March 2023 Business Litigation Update

The developments related to Artificial Intelligence (AI) have truly been amazing, and tech, media, and seemingly every other industry are scrambling to use this technology in numerous ways. It has the potential to transform so many aspects of our lives including the workplace, health care, education, agriculture, and even the law. The possibilities truly seem to be endless, but some feel that some “ground rules” need to be established.

In January, Representative Ted Lieu, a California congressman, filed legislation calling on Congress to create a nonpartisan AI Commission to provide recommendations on how to structure a federal agency to regulate AI and determine what types of A.I. should be regulated and what standards should be applied.  Lieu also introduced a nonbinding resolution calling on Congress to support regulating AI. In order to grab attention, Lieu utilized AI (specifically, ChatGPT) to write the resolution itself!  [Note to readers: This newsletter was not generated by ChatGPT!]

While no federal regulation specifically focused on AI currently exists, enforcement actions and litigation are already here.

According to a White Paper published by DLA Piper, the Federal Trade Commission and the EEOC have successfully brought enforcement actions related to misuse of AI.  For example, the White Paper notes that in 2021, the FTC settled claims against three companies that allegedly used ticket bots to fool tests designed to prevent nonhuman users in violation of the Better Online Ticket Sales Act.  And in 2022, the EEOC brought an action against a company using recruiting software that allegedly was designed to reject older applicants.

Private litigation arising out of AI is also here, and only going to increase. Accidents involving autonomous vehicles have generated significant products liability litigation.  So-called “generative” AI – where AI generates derivative texts and images based on original work – has led to copyright infringement litigation.  And there has been litigation over apps, including one lawsuit where the developer was accused of using an AI generated algorithm that restricted price competition.

As with any fast-developing technology, regulation always trails advancement.  Litigation, however, does not.

So, as your company explores how to incorporate artificial intelligence into your business, it will be important to watch for the introduction of regulatory schemes at the federal and state level.  But, for the present, it is important to understand that civil liability may already exist for misuse of AI.