Artificial intelligence is powering a new generation of products, services, and platforms but it is also introducing fresh legal risks. As companies rush to license AI technologies for everything from predictive analytics to automated decision-making, many find themselves locked in complex agreements that can quickly unravel. When that happens, commercial lawyers are the first line of defense, stepping in to protect the business, resolve disputes, and keep deals from turning into liabilities.Know More
Unlike standard software contracts, AI licensing agreements often involve more uncertainty, especially around data rights, intellectual property, liability, and performance guarantees. When something goes wrong, the consequences can ripple across entire supply chains, product roadmaps, and investor relations. This is where commercial lawyers play a critical role both as legal strategists and business negotiators.
When the Agreement Breaks Down
AI licensing agreements can fall apart in several ways. A vendor may fail to deliver the promised functionality. A licensee may exceed the agreed usage limits. A dispute may arise over who owns the outputs generated by the AI model. In other cases, concerns around data security, compliance with laws like the GDPR, or unintended bias in machine learning outputs can create friction between the parties.
Business contract lawyers step in to review the original agreement, assess breach or non-performance issues, and determine the available remedies. They evaluate whether the licensing terms were clearly defined and enforceable, and whether the risks were adequately accounted for in the contract’s limitations and indemnities.
Identifying Ambiguities and Risk Gaps
Many AI contracts suffer from vague or incomplete language, especially when it comes to accountability. For example, if an AI tool produces a result that causes harm or loss, who is responsible? If data used to train the model was not properly vetted, is the licensee liable?
Commercial lawyers examine the fine print of these agreements to identify gaps that may expose the client to legal or financial risk. They provide practical recommendations for renegotiation, escalation, or termination of the agreement when necessary. In high-stakes situations, these insights are essential for protecting the business.
Managing Legal Disputes
When parties cannot resolve issues through informal communication, the situation may escalate into a formal dispute. Commercial litigation attorneys prepare for enforcement or defense, whether through arbitration, mediation, or court proceedings. In global deals, they also help determine which jurisdiction’s laws apply and how cross-border enforcement can be handled.
A skilled dispute resolution counsel understands how to manage risk while preserving business relationships where possible. They also help minimize disruption by quickly addressing legal concerns before they interfere with operations or investor confidence.
Negotiating Licensing Terms in Future Deals
In many cases, the legal fallout from one bad deal becomes the foundation for smarter contracts in the future. Trade agreement experts work with internal legal teams and procurement officers to build stronger, more balanced AI licensing frameworks. This includes specifying performance benchmarks, clarifying ownership of trained models or outputs, and outlining exactly what happens in the event of system failure or data breach.
Commercial lawyers also help structure agreements that are scalable, allowing businesses to expand usage as AI integration deepens. This forward-thinking approach not only avoids future conflicts but also supports long-term growth and innovation.
Supporting Corporate Transactions Involving AI Assets
When AI is a core part of a company’s product or IP portfolio, licensing disputes can impact larger corporate events such as mergers, acquisitions, or investor rounds. Corporate transaction legal advisors assess how ongoing or past licensing issues affect company valuation, risk profiles, and deal structure.
They also assist with contract assignments, license transfers, and restructuring of rights when AI assets are bought, sold, or reorganized.