<div id="readability-page-1"><div id="body">More and more US companies are using generative AI as a way to save money they might otherwise pay creative professionals. But they're not thinking about the legal bills.You could be asking an AI to create public-facing communications for your company, such as a logo, promotional copy, or an entire website. If those materials happen to look like copyrighted works, you may be hearing from a lawyer.&#34;It's pretty clear that if you create something that's substantially similar to a copyrighted work that an infringement has occurred, unless it's for a fair use purpose,&#34; said Kit Walsh, the Electronic Frontier Foundation's Director of AI and Access-to-Knowledge Legal Projects. You could be infringing deliberately – such as if you ran a plumbing business and prompted a tool to draw you &#34;Super Mario&#34; and then put that image on the side of your van. However, if you simply ask Bing Image Creator, which is powered by the DALL-E engine, for a &#34;video game plumber,&#34; it will give you the same character. What if you gave it that neutral prompt and didn't know you were getting back copyrighted IP? You could still be on the hook.<div><img src="https://imageproxy.pbkrs.com/https://regmedia.co.uk/2025/08/11/infringe1.jpg/query-aW5mZXJfeT0xJng9NjQ4Jnk9MzA4?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" height="308" width="648" original-src="https://imageproxy.pbkrs.com/https://regmedia.co.uk/2025/08/11/infringe1.jpg/query-aW5mZXJfeT0xJng9NjQ4Jnk9MzA4"/>Entering video game plumber on Bing gives you a copyrighted character - Click to enlarge</div>&#34;I think it's wise for any business that's going to have public-facing creations made with AI to have a legal AI policy that they've worked with general counsel to develop to avoid legal risks, including copyright infringement or defamation,&#34; Walsh advised. &#34;You need to always have human review of those things.&#34;<h3>What's the damage?</h3>Benjamin Bedrava, a lawyer who leads the intellectual property practice at Miami firm EGPD, said that if the offender is a small business and the IP is owned by a large company like Nintendo, you'll probably get a cease and desist letter and the opportunity to stop using the infringing materials before getting sued. However, if the business whose copyright is infringed is about the same size as yours or they are a direct competitor, all bets are off.The actual damages you could face depend on several factors, including whether you made a profit off the infringed materials and whether the infringement was &#34;willful.&#34; According to Title 17 of the US Code, Chapter 5, the copyright holder gets either actual damages, which include profits made by the defendant as a result of their infringement, or statutory damages, which are only up to $30K per infringed work, but up to $150K if willful. The plaintiff has the burden of proving that an act of infringement was willful – deliberate and knowing. Sometimes the court hits the infringer with damages that are equivalent to what a license fee for using the material would have cost, Bedrava noted. However, even if the plaintiff gets very little, legal fees can cripple the defendant.&#34;The real harm comes from the attorney's fees that you can get saddled with,&#34; he said. &#34;Because you could have a hundred and fifty thousand dollars in attorney's fees over something where the license would have been fifteen hundred dollars.&#34; Just being asked to cease and desist from using copyrighted material could also be very damaging to your bottom line. If you make a logo or create a slogan for your business with generative AI and then have to stop using it, you lose whatever investments you've made in business materials. What if you put that logo on the side of your truck, paid for a billboard with it, or built a website around it?<h3>Are you indemnified?</h3>You might think that, if an image generator gives you copyrighted output and you get threatened with legal action, you can expect the AI company – Meta, OpenAI, Midjourney, Google, Microsoft, etc – to suffer the consequences in your stead. Good luck with that.If you read the overall Terms of Service (TOS) on any AI vendor's site, you're likely to find a clause that disclaims responsibility for lawsuits caused by a business or individual using these tools. For example, OpenAI's TOS reads:&#34;If you are a business or organization, to the extent permitted by law, you will indemnify and hold harmless us, our affiliates, and our personnel, from and against any costs, losses, liabilities, and expenses (including attorneys' fees) from third party claims arising out of or relating to your use of the Services and Content.&#34;And Bing's image creator TOS says &#34;Microsoft does not make any warranty or representation of any kind that any material created by the Online Services does not infringe the rights of any third party in any subsequent use of the content you may use (including but not limited to copyright, trademark, rights of privacy and publicity, and defamation).&#34; At the same time, several companies, including Microsoft, OpenAI, and Anthropic state on other pages of their sites that they are indemnifying certain business customers (not the unpaid ones) from legal liability over copyright infringement.But even if an AI company promises to indemnify your business against copyright claims, it's not a get out of jail free card. You'd be involved in a court case that could drag on for years, and there's always the possibility that the company would find a reason not to defend you.Plus, these indemnification policies contain plenty of gotchas. For example, OpenAI says in its Service Terms page that users of its API, ChatGPT Team, or ChatGPT Enterprise are indemnified but with the following conditions:&#34;This indemnity does not apply where: (i) Customer or Customer's End Users knew or should have known the Output was infringing or likely to infringe, (ii) Customer or Customer's End Users disabled, ignored, or did not use any relevant citation, filtering or safety features or restrictions provided by OpenAI, (iii) Output was modified, transformed, or used in combination with products or services not provided by or on behalf of OpenAI, (iv) Customer or its End Users did not have the right to use the Input or fine-tuning files to generate the allegedly infringing Output, (v) the claim alleges violation of trademark or related rights based on Customer's or its End Users' use of Output in trade or commerce, and (vi) the allegedly infringing Output is from content from a Third Party Offering.&#34;You don't need a law degree to see the giant holes in this offering. First, who determines whether the customer &#34;should have known that the Output was infringing or likely to infringe?&#34; If I am completely ignorant of video game culture but get Mario and use him as my logo, could OpenAI argue that I should have known better?&#34;Indemnifications are never rock solid,&#34; said lawyer Mike Poropat of Stockman &amp; Poropat. &#34;They can always be taken apart (and they do so often). That said, in this particular case, there are also caveats. Specifically, if the customer should have known that it was infringing. That is a pretty wide open net that could get the consumer in trouble.&#34;Second, what counts as &#34;modified, transformed or used in combination with products or services not provided by or on behalf of OpenAI?&#34; If I use Photoshop to crop an image or Microsoft Word to edit some text before I publish it, does that obviate my indemnification? What about if I just upload the image to Wix website builder so I can use it on my company's home page?&#34;These provisions do not prevent a third party from claiming infringement, but rather provide a mechanism to then pursue the AI platform to seek that they indemnify you against losses or that they defend the action on your behalf,&#34; Bedrava said. &#34;Likewise, there may be a number of reasons or means for how a platform may be able to circumvent these obligations, such as the limitations that are placed on the types of users it applies to, the restrictions the user must have abided by, and the limitations on the purpose or use of the outputs.&#34;We reached out to OpenAI for comment on their indemnification policy, but we didn't receive a response by press time.<h3>Image services still getting sued</h3>Now, even though generative AI vendors won't defend you when you are sued, that doesn't mean that they are legally blameless. Copyright holders are suing these AI companies because they enable users to infringe.In June of 2025, Disney and Universal filed suit against Midjourney, making two claims against the image generation company based on its ability and propensity to reproduce the studios' characters nearly verbatim. In the first claim of the complaint [PDF], that of &#34;direct infringement,&#34; the plaintiffs state that:These are still uncharted waters. But Midjourney might be able to claim successfully that its users are the only ones who are guilty of infringing, because they are the ones entering the prompts that produce these outputs. If that's the case, the plaintiffs' other claim of &#34;secondary copyright infringement&#34; kicks in.Secondary infringement occurs when a third party enables or induces the primary infringer to do their work. According to Disney and Universal, Midjourney has the ability to prevent copyright infringement by blocking infringing prompts, but it doesn't do so. The plaintiffs also claim that Midjourney promotes its ability to infringe by featuring artwork with the company's characters in the &#34;Explore&#34; section of the defendant's website, an area that potential subscribers see.In its answer [PDF] to Disney and Universal's complaint, Midjourney says that training on images of the studios' characters is &#34;quintessentially transformative fair use.&#34; Fair use is a defense against infringement that, according to section 107 of the Copyright Act, allows anyone to use copyrighted materials for non-commercial purposes such as criticism, parody, and education. But courts will test any fair use claim to determine if too much of the original work was taken and if the newly-created work limits the potential market for the original.&#34;You don't really have that [fair use] argument when you're using someone's images to create new images for yourself that you are then going to commercially exploit, and Midjourney has subscriptions; people pay for that service,&#34; said entertainment lawyer Silvino Diaz of EPGD Business Law. &#34;You are essentially competing with the original Disney market, which is selling images for consumption by the public.&#34;Perhaps more importantly, Midjourney claims that it shouldn't have to automatically prevent users from generating images with the plaintiffs' intellectual property because they don't know how the customers are going to use it.&#34;Midjourney does not presuppose and cannot know whether any particular image is infringing absent notice from a copyright owner and information regarding how the image is used,&#34; the image generator writes in its legal response. &#34;Indeed, there are any number of legitimate, noninfringing grounds to create images incorporating characters from popular culture like those claimed by Plaintiffs, including non-commercial fan art, experimentation and ideation, and social commentary and criticism. Plaintiffs seek to stifle them all.&#34;In other words, Midjourney believes that you, the user, are the only one responsible for acts of copyright infringement you make by using its tools. No matter who wins in Disney and Universal's lawsuit, you could still be in legal jeopardy. However, Bedrava said that large companies like Disney are more likely to sue the generator companies because they could collect much larger damages if they win.&#34;Disney is not going after all the people who used Midjourney in order to make sure the world knows, don't you dare query Disney characters,&#34; he said. &#34;They're going after the big guys who have made 300 million give or take in 2024.&#34;<h3>You can't copyright AI-generated assets</h3>Even if you don't violate anyone's copyright by generating an AI image or text, you will have a difficult time protecting your materials against other people copying them. According to the US Copyright Office, AI-generated content is not copyrightable [PDF], because it lacks a human author to take credit.Courts have affirmed this view in cases such as Thaler v. Perlmutter [PDF], where researcher Dr. Stephen Thaler attempted to copyright an image made by his AI and then sued the copyright office when it denied his application. In Naruto v. Slater, People for the Ethical Treatment of Animals sued wildlife photographer David J. Slater for using selfies taken by a monkey without permission and the court ruled that a non-human can't obtain copyrights.If some parts of work are AI-generated, only the human-made portions can get copyright protection. For example, in 2023, the Copyright Office ruled that human-written text [PDF] of a graphic novel, Zarya of the Dawn, was copyrightable but the AI-generated images were not.On the bright side, if you use AI to generate a logo or slogan, you may be able to register it as a trademark. Trademarks don't require human authorship, but they do have to be closely associated with your brand.&#34;The test for whether something is a trademark or not is that it is an indicator of origin that immediately traces back to your product or service, meaning that the customers – when they see it – they know it's your business,&#34; Silvino said. &#34;And that's a logo, a slogan, a name, a mascot, and so, to the extent that that logo can be proven that it is an indicator of origin for your service, because your public, your market, your consumers identify it with the service that you're providing, then yes, it would be trademarkable.&#34;<h3>Check your work; make sure it's unique</h3>If you want to make sure that your materials won't get you sued, you need to have a human check anything you make to see if it's too similar to an existing, copyrighted work. One way is to use Google Image Search, which will show you if something very similar or identical to an AI-generated image already exists online. If it's an AI slogan, search for the slogan with quotes around the query text to see if someone else is using it already.You must accept that you won't be able to copyright AI-generated work, but trademarking a logo or slogan may be enough to protect your brand. Most importantly, you need a human in the loop.&#34;If companies want to mitigate risks,&#34; said intellectual property lawyer Travis Stockman of Stockman &amp; Poropat, &#34;they should integrate real human creativity in final materials, thoroughly vet their outputs for existing works, document the creative process, and, for any AI tools they do use, make sure they're aware of licensing terms.&#34;® </div></div>

As US companies increasingly adopt generative AI for cost savings, they may face significant legal risks, particularly regarding copyright infringement. Experts advise businesses to develop legal AI policies and ensure human review of AI-generated content to mitigate risks. Legal consequences can include cease and desist letters, substantial damages, and crippling attorney fees. AI companies typically disclaim responsibility for legal issues arising from their tools, leaving businesses vulnerable. Companies must be cautious when using AI for public-facing materials to avoid costly legal battles.

- Many US companies are increasingly using generative AI to cut costs associated with creative professionals, but they often overlook potential legal issues, particularly copyright infringement.  
- Legal experts advise businesses to develop a legal AI policy and ensure human review of AI-generated content to mitigate risks, as copyright holders can pursue significant damages and legal fees.  
- Additionally, AI-generated content is not copyrightable, but businesses can protect logos and slogans through trademark registration, emphasizing the importance of human oversight in the creative process.

Suetopia: Generative AI is a lawsuit waiting to happen to your business