The issue of intellectual property in computer generated artworksgettyA few months ago, a multinational marketing firm launched a campaign with AI-generated visuals and wording. The results were impressive: eye-catching images, compelling messaging, and a quick turnaround. However, when a rival reused the campaign's AI-generated parts, the firm's legal team identified an issue: the work lacked copyright protection, making enforcement practically impossible.This situation is no longer hypothetical. The United States Copyright Office's recent report, Copyright and Artificial Intelligence, Part 2: Copyrightability, indicates that copyright law is struggling to keep up with AI-generated content. Businesses that rely on AI-driven creative processes, as well as those developing AI technologies, must address a crucial question: Who owns what?Findings from the Copyright Office ReportThe Copyright Offices latest report offers a detailed analysis of AI-generated works and copyrightability. Key takeaways include:No Copyright Without Human Authorship: The report reinforces that AI-generated works cannot receive copyright protection unless a human provides significant creative input. This aligns with the Thaler v. Perlmutter ruling, which denied copyright registration for AI-generated art.Case-by-Case Assessment: The Office emphasizes that determining copyrightability requires evaluating the extent of human involvement in AI-generated works.Global Implications: The report acknowledges international differences, noting that some jurisdictions (such as China) may offer limited protection for AI-generated works, while the U.S. remains firmly committed to the human authorship requirement.Business Considerations: The findings highlight the need for businesses to assess their reliance on AI for creative processes and ensure compliance with copyright laws.The Copyright Offices Stance: No Human, No CopyrightThe Copyright Offices position is clear: copyright law only protects works with human authorship. Copyright has never stretched so far as to protect works generated by new forms of technology operating absent any guiding human hand, the Office stated, citing Thaler v. Perlmutter (2023). In this case, a court denied copyright registration for an AI-generated artwork with no human intervention.This ruling means that businesses leveraging AI for creative output may lack traditional intellectual property (IP) protections. If competitors copy or modify AI-generated marketing materials, product designs, or branding, legal recourse is limited.After considering the extensive public comments and the current state of technological development, our conclusions turn on the centrality of human creativity to copyright, says Shira Perlmutter, register of copyrights and director of the USCO. Where that creativity is expressed through the use of AI systems, it continues to enjoy protection. Extending protection to material whose expressive elements are determined by a machine, however, would undermine rather than further the constitutional goals of copyright.The Business Implications: Risks and OpportunitiesFor businesses, the legal and regulatory ambiguity surrounding AI-generated content creates both risks and opportunities.Companies using AI-generated branding or marketing assets may struggle to prevent unauthorized use. Traditional trademarks may offer some protection, but copyright safeguards are weak if AI is the sole creator. Therefore, AI-powered content strategieswhether in publishing, advertising, or product developmentmust account for copyright limitations.On the flip side, companies looking to license AI-generated content may find themselves unable to assert exclusive rights. This implies that businesses may freely use AI-generated content created by competitors, opening new competitive strategies. However, ethical and reputational considerations come into play.Moreover, this lack of clarity affects start-ups as well, not just established businesses. "To the extent the U.S. wants to foster the development of AI businesses, the laws around the use of copyrighted works in training AI models need to be sufficiently clear that even an early-stage startup can predictably determine whether their business model will run afoul of copyright laws," commented David Siegel, partner at Grellas Shah LLP, "We are not even close to that point."Global Landscape: Diverging Approaches to AI CopyrightThe U.S. is not alone in grappling with AI copyrightability. The European Union takes a similar approach, stating that AI-generated content is only eligible for copyright if the human input in the creative process was significant. China, on the other hand, has begun recognizing AI-generated works under specific conditions, granting copyright protection when human input is deemed substantial.The United Kingdom stands out with its unique stance: existing law grants copyright to works generated by a computer in circumstances such that there is no human author of the work. However, this protection is limited in duration (50 years instead of the standard 70) and remains legally untested in AI-driven contexts.For businesses operating internationally, these discrepancies mean that an AI-generated work might be protected in one jurisdiction but not in another, complicating global intellectual property strategies.Human Intervention: The Key to Copyright ProtectionTo navigate these legal gray areas, businesses must ensure that human authorship plays a meaningful role in AI-assisted content. The Copyright Office provides some guidance:Selection and Arrangement: If a human selects, arranges, or edits AI-generated content in a way that demonstrates creativity, that portion of the work may be copyrightable.Hybrid Works: If an AI-generated element is incorporated into a broader human-created work, copyright protection applies to the human contributions.Disclosure Requirements: The Copyright Office now requires applicants to disclose AI-generated elements in copyright applications, distinguishing between human and machine contributions.Ten Alternative IP Protections for AI-Generated ContentSince legal protection for AI-generated content remains limited, businesses can explore alternative intellectual property strategies, including:Trade Secrets. If AI-generated content involves proprietary data, unique methodologies, or confidential processes, it may qualify for trade secret protection. Keeping such information undisclosed can prevent competitors from copying and using it.Contractual Agreements. Licensing agreements, terms of service, and other contractual arrangements can define ownership and usage rights for AI-generated content, ensuring businesses maintain control over its distribution and commercialization.Database Rights. In jurisdictions like the EU, AI-generated datasets and structured compilations may qualify for database rights, protecting substantial investments in data collection, organization, and management.Copyright with Human Oversight. If human intervention plays a meaningful role in shaping AI-generated content, copyright protection may apply, granting exclusive rights to the individual who contributed creative input.Patents. AI-driven innovations in design, software, or process automation may be patentable, offering stronger protection than copyright and ensuring exclusivity for AI-generated technological advancements.Digital Watermarking & Attribution. Using digital watermarks, blockchain verification, or provenance tracking can help establish authenticity and authorship for AI-generated content, discouraging unauthorized use.Creative Commons & Open Licenses. Applying open licenses, such as Creative Commons, allows creators to define permissible uses for AI-generated content while still retaining some level of control and attribution.Collective Rights Management. Organizations and industry groups can establish collective rights management frameworks for AI-generated content, allowing creators to register and license their works while ensuring fair compensation and protection.AI-Specific Legal Frameworks. Emerging legal frameworks in certain jurisdictions are beginning to recognize AI-generated works, potentially offering new protections tailored specifically to machine-created content.Human-Only Content. Restricting content creation and licensing to human authors, ensures clear ownership and eligibility for traditional IP protections like copyright, trademarks, and patents, avoiding legal uncertainties surrounding AI-generated works. Even content inspired by AI may meet this criteria.Leveraging these alternative IP protections, businesses can better safeguard their AI-generated assets, ensuring they maintain a competitive edge while navigating the murky and evolving legal landscape surrounding AI and intellectual property.The Future of AI and Copyright LawWhile the Copyright Offices current stance emphasizes human authorship, ongoing legal and policy discussions could lead to new frameworks. Some commentators argue for a sui generis righta specialized intellectual property category for AI-generated works. Others propose corporate ownership models, where businesses that develop and train AI models hold exclusive rights to their outputs.Nizel Adams, CEO and principal engineer at AI consultancy Nizel Corp, highlights the complexity of the issue: "The problem with AI-generated content is that users don't know exactly where the AI is sourcing things from and which parts of the content it creates are from scratch or just pulled from another piece of copyrighted content, or even another person's AI-generated artwork on the platform."For now, businesses should stay informed and proactive. AI-generated content may lack traditional copyright protection, but with strategic legal structuring, companies can still safeguard their intellectual assets. As AI continues to reshape industries and economies, those who adapt their IP strategies accordingly can maintain a competitive edge.