GenAI Contracts Hinge on 'Platform' vs. 'Output' Use
Generative AI license agreements increasingly restrict using the platform or its output to train or develop competing products, but market terms vary widely on the scope of these key limitations.
As organizations adopt generative AI, providers are embedding non-competition clauses in license agreements to protect their proprietary models. This guide highlights a critical and evolving point of negotiation: restrictions on using the AI to train, improve, or develop competing offerings. A central ambiguity exists between use of the AI "platform" versus use of the AI-generated "output," with significant uncertainty over whether a contractual restriction on the former implicitly covers the latter. For corporate counsel, this distinction is crucial, as overly broad terms can severely limit a company's ability to innovate or use AI-generated content for core business purposes. Conversely, AI providers risk devaluing their intellectual property without carefully drafted protections. With no clear market consensus or judicial precedent, counsel for both licensors and licensees must proactively and explicitly define the scope of these restrictions, clarifying their application to both the platform and its output to align with commercial objectives and mitigate future disputes.