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Artificial intelligence is reshaping how businesses operate, from small startups to multinational corporations. But as companies race to harness its power, lawsuits linked to AI use are surging, catching businesses off-guard and leaving legal systems scrambling to catch up.
To unpack the risks, Yahoo Finance UK sat down with Testudo CEO George Lewin-Smith to explore the real-world legal consequences of AI deployment, and what businesses can do to protect themselves.
Is AI a new weapon in corporate warfare?
"It's really interesting that for the first time, we have now seen lawsuits where companies are actually taking advantage of another company's AI system to extract information and data and even copy that system themselves," Lewin-Smith said.
This trend, he explained, goes beyond mere copyright concerns. “Copyright and IP infringement is not just the only story here. The type of litigation we see is much broader as well.
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“There's discrimination and bias, there's performance related issues, contractual issues and regulatory enforcements as well. So copyright and IP infringement is key in the headline, but the story is much broader than that as well.”
Are small businesses at risk without knowing It?
As AI tools become more accessible, small businesses are increasingly turning to generative models for everything from marketing visuals to legal templates. But this convenience comes with hidden danger.
When asked if these businesses might be unwittingly putting themselves at risk of AI-related copyright infringement, Lewin-Smith said: “It's very interesting that for the first time, companies deploying and using AI systems might unintentionally be exposed to IP and copyright risks, based on just the inherent nature of how that technology is built and how the base models have created. Those models means that the risk is new to them.”
While some developers have introduced limited contractual indemnities, Lewin-Smith believes these are insufficient. “They're actually quite light, and our analysis is, is that that is not enough, and unfortunately, companies could be at risk.”
AI-related lawsuits are surging
The explosion of generative AI tools since late 2022 has triggered a spike in related litigation. “From 2023 to 2024 alone, we saw 143% increase in generative AI lawsuits in the US alone,” Lewin-Smith said.
“More broadly, this trend is increasing, and this is because this technology is becoming more widely used, but also because there are inherent risks in using it.”