Every third globally-based company implementing Artificial Intelligence (AI) solutions has encountered legal troubles, resulting in penalties or being subjected to regulatory investigations, according to a report by international law firm DLA Piper. The major reasons for disputes with regulators are focused around data protection, competition issues, and product safety.
Almost all of the biggest companies worldwide (96%) are implementing AI-based solutions in some form to improve their competitive stance. This piece of information is derived from a DLA Piper survey conducted among 600 international market leaders. However, the high costs of investment and the complex process of implementing new technologies result in 72% of companies purchasing ready-made AI solutions from external providers, accepting standard contract terms without appropriate data control clauses.
“A lot of companies treat cooperation with AI providers like typical IT service outsourcing and do not appreciate the challenges associated with the use of artificial intelligence. Many disputes, both with regulators and with external suppliers, can be prevented. AI implementation companies need to make efforts to have full knowledge regarding data use and protection, especially personal data used in AI models,” says Ewa Kurowska-Tober, partner, and head of DLA Piper’s Warsaw-based intellectual property and new technologies legal team.
DLA Piper’s international study shows that around 65% of companies were forced to terminate contracts with AI solution providers due to reasons such as ethical issues and data use. Almost 10% of them already have had a dispute with the technology provider.
“With the inclusion of appropriate provisions in contracts, along with obtaining statements and assurances from the provider, parties can avoid future disputes regarding who is liable for different aspects of the technology’s operation. Reaching such safeguards helps business owners avoid disputes with both the technology provide r and the regulator,” adds Ewa Kurowska-Tober.
As many as 83% of companies claim to make an effort to adhere to corporate governance in the field of artificial intelligence. However, at the same time, more than one-third of the respondents aren’t sure if they are correctly applying legal regulations, while 39% lack knowledge about the direction of AI regulations.
“Over half of the companies our survey covered admitted that their legal teams dealing with compliance issues do not participate in the decision-making process concerning the choice of AI solutions. They argue their participation would rather slow down than streamline the decision-making process. Such approach is counterproductive and in the long run exposes companies to delays in projects, mistakes, oversights, and therefore severe financial consequences”, says Ewa Kurowska-Tober.
Almost all companies identify intellectual property protection as the main challenge associated with the use of artificial intelligence. In addition to the risk associated with partnering with external AI technology providers, the biggest threat companies perceive is improper use of AI by their own employees.
“Two clear messages emerge from our study. First, companies urgently need to implement AI-based solutions and have no time to wait for the situation to unfold. Second, increasing productivity and efficiency using AI shouldn’t pose a threat to ethical business practices. The key is for companies to lead with values and exercise due diligence in implementing the latest technologies,” highlights Ewa Kurowska-Tober.
