We would like to share a brief update from the Green Cabbage market intelligence frontlines regarding one AI contractual clause that we are increasingly seeing SaaS suppliers advocate for.
PERMISSION SLIPS TO USE YOUR DATA FOR AI RESEARCH
Suppliers are adding terms, exhibits and addendums to standard cloud contracts that allow a Supplier to use your data, including customer data, to conduct AI research to improve their products and services.
Below is AI research consent language from a Supplier contract: “Customer’s participation in the development of technological improvements and technique analysis for Supplier’s artificial intelligence and machine learning technology research… Customer instructs and authorizes Supplier to clone its production instance(s) during the term of this Agreement, including any configurations and customizations thereon and data therein… in connection with its participation in the AI Research Program pursuant to these AI Research Terms.”
Why this matters to you: Your data is your intellectual property. If you provide such permission, Suppliers may use your intellectual property to create commercially available AI models without providing you compensation or credit, which may be adverse to your interest. For example, a Supplier’s AI chat engine could be trained on your data, including customer data, to expertly respond to your end user consumer questions while ultimately recommending your competitor’s products and services. This is a worst-case scenario but a risk. Further, this usage could run afoul of your confidentiality and data protection obligations to your end users concerning end user data. As such, it may even be in your best interest to build your own AI models using your data and your trade secrets for your financial gain.
Commentary from Bennett Falck - Head of Development at Green Cabbage: “For example, let’s say I'm a LinkedIn content creator. I view myself as someone who puts out very new thoughts in the industry. In mid-September of 2024, LinkedIn auto-opted everyone into their data sharing program that allows them to use everyone's content for their AI training. Now, if I'm not able to opt out, I'm worrying that my thoughts that have created for me this big following base will be disseminated across multiple different AI conversation bots without crediting me for my content or thought.”
Why this matters to a Supplier: Your data is worth gold to a Supplier looking to train AI models. Without a wide array of data sources, Suppliers risk pigeonholing their AI models. Using the LinkedIn example, if everyone opts out but for a few, the LinkedIn AI model is now almost useless. The same concerns from the LinkedIn creator also apply to you. Any research about emerging trends in your industry or your customer’s consumer behavior could be contained within the data shared with an AI model and used for other purposes by a Supplier.
Artificial intelligence will continue to disrupt the technology licensing marketplace in many unanticipated ways. Customers must proactively account for AI technology in contracts with their Suppliers. Suppliers are already working hard to rally their legal troops to roll-out new AI contractual clauses as well as adapting their licensing models. However, Green Cabbage will continue to serve as your technology industry minutemen to alert you of the latest trends and news.
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Written by: Wesley Schnell Chief Legal Officer, at Green Cabbage
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