Over the last few months, the Federal Trade Commission (FTC) has voiced an increasing interest in AI-generated content and copyright law. In an August 2023 Business Blog1 entitled “Can’t Lose What You Never Had: Claims About Digital Ownership and Creation in the Age of Generative AI,” the FTC conceded that intellectual property rights are normally outside the FTC’s jurisdiction, but suggested that it may intervene if companies mislead consumers about the content they are consuming, including who created it. The FTC called out the use of copyrighted work to train models, which may be reproduced in “bits and pieces” by generative AI without credit to the creator. The FTC cautioned that failing to disclose the use of copyrighted training material may violate Section 5 of the FTC Act. Finally, the FTC stated that companies “should keep in mind” that when offering a generative AI product, they “may need” to disclose the extent to which training data includes “copyrighted or otherwise protected material.”
Recently, in an October 3, 2023 Business Blog2 (the “October Business Blog”) entitled “Consumers Are Voicing Concerns About AI,” the FTC again warned that the use of copyrighted AI material may give rise to consumer protection issues. Specifically, after consulting its Consumer Sentinel Network,3 the FTC claimed that consumers are concerned about the use of copyrighted material. Again, the FTC expressed concern about the use of copyrighted material without the consent of the original creator, and without disclosing it to consumers. The FTC closes the October Business Blog by cautioning that it is “keeping a close watch” as “more AI products emerge.”4
In conclusion, companies providing generative AI products should be aware that the FTC is monitoring consumer comments and complaints about products, and is taking the position that “[g]enerative AI tools that produce output based on copyrighted or otherwise protected material may … raise issues of consumer deception or unfairness. That’s especially true if companies offering the tools don’t come clean about the extent to which outputs may reflect the use of such material. This information could be relevant to people’s decisions to use one tool or another. It’s not unusual for the FTC to sue when sellers deceive consumers about how products were made, such as with cases involving environmental claims.” We will continue to provide updates as the FTC comments on this important issue.