Protecting intellectual property (IP) and engaging with the issues of AI-generated contracts is an important topic for growing businesses.
In this article, we set out practical recommendations for start-up and scaling businesses, covering scraping and misuse safeguarding, AI-generated contracts and early stage IP protection.
AI is transforming the creation of new content and technology - making it faster and more accessible. But with opportunities come risks. A recurring concern raised by growing businesses is how to safeguard proprietary data, apps and technology from unauthorised scraping or misuse to train generative AI models or having a generative AI platform create a similar version.
Businesses regularly exchanging confidential data through contracts are increasingly aware that data shared today could unwittingly train tomorrow’s competing AI products. A high-profile example involves the AI chatbot provider DeepSeek. Earlier this year, OpenAI alleged that DeepSeek, which has been reported to sometimes claim that it's ChatGPT, may have 'inappropriately' used outputs from OpenAI’s model as training data in a process called ‘distillation’ - highlighting how easily sensitive information can inadvertently fuel competitors’ growth.
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Generative AI tools, including ChatGPT, are increasingly used by startups to draft agreements quickly. However, using these tools without legal oversight creates potentially significant risks.
In a recent example, a fast growing e-commerce retailer pasted its legacy supplier terms into a free generative AI tool and signed the returned draft without legal review. Six months later, when the supplier’s performance dipped, the retailer discovered that the AI generated contract:
Because the contract was already in force, the retailer had to pay for an emergency re negotiation, absorbing additional legal fees and delaying a £2m re platforming project that investors were expecting that quarter.
We have started seeing businesses come across issues due to poorly drafted AI-generated contracts, such as ambiguous termination clauses, unclear IP ownership, and unenforceable liability limitations, requiring our expert input to salvage the situation.
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Your IP can be your most valuable asset. Yet early-stage businesses often delay taking basic protective measures, leaving their business exposed. Protection for patents, trade marks, trade secrets - are most critical in the early days.
Last year, EasyJetwash, a single van pressure washing business in Staffordshire picked a catchy name but never cleared or registered it. EasyGroup, the owner of the easyJet brand, sued, arguing the ‘easy’ prefix rode on its airline’s fame. The founder paid 'significant' damages and legal costs and must rebrand to Stoke Jetwash within 18 months, losing hard won brand equity.
A quick UK Intellectual Property Office (IPO) clearance search and filing (≈ £170) could have avoided a costly dispute and a total rebrand when cash was tight. Early registration also makes investor due diligence far smoother.
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Ashfords proudly supports innovative tech companies through Tech South West's Growth Forge programme, connecting growing businesses with the insights they need to thrive.
Ashfords specialises in guiding growth-oriented tech companies through complex commercial and IP issues. As headline sponsors of the programme, we bring insights from working directly with ambitious businesses facing real-world challenges every day. Find out more about our partnership here.
If your business needs tailored advice on AI contract drafting, start-up IP protection, or other commercial issues, please contact our commercial and IP team.
