Hey there! In the fast-paced world of artificial intelligence (AI), understanding the ins and outs of AI contracting is super important for businesses looking to make the most of this technology. Here’s a friendly guide to help you navigate AI contracts successfully.

A. Key Factors in AI Development Contracts

B. Key Factors in Service and License Agreements

1. Service Description: Clearly describe what the AI system does and how it uses data. This sets clear expectations and ensures everyone is on the same page.

2. Scope: Define the use rights and limitations. This helps prevent misuse and ensures the AI is used within agreed parameters.

3. IP and Data: Address ownership and restrictions on data use, making sure you comply with data protection regulations. This protects sensitive information and maintains data integrity.

4. Bias and Fairness: Include measures to address bias and provide audit rights. Ensuring fairness in AI systems is critical for ethical considerations and regulatory compliance.

5. Regulatory Compliance: Cover various regulatory areas, including IP, data, and AI-specific regulations. Comprehensive compliance ensures the AI adheres to all relevant laws and standards.

C. Practical Tips for AI Contracts

D. Questions for Generative AI Products

E. Emphasising Regulatory Compliance

With the EU AI Act and the ongoing UK AI regulation conversation, keep in mind a few more areas / clauses in your contract:

• Scoping Clauses: Clarifying whether the AI solution is subject to the EU AI Act and defining the roles of providers and deployers.

• Use/Purpose Clauses: Specifying the intended use of the AI solution and prohibiting high-risk or prohibited uses.

• Compliance Clauses: Ensuring that providers and deployers meet their obligations under the EU AI Act, including risk management, data governance, technical documentation, and transparency.

• Termination and Suspension Events: Outlining conditions under which the contract can be suspended or terminated due to non-compliance with the EU AI Act.

• and more…!

F. Wrapping it up!

As AI continues to evolve, it’s crucial to stay informed and proactive in managing AI contracts. In-house counsel have a lot on their plate already so being prepared to incorporate AI contracting thinking will greatly help. For more detailed guidance, consider consulting with RMOK.

“May your AI initiatives be compliant, your algorithms be ethical, and your legal tech stack be ever evolving!”

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