by Todd Van Thomme and Erin Stender
Using artificial intelligence in your business today might feel scary or at least futuristic—it may even seem, as in Wargames, “the only winning move is not to play.” But ignoring AI isn’t practical, and the work it provides using your input to create its ideas, innovations, and projects could place them all at risk before you even realize it. Just like the supercomputer in the movie, AI is now analyzing, creating, and making decisions in ways that can have real-world consequences for your business. Iowa manufacturers are leveraging AI-powered design and simulation tools like Autodesk Fusion 360, Siemens NX, and PTC Creo to optimize parts and improve production lines. Professional services firms rely on ChatGPT, Microsoft Copilot, and Jasper AI to draft client communications, marketing content, and reports quickly. Companies may use AI platforms like OpenAI Codex, MidJourney, and DALL·E to prototype products, analyze customer data, and create pitch decks or branding materials. Even routine operations—from customer service to HR—are increasingly automated with AI chatbots and workflow tools like ChatGPT Enterprise and Salesforce Einstein. However, using AI somewhere in your business can feel like Marty McFly showing up to Hill Valley in 1985 with a smartphone—exciting, but a little risky if you’re not sure what to do with it.
Now imagine this: an engineering firm in West Des Moines leverages AI to optimize a component that reduces energy use in industrial equipment. Everything works great, it looks innovative and like something the company wants to protect and maybe license, but that’s when the questions start. Who is the inventor? Who owns the content? And can patent rights or copyright be claimed if AI played a role? Can you even identify the portions created by humans and those created by AI?
That’s the catch—use AI without careful consideration, and your business’ ownership rights could vanish faster than the DeLorean speeding past 88 miles per hour. How businesses use AI and how they track it can directly affect whether the business can actually own and protect what it helps create. In some cases, using AI the wrong way may result in the loss of patent rights, copyright protection, or both. Intellectual property law covers patents, trademarks, copyrights, and trade secrets, and AI touches all of them—but not in the same way. This article focuses on the most practical and immediate concerns for businesses related to AI use: patents and copyrights. We will look at when AI involvement can jeopardize patent inventorship, limit or eliminate copyright ownership, and create unexpected copyright infringement risks tied to AI-generated content.
A patent protects an invention, which can be a product, a machine, a process, or even a new way of doing something. To qualify, the invention must be new and have a real, practical use. One key requirement—often overlooked when AI is involved—is that a patent must name a human inventor. The courts have interpreted this to mean that only a human being may be an inventor for purposes of patent law. Therefore, inventions originally created by AI cannot be patented because AI may not be a named inventor. While this is the current law in the U.S., the landscape around AI is always changing and modifications to this interpretation may be made in the future. For example, the rule on AI authorship of a copyrighted work is not as stringent and requires a balancing test—it is possible for the interpretation of patent inventorship to change, requiring a balance with human inventorship rather than a blanket exclusion of AI-invented patents.
What about copyrightable material? A copyright is any original work of authorship, including things like music, books, videos, drawings, sculptures, or pictures. A first issue with AI under copyright law is whether AI may be the author of a copyrighted work. Under current U.S. law, AI systems cannot be authors, meaning any works that are generated by AI cannot get copyright protection unless there is sufficient human creative input. Notably, the “sufficiency” requirement is a gray area determined on a case-by-case basis by evaluating the extent of human creative control over the work if generative AI assists in the creation.
There are many different types of artificial intelligence tools such as generative AI, large language models (LLMs), machine learning, and predictive AI. Generative AI can be prompted by the user to create output based on the training data fed into the model. Large language models are designed to understand and comprehend words in text. These models are trained on large datasets of language and use learning techniques to understand patterns in language. They can then be used to generate text based on prompts or summarize text. Machine learning models are also trained on large datasets. They can be used to predict outcomes in datasets. In the context of copyright law, generative AI is particularly problematic because it can be used to generate text, images, or videos from a human prompt, potentially creating output that infringes the copyright of another. Copyright infringement occurs when a copyrighted work is reproduced, distributed, performed, publicly displayed, or made into a derivative work without the permission of the copyright owner.
AI models may use copyrighted works as input when the model is being trained. They might also output copyrighted works or derivatives of copyrighted works. Using copyrighted works as training data or output can infringe an owner’s copyright. . Copyrighted works used as input for AI models are more difficult to detect and prove infringement. This is because the works are not being directly reproduced, distributed, or publicly displayed, rather the works are being utilized on the back end to create the AI system. Copyright infringement is more readily detectable in the output of an AI model. AI models may output copyrighted works or variations of copyrighted works when they are trained on copyrighted data. Some AI models have protections against copyright infringement. They may give an error message to user’s that prompt copyrighted outputs, but some models have limited or no infringement protections.
Because of this, many lawsuits against AI companies alleging copyright infringement have been filed. In general, AI has been an issue for creators, whether that be small creators like artists or bloggers or larger creators like Disney and Universal. For example, Disney and Universal recently sued Midjourney for using their copyrighted works to train an AI model which then reproduced, made available, and distributed infringing copies of their works. While this lawsuit is ongoing, it exemplifies a multitude of other lawsuits filed against AI companies that utilize the copyrighted works of others.
Notably, the fair use defense is often asserted by the AI model owner in these cases
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fair use was asserted by Midjourney in response to the lawsuit filed by Disney and Universal. The fair use defense allows a person to create a derivative work based on a copyrighted work if the derivative work is sufficiently “transformed” as compared to the original work. The “transformative” test varies based on the context of the alleged infringement, but if the derivative work has sufficiently altered the message, meaning, purpose and character of use, or potential market of the original work, then it may be protected by fair use. This is the largest hurdle for plaintiffs wishing to recover for the unauthorized use of their protected works, because the fair use defense is a fact-specific inquiry and often the outcome will change based on the facts of the specific case being litigated.
Recently, Disney announced an agreement with OpenAI under which Disney agreed to license over 200 Disney, Marvel, Star Wars, and Pixar characters to OpenAI for three years. OpenAI will be able to use these characters in connection with their platform, Sora, a generative AI tool for creating short form videos. This may indicate a shift in the way AI is viewed in the U.S. by at least some content creators. Previously, creators were in a battle against AI models because these models profited off of the creators’ protected works. But there seems to be a shift toward working with AI companies for mutual profit as demonstrated by this agreement. https://thewaltdisneycompany.com/disney-openai-sora-agreement/
Intellectual property laws are generally governed by the laws of each country or entity. The European Union has become a world leader in AI compliance after implementing a comprehensive AI Act to address concerns with AI models. The EU AI Act classifies AI based on risk—unacceptable risk, high risk, limited risk, and minimal risk. Manipulative or social scoring systems are classified as unacceptable risk and are prohibited, whereas high-risk AI systems are highly regulated, limited risk AI systems are regulated less stringently, and minimal risk AI systems are not regulated. Some examples of prohibited systems in the EU include systems that profile individuals to assess crime risk, facial recognition databases compiled through scraping the internet, and social scoring systems that classify individuals based on certain traits. https://artificialintelligenceact.eu/high-level-summary/
Providers of AI systems must comply with certain requirements dependent on the type of AI system. For example, providers may need to provide documentation, comply with the Copyright Directive, disclose how the model was trained and what data was used for training, provide instructions for use, conduct model evaluations and testing, and utilize incident reports for cybersecurity.
The U.S. does not yet have a comprehensive artificial intelligence law like the EU AI Act. For businesses, the takeaway is clear: stay informed, be deliberate in how you use AI (and document its use), and develop proactive strategies to identify and protect your intellectual property. Companies should consider either limiting AI’s role in creating patentable innovations or original branding and works of authorship—or accept that what AI produces may not be patentable or protectable. The rules are evolving, but the opportunity to leverage AI responsibly while prioritizing human creativity to safeguard your innovations has never been more important. As Doc Brown famously observed, “the future hasn’t been written yet.” In the context of AI, that future will be shaped by how intentionally companies balance technology, human creativity, and intellectual property protection today.