Artificial Intelligence (AI) is transforming creative industries by generating content such as artwork, music, literature, and even inventions. This raises a fundamental legal question: who owns the intellectual property (IP) of AI-generated works? Traditional copyright and patent laws are based on human authorship, meaning only a person or a company can claim ownership.

However, when Artificial Intelligence (AI) is transforming creative industries by generating content such as AI creates something independently, there is no clear legal owner. Should the rights belong to the AI's developer, the person using the AI, or the organization funding the technology? This legal uncertainty makes ownership disputes common.

Since most legal systems do not recognize AI as an independent creator, contractual agreements become the key to deciding ownership and usage rights. Companies and individuals rely on work-for-hire agreements, licensing contracts, and collaboration agreements to allocate IP rights. For example, if a company hires an AI engineer, contracts often state that the employer owns any AI-generated content. Similarly, software licensing agreements may allow users to create content with AI but restrict them from claiming full ownership.

Different countries have adopted different approaches. The United States and the European Union deny copyright for purely AI-generated works, requiring a human author. India and the UK, however, recognize "computer-generated works" and grant ownership to the person who initiated the AI's creation.

As AI continues to evolve, contract law plays a crucial role in filling the legal gaps left by traditional IP frameworks. This paper examines how AI-generated works are treated under intellectual property law and how contracts help determine ownership in the absence of clear legislation.

Introduction
Artificial Intelligence (AI) has rapidly advanced in various fields, including art, music, literature, and even scientific inventions. With AI-generated content becoming more common, a major question arises—who owns the intellectual property (IP) of AI-generated works? Traditional Indian copyright and patent laws require human authorship, making it unclear whether the AI developer, user, or organization funding the AI holds ownership rights.

India does not yet have specific laws on AI-generated IP, making contractual agreements the key legal mechanism for defining ownership and rights. This paper examines the legal position of AI-generated works under Indian IP laws, explores landmark cases, and highlights the importance of contracts in determining ownership.

Intellectual Property Challenges in AI-Generated Works

Copyright and AI in India

• India's Copyright Act, 1957 recognizes computer-generated works but does not define AI's role in authorship.
• Section 2(d)(vi) of the Copyright Act states that the author of a computer-generated work is the person who caused it to be created (i.e., the developer or user).
• Implication: AI itself cannot be considered an author in India, meaning the human involved in AI's creation or use is the legal owner.
• Risk: Without clear contracts, AI-generated content could fall into the public domain, allowing anyone to use it freely.

Patents and AI in India

• The Patents Act, 1970 only recognizes natural persons or legal entities as inventors.
• Section 6 of the Patents Act states that only a human or a company can apply for a patent.
• In India, AI cannot be listed as an inventor, similar to global practices.
• This was confirmed when the Indian Patent Office rejected AI-generated inventions, citing the need for human contribution.

Ownership Disputes in AI-Generated Works

Since AI lacks legal personhood, ownership disputes arise between:

• Developers: Who create the AI.
• Users: Who operate the AI to generate content.
• Organizations: Who invest in or own the AI system.

With no clear legal framework, contractual agreements become essential to allocate ownership rights in India.

Role of Contractual Agreements in AI-Generated IP

1. Work-for-Hire Agreements
   Companies in India include work-for-hire clauses in employment contracts to ensure AI-generated works belong to the employer.
   Example: If an IT company develops AI-generated software, the company retains ownership, not the individual developer.
    
2. Licensing Contracts
   AI-generated works are often controlled through licensing agreements rather than full ownership transfers.
   Example: An AI-generated advertisement can be licensed to brands rather than given full copyright protection.
    
3. Collaboration Agreements
   When multiple entities work on AI-generated projects, contracts help define who owns the final output.
   Example: An AI startup collaborating with a university must clearly specify IP rights in the agreement.
    
4. Liability in AI-Generated Works
   If AI-generated content infringes another's copyright, who is responsible?
   Contracts help assign liability to either the AI developer, the user, or the organization using the AI.
   Since Indian IP laws do not address AI-generated ownership disputes, contracts serve as the best legal protection.

Indian Legal Cases on AI-Generated Works

1. Tech Mahindra Ltd. V. SBI (2020) – Delhi High Court
   • Issue: AI-generated software ownership under contract.
   • Ruling: Since the software was developed under a contract, SBI retained ownership, not Tech Mahindra.
   • Significance: Contracts play a key role in determining AI-generated IP ownership in India.
2. Google LLC v. Competition Commission of India (2022)
   • Issue: Google's AI algorithms and their proprietary rights in India.
   • Ruling: Google was allowed to retain control over its AI-generated content under Indian competition laws.
   • Significance: AI-generated content in India is currently protected through contracts, not direct IP laws.
3. Delhi High Court's Observation on AI & Copyright (2023)
   • A petition was filed questioning the lack of AI-specific IP laws in India.
   • The court noted that Indian IP laws do not recognize AI as an author or inventor.
   • The judgment suggested that contractual agreements should define AI-related ownership until laws are updated.
4. These cases show that contract law is the primary method of securing AI-generated IP in India.

Future of AI & IP Laws in India

1. Government Reports on AI and IP
   • The Indian government is aware of the legal gaps in AI-related IP.
   • NITI Aayog's 2020 Report on AI: Recommended updating IP laws to include AI-generated works.
   • Parliamentary Standing Committee on AI & Law (2023): Suggested new amendments to the Copyright Act and Patent Act to address AI ownership.
      
2. Proposed Reforms
   • The Copyright Act may be amended to clarify AI authorship rights.
   • The Patent Act may introduce a model where AI-generated inventions have assigned human inventors.
   • A dedicated AI & IP framework could be introduced to regulate ownership and liability.
   • Until such reforms are implemented, contractual agreements remain the best legal tool for protecting AI-generated IP in India.

Conclusion

• Current Status: AI cannot be an author or inventor in India, and IP laws do not explicitly protect AI-generated works.
• Legal Gap: India recognizes computer-generated works but lacks strong legal protections for AI creations.
• Role of Contracts: Work-for-hire, licensing, and collaboration agreements are the best way to define ownership of AI-generated works.
• Future Outlook: India may introduce AI-specific IP laws, but until then, contracts remain the primary solution for AI-generated IP disputes.

References:

1. Copyright Act, 1957 (India) – Section 2(d)(vi)
2. Patents Act, 1970 (India) – Section 6
3. Tech Mahindra Ltd. V. SBI (2020) – Delhi High Court
4. Google LLC v. Competition Commission of India (2022)
5. Delhi High Court Order on AI & Copyright (2023)
6. NITI Aayog, "AI Strategy for India" (2020)
7. Parliamentary Standing Committee Report on AI & Law (2023)

Written By: Sneha Swami - BBA LLB (3rd Year)