This here is the second part of our discussion on key contract terms and conditions for AI products and services, and it’s all from the perspective of the customer. In the previous installment, we talked about data ownership and licensing, but this time we’re diving into some other important aspects. Now, let me make it clear that we’re not talking about AI creating contracts, alright? We’re talking about when you, as a customer, enter into contracts for AI products and services.
Now, when it comes to these contracts, you gotta remember that you’re dealing with some unique issues and more complexity compared to your regular SaaS agreements. See, AI Solutions have all kinds of data involved – we’re talking about data that trains, fuels, guides, and even modifies these generative AI-based models, solutions, and systems. And let me tell you, there are different types and sources of data in the mix here.
First up, let’s talk about the algorithm. Providers expose this algorithm to massive amounts of data sets to “train” it before customers like you can get your hands on it. We call this initial training data. But here’s the thing, this initial training data is often fine-tuned and improved by adding more data as a new layer. This data could come from the provider, from you, from both of you together, or even from a third party. We call this enhanced training data, and it’s important to understand how it affects the AI Solution.
Now, as a customer, you come into the picture by providing the AI Solution with prompts, instructions, queries, or any other input. And let me tell you, this input is crucial. It’s what gets the AI Solution to generate the output you’re looking for. This output could be all sorts of things – data, text, images, videos, audio, and even new code or other materials. And hey, this output could even become a part of the enhanced training data.
Now, when it comes to commitments and disclaimers, providers might have some limitations on how you can use their AI Solution. They might have specific parameters on what input prompts you can use and what the generated output can’t be used for. And you know, just like any other cloud or platform agreements, they might have some service level commitments in terms of uptime and accessibility.
But here’s the interesting part. AI Solution providers might make performance commitments as general and vague as possible. Why? Well, it’s because they can’t really control everything that goes into the AI Solution and how it spits out the output. Sometimes, these generative AI Solutions can produce some “hallucination” output that might look correct but isn’t really accurate. So, providers will definitely have some disclaimers in place, saying that they can’t guarantee the accuracy of the results or how customers decide to use the output. It’s all about managing expectations, my friends.
Now, let’s talk about a situation where your data might benefit others using the AI Solution. If the input prompts or output you provide are contributing to the enhanced training data that improves the AI Solution as a whole, you might want some liability disclaimers or indemnity from the provider. You don’t want them exploiting your contributions with other parties without any consequences, right?
And then we come to the regulatory and privacy side of things. In the US, there are regulations popping up at both the federal and state levels when it comes to AI. Some laws prohibit certain uses of AI or require certain safeguards to be in place. It’s a whole new ball game, my friends. Especially when it comes to regulated data and personal information – that stuff brings along a whole load of liabilities.
For example, if you’re providing input prompts that contain health information governed by HIPAA or personal information subject to GDPR or state privacy laws, you gotta think about how that data is being used. Can it be used as a part of the output or as enhanced training data? Or is there a separate agreement needed for that? It’s all about the privacy and protection of data. And trust me, if you’re in a field with anti-discrimination regulations, you better make sure the AI Solution is fair and not biased in any way. Customers have the right to know how the AI Solution was trained and how it operates to make sure it’s not making any unfair or inaccurate decisions.
And of course, we gotta talk about risk allocations. Let’s say you’re not intentionally signing up to use AI, but you wanna know if your provider is using it in the services they’re providing you. Well, you can add a clause in the contract that forces them to disclose whether or not AI is being used. No secrets here, my friends. And just like with software licenses and SaaS agreements, providers might have to cover any intellectual property rights infringements caused by their AI Solution. It’s all about protecting your rights and making sure you’re not in any legal trouble.
Now, here’s where things get a little tricky. AI Solutions can create all sorts of infringement risks, especially when the output incorporates, builds from, or modifies the training data. Providers might argue that liability for copyright infringing output rests with the customers who chose the input prompts. And let me tell you, breach of contract is another thing to watch out for. Providers and customers might have certain limited rights to use training data and input prompts from third parties, and they can’t just go around sharing it or using it for other purposes without proper permissions. It’s all about playing by the rules, my friends.
And hey, there are even more potential risks that parties need to address in these contracts – product liability, false advertising, defamation, just to name a few. It’s a whole world of risks out there, especially with these new AI Solutions. So, parties might wanna include some insurance requirements in their agreements to cover their butts.
And there you have it, my friends. That’s the deal when it comes to contract terms and conditions for AI products and services. It’s a whole lot of complexity and unique issues to navigate, but hey, that’s what we’re here for. So, stay smart, stay informed, and keep rockin’ the AI game. Peace out!