Artificial Intelligence: Coming to a store near you
January 14, 2019
Understanding legal implications of AI critical to leveraging its power for your business
BY CAROLE J. PIOVESAN, McCarthy Tétrault LLP
ARTIFICIAL Intelligence (AI) refers to a computer system that can analyze massive amounts of data, learn from the analysis and execute actions in unconventional ways, over time, without the need for human intervention. It provides tremendous opportunities for businesses to identify areas for improvement, potential increases in efficiencies, improvements to corporate strategies and reductions in costs, among countless other possible uses.
AI in the Retail Space
AI is being utilized across the retail sector, changing the way people buy and sell and the way organizations provide services and products to consumers. Consumers are seeking more convenient, responsive and personalized services from retailers. AI applications such as chatbots, advanced recommendation engines, and price and incentive personalization platforms help organizations provide these responsive services.
Advantaged technologies like AI are being used to detect counterfeit products, help customers “try-on” products using augmented reality, redesign the entire storefront experience, reduce the size of warehouses and make inventory management more efficient, among many other possible use cases. Investments are on the rise in robotics, virtual assistants and inventory management. In fact, according the CB Insights, “Top Retail AI Trends to Watch”, retail AI start-ups raised $1.8 billion across 374 deals from Q1 2013 to Q3 2018. Translation: AI is hot in retail.
Some Legal Implications
There are aspects of AI development and operationalization that engage some core legal issues. Developing a deep understanding of the AI system the organization is building, buying or operationalizing is critical to supporting innovation while mitigating risks. Some top-of-mind issues include:
Privacy Law: Large datasets are required to train algorithms. These datasets often include personal information that is subject to privacy protections. Developing good data governance practices and privacy assessment policies are key to facilitating AI innovation in your company.
Cybersecurity: Companies are encouraged to develop comprehensive cybersecurity plans to manage risks of data breaches and cyber-attacks. These plans streamline communications and improve outcomes for companies following a breach.
Intellectual Property (IP) Law: AI systems are both users and creators of IP. As a result, they raise some unique questions from an IP perspective. These may include patents for AI created products, copyright infringement, and ownership rights.
AI can improve customer experiences, create efficiencies and result in higher profit margins. Organizations and legal advisors, however, are grappling with the fundamental questions arising from the transformative technology that is AI. Organizations that understand the legal risks associated with it can take steps to reduce them and ultimately realize a greater return on the technology’s benefits.
