- with readers working within the Business & Consumer Services industries
Somewhere in your company right now, an employee or third-party vendor is using a generative AI tool to write code, draft marketing copy, or summarize a confidential business plan or meeting. The question is not whether that is happening, it most certainly is. Instead, the question to ask is whether anyone in your organization has thought through the intellectual property consequences.
The rapid adoption of AI across industries has created a new category of legal and business risk that most company leaders are still grappling with. Trade secrets are being inadvertently disclosed to third-party AI platforms. Engineers are “vibe coding” with AI tools using methods that raise serious questions about data security and IP ownership. And the legal frameworks governing how AI interacts with copyrighted material are being written in real time through active litigation.
These are not hypothetical concerns. They are the issues I see companies grappling with every day. Here are five things every business and legal leader should know, and do, right now.
1. AI Issues Don’t Stay in One Lane
One of the most common mistakes companies make is treating AI as a singular problem. In reality, a single AI-related question can implicate intellectual property, data privacy, cybersecurity, financial regulation, and product liability simultaneously. Issues that initially seem like they belong to compliance or product development often turn out to have a significant IP dimension that gets missed when no one is looking at the full picture.
What to do: Break down internal silos. Make sure your IP counsel, data privacy team, cybersecurity group, and product leads know each other and are talking regularly about AI-related risks and not just when a crisis hits. Ensure that your teams have a good understanding of who owns particular AI-related issues so that an issue does not slip through the cracks because it did not clearly belong to anyone: more on this in #2 below.
2. Build Internal AI/IP Governance Before You’re Forced To
Many companies are layering AI responsibilities onto existing roles by asking their IP counsel, compliance teams, or product lawyers to absorb AI governance on top of everything else, without adjusting workloads or building dedicated infrastructure. Companies that wait for a regulatory mandate or a lawsuit to formalize their AI governance will find themselves playing catch-up against competitors who built those structures proactively.
What to do: Designate clear internal ownership of AI-related IP risk, whether that means creating a dedicated role, a cross-functional working group, or explicit additions to existing job descriptions. Ensure your governance structure accounts for the places where IP, privacy, cybersecurity, and product development intersect, and adjust workload expectations so nothing falls through the gaps.
3. Your Trade Secrets May Already Be at Risk
When employees use third-party AI tools, even seemingly innocuous and now ubiquitous chatbots, coding assistants, and content generators, they may be feeding your company’s proprietary information into systems your company does not control. If a third-party vendor has ingested your confidential data, even accidentally, the question of whether trade secret protection has been waived becomes a live issue. Trade secret law generally requires companies to take “reasonable measures” to protect confidential information, and uncontrolled AI usage can undermine that standard.
What to do: Audit how your teams are using AI tools today by determining what tools are being used, why they are being used, and what goal their use is attempting to achieve. Establish clear internal policies about what information can and cannot be entered into external AI platforms and how to identify and scrub proprietary information, and make sure those policies are communicated company-wide.
4. “Vibe Coding” Can Become a Real Problem
The term may sound casual, but the practice of employees using AI to rapidly generate or modify software code can create genuine IP exposure. Questions arise about who owns AI-assisted code, whether it inadvertently incorporates open-source or third-party material, and whether proper data security protocols were followed during the process. These issues do not just live in your legal department; they affect product development, engineering, and your competitive position.
What to do: Work with your legal and engineering teams to develop protocols for AI-assisted development. Understand what tools are being used, what data flows into them, and what obligations attach to the outputs.
5. The Lawyers Who Understand AI Are Your Competitive Advantage
The most valuable legal advisors in this environment are not the ones with the most credentials on paper; they are the ones who can translate between your engineering team and a courtroom. In-house counsel who have immersed themselves in how your company’s product and engineering teams are using AI tools and who have spent time understanding the technology well enough to spot risks early and communicate them clearly, are indispensable. And these lawyers also understand that the boundaries of copyright fair use as applied to generative AI are actively being litigated: Can AI systems be trained on copyrighted material? Who owns the output? What constitutes infringement? These decisions will affect every company that uses AI to generate content, whether that is marketing materials, product designs, or internal reports.
What to do: Invest in your legal team’s AI literacy. Encourage them to engage directly with your technical teams, attend product briefings, and build the cross-functional fluency that lets them understand what AI tools are being used by the stakeholders within your organization to further its objectives and why these particular AI tools are assisting these stakeholders. Ensure that your legal team stay informed about key pending cases. Understand that the legal landscape is evolving rapidly, and the risk-based advice your legal team gives you today may need to be revised as new court decisions come in. Build flexibility into your AI strategy.
The Bottom Line
AI is transforming how companies operate, compete, and create value. But it is also creating IP risks that are moving faster than most organizations can respond. The companies that will be best positioned are the ones that act now and take the AI risk seriously by auditing their AI exposure, updating their internal policies, and empowering their legal teams to lead, not just react. Do not wait for a lawsuit to find out where your blind spots are.
Originally published by Columbus Business First
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
