addressing various aspects of AI development. Recent efforts emphasize the need for comprehensive guidelines covering privacy, transparency, and accountability in AI applications.

President Biden’s executive orders on AI underscore the strategic importance of maintaining American leadership in AI by advocating for a balanced approach that safeguards intellectual property rights while fostering innovation and technological progress.

For IP lawyers and their clients, these developments highlight a rapidly evolving landscape where legal frameworks strive to keep pace with technological innovation. The implications for IP ownership and protection are profound, necessitating a nuanced understanding of both AI technologies and the legal precedents that govern them.

As regulations continue to evolve, staying informed and adaptable is crucial for effectively navigating the intersection of AI and IP, ensuring that creators can protect and leverage their innovations in this new era.

Practical implications for IP lawyers

In the dynamic digital landscape, the convergence of AI advancements and stringent privacy laws significantly influences IP lawyers’ roles. As they delve into the intricacies of technology operations and regulatory compliance, they extend their proficiency from theoretical knowledge to practical applications.

IP lawyers increasingly are sought for advice on embedding data privacy compliance within technology and licensing agreements, navigating a complex terrain of IP protection alongside AI and privacy regulations.

Content creation by AI systems brings to the forefront issues like copyright ownership and authorship. IP lawyers guide clients in protecting AI-generated works, delving into the nuances of copyright law’s application in this innovative context.

Similarly, the automation of trademark search and registration processes by AI, coupled with concerns over AI-generated content’s impact on brand value, requires diligent oversight to prevent trademark infringement and brand dilution.

Moreover, AI systems’ reliance on proprietary datasets and algorithms accentuates the importance of safeguarding these assets as trade secrets, though this aspect, while critical, often takes a secondary priority compared to patent and copyright issues.

In the era of increasing trade secret litigation, maintaining confidentiality and emphasizing security measures and breach management is even more critical for companies.

Integrating these considerations, IP lawyers must stay abreast of the latest developments in privacy and AI regulations that affect IP rights protection and enforcement in order to provide strategic counsel.

Advising clients on compliance with privacy laws when collecting and using data for AI is paramount, ensuring that AI’s incorporation into operations doesn’t contravene privacy standards. The dynamic nature of AI and privacy laws necessitates a proactive, adaptive approach from IP lawyers, who must continuously update their strategies and knowledge base.

This changing landscape demands a proactive approach to navigating modern IP challenges that support innovation and client growth in a world shaped by AI progress and privacy considerations.

The task is complex, involving a deep understanding of technology and law, and a commitment to ongoing education and flexibility to effectively address the legal intricacies presented by the digital age.•

__________

Brian J. McGinnis is a partner with Barnes & Thornburg, where he is a founding member and co-chair of the firm’s data security and privacy law practice group and a member of the intellectual property department and internet and technology practice. Opinions expressed are those of the author.

__________