#242 Your client pasted your work into ChatGPT. Who owns it now?
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You have poured your heart and soul into a concept for a new client. You have built the mood board, drafted the concept, and mapped out the thinking that makes the whole project work.
The client loves it. Great.
Then, quietly, they upload your work into an AI tool to cut costs. They come back with the words you dread, “Thanks so much, but I’ve decided to go another way.” Later down the track, you discover they have taken your design to someone else, or used AI to complete the work themselves.
So here is the question. Who owns that work now, and what could you have done differently to guard against this situation?
This dilemma crosses my desk often. Even if it is not happening in your business right now, you probably know someone it is happening to. AI is here to stay, and that is okay. The bigger issue is that many clients are not acting in bad faith. They simply do not realise they are crossing a line.
The fix is prevention. Setting expectations clearly, in writing, from the start.
Protecting Your Work With Proper Agreements
At the heart of this issue is your client agreement. This document is both a legal shield and a business guide. It sets the tone for the relationship and it sets the rules.
If you want your work protected, you need clear clauses that deal with AI use. In plain language, you want a clause that says the client must not upload your work into AI tools without your prior written consent.
That does not need to read like a threat. You can frame it warmly so the client understands it is about protecting the integrity of your work, your reputation and the value of what they are paying for.
Understanding Intellectual Property Rights
This is where assumptions can get expensive. Under Australian copyright law, the creator of original work generally owns the rights unless those rights are assigned to someone else in writing. There is a big difference between giving a client a licence to use something for a specific purpose and transferring ownership completely.
Many creatives give away too much without meaning to, simply because their documents are not clear enough. Your agreements need to be tailored to your business, your process and what you actually want to happen with your work once it leaves your hands.
Disclosure Of AI Use In Your Business
Clarity builds trust. If you use AI tools in your own business for admin, summaries or workflow efficiency, it is worth being transparent about that. Your clients should understand what you are using, what for and what that means for their information.
You also cannot ignore the privacy implications. You need to understand where data is stored, what happens to what is input, and whether it can be used for training. You have obligations under privacy legislation, and you need to be confident you are meeting them.
Guidance On Implementing AI Clauses
Even the best clause will not help you if it is buried and never mentioned. Clients do not always read every word of an agreement, and that is normal. The way you protect yourself is by bringing the important points forward.
Mention it in your proposal, your welcome email or your onboarding process. Let clients know they can ask questions and have an open conversation about how AI might fit into the project, and what is and is not okay. That one step can prevent a lot of issues before they start.
The Importance Of Updating Your Agreements
Your agreements should serve the business you are running today. AI is changing how clients behave and how work is used. If your documents were drafted years ago, they may not reflect the risks you are dealing with now.
Templates can be a starting point, but they are not armour. If you want real protection, your agreements need to be clear, current and tailored.
What To Do Next
If you are worried about clients using AI with your work, start by reviewing your client service agreement.
Check whether it covers IP ownership, licensing and permitted use. Add clear language around AI use and consent. Make sure you understand the privacy implications of the tools you are using, and what your clients might be using too.
These issues are fixable, but like I always say: prevention is better than cure.
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[00:00:49] Tracey: Imagine this scenario. You've spent weeks developing a concept for a new client. You've presented a mood board, a draft concept, maybe a framework or a material selection schedule, and the client loves it. Fantastic. Then though, quietly, unbeknownst to you, they upload everything into an AI tool and they say, "Make this cheaper."
[00:01:15] Client comes back to you and says, "Thanks so much. I've decided to go another way." And then later, at some point in time down the track, you discover they took your design to someone else, or they used AI to develop it and build it themselves. Who owns that work now, and what could you have done differently to avoid that happening?
[00:01:35] This is such a common question that comes across my desk, and I'm gonna dive into this in today's episode of the podcast. So thank you for joining me. If you haven't encountered an issue like this yet in your own business, you probably know somebody who has. AI is not going anywhere.
[00:01:51] It's here to stay, and that's okay. AI tools are free. Some have paid versions, but some of them are free. They're fast. They're easy. [00:02:00] Most people have them on their phone. Some have them on their computers. Somebody, either you or someone you know, is using AI to some extent. The thing is, in my experience, most of the time when clients do input your data or your material or your work into AI, they're not doing it in bad faith.
[00:02:18] Most of the time they're doing it because they don't know they can't, or they don't know that they haven't supposed to. No one's told them where the line is, and no one's told them that by doing that, they're crossing the line. As with all things on this podcast and in, in my business, I stand by the ethos that prevention is better than cure.
[00:02:36] So when we're talking about this issue, the place to take care of this and to set these expectations and to set both parties up for success and to protect you and your business and your work is in your agreement with your client. And like most things, there's two prongs to this approach, the legal prong, and we look at this through the legal lens, and also the business prong, which is the business lens, and sometimes they don't align. But if used well, the legal lens and the business lens, we can set them both up to support the business moving forward.
[00:03:08] I don't have a problem with AI. I just want to say that right now. I am not anti-AI at all. In fact, I use AI in my own business for streamlining my workflows, for brainstorming, and for helping me with things like summaries and research. So it has its place, but it needs boundaries. It needs guardrails. If it's to be used well, we need to understand what we're using, and we need to understand the limitations, and I'm gonna talk about that in today's episode as well.
[00:03:38] So let's go back to the question, who owns it? If that scenario that I shared at the beginning, if that happens, who owns the IP now? It's a tricky area. In plain English, simply put, in Australia, under the Copyright Act, the creator of original work owns the work unless it's been assigned to another party in writing.
[00:03:59] There is a difference [00:04:00] between assigning IP to another party, giving it away completely, or having a license for them to use it for a certain purpose in certain circumstances, and that's where the boundaries come in. What I find is so many creative business owners give away so much without realizing it because they've used a template document that has just simply assigned everything by way of intellectual property once the work's been done, or it's completely silent on IP, which means no one really knows anyway because the intentions of both sides were different.
[00:04:32] So for creative business owners, this is a really important discussion to think about how to best protect your work. Template documents aren't going to do it. You've heard me say this before, DIY is for Bunnings, not for your legals. So when it comes to legal documents, I wholeheartedly am of the view that templates don't serve either the business or the client, and they don't set anybody up for success because they're lacking in detail, they're lacking in nuancing, and they're often lacking in an understanding and appreciation of the, the risks associated with particular industries.
[00:05:03] So if a client has put your work through AI and they get something new, the question of ownership arises because first we need to understand whether they were entitled to run it through AI. Second, we need to understand what they put in and what they got out. The client has their own complexities and difficulties in relation to infringing and potentially infringing somebody else's intellectual property because we don't know where AI got what it's produced from.
[00:05:32] It may have infringed. So let's just think about how it is that we can avoid this murky area, how we can set ourselves up for success so that we don't even need to be going down the path of, gosh, now this has happened, who owns the IP and what can I do about it?
[00:05:46] Let's set the businesses up for success so it doesn't happen in the first place. So when we go to the agreement that the creative has with their clients, the business service agreement or client service agreement, whatever it's called, there's three things we really want to have [00:06:00] a close look at, and one is what clauses in the agreement govern the rules around the client putting the work into AI?
[00:06:10] There needs to be a provision there that says, "Please do not upload our work into AI tools," and we can be specific, designs, drafts, concepts, whatever it might be, " without your prior written consent." Let's just get really clear about that and put that front and centre, and we don't need to do it in a dictatorship type of way.
[00:06:30] We can frame it warmly so that the client knows that it's your original work and you want to protect the integrity of your work and your reputation. So we want to make sure that the client understands that it's not okay unless you've agreed to it in writing to input your original work into AI, and this is why.
[00:06:48] That's a really important clause to look for. Once we have that, we then have a launchpad to have those conversations with clients to let them know, "This is not okay. Please don't do that." I'll come back in, in a moment to the question that you might be asking, "Well, Tracey, what if it happened and we get six months down the track and I didn't know about it until then?"
[00:07:07] I'll come back to that. But what we want to make sure we're doing is making it really clear to the client from the outset how we work, what we do, what we don't do, and what we expect of the client. Those sorts of things should be in the client service agreement already. So when we're developing those types of clauses and those guardrails or boundaries, we need to make sure we're dealing with AI in there, up front and centre.
[00:07:30] We then need to think about how you're using AI. This is the second thing, because if you're using AI, we want to disclose that so that it's really clear to everybody what you're using AI for. Usually things like, as I say, administration, workflow efficiencies, summaries. If you're a creative, if you're a designer, for example, it could be to assist with renders.
[00:07:50] But we need to make it clear to the client as well that any judgments or works that you're producing are yours, so the client doesn't need to be worried that you're [00:08:00] simply inputting the work into AI and you're simply producing to the client what the AI has produced to you. So no, that's a no-no. We're not doing that. You're not doing that. But we need to make it clear to the client for trust and credibility, because as we know, these documents, the client service agreement, they serve so many purposes, and trust and credibility is an important role that the agreement will play. So we need to make sure that we're setting out for the client what you're using AI for and what you're not using it for, and you're not using it for original designs or judgments.
[00:08:29] So we put that in as well. Be as specific as you can here, not vague, because we want to get on the front foot with it and use it as a disclosure step so that the client knows, "Huh, just about everybody I talk to these days is using AI. I'm about to engage this service provider, and they've been really transparent and upfront with what they use AI for. That's excellent." So that's the approach with that clause. The third clause that I want to point out, which is really important here when we're thinking about AI, is privacy. Because gone are the days where we can simply sign up to tools or apps in our business and just tick the box to say, "Yes, I agree to these terms and conditions," without reading them and with no idea what it is that you're agreeing to.
[00:09:11] As a business owner, you have a responsibility to make sure that when you're using AI, you know what is happening to the data that you're inputting. You know where it's being stored. You know if it's being used for training or not. You're clear and you're across it. You also then need to be really clear that for your business you have a process where you don't input confidential data into an AI tool unless you're satisfied that it's safe to do so.
[00:09:40] My advice always is just simply don't put confidential or sensitive data into AI. It's a constantly evolving and changing landscape. As I say, prevention's better than cure, and we don't wanna be in a position as business owners where there is a complaint made later that there's been a breach of some type of privacy [00:10:00] obligation by putting inappropriate data into AI.
[00:10:03] So best practice in my view is don't put confidential or sensitive information into AI, but be really clear in your business what your processes are for you and your team, and you can explain it to your clients if they ask, what is it that goes into AI and for what purpose? So we need to make sure we're complying with the privacy obligations here and it's an important consideration that needs to be addressed in your client service agreement, in my view.
[00:10:25] That's the legal lens. That's where I've talked about making it really clear in your client service agreement what you're using, what you're using it for, you're aware of privacy obligations, and you're making it clear to clients that you don't want them inputting your work, your original work, into AI tools, and you've explained why.
[00:10:45] The business lens for a moment is an area I focus on a lot when I'm working with my clients. We look at these documents and these processes and systems through both lenses, the legal and the business.
[00:10:56] And so sometimes a business owner will say to me, "But Tracey, how can I be sure that my client has read that section of my terms?" We can't. Of course, we can't. But what we can do is bring the really important components front and centre and pop them in the bottom of an email, or we can even include them in some of the key terms that we want to bring to the client's attention in our proposals or our scope of work documents.
[00:11:20] We can put them in a number of different places. That's the business lens, and that's bringing it to the client's attention to set the client up for success so that they know. So at the beginning of the episode, I'd said that in my experience, most clients don't do it in bad faith when they're inputting material into AI.
[00:11:38] They do it because they don't know they shouldn't or they don't know where the line is. So from a business perspective, we make the line really clear and we bring it front and centre, perhaps in two or three places, and we say to our clients either in our proposal or our welcome email or our onboarding handbook, or whatever it is that your user experience is set up to support clients through, whatever that [00:12:00] journey looks like for you, we pop the really important things in a couple of different places.
[00:12:04] And usually that's things like payment terms, contact hours, and AI use. And if we put it in a few different places and all of a sudden the client has seen it a couple of times, guess what? They then know that that's not okay and that they can't do that. They can then have the conversation. They can have the conversation with you to ask you, "Oh, your agreement says I can't do this without your consent. What I really want to do is this." You can then make the judgment call in communication with the client. You can say to them, "Yes, that's fine," or you can say to them, "Actually, no. What's better, let's have a meeting. Tell me what the concerns are. Tell me what you want to achieve. Let me do it." That's often a far better outcome for a creative business When we're looking at our client agreements, we wanna make sure that they are crystal clear, that they are on brand, and that they operate and support your business for the way you operate today, not the way you operated three years ago, and not the way someone else operates, which is typically what a template or a borrowed document will do, but they support your business for the way you operate now.
[00:13:11] So when you're reading your client agreement, and you can do this today or next chance you get, if you get it out and have a look at it and actually read through it, has anything changed? Does it still reflect the way you do business now? If you are an interior designer, and I do have a lot of clients who are interior designers, which is why I raise this, but if you are an interior designer, you can actually go to my website on the resources page and download a free copy of your interior designer self-audit checklist.
[00:13:40] Because this is a conversation I have so often with interior designers, I've created that checklist for you so you can actually work through it alongside your own agreement and do your own self-audit. It's recently been updated to include AI, so when you work through it, you'll see that some of the clauses that I'm telling you are really important, [00:14:00] and I'm explaining why, relate to the use of AI for the reasons we've just talked about.
[00:14:04] So that's a resource that you might find handy if you're an interior designer.
[00:14:08] So as you can see from what we've talked about, it is not an easy answer when someone says, "My client has input my original work into AI. They terminated me, and now I've seen my design or something very similar done by someone else or delivered by the client." Usually by using AI if the client's done it.
[00:14:28] Who owns it now? It depends on so many things. What we're better off doing is setting ourselves up so we don't end up there. So in your client agreement, we make sure we've outlined what's permitted use of AI for the client and what's not, what they're not authorized to input into AI. Make sure your client agreement, regardless of your industry, is really clear on IP ownership.
[00:14:51] And think about whether or not upon full payment by the client, whether they have the IP assigned to them in full, so transferred to them for them to do with what they want. In which case, if they upload it later, then it's nothing you can do about it. It's, it's their IP from that point. So think about whether you transfer it or assign it to them fully, or whether you're just giving them a license.
[00:15:13] So once you pay, you have a license to use it for this purpose, for this long. That's a very common approach when creatives want to protect their IP. So have a look at the IP clause in your agreement, regardless of your industry, and make sure that you're comfortable with what it says about IP assignment or licensing Then you might want to go further and have a look at your termination clause and see what it says about termination.
[00:15:39] And if you're terminated partway through a creative project, what boundaries or guardrails do we want to put around future use of that IP? And we think about this when we're drafting the IP clause. So these are all really relevant things to think about when you're having a look over your client service agreement to make sure that it serves your business the way it operates [00:16:00] today, but to future-proof and to make sure that you are being really clear on your IP, AI use, your original works, and what's to happen if you are terminated.
[00:16:09] There's some really good things to think about, and it's a conversation worth having.
[00:16:13] I've mentioned earlier in this episode, and I mention it very often on the podcast, that a template is fine to get you started, but it won't get you out of trouble when you need it to. Very rarely will a template document do all the things it needs to do to serve and protect your business because they're generic documents, and they're designed for everyone, which means they serve no one, in my view.
[00:16:36] So if you are sitting down to look at your client service agreement after listening to this episode and you realize that it's time for an update, or you realize that what you've got served you three years ago, it no longer serves you now, you are so welcome to reach out, and we can have a conversation to see how I can help develop your documents to the level that they need to be, to the level that your business deserves them to be to support the business moving forward.
[00:17:01] You can contact me via my website. All the links are in the show notes, and I'm very active over on Instagram. My handle is @tmlegalatelier. Thank you so much for listening. I hope you really enjoyed this episode. If you know a creative business owner that you think would benefit from this as well, please feel free to share. I'd be ever so grateful. I'll catch you next time.
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