On Applied AI, we will regularly share AI licensing tips from Craig Auge, a partner in the Vorys Columbus office and a member of the firm’s technology and commercial transactions practice. This tip focuses on warranties and disclaimers.
The Thrust and Parry of New GenAI Warranties and Disclaimers
Common warranties and standard disclaimers in agreements are only partly effective with GenAI products, tools, and services. Customers on offense can secure GenAI-specific commitments from Providers of these products, tools, and services, such as:
“Provider represents and warrants that:
(i) Provider will adhere to procedures and policies for responsible training (with data), development, and operation of the GenAI Tool that are consistent with best practices in the industry, including those designed to prevent inaccurate or otherwise unwanted Output; and
(ii) the Output will not contain legally actionable bias, patently false or misleading results, or hallucinations.”
Providers will want to deflect with GenAI-specific acknowledgements and disclaimers, such as:
“Customer acknowledges that Provider’s GenAI Tool operates on probabilistic models, which may produce inappropriate or inaccurate Outputs. Provider does not guarantee that such Outputs are complete, correct, accurate, or appropriate. Before relying on, using, or distributing, Customer is solely responsible for reviewing and validating such Outputs.
Moreover, each of Provider and Customer acknowledges that regulations regarding GenAI are evolving, and, if in the future a regulatory change restricts or requires modification of features of the GenAI tool, then, to the extent commercially practicable, the parties will work together to implement necessary modifications in a reasonable amount of time.”
Insights on applying:
- Customers seeking certitude with standard performance warranties about conforming to specifications or resulting in a particular result will need to bend, for example, to focusing on procedures “designed to” attain accuracy and to only addressing extremes (e.g., not all “bias” but “legally actionable bias”).
- Providers should not abandon common warranty disclaimers (e.g., “Except for the limited warranties in this Section, Provider provides no other warranties and disclaims any other express, implied, or statutory warranties, including....”). But Providers can reduce their exposure by qualifying or limiting commitments stemming from the unknowns intrinsic to GenAI.
By: Craig Auge