AI Art: The Legal Time-bomb Ticking Under Your Brand

Artificial Intelligence (AI) is revolutionizing industries—from advertising to art—but in doing so, it is also throwing brands, agencies, and tech companies into the murky waters of copyright infringement. With AI-generated images now mainstream, the key question facing these sectors is: Are they unknowingly risking their future by ignoring legal and ethical traps, or will they seize the opportunity to lead responsibly in this fast-evolving space?

The Current Legal Landscape: A Collision of Creativity and Code

Copyright law, designed to protect human creativity, is struggling to keep up with the unprecedented power of AI. These laws were written in a time when no one could have imagined machines generating artwork indistinguishable from human-made content. As it stands, AI-generated images cannot typically be copyrighted due to a lack of human authorship—yet this position is increasingly being challenged.

The U.S. Copyright Office, for instance, has begun accepting registrations for works incorporating AI elements, provided that there is “substantial human involvement.” But what exactly does this mean? Where do we draw the line between human creativity and machine output, and how much human input is necessary to establish copyright protection?

As the law lags behind the technology, many businesses are finding themselves in a grey zone, potentially exposing themselves to lawsuits, legal fees, and reputational damage.

The Legal Battles: Setting Precedents for the Future

Some early legal battles are shaping the contours of this evolving landscape. Getty Images’ lawsuit against Stability AI—accusing the company of using millions of copyrighted images to train its Stable Diffusion model without permission—could set a crucial precedent. If Getty wins, companies using AI-generated images could face similar lawsuits unless they can prove proper licensing of their training data.

In parallel, a group of artists is leading a class-action lawsuit against AI companies like Midjourney and Stability AI, alleging their copyrighted artworks were scraped and used to train models without their consent. With artists at the forefront of this movement, it’s clear that creative industries are not sitting idly by as AI reshapes the boundaries of artistic ownership.

Corporate Reactions: Legal Safeguards or Ethical Quandaries?

Different companies are reacting in vastly different ways to these challenges:

1. Full Indemnification for Users: Major AI companies like Google and Adobe are offering full indemnification to users of their AI models, assuming the legal risks of any copyright issues. But this raises deeper ethical concerns: Does taking on legal risk absolve companies of the responsibility to ensure their models are trained ethically?

2. Ethically Sourced Data: While companies like Bria AI pride themselves on using ethically sourced and licensed data, a hidden layer of risk often remains. Many of these ethically-trained models still rely on foundational models that may have been polluted with copyrighted material from their early training stages. Even if these models are legally defensible, the ethical question lingers—should brands, agencies, and tech companies base their operations on models that aren’t transparent about their origins?

3. Shifting Responsibility to Users: Some AI platforms, particularly those in their early stages, place the burden of responsibility on users. By doing so, they sidestep liability, pushing agencies and brands into a legal minefield with no protection. Is this a responsible approach, or are these companies prioritizing rapid growth over long-term accountability?

The Adobe Incident: The Illusion of Legal Consent

Even established players are not immune to controversy. Adobe, a company trusted by millions of creators, faced a major backlash when it was revealed that it used customer images—without consent—to train its Firefly AI art generator. While Adobe claims to have covered the legal bases, this incident highlights a more unsettling reality: Even with legal permission, does a company still hold the ethical high ground if it breaches the trust of its users?

This example underscores a fundamental issue: Are companies prioritizing AI innovation at the cost of consumer rights and trust?

Can You Prove Copyright Infringement? A Legal and Ethical Dilemma

A key challenge in these lawsuits is the question of proof. Unlike traditional plagiarism, AI models don’t directly copy an image—they study patterns from millions of examples to generate new, unique content. This makes it nearly impossible to prove a direct infringement, especially when the output is a combination of countless images, blurred together by AI’s machine learning algorithms.

“The courts are going to have a real problem with figuring out how to adjudicate this when AI models don’t have an obvious, traceable origin of the content.” Charles Duan, Senior Fellow at the R Street Institute

But while this technical complexity might make it harder to enforce copyright, it also raises a bigger question: Just because something is difficult to trace, does that absolve companies of ethical responsibility?

Emerging Regulations: The AI Act and Beyond

Governments around the world are only beginning to address these issues. The European Union’s proposed AI Act could reshape the AI landscape by imposing strict transparency rules. Companies will likely be required to disclose when AI is used in content creation, as well as the source of their training data.

However, transparency alone may not solve the deeper copyright issues. Will laws evolve to establish new protections for AI-generated content? Could the concept of “authorship” itself be redefined in a world where AI co-authors art, design, and even literature?

Best Practices for AI Image Generation: Protecting Your Brand, Legally and Ethically

For companies using AI to generate images, here’s how to safeguard against legal and ethical pitfalls:

1. Avoid Well-Known Figures: Generating images of celebrities or trademarked characters invites unnecessary risk.

2. Style Prompts: Be careful when prompting AI to replicate a specific artist’s style. While legally ambiguous, this practice could lead to ethical concerns if an artist’s work is too closely mimicked.

3. Transparency: Be transparent about your use of AI in creative processes. This builds consumer trust and anticipates future regulations.

4. Human Oversight: Ensure substantial human involvement in content creation to strengthen any copyright claims and preserve creative integrity.

5. Ethically Sourced Models: Whenever possible, choose AI models trained on licensed or public domain data. This reduces the risk of inadvertently violating copyright and ensures you’re operating ethically.

“Rights-Free Humans” and AI-Generated Characters: Exploring the Legal Grey Zone

One of the most compelling trends in AI image generation is the rise of “rights-free humans”—AI-generated characters that don’t exist in real life. These virtual humans are designed to bypass the traditional legal requirements for using a person’s likeness, such as model releases or image rights, presenting a tantalizing prospect for brands, agencies, and media companies looking to streamline production costs. However, while this might seem like a convenient loophole, the legal and ethical implications are far from settled.

The Allure of Rights-Free Humans

From an economic standpoint, the benefits of AI-generated characters are hard to ignore. Brands could potentially use AI to generate hyper-realistic models that align perfectly with their target audience, without ever paying for a photoshoot, handling contracts, or facing potential legal claims over unauthorized use of someone’s image. AI models can be created to represent diverse demographics, tailor-made to fit specific cultural or geographic markets, providing advertisers with an unparalleled level of flexibility.

For instance, an ad campaign for a global fashion brand could feature AI-generated models customized to look like regional populations—appearing in Asian markets with East Asian features, and in African markets with African features—all from a single AI-generated source. This would allow brands to localize their campaigns at scale while dramatically cutting costs and timelines, sidestepping the logistical hurdles of hiring diverse models in different regions.

The Legal and Ethical Minefield

But while “rights-free humans” may offer brands a convenient way to streamline their operations, the legal terrain is far from clear. What happens when an AI-generated character, created to avoid legal entanglements, bears a strong resemblance to a real person? Could brands find themselves facing lawsuits from individuals claiming the AI-generated likeness is too close to their own?

This concern is not hypothetical. While the concept of an AI-generated person is still legally untested, it’s not hard to imagine a scenario where a celebrity or a private individual sues a company for using an AI character that resembles them, whether intentional or not. If AI-generated characters start closely mirroring real people, even unintentionally, it could lead to a surge in “lookalike” lawsuits—pushing the boundaries of copyright and image rights even further.

Moreover, the ethical implications of creating entirely artificial humans are equally complex. Should brands be allowed to create virtual people that are so realistic they could deceive consumers into believing they are looking at actual humans? And more importantly, what rights should AI-generated individuals have? While they are not “real,” these virtual characters exist in a space that straddles reality and fiction, and consumers may start to feel uncomfortable with brands using "fake" people in advertising without making it clear that the models aren’t human.

Blurred Lines Between Fiction and Reality

The potential for abuse is high. What’s to stop companies from using AI to create characters that subtly evoke celebrities or public figures, but don’t cross the threshold of legal infringement? For example, an AI-generated “rights-free human” could have features that, while not identical, heavily evoke a well-known celebrity like Brad Pitt, blurring the line between homage and infringement. In such cases, where does one draw the line between creative license and exploitation?

This dilemma extends beyond just celebrities. Imagine an AI-generated character that resembles a private individual—a person who never agreed to have their likeness used in any form of media. In such instances, proving intent might be difficult, but the emotional and reputational harm could be significant. Could we eventually see individuals suing brands for unintentional likeness infringement caused by AI? The potential legal quagmire is staggering.

A Moral Question for Brands

Beyond the legal issues, there are broader ethical concerns. Is it right for brands to create “virtual humans” in an era where authenticity and transparency are highly prized by consumers? Many companies are moving towards purpose-driven marketing that emphasizes real connections with real people. In this context, using AI-generated characters in place of actual models could backfire, especially if consumers feel deceived by the practice.

In short, while “rights-free humans” may offer a temporary legal loophole, they exist in a legal grey zone that is primed for future challenges. As AI technology continues to advance, brands, agencies, and tech companies will need to tread carefully, ensuring that they balance cost-efficiency and creativity with the emerging ethical and legal concerns that are sure to follow.

Seize the AI Revolution: Your Blueprint for Ethical Innovation

The AI content revolution isn't coming—it's here. Will you lead the charge or be left in the digital dust? Here's your roadmap to not just survive, but thrive in this new landscape:

Brands: Transform AI from a legal minefield into your competitive edge. Arloesi doesn't just help you avoid copyright catastrophes—we empower you to create cutting-edge campaigns that resonate with audiences and regulators alike. Imagine AI-driven content that's not only legal but becomes the gold standard for ethical innovation in your industry.

Agencies: In a world where everyone claims AI expertise, become the partner that truly delivers. With Arloesi, you're not just keeping pace—you're setting the pace. We'll arm you with AI strategies that don't just push boundaries, they redefine them. Be the agency that turns "It can't be done" into "We just did it," all while upholding the highest ethical standards.

Tech Companies: You're not just creating tools; you're shaping the future. Partner with Arloesi to build AI models that don't just comply with today's ethics—they anticipate tomorrow's. Imagine being known not just for your innovation, but for your integrity. Let's create AI frameworks that don't just protect reputations—they enhance them.

The Path Forward: Will You Lead, or Be Left Behind?

AI is here to stay, and it’s transforming industries at a breakneck pace. But the future isn’t just about who adopts AI fastest—it’s about who does it responsibly. Partner with Arloesi to ensure your company not only leads the charge in AI-driven creativity but also stands firm on ethical ground.

Don't just adapt to the AI future—define it. With Arloesi , you're not just checking boxes—you're setting benchmarks. We're not here to help you keep up; we're here to ensure you lead.