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Intellectual Property Report

Client Updates

USPTO Issues Updated Guidance Highlighting the Requirement for a Flexible Approach to the Obviousness Determination 
Alexis Symcheck
On February 27, 2024, the USPTO issued its Updated Guidance for Making a Proper Determination of Obviousness in the Federal Register. While the guidance does not constitute substantive rulemaking, its goal is to provide guidance for USPTO personnel when making obviousness determinations. The guidance focuses on the flexible approach to determining obviousness that is required by KSR Int'l Co. v. Teleflex Inc. (KSR) and post-KSR Federal Circuit precedent. 
To read the full article, click here

Use This Four-Step Framework to Protect Al-Assisted Inventions in the US
Paul RagusaNick Palmieri
The USPTO's recent guidance has important implications for in-house counsel and patent practitioners who are involved in the development and protection of AI-assisted inventions. They may need to create a new framework (or supplement their existing framework) when filing such patent applications to incorporate four specific steps.
To read the full article, click here.
This article was previously published in IAM on March 22, 2024.

This Month: Our Take on AI
Joseph Cahill 
EU AI Act Passed: On March 13, 2024, the European Parliament passed the AI Act, the first comprehensive attempt to regulate AI globally. The AI Act will go into effect 30 days after publication in the Official Journal of the European Union, with staggered compliance deadlines. Key points include:

  • Risk-based approach: The Act categorizes AI systems based on risk level (unacceptable, high, limited) with corresponding compliance obligations. Unacceptable risk systems are banned, while high-risk systems require complex assessments and registration.
  • Broad scope: The Act has potentially broad extraterritorial reach, covering entities placing AI systems on the market, putting them into service, or using their output in the EU.
  • GPAI models: The Act provides rules for General Purpose AI (GPAI) models, with enhanced requirements for those posing "systemic risks." 
  • Next steps: businesses should carefully assess the Act's scope to determine if its requirements will govern their AI systems. Compliance deadlines vary by provision.

The passing of the EU AI Act marks a significant milestone in AI regulation and will substantially impact businesses deploying AI systems in the EU market. Proactively evaluating AI use cases against the Act's risk categories will help ensure timely compliance. The team at Baker Botts is analyzing the text of the Act and will be posting analysis at

Chatbot Liability: Air Canada was recently held liable for hallucinations from its chatbot in a decision by the British Columbia Civil Resolution Tribunal (CRT). The CRT found that Air Canada did not take reasonable care to ensure its chatbot was accurate, rejecting the argument that the chatbot was a "separate legal entity" responsible for its own actions. While the damages in this case were small (CA$ 650), it provides a cautionary tale for companies using chatbots, as the damages could have been more severe if the hallucinations were more widespread.
The FTC also recently placed guardrails on Rite Aid's use of AI with biometric scanning for facial recognition. While specific to a higher risk use case than chatbots, the FTC's order provides some guidance on what it expects from companies in terms of checking AI systems for inaccurate outputs. For example, the FTC provided that Rite Aid should document the testing of its AI system before deployment and at least every twelve months after that to identify factors that cause or contribute to inaccurate outputs, and assess any statistically significant variations in the system's rate of inaccurate outputs. Partner Maggie Welsh analyzes the implications of these developments in her article "Chatbots and Liability."

Proposed Requirements for IaaS Providers: The U.S Commerce Department's Bureau of Industry and Security (BIS) has proposed a rule imposing heightened obligations on U.S. Infrastructure as a Service (IaaS) providers and their foreign resellers when foreign persons use their services to train large AI models. The rule would require verifying foreign customers' identities, implementing know-your-customer programs, submitting annual certifications, and reporting instances of foreign persons training large AI models that could enable malicious cyber activities. The proposed rule, if implemented, will significantly impact U.S. IaaS providers who will need to implement measures to meet the new requirements. Partner Matthew West provides an in-depth look at the proposed rule in his article "U.S. Government Proposes New Requirements for U.S. IaaS Providers and Foreign Training of AI."
IP Considerations for AI:
Businesses should consider multiple ways of protecting intellectual property related to AI technology, including patents, copyrights, and trade secrets. The best method depends on various factors, such as the practical ability of your business to enforce the IP. Documenting human involvement in the creation process is critical to seek patent or copyright protection. For trade secrets, businesses must document efforts to maintain secrecy. Businesses should also be cautious about using public AI tools that may disclose ideas and ensure third-party collaborators follow proper record-keeping and IP assignment practices. I examine these issues more in my article "Navigating the Maze of Intellectual Property in the Age of AI."
To read more on our Team's insights on AI and the impact on our world, click here. 

March 2024 Intellectual Property Report Recap
In case you missed it, here is a video recap of our March 2024 Intellectual Property Report that looked at:

  • Beyond Chatbot Policies: The Case for AI Governance 
  • Two Sides of One Coin: Utilizing and Preventing Declaratory Judgment Actions
  • Blog: Our Take on AI

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