Three Laws Blog: Law and Artificial Intelligence

Bertoneu, Lin, Liu, and Ni on Capital Market Consequences of Generative AI: Early Evidence from the Ban of ChatGPT in Italy @WUSTL @NUSingapore

Jeremy Bertoneu, Washington University in St. Louis, Business School, Yupeng Lin, National University of Singapore, NUS Business School, Yibin Liu, National University of Singapore, NUS Business School, and Zhenghui Ni, National University of Singapore, Department of Finance, have published Capital Market Consequences of Generative AI: Early Evidence from the Ban of ChatGPT in Italy. Here is the abstract.

Measuring the economy-wide effects of a revolutionary technology such as Generative AI is challenging. On March 31, 2023, the Italian data protection authority found that ChatGPT violated data protection laws and banned the service in Italy, providing a rare experiment. Relying on this event, we show that Italian publicly-traded companies declined by 1.4% (2.7%) over three days around the ban (throughout the entire ban duration) relative to a matched sample of European firms. Stock prices of industries most exposed to AI incrementally declined, suggesting that the unavailability of ChatGPT drives the price change. Consistent with the creative destruction effect, we find that younger and smaller firms suffer more from the ban than their peers. Using a difference-in-difference design, we find that volatility and trading volume decreased and bid-ask spreads increased during the ban, consistent with AI facilitating information dissemination among investors.

Download the article from SSRN at the link.

Tomlinson, Torrance, and Black on Chat GPT and Works Scholarly: Best Practices and Legal Pitfalls in Writing with AI @SMULawReview

Bill Tomlinson, University of California, Irvine; University of Welling, Te Herenga Waka; Andrew W. Torrance, University of Kansas School of Law; MIT Loan School of Management; and Rebecca Black, University of California, Irvine, are publishing ChatGPT and Works Scholarly: Best Practices and Legal Pitfalls in Writing with AI in the SMU Law Review Forum. Here is the abstract.

Recent advances in artificial intelligence (AI) have raised questions about whether the use of AI is appropriate and legal in various professional contexts. Here, we present a perspective on how scholars may approach writing in conjunction with AI, and offer approaches to evaluating whether or not such AI-writing violates copyright or falls within the safe harbor of fair use. We present a set of best practices for standard of care with regard to plagiarism, copyright, and fair use. As AI is likely to grow more capable in the coming years, it is appropriate to begin integrating AI into scholarly writing activities. We offer a framework for establishing sound legal and scholarly foundations.

Download the article from SSRN at the link.

Blank and Osofsky on Automated Agencies @JoshuaDBlank @LeighOsofsky @MinnesotaLawRev @unc_law @UCILaw

Joshua D. Blank, University of California, Irvine, School of Law, and Leigh Osofsky, University of North Carolina, Chapel Hill, are publishing Automated Agencies Minnesota Law Review, Vol. 104, 2023 in volume 104 of the Minnesota Law Review. Here is the abstract.

When individuals have questions about federal benefits, services, and legal rules, they increasingly seek help from government chatbots, virtual assistants, and other automated tools. Most scholars who have studied artificial intelligence and federal government agencies have not focused on the government’s use of technology to offer guidance to the public. The absence of scholarly attention to automation as a means of communicating government guidance is an important gap in the literature. Through the use of automated legal guidance, the federal government is responding to millions of public inquiries each year about the law, a number that may multiply many times over in years to come. This new form of guidance is thereby shaping public views of and behavior with respect to the law, without serious examination. This Article describes the results of a qualitative study of automated legal guidance across the federal government. This study was conducted under the auspices of the Administrative Conference of the United States (ACUS), an independent federal agency of the U.S. government charged with recommending improvements to administrative process and procedure. Our goal was to understand federal agency use of automated legal guidance, and offer recommendations to ACUS based on our findings. During our study, we canvassed the automated legal guidance activities of all federal agencies. We found extensive use of automation to offer guidance to the public by federal agencies, with varying levels of sophistication and legal content. We identified two principal models of automated legal guidance, and we conducted in-depth legal research regarding the most sophisticated examples of such models. We also interviewed agency officials with direct, supervisory, or support responsibility over well-developed automated legal guidance tools. We find that automated legal guidance offers agencies an inexpensive way to help the public navigate complex legal regimes. However, we also find that automated legal guidance may mislead members of the public about how the law will apply in their individual circumstances. In particular, automated legal guidance exacerbates the tendency of federal agencies to present complex law as though it is simple without actually engaging in simplification of the underlying law. While this approach offers advantages in terms of administrative efficiency and ease of use by the public, it also causes the government to present the law as simpler than it is, leading to less precise advice and potentially inaccurate legal positions. In some cases, agencies heighten this problem by, among other things, making guidance seem more personalized than it is, ignoring how users may rely on the guidance, and failing to adequately disclose that the guidance cannot be relied upon as a legal matter. At worst, automated legal guidance enables the government to dissuade members of the public from accessing benefits to which they are entitled, a cost that may be borne disproportionately by members of the public least capable of obtaining other forms of legal advice. In reaching these conclusions, we do not suggest that automated legal guidance is uniquely problematic relative to alternative forms of communicating the law. The question of how to respond to complex legal problems, in light of a public that has limited ability or inclination to understand complex legal systems, is a difficult one. There are different, potential solutions to this problem, which each present their own series of cost-benefit tradeoffs. However, failure to appreciate, or even examine, the tradeoffs inherent in automated legal guidance, relative to the alternatives, undermines our ability to make informed decisions about when to use which solution, or how to minimize the costs of this form of guidance. In this Article, after exploring these challenges, we chart a path forward. We offer policy recommendations, organized into five categories: transparency; reliance; disclaimers; process; and accessibility, inclusion, and equity. We believe that our descriptive as well as theoretical work regarding automated legal guidance, and the detailed policy recommendations that flow from it, will be critical for evaluating existing, as well as future, government uses of automated legal guidance.

Download the article from SSRN at the link.

Bonadio and Trapova on Property Law in Gaming and Artificial Intelligence @enricobonadio @alinatrapova @CityLawSchool @ucl

Enrico Bonadio, City University London, The City Law School, and Alina Trapova, University College London, are publishing Property Law in Gaming and Artificial Intelligence in Handbook on Property Law & Theory (Chris Bevan, ed., Elgar) (Forthcoming). Here is the abstract.

This chapter focuses on copyright and patent aspects of AI in gaming. As is known, copyright law protects original creative expression, while patents safeguard new inventions capable of industrial application. On the copyright side, the central classic question is what video games are in terms of protectable subject matter. This issue of the video games’ legal nature is rather old, but still pertinent topic. By now, it has been widely accepted that video games are complex subject matter from a copyright perspective, comprising not just a software, but also graphic and sound elements that contribute to the unique creative value of the game. That said, different jurisdictions adopt varying approaches to the nature of video games with some classifying them as predominantly computer programs and others dissecting the different elements in the game or treating the game as an audio-visual work as a whole. Patents instead have historically attracted less attention. Nonetheless, these can be extremely important for some hardware, software, development tools and other middleware companies, but as it currently stands the considerable cost tied to patents renders them less utilised in the field. Against this background, AI has stepped in to not only disrupt classical IP models, but to also offer a wide range of immersive interactive experiences for gaming; thus, opening new avenues for exploitation. As far as copyright law is concerned, the infusion of an AI element into the game provokes questions of authorship when it comes to in-game creativity. Put differently, who is the author and owner of creative expressions when they are created by players within the context of playing the game where certain interactions are driven (and often dictated) by AI? When it comes to patents and AI in this industry, central issues revolve around whether inventions covering the video games’ mechanics constitute patentable subject matter because they have technical features (and not just an unpatentable set of rules developed to be executed by hardware including a console or computer); and in general, whether patents protecting video games are too broad so as to discourage technological progress in this field. This chapter starts with a brief explanation of the influence of AI in gaming (Section 2). It then moves to sketch out the copyright law authorship and in-game creativity challenges (Section 3). Next, it turns to the several patent law conundrums in the field (Section 4). The final part (Section 4) concludes the discussion by arguing that while AI in gaming has been rather recently implemented, the fast pace with which this creative industry develops will certainly quickly transform the experience of video game players, but also the manner in which one understands (intellectual) property in-game.

Download the chapter from SSRN at the link.