OOH Today Legal Q&A
Article No. 5
andy@mcdonaldlawpllc.com
https://www.mcdonaldlawpllc.com/
Legal Issues Surrounding the Use of AI
Artificial Intelligence (AI) constitutes a growing presence in our day-to-day lives. In addition to personal use, more companies are exploring ways that AI can either assist their employees in performing their functions or even fill or replace positions. I’m sure at this point, many of you have explored the free version of ChatGPT by asking it questions you would normally put into a Google search. Rather than being left with a host of websites that may provide answers to the search query, ChatGPT normally provides a well-reasoned and definitive answer. With that said, I think we’ve all heard horror stories of people relying upon AI’s answers, without any independent verification, to their embarrassing detriment – personally, I’ve heard of lawyers citing cases that were either non-existent or did not stand for the precedent that AI led the citing attorney to believe. Understanding that AI is becoming more prevalent, it’s important for us to understand AI’s limitations and the legal ramifications resulting from same. As of the writing of this article, I am unaware of any legal precedent that addresses a party’s liability for the use of or reliance upon AI. However, there are a few legal issues that could arise from the use of AI which I’ll briefly discuss – exposure of confidential information, breach of contract, and common negligence.
Confidential information, comprising sensitive data such as personal, financial, or proprietary details, should be managed with utmost care and caution, especially when considering its integration with AI systems. Either a company wishes to maintain the confidentiality of its key information to maintain a competitive advantage or a company is under a contractual, equitable, or other legal duty to maintain the confidentiality of a third party’s information. While AI offers immense potential for data analysis, automation, and decision-making, feeding confidential information to AI poses significant risks that can compromise privacy, security, and trust. The potential for data breaches and unauthorized access presents a grave concern because if confidential information fed into an AI system falls into the wrong hands due to a breach or unauthorized access, the exposure of such confidential information, which may lead to identity theft, financial fraud, or other malicious activities, may in turn expose the “feeder” of such information to legal liability. Exposing confidential information to AI increases the attack surface and heightens the risk of data breaches, putting individuals and organizations at risk.
Exposure of confidential information can result in legal liability in a number of ways. For instance, in using AI to assist it in performing due diligence on a potential M&A acquisition, a billboard company, which is under a confidentiality agreement with the target company, scans and inputs to AI various information provided to it, such as copies of leases and ad contracts. AI digests such information and assists the acquiring company in more quickly summarizing the information, i.e., determining lease and ad contract end dates, whether consent to assignment is required, etc.
During such due diligence, the acquiring company determines not to proceed with the acquisition and terminates the proposed deal. Later on, the AI system experiences a leak, is hacked, or regurgitates the information fed to it during the due diligence process. The target company becomes aware of the exposure of its confidential information and proceeds against the acquiring company based upon a breach of the confidentiality agreement (breach of contract), as well as for negligence in failing to anonymize the target’s information in feeding data to the AI.
In another scenario, an advertiser approaches an ad agency or a billboard company with a desire to retain it in the production and display of an ad campaign. The advertiser provides the OOH company with its concept. The OOH company reviews the concept and identifies a possible legal issue – maybe the concept might impinge upon another company’s intellectual property or the concept touches upon campaign finance law, etc. Rather than reaching out to an attorney for advice, the OOH company determines to query an AI system. The AI system provides a response to the query that either fails to identify any possible liability or cuts out of whole cloth some non-existent legal precedent showing no legal liability under the circumstances presented. The OOH company proceeds with the ad campaign only for it and its advertiser to later face legal action from some third party who was negatively impacted by the campaign or is under a duty to enforce compliance with an impacted law, rule, or regulation.
AI is an incredible tool. However, its use by the public is relatively new. Like so many of us, OOH companies are exploring how AI may best be used to assist them in better managing their day-to-day work. Without a doubt, AI can be of significant help, but there are potential risks which must be understood and managed. The importance of understanding these risks and addressing them through a formalized AI policy are good first steps a company can take in ensuring any potential liability is either prevented or better controlled.
About the Author: Andy McDonald works for his law firm, McDonald Law, PLLC. He is an AV Preeminent Martindale-Hubbell Peer-Review rated attorney and has practiced law and dealt with billboard issues since he first became licensed in 1999. Andy is licensed in Mississippi, New Mexico, Oklahoma, and Texas.
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