AI Contract: Types, Key Features, Red Flags, Lawyer Help
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What is an AI Contract?
An AI (artificial intelligence) contract outlines how parties are allowed to use AI for tasks and projects. The contract specifies important details, such as the parties’ rights, duties, and more.
Read the rest of this article to explore the different types of common AI contracts, key features in AI contracts, red flags to note, and how a lawyer can help you draft or review these essential agreements.
What are Common AI Contracts?
Some of the most common AI contracts include:
- AI licensing agreement. This agreement refers to how AI models and software can be used and licensed, such as their permitted and prohibited uses.
- Data licensing agreement. Access to datasets for training AI or other tasks is involved in these contracts, which should specify data ownership and privacy.
- Development agreement. This contract involves one party building or developing an AI model, with key terms including costs and milestones.
- Joint development agreement (JDA). If two or more parties are involved in developing AI, the agreement has to allocate intellectual property (IP) rights and duties.
What are Key Features of AI Contracts?
To be legal and clear for all parties concerned, AI contracts must include key terms such as the following:
- Intellectual property (IP). A big concern with AI contracts is who owns the IP, such as the model, data, and software improvements.
- Data usage. The contracts must specify what happens to the data, such as after the contract ends.
- Data protection. If personal or sensitive information is being processed or stored, the agreements need to specify what measures are in place to protect user privacy.
- Accuracy. Since AI systems are known for making errors, the contracts must specify how liability can be shared between parties and limited.
- Performance. There should be specific service levels the provider of the AI should meet, such as uptime guarantees.
- Termination. How parties can end the contract and what happens to the data/models when the contract comes to an end must be clearly defined.
- Human oversight. To ensure that AI is reviewed for accuracy, there should be provisions for human oversight.
- Transparency. Parties using the AI model or software will want to know how it works and how information is protected.
What are Red Flags in AI Contracts?
Across different types of AI contracts, there are specific things to keep an eye out for when reviewing them. Hiring a lawyer is also beneficial because they will be able to identify risks and liabilities that you might miss without a legal background.
Here are some typical red flags to spot:
- Broad rights. If the AI provider has full rights to inputs, outputs, software, or data, without any limits, this can put you at privacy or other risks.
- Lack of protection. Things can go wrong with AI systems. If the contract doesn’t put protection measures in place, this can leave you as the user or customer exposed.
- Unrestricted modifications. If the AI provider wants to make changes to the models or software, they should give the customer notice ahead of time.
- Vague wording. If the contract is vague or general, this can hide risks or create confusion between parties.
- Missing human oversight. There should be human review of the AI systems, especially if it’s allowed to make decisions.
- Unclear services. You want the services scope to be transparent, with commitments from the AI provider, such as uptime guarantees.
- Error remedies. Should the AI software or model fail, the provider should give you support to fix whatever went wrong to reduce the customer’s losses.
You can request a legal review of your AI contract by hiring a qualified lawyer on ContractsCounsel, one of the largest online legal marketplaces where clients can connect with vetted lawyers. Here’s how:
1. Go to the ContractsCounsel marketplace, where you can post your project for free.
2. You’ll receive multiple bids from lawyers directly on the platform who can assist you.
4. Once you receive the lawyer bids, you should review the lawyers' profiles. There’s lots of info on the platform to help you choose the best lawyer, such as their location, client ratings, years of experience, and field of expertise.
5. Connect with a lawyer you think is best suited to your requirements and hire them.
How Can a Lawyer Help You with AI Contracts?
AI contracts can be dense and technical, which can make them challenging to review. Besides reviewing or drafting your AI contract for you, a lawyer can help you in various ways, such as the following.
- They’ll identify any risks, such as one-sided clauses in the contract that give the provider broad rights.
- They’ll help you to negotiate with the other party for fair, balanced terms.
- They’ll protect your data and privacy rights, ensuring that sensitive information isn’t exposed or used in unauthorized ways.
- They’ll clarify all IP ownership. This prevents future disputes between parties.
- They’ll check all regulatory compliance. A lawyer is skilled at aligning the AI contract with all applicable regulations and laws.
- They’ll ensure you have favorable exit terms. They’ll help you keep your data and development ownership if the agreement comes to an end.
- They’ll consider what will happen if something goes wrong with the AI system or model. This enables you to add provisions for how to fix the issue, preventing hassles later.
Where to Find a Lawyer for an AI Contract
Finding a lawyer isn’t always easy, but you don’t have to cold-call traditional law firms, which can be time-consuming and expensive. The process of locating and hiring a lawyer is easier on online legal networks.
On ContractsCounsel, you can easily connect with vetted lawyers on the platform by finding an AI lawyer from the comfort of your home. All lawyers have the expertise and knowledge to guide you through all your AI concerns.
The platform provides comprehensive research on the lawyers’ profiles, enabling you to search for lawyers based on data such as their level of expertise, years of experience, client ratings, location, and previously completed projects.
ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.
Meet some of our AI Contract Lawyers
Robert A.
Robert A.
Robert McMillan Arthur is a collaborative attorney and mediator practicing across Wisconsin, with offices in the Metro Milwaukee area and Northeastern Wisconsin. He is a general practitioner, concentrating in Small Business Law, Entertainment Law, Intellectual Property Law, Nonprofit Law, Divorce and Family Law. Robert’s business law practice focuses on the needs of small, closely-held businesses and startups. As a veteran of a family owned business, Robert applies his extensive experience to advise his clients in a broad spectrum of legal issues, including contracts, licensing, trademark, copyright, employment, and business formation. With multidisciplinary qualifications and experiences, Robert chose his career in law to help people caught up in difficult situations in their personal or professional lives. His core principle of law practice is based on empowering and informing clients, advocating for their interests when appropriate, and guiding them in difficult problem solving.
"Robert helped us with a contract review and addressed all of our concerns. He gave us a thoughtful analysis of the risks we would be accepting upon execution."
March 19, 2024
Nichole M.
Ms. Melton-Mitchell is a seasoned executive that has obtained a law degree and is practicing law as a second career. She has spent over 25 years in the health care industry and is well versed in health law, contract law, financial law, trusts and estates, M&A and other types of transactional law. She maintains evening and weekend hours to allow clients flexibility in connecting with her around their schedule.
March 29, 2024
Charles D.
I have practiced civil law for 13 years and have concentrated my practice serving the construction and real estate industries.
April 8, 2024
Steve H.
Steve has 20+ years of IP and litigation experience, including 10+ years of experience at two of the most prestigious large U.S. law firms, Greenberg Traurig LLP, (AMLAW 10) and Sheppard Mullin LLP (AMLAW 100). Steve has been a licensed U.S. Patent and Trademark Office registered attorney and litigator since 2002. Steve’s extensive experience and interpersonal skills have given him the skills that allow him to provide his clients with the very best quality and service. Steve has successfully represented clients achieve their goals in a variety of IP, patent, trademark and trade secret disputes. He has successfully obtained many hundreds, if not over a thousand, valid and enforceable U.S. and international patents and trademarks applications for his clients over the years. As a result, he has strong, longstanding relationships with many of the Examiners at the USPTO and works with an international team of foreign associates to secure foreign rights and litigate abroad whenever needed. Many of Steve’s clients have been a client of Partners Law Group for 5+ years. More than a few have been clients for 15+ years. Steve prides himself on providing accurate results and efficiency-driven advice on complicated IP, litigation, and real estate matters in a clear and concise way; helping his clients make the best decisions possible when dealing with complex and sensitive legal matters. Steve has successfully negotiated hundreds of complicated licensing and pre-litigation IP, patent, trademark, business, real estate cases and matters for various clients large and small. Steve’s IP practice focuses on all aspects of intellectual property and covers various technical disciplines. He has extensive experience in medical devices, pharmaceuticals, internet or business methods and processes, broadband and 5G technologies, data acquisition, migration, monitoring and protection, piracy, nutritional supplements, sports and nutrition products, herbal products, pharmaceuticals, orthodontics, and surgical procedures and devices, health-related products to computer hardware and software, music, and mobile device applications, hardware and software, business methods, industrial machinery, mechanical devices to other technologies he understands and believes he can help the client achieve his or her goals.
April 10, 2024
Gordon F.
30+ Years counseling clients in entertainment, media and the arts and representing them in transactional, structural and strategic matters.
April 17, 2024
Eugene S.
I have experience with the protection and monetization of intellectual property, negotiating license agreements that have earned several hundred thousand dollars in revenue, and I have negotiated multiple multi-million dollar agreements. Additionally, I have worked with various client to incorporate intellectual property strategies into their underlying business plans. I have been working remotely for over seven years and I have a home office dedicated to my work. I am available to travel to clients on an as needed basis. I enjoy working with clients in this manner because the costs are reduced, and I have the freedom to travel to my clients as needed.
April 11, 2024
Kelly C.
Hello! I'm an attorney who practices mainly landlord/tenant law (eviction, both plaintiff and defendant side); and criminal law (misdemeanor). I also work as appearance counsel to fill in at hearing when conflicts arise for other lawyers.
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