How do I manage the legal risks of using Artificial Intelligence (AI)?

Artificial Intelligence is a powerful tool, but it currently operates in a legal “grey zone.”

1. Confidentiality and Privacy

When you type data into a public generative AI, you are essentially transmitting it to a third party (often overseas). If that data contains confidential business secrets or personal information of your clients, you may be in breach of your confidentiality agreements or the Privacy Act.

2. Who Owns the Output?

Under current Australian law, a person must be the author of a work for it to be protected by copyright. Works generated entirely by AI may not be eligible for copyright protection, meaning your competitors could potentially copy them without penalty.

3. Accuracy and “Hallucinations”

AI can confidently state things that are flatly wrong. If your business uses AI to generate advice, marketing copy, or code, you (the human director) remain legally responsible for any misleading or deceptive conduct that results from AI errors.

4. Drafting an AI Policy

Every business using AI should have a clear policy for staff:

• Prohibited Data: Never upload customer PII (Personally Identifiable Information) or trade secrets.
• Human-in-the-Loop: Every AI output must be reviewed and “fact-checked” by a human before publication.
• Disclosure: When should you tell clients you used AI to assist in their work?

Related Topics

• Cybersecurity Policies
• IP Protection Strategies
• Employment Law Basics

Future-Proof Your Business

We help tech companies and traditional businesses develop AI Governance Frameworks that encourage innovation while protecting your liability.

Using AI? Contact Bell & Senior today. Call (07) 5532 8777.