Could Popular AI Chatbot Talk Users into Legal Peril?

Could Popular AI Chatbot Talk Users into Legal Peril?

Could Popular AI Chatbot Talk Users into Legal Peril?

1000 648 David Hoppe

ChatGPT is the fastest-growing consumer application in the history of internet applications. In just two short months, ChatGPT has reached 100 million users. The ChatGPT AI language processor has gained popularity in various industries due to its ability to generate comprehensive responses using natural language processing (NLP). From its vast but still limited set of training data, ChatGPT can write codes, stories, and articles, among other things.

The gaming industry, in particular, has shown interest in ChatGPT for its potential to create realistic non-player characters (NPCs), text-based chatbot games, new game content, and enhance the gaming experience. However, like all AI systems, ChatGPT is not without legal and regulatory hurdles.

One of the main legal concerns for ChatGPT is data privacy and security. Since ChatGPT relies on a vast amount of data, it is crucial to ensure that user data is protected and that the system complies with relevant data protection laws. Additionally, ChatGPT’s ability to generate content raises issues over intellectual property rights and ownership.

As gaming, extended reality, and other emerging technology companies continue to experiment with ChatGPT and its potential uses, it is essential to address these legal and regulatory concerns. Possible legal solutions or strategies may include complying with data protection laws, obtaining necessary licenses or permissions, and establishing clear ownership and licensing arrangements for generated content.

Legal Responsibility

The use of ChatGPT in various business models raises the question of who can take credit or who should take responsibility for information generated by ChatGPT. The answers are not immediately clear. If ChatGPT creates defamatory, libelous, or slanderous speech, who will be held accountable?

A group of Stanford professors explains that the defamed party likely would start with the AI’s owner. The owner, in turn, would try to shift blame to the device’s manufacturer, “arguing that it was designed in a way that made it dangerous…The truth of the matter often is likely to be quite unclear.” While the product’s design may include training that introduces a proclivity for inaccuracies and defamation, it is equally likely that the AI adapts its output to its owner’s viewpoint. Its responses, therefore are reflections of the prompts it receives. And, these prompts over time reveal the owner’s prejudices and attitudes. It becomes a debate over whether  “design or experience,” “nature or nurture,” is more influential.

Emerging technology companies can take several precautions to avoid legal liability for ChatGPT’s output. Depending on the state in which the business using ChatGPT is based, a disclaimer that clarifies the rights and obligations of each party, including ChatGPT, could be sufficient to avoid legal trouble. It is important for companies using ChatGPT to be proactive and establish measures to address potential legal issues associated with its usage.

Data Protection and Privacy Concerns

ChatGPT’s ability to share personal data from its training datasets with its users raises concerns about data protection and privacy. The data collection process used to train ChatGPT is problematic for several reasons. First, users are not asked for consent to use their data, which would constitute a clear violation of privacy if that sensitive data can be used to identify specific individuals, their family members, or their location. Even when data used is publicly available, using it could breach “contextual integrity,” a fundamental principle in legal discussions of privacy that requires that individuals’ information not be revealed outside the original context in which it was produced.

Furthermore, the developer of ChatGPT, OpenAI, seems not to offer procedures for individuals to check how long the company that collects and uses their data continues to store it or to request that it be deleted. This functionality is required under the European General Data Protection Regulation (GDPR), but it remains unclear whether ChatGPT is compliant with GDPR requirements. Companies using emerging technologies such as ChatGPT must take data protection and privacy concerns seriously and establish protocols to protect users’ data privacy rights, including obtaining consent for data use, providing transparency about data storage and sharing practices, and enabling individuals to exercise their right to be forgotten.


ChatGPT’s ability to generate text raises concerns about its potential to create fake news or other misleading content. This feature could have serious consequences, such as damaging reputations, spreading misinformation, or even inciting violence. The legal risks associated with using ChatGPT for these purposes are unclear, but it is likely that companies using ChatGPT or similar technologies could face civil and criminal penalties if they deliberately use the technology for these purposes. A well-drafted disclaimer may mitigate some degree of legal liability arising due to false or inaccurate information, though inadvertent defamation or libel could still be punishable if negligence can be proven.


One of the major legal challenges posed by ChatGPT is its potential infringement upon copyrights held by others. This is because ChatGPT is trained on a vast amount of text and data including books, articles, blogs, forum postings, and other written materials. Given that much of this “pre-fed” data includes works under copyright protection, ChatGPT’s outputs may arguably potentially infringe upon someone else’s intellectual property. This may lead to secondary copyright liability as the companies using ChatGPT may be deemed to be contributing to infringement. There are ways to mitigate or avoid contributory or secondary liability for copyright infringement such as by signing a copyright release document, and having appropriate copyright policy, and disclaimers. An intellectual property attorney can provide guidance on this.

Offensive And Defamatory Content

Another legal risk of ChatGPT is that it could generate offensive content. Open AI is quite aware of this possibility and provides monitoring for text that “contains profane language, prejudiced or hateful language, something that could be NSFW or text that portrays certain groups/people in a harmful manner.”

As a language model, ChatGPT has the ability to generate text that is similar to human conversation. However, it does not have the same ability to understand the context or implications of the words it generates. This means that ChatGPT could potentially generate content that is offensive or defamatory, which could lead to legal action against its users. To avoid this risk, it is important to check the content produced by ChatGPT before it is published, distributed, or shared with end users. In addition, depending on the goal, a legal agreement with the end users of the content may be advisable.


ChatGPT is still in its early stages, and regulations prescribing its use, best practices, and ramifications when things go wrong remain in flux. The use of ChatGPT in various business models raises several legal and regulatory hurdles that companies must be aware of and take appropriate measures to mitigate. Legal solutions may include adding appropriate disclaimers and policies, obtaining consent from individuals for data collection, and implementing procedures to delete personal information when requested. It is recommended to consult with an attorney to ensure compliance with all legal and regulatory requirements related to using ChatGPT.

Gamma Law is a San Francisco-based Web3 firm supporting select clients in complex and cutting-edge business sectors. We provide our clients with the legal counsel and representation they need to succeed in dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.


David Hoppe

All stories by: David Hoppe

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