California has emerged as a frontrunner in advancing the connection between AI and law, namely regulations that govern AI use. The state continues to take steps toward new artificial intelligence (AI) laws. On September 28, 2024, Governor Gavin Newsom signed Senate Bill 942: the Generative AI: Training Data Transparency Act, aimed at regulating AI technologies.
The new AI laws are provide safeguards for digital content creators and will be in effect as of January 1, 2026.
These measures underscore the intersection of technology and legal rights. California is paving the way for AI regulation—AI-generated digital content creators need to protect their IP rights.
Do California AI Laws Impact AI Developers and AI Content Creators Outside California?
The short answer is, YES. Although these regulations are localized, they do impact both AI developers and content creators beyond California’s borders. And with the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA), digital content creators both within and outside the state are wondering how all these AI laws affect their IP. Let’s explore the implications of California’s AI laws for AI developers and AI content creators operating in and outside of California.
Understanding California’s AI Regulations
Key laws focus on privacy, data protection, and accountability in how AI systems are developed and used. For example, the CCPA grants consumers specific rights regarding their personal data, which impacts how businesses collect, process, and share data derived from consumers and content creators.
AI Training Data Transparency
By January 1, 2026, AI companies must disclose a summary of the datasets used to train their systems. This includes identifying:
- The sources or owners of the datasets and whether the data was purchased or licensed.
- If the datasets include copyrighted, trademarked, or patented materials.
Posthumous Rights for Public Figures
This law expands protections for deceased personalities, creating liability for unauthorized use of their voice or likeness in digital replicas. Violators face penalties of at least $10,000.
California AI Transparency Act
AI developers with over 1 million monthly users must provide free tools for detecting AI-generated content. They’re also required to embed visible or hidden markers in AI-created works.
Implications for AI Companies and Content Creators
The newly enacted AI laws may be double-edged sword for AI content creators. While they introduce measures that could enhance the protection of original works, they also place new responsibilities for digital content that incorporates AI.
Enhanced Protection of Original Works
The great thing about the new AI laws is that the requirement for AI technologies to disclose datasets used in training their models allows IP owners to understand if their work was included in these datasets without permission.
This transparency allows for:
- Awareness of Unauthorized Use: Creators will be able to identify when their IP was used in AI training, potentially leading to more effective legal action against unauthorized usage.
- Stronger Licensing Agreements: By knowing what datasets are used, creators may negotiate more favorable terms when licensing their content to AI developers.
Why the new AI Laws Require Compliance by AI Companies Operating Outside of California
The Concept of Extraterritoriality makes AI companies operating outside of California subject to these regulations. If GenAI digital content creators allow access by California residents or utilize data derived from them, they must comply. For instance, if a digital a content creator based in New York produces an online video that is accessible to California viewers or if they utilize AI tools that process data from California users, they may need to comply with the CCPA or CPRA.
Implications For AI developers In And Outside California
1. Increased Compliance Costs: AI companies not only have to familiarize themselves with California’s laws but may also need to invest in compliance measures. This could include revising data collection practices, updating privacy policies, and implementing new protocols to ensure accountability when utilizing AI tools. This also applies to AI companies that are small businesses.
2. Potential Legal Risks: If you don’t comply with California’s AI regulations, you could face hefty fines and lawsuits. Since these regulations are designed to protect consumer rights, the enforcement of the law will be unforgiving. Which means AI companies need to reconsider how they approach data usage and AI technologies.
3. Reputation Management: Non-compliance can damage an AI content creator’s reputation.
With transparency requirements for AI training data and the broader California AI Transparency Act, the laws will affect how AI developers operate. Understanding the nuances of these regulations is essential for safeguarding intellectual property rights and ensuring compliance.
We Can Help
Gouchev Law can guide IP owners in adapting to this evolving framework. Our expertise in intellectual property law, technology law, and artificial intelligence allows us to provide creative legal solutions that align with your unique business needs.
Whether you are navigating new licensing agreements or ensuring compliance with AI transparency laws for your digital content, we’ve here for you. We help you protect your creative work while maximizing your monetization of digital content.
About the Author
Jana Gouchev is the Managing Partner of Gouchev Law and a prominent attorney specializing in commercial transactions and intellectual property, and at the forefront of technology law. Jana's keen legal and business acumen drives companies towards success. Her practice is focused on Corporate Law, Data Privacy and Information Security, Technology Law (covering consulting, SaaS, and AI), Complex Commercial Contracts, Intellectual Property, and Mergers and Acquisitions.
Jana is passionate about collaborating with change-makers in various industries. With a background at an AmLaw 50 firm, she serves as a trusted advisor to executives of some of the world’s most forward-thinking brands. Her client portfolio features Estee Lauder, Hearst, Nissan, Squarespace, tech consulting firms, and various SaaS companies. Jana has been recognized in prominent publications such as Forbes, Bloomberg, The New York Law Journal, Law360, Modern Counsel, Inc., and Business Insider for her expert commentary on Technology Law, Intellectual Property, and Contracts and M&A.
Check out Jana on LinkedIn!
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