Japan to set Guidelines rules for sharing AI’s riches

The spread of artificial intelligence technology has raised thorny legal questions about how to distribute rights to and profits from AI products, issues that Japan’s industry ministry hopes to address with guidelines due out next year.

Japan has next to no legal precedent on AI-related contracts, leaving companies to navigate these largely uncharted waters on their own. Drawing up contracts can take nearly half a year in some cases, and terms are sometimes set based on the power balance between the businesses involved.

AI-related development in Japan is commonly outsourced to startups. Traditional outsourcing contracts often give the customer full ownership of the intellectual property produced and all rights to its use. Developers in the field have called for a new model that recognizes the importance of their expertise and compensates them for it.

The Ministry of Economy, Trade and Industry will release guidelines as soon as March to provide practical examples for companies to use when drawing up contracts, focusing on how to allocate usage rights and profits.

For example, a financial institution looking to offer a service using AI to craft individualized financial products hires a developer to handle the project and provides customer data to train the AI. The institution seeks sole rights to use the AI as well as all profits generated by the service. Under the ministry guidelines, the developer will have the right to seek a share of the profits.

The guidelines will list factors to consider when deciding how to split usage rights and profits, probably including the division of development costs, the rarity of the supplied data and the uniqueness of the developer’s technology.

The ministry will also examine who should hold the rights to use an AI developed by one company and trained using data from another. Developers sometimes patent such AIs and offer them to other businesses. The guidelines will call for developers to offer better terms to data suppliers, such as lower licensing fees for the AI in question.

The issue of legal responsibility in cases such as accidents caused by AI-equipped machinery will be addressed as well. Where the liability lies differs depending on whether the problem stems from the design of the AI or equipment, or from the data used for training.

The industry ministry guidelines will stipulate that the company furnishing data should be responsible for guaranteeing its quality, and the developer responsible for ensuring that the AI is working properly. The ministry will also consider whether a business should be held liable for problems that could not be predicted with current technology.

More cases are likely to crop up in which the root cause of an accident is not clear-cut. The ministry will recommend that companies maintain liability insurance and agree in advance to cooperate with any investigations.

An expert committee set up by the ministry is studying a wide-ranging set of cases from big businesses to identify the legal issues that need to be addressed. Members include representatives from Toyota Motor, the Japan Electronics and Information Technology Industries Association and the Japan Chemical Industry Association.

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