Guidelines For Creating Ads Using AI – New Technology – United States

Generative artificial intelligence (AI) can be a powerful tool
to create and enhance advertising campaigns, but it is important to
ensure that the ads are legally compliant. Generative AI, a type of
AI that can create new content, including text, images, video,
audio, code and simulations, has become increasingly popular for
use in many industries, including advertising. However, there are a
myriad of legal issues that can arise when using AI to create
ads.

Many advertisers, advertising agencies and public relations
firms are now using AI chatbots such as OpenAI’s ChatGPT,
Microsoft’s new Bing search engine and Google’s new Bard
chatbot to brainstorm ideas for ads and advertising campaigns.
Using AI merely to help brainstorm new ideas presents some legal
risks. However, using AI to create ads, either in whole or in part,
presents numerous legal risks.

Here are some guidelines to follow when creating ads using AI to
help reduce some of the legal risks.

1. Document the creative process used to create ads when using
AI.

Under recently published guidance by the U.S. Copyright Office, works
created with the assistance of AI may be copyrightable as long as
they involve sufficient human authorship. The Copyright Office has
stated that “it is well-established that copyright can protect
only material that is the product of human creativity.”
According to the policy statement, works created by AI without
human involvement cannot be copyrighted because they do not meet
the human authorship requirement. “When an AI technology
receives solely a prompt from a human and produces complex written,
visual, or musical works in response, the ‘traditional elements
of authorship’ are determined and executed by the
technology—not the human user.” However, a work
containing AI-generated material may be copyrightable, such as when
a human selects or arranges “AI-generated material in a
sufficiently creative way that ‘the resulting work as a whole
constitutes an original work of authorship.'”

Therefore, advertising that is created solely by AI is not
entitled to copyright protection in the United States. There must
be sufficient human involvement, which should be documented. A best
practice is to document how the advertising was created, such as by
saving the history of the prompts used, subsequent steps taken to
modify the prompts, steps taken to modify the output, and other
ways in which the advertising was created.

Copyright protection for advertising created with AI varies by
country. In the United Kingdom (UK), advertising and other works
created solely by a computer can be protected. The UK Intellectual
Property Office has stated that “computer-generated works
without a human author . . . are currently protected in the UK for
50 years.” The European Union (EU) is less clear. It has stated that an AI-generated work
“could qualify as a work protected under EU
copyright law on condition that a human being initiated and
conceived the work and subsequently redacted the AI-assisted output
in a creative manner.”

When there is no copyright protection for advertising created by
AI, companies may not be able to enforce their rights over others
if the advertising is copied, even if it is blatantly copied.

2. Review all claims to ensure that they are truthful,
nondeceptive and substantiated.

Advertising created by AI is subject to the same false
advertising rules as all other advertising. The Federal Trade
Commission (FTC) prohibits advertising that is false, misleading or
unsubstantiated. False advertising is also prohibited under state
and local laws and can result in law enforcement action by the FTC
and other federal agencies, state attorneys general, and local
district attorneys, as well as lawsuits by competitors under
Section 43(a) of the Lanham Act and lawsuits by consumers,
including class actions.

The remedies for false advertising consist of cease and desist
orders, injunctions, monetary penalties, and/or corrective
advertising. In addition to monetary penalties, financial losses
from false advertising can include fines and attorneys’ fees;
the cost of defense; the cost of replacing existing advertisements,
displays and packaging; the cost of fielding consumer complaints;
the cost of issuing refunds; and the loss of sales due to damage to
consumer trust.

FTC Chair Lina Khan has stated that the FTC will be taking an
active role in ensuring that the rise of AI does not violate
consumer protection and antitrust laws. In a guest essay in The New York Times, she
wrote: “As companies race to deploy and monetize A.I., the
Federal Trade Commission is taking a close look at how we can best
achieve our dual mandate to promote fair competition and to protect
Americans from unfair or deceptive practices.”

Additionally, objective claims for products and services must be
true, nondeceptive and adequately substantiated. AI chatbots can
make up facts that may seem plausible but are not true and generate
misinformation. According to an article in The New York Times,
“because of the surprising way [AI chatbots] mix and match
what they’ve learned to generate entirely new text, they often
create convincing language that is flat-out wrong, or does not
exist in their training data. A.I. researchers call this tendency
to make stuff up a ‘hallucination,’ which can include
irrelevant, nonsensical, or factually incorrect answers.”

Advertising created in whole or in part by AI can contain
hallucinations and other misinformation. Of course, claims for
products or services based on AI hallucinations are likely to be
false. Consequently, it is important that advertising created by AI
be carefully reviewed to make sure that it is not false, misleading
or unsubstantiated.

3. Be careful to avoid copyright infringement.

Many AI chatbots are trained by analyzing huge amounts of data
from the Internet. Advertising created by AI reflects this data. In
some cases, the output of AI can include identifiable portions of
the training data. When such outputs are used to create
advertising, there is a risk of infringement of third-party
copyrights by reproducing copyrighted material without permission.
Advertising created by AI may also constitute a derivative work of
copyrighted material, which also creates a risk of copyright
infringement.

Specifically, if the advertising created by AI is too similar to
a copyrighted work, the advertising may violate the Copyright Act
or foreign copyright laws and expose the advertiser to copyright
infringement claims. The difficulty is that because users of AI are
not aware of all the copyrighted material on the Internet (and used
to train the AI), users may not know how similar the advertising is
to a copyrighted work and may publish infringing advertising. Even
if this does not give rise to copyright infringement claims, it can
cause significant damage to the advertiser’s reputation.

Advertising created by AI should be carefully reviewed to ensure
that it does not infringe third-party copyrights or result in
reputational damage to the advertiser.

4. Be careful not to use an advertiser’s confidential
information for prompts.

Prompts are the queries that users input into an AI system to
generate an output. Prompts can be used by AI software for training
purposes to improve their models. Users should be careful to avoid
sharing confidential or sensitive information when creating
prompts, since AI systems can incorporate the prompts to generate
outputs for other users.

If an advertising agency, a public relations firm or an employee
of an advertiser uses the advertiser’s confidential information
in prompts to create advertising with AI, this could result in
liability based on a breach of confidentiality.

Likewise, if a prompt uses a company’s trade secret,
providing that data to an AI model could result in the information
losing its trade secret protection.

If a prompt uses information subject to the attorney-client
privilege or work product doctrine, that information may lose its
privileged status due to waiver of the privilege.

Prompts that contain personal information can raise privacy law
compliance obligations. There are United States and EU requirements
regarding notice, consent and data rights, such as the rights of
individuals to access, delete or correct information. Many states
have stringent consumer privacy laws, such as the California
Consumer Privacy Act (CCPA), which was strengthened as of
January 1, 2023. The Children’s Online Privacy Protection Act
(COPPA) applies to the online collection of personal information
about children under 13 years of age. In the EU, companies must
comply with the General Data Protection Regulation (GDPR) when
using AI tools. The GDPR covers the use of personal data to train,
develop or deploy AI.

5. Review the terms of use of the AI system.

Companies using AI to create advertising should review the terms
of use of the AI system to understand the ownership and other
rights involving the prompts and the output generated by the AI
system, such as advertising.

For example, OpenAI’s Terms of Use provide:

These terms apply to all OpenAI products, including ChatGPT,
GPT-4 (OpenAI’s most advanced AI model) and DALL-E2 (an AI
system used to create images and art from text inputs).

Since the AI system may have rights to use the output, the
system may reproduce the same or similar content for another user.
This can result in copyright infringement claims and reputational
harm based on plagiarism.

6. Establish AI usage policies for employees.

Considering the risks when using AI to create advertising,
advertisers, advertising agencies and public relations firms would
do well to develop AI usage policies for employees. If a company
permits its employees to use AI to create advertising, there should
be protocols for the use of AI tools and for review of the
advertising before it is published.

Specifically, the usage policy should contain guidelines for
employees to seek approval to use AI to create advertisements and
to use AI for other purposes. The guidelines should also cover what
the review process of the advertising will entail, including
higher-risk areas that employees should be aware of when using AI
to create advertising. It is important for employees to understand
that they should not use AI to create advertising unless they are
permitted to do so by their employer. For example, the guidelines
could prohibit employees from using AI tools for advertising unless
approved by the legal department.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.