The SEC has entered into settlements on charges with two investment advisers based on misleading statements in their SEC filings regarding their use of Artificial Intelligence technology. Late last year, the Chair of the SEC had warned against overstating use of AI technology so as to mislead investors, and the settlements this week show an intent to follow-through with this priority. The SEC’s efforts to protect investors dovetail with the FTC’s warnings and enforcement actions against misleading consumers by overstating AI capabilities. Companies in the AI space, particularly those with SEC filing obligations, should be aware of this enforcement activity when making claims regarding their technology.
The AI Update | March 14, 2024
#HelloWorld. Much to catch up on from February and the first half of March. In this issue, we cover the latest AI activity from Europe, as well as a bevy of guidance and updates from U.S. agencies. Off to the races. Let’s stay smart together. (Subscribe to the mailing list to receive future issues.)
The AI Update | January 26, 2024
#HelloWorld. January has not been especially frantic on the legal-developments-in-AI front. Yes, we know the anticipated final text of the EU AI Act was published unofficially, but the final vote hasn’t happened yet, so we’re biding time for now. Meanwhile, in this issue, we check in with state bar associations, SAG-AFTRA, and the FTC. They have things to say about AI policy too, so we’ll listen. Let’s stay smart together. (Subscribe to the mailing list to receive future issues.)
FTC Staff Issues Reminders to AI Companies
Today, the Staff in the Office of Technology of the Federal Trade Commission (“FTC”) posted a reminder to AI companies, enumerating the ways that they can run afoul of the laws enforced by the FTC. In particular, FTC Staff called out Model-as-a-Service companies, and impressed the importance of safeguarding individual and proprietary data involved in creating the models. FTC Staff indicated that there could be both consumer protection and competition concerns associated with a failure to do so. Further, FTC Staff warned that AI companies need to be forthcoming in how data is being used, and companies that omit material facts that would affect whether customers buy a particular product or service may run afoul of competition laws.
The AI Update | August 10, 2023
#HelloWorld. In this issue, the state of state AI laws (disclaimer: not our original phrase, although we wish it were). Deals for training data are in the works. And striking actors have made public their AI-related proposals—careful about those “Digital Replicas.” It’s August, but we’re not stopping. Let’s stay smart together. (Subscribe to the mailing list to receive future issues.)
States continue to pass and propose AI bills. Sometimes you benefit from the keen, comprehensive efforts of others. In the second issue of The AI Update, we summarized state efforts to legislate in the AI space. Now, a dedicated team at EPIC, the Electronic Privacy Information Center, spent all summer assembling an update, “The State of State AI Laws: 2023,” a master(ful) list of all state laws enacted and bills proposed touching on AI. We highly recommend reading their easy-to-navigate online site, highlights below:
The AI Update | July 27, 2023
#HelloWorld. Copyright suits are as unrelenting as the summer heat, with no relief in the forecast. AI creators are working on voluntary commitments to watermark synthetic content. And meanwhile, is ChatGPT getting “stupider”? Lots to explore. Let’s stay smart together. (Subscribe to the mailing list to receive future issues).
Big names portend big lawsuits. Since ChatGPT’s public launch in November 2022, plaintiffs have filed eight major cases in federal court—mostly in tech-centric Northern California—accusing large language models and image generators of copyright infringement, Digital Millennium Copyright Act violations, unfair competition, statutory and common law privacy violations, and other assorted civil torts. (Fancy a summary spreadsheet? Drop us a line.)
Here comes another steak for the grill: This month, on CBS’ “Face the Nation,” IAC’s chairman Barry Diller previewed that “leading publishers” were constructing copyright cases against generative AI tech companies, viewing it as a lynchpin for arriving at a viable business model: “yes, we have to do it. It’s not antagonistic. It’s to stake a firm place in the ground to say that you cannot ingest our material without figuring out a business model for the future.” Semafor later reported that The New York Times, News Corp., and Axel Springer were all among this group of likely publishing company plaintiffs, worried about the loss of website traffic that would come from generative AI answers replacing search engine results and looking for “billions, not millions, from AI.”
The AI Update | July 13, 2023
#HelloWorld. Pushback and disruption are the themes of this edition as we look at objections to proposed regulation in Europe, an FTC investigation, the growing movement in support of uncensored chatbots, and how AI is disrupting online advertising. Let’s stay smart together. (Subscribe to the mailing list to receive future issues.)
Pushback against AI regulation. The AI Update has followed closely the progress of the European Union’s proposed AI Act. Today we report on pushback in the form of an open letter from representatives of companies that operate in Europe expressing “serious concerns” that the AI Act would “jeopardise Europe’s competitiveness and technological sovereignty without effectively tackling the challenges we are and will be facing.” The letter takes aim in particular at the proposed “high risk” treatment of generative AI models, worrying that “disproportionate compliance costs and disproportionate liability risks” will push companies out of Europe and harm the ability of the EU to be at the forefront of AI development. The ask from the signatories is that European legislation “confine itself to stating broad principles in a risk-based approach.” As we have explained, there is a long road and many negotiations ahead before any version of the AI Act becomes the law in Europe. So it remains to be seen whether any further revisions reflect these concerns. Continue reading “The AI Update | July 13, 2023”