Using AI For Your Singapore Business: 4 Things to Note

Last updated on March 22, 2024

Woman chatting with AI chatbot

In our fast-paced and highly modernised world where technology reigns supreme, artificial intelligence (AI) pervades nearly all sectors ranging from healthcare to transport and business. AI refers to computer software that simulates human intelligence to solve problems and make decisions. This article will cover some of the key legal considerations that business owners should take note of when using AI.

Why Might a Business Owner Use AI For Their Business? 

A business owner may wish to use AI in their business operations for a myriad of reasons. For example, generative AI may be used to draft business documents such as employee handbooks, employment agreements and confidentiality agreements.

AI has various other operational uses such as automating customer support services via the use of chatbots, analysing large amounts of data to improve business operations as well as detecting fraudulent activities in business transactions.

Here are some examples of commonly used AI tools today:

  • ChatGPT: ChatGPT is a chatbot that engages users in conversations highly similar to real life. The technology behind the chatbot allows it to respond to follow-up questions asked by users, concede errors, dispute inaccurate assertions and even turn down improper requests.
  • SlidesAI: This is a type of software that produces presentations using AI by generating slides according to pointers and information submitted by users. Among other capabilities, it can come up with suggestions to improve the design and layout of presentation slides.
  • Alli AI: This AI tool helps companies with Search Engine Optimisation (SEO) tasks by allowing users to easily track and evaluate the effectiveness of their SEO efforts.

As mentioned above, AI can be used across a wide range of sectors such as the healthcare, financial, legal, manufacturing, agricultural and cybersecurity sectors. Depending on the sector, there might be industry-specific legal considerations that a business owner would need to bear in mind when using AI, and some companies may also have their own internal policies and guidelines regarding the use of AI.

The legal considerations explored in this article include:

What are Some of the Legal Considerations When Using AI For Business? 

1. Data privacy and protection

The use of AI in business operations usually involves processing large amounts of personal or sensitive data. Consequently, this can raise privacy concerns around the collection, usage, storage and disclosure of such information.

One possible risk is that of a data breach, for instance, due to negligence on the part of the AI inventors. This can occur when they fail to detect vulnerabilities within the AI technology in a timely manner. Such vulnerabilities may then be exploited by malicious actors who wish to gain access to users’ data, hence compromising the safety and security of consumers’ personal information.

For example, in 2023, ChatGPT experienced a data breach due to a vulnerability in the technology’s open-source library, which allowed users of the platform to view other users’ chat histories — this raised concerns about data privacy and security risks.

Furthermore, as AI becomes more deeply integrated into business operations and infrastructure, it could grow more susceptible to cyberattacks from hackers with malicious intent. For instance, cybercriminals may intentionally throw AI systems into flux by “contaminating” or “poisoning” them, causing them to operate poorly or even break down altogether. This can be done by feeding the AI system with unreliable or undesirable data, causing the AI system to behave in an undesirable manner. To illustrate, a hacker could insert data containing profanities into conversation records used to train a business’ customer service chatbot, resulting in the chatbot responding inappropriately to customers’ enquiries.

In Singapore, issues relating to data privacy and protection are governed by the Personal Data Protection Act (PDPA). Where a business is in breach of the PDPA due to careless use of AI, it may face a financial penalty of up to 10% of the organisation’s annual turnover in Singapore for organisations with an annual local turnover exceeding $10 million, or up to $1 million, whichever is higher.

Apart from inventors failing to detect vulnerabilities in their AI software as detailed above, careless use of AI could also encompass situations where companies accidentally transfer customers’ personal information or other kinds of sensitive data onto AI platforms. For example, Samsung Electronics banned employees from using generative AI tools after finding out that its engineers had inadvertently leaked the company’s internal source code by uploading it onto ChatGPT.

To ensure compliance with the PDPA, businesses are required to appoint one individual as a data protection officer (DPO). A DPO ensures adherence to PDPA regulations, handles matters relating to data privacy and protection, brings potential data protection risks to the attention of the upper management and communicates with the Personal Data Protection Commission (PDPC) on data protection issues should the need arise. In a similar vein, businesses may wish to consider appointing an AI specialist to oversee employees’ usage of AI, maintain the company’s own AI solutions and ensure that data breaches do not occur as a result of using such technology.

Data leaks caused by negligent AI usage (as detailed above) can be prevented by consistently scanning and monitoring data environments, as well as educating company employees on how to guard against security risks associated with AI.

For example, all employees should be taught not to upload personal information to “open” AI systems such as ChatGPT and Bard — this is especially pertinent to Human Resource (HR) professionals who handle other employees’ private data, such as health information. To facilitate such efforts, businesses could implement a data breach management plan to help identify potential data breaches arising from the use of AI tools.

2. Intellectual Property rights

When using AI in business, business owners need to consider who owns the intellectual property (IP) created by the AI or input into the AI model. Legal trouble arises when AI companies train their AI models using copyrighted materials without authorisation from the authors or owners — companies such as OpenAI, Microsoft and Meta have faced lawsuits in this regard.

For example, The New York Times had filed a suit against OpenAI and Microsoft for using its articles to train their respective chatbots, which has led to instances of the AI systems quoting the Times’ work word for word when faced with questions from users. Hence, a business owner could potentially be infringing someone else’s copyright if they rehash the AI-generated work product instead of using the output for inspiration or guidance.

Currently, the law in Singapore remains unclear on whether AI-produced works, such as AI-generated art, are protected by copyright. However, source codes and AI algorithms may be protected by copyright if the following conditions are satisfied:

  1. The work is original. It should originate from the author and it must not be copied from another work.
  2. It has a sufficient connection to Singapore. The author is a Singapore citizen or resident in Singapore. Alternatively, the work is published in Singapore.
  3. It is fixed on a tangible medium. For instance, the work is in writing on a piece of paper.

In addition, copyright protection is conferred upon an AI invention as soon as the work is created and expressed in a tangible form (meaning that the work can be communicated via visual or audio forms); the work does not need to be registered for copyright protection to be effective. Hence, businesses seeking to develop their own AI tools and solutions would be offered better legal protection over such intellectual property.

It must be noted that copyright protection only arises where the work was created by human authorship. Hence, it would be necessary to show that human authorship was involved in producing the AI output. Examples include the programmer who wrote the AI algorithm and the person who trained the AI system to generate output. With this in mind, it would be advisable for businesses to keep proper records of employees and/or third-party vendors who were involved in developing and utilising AI tools and solutions.

3. Accuracy & reliability of AI outputs

It is important to note that AI outputs are not foolproof — they may contain errors and inaccuracies, otherwise known as AI hallucinations. For example, ChatGPT appears to have an information cutoff up till January 2022. Hence, it cannot be relied upon to provide updated information on current events. Further, despite the cutoff date being in 2022, some users have reported that the software is unable to accurately answer questions about events that occurred in 2021.

Some of the potential legal issues that may arise relate to that of negligence and liability. For example, can a business owner be held liable for negligence if a customer relies on an AI-generated output which causes them harm? Such an issue may manifest where an individual asks an AI tool for medical advice and falls ill or suffers an injury after relying on the advice generated. While there is no definite answer to this question, and it must be noted that there are many actors involved in the overall AI journey (e.g. manufacturers, programmers, users), the European Parliament and the European Law Institute have recommended that the operator of the AI invention should be held liable in the event of any harm caused by the AI output. This is because the operator is best placed to evaluate, control and ward off potential risks brought about by the AI invention in question.

To guard against liability resulting from negligent use of AI, business owners can include exclusion and limitation of liability clauses in contracts governing the usage of AI (although such clauses have not yet been tested by the Singapore courts). It may be possible for such disclaimers to explicitly state that AI tools should not be relied upon for legal, medical and even financial advice. However, it must be noted that all such disclaimers would be subject to the requirement of reasonableness pursuant to the Unfair Contract Terms Act. Business owners should also fact-check the veracity of AI outputs against credible sources and review them regularly to ensure their accuracy instead of relying solely on such output.

In addition, the PDPC has rolled out a Model AI Governance Framework, which, though not legally binding, contains comprehensive recommendations that organisations can implement when using or developing AI solutions to reduce the risks of potential harm caused by AI solutions. Hence, business owners may refer to this framework as a guide to develop their own policies regarding responsible AI usage.

4. Discrimination & bias

AI systems are trained with pre-existing data, which may contain certain biases. Consequently, AI-generated content has the potential to reflect biases inherent in the training data it relies upon, leading to biased output. For instance, DALL-E, an AI model which produces images from text prompts, was found to contain racist and sexist stereotypes — prompts for “CEO” generated only images of white men, while prompts for “nurse” produced only pictures of women.

If an AI tool laden with such biases and stereotypes is used for employment and recruitment purposes, discriminatory hiring practices could run rampant. While there is currently no legislation in Singapore that governs the use of AI in hiring processes, there are two guidelines that business owners should take note of:

  1. The Tripartite Guidelines on Fair Employment Practices: Pursuant to the Guidelines, employees must be hired on the basis of merit (i.e. skills, experience or ability) instead of factors such as age, race, gender or religion.
  2. The Model AI Governance Framework: This framework contains practical recommendations that business owners can follow in order to minimise bias in the training data used to develop the AI model. One such recommendation is that businesses should obtain a wide variety of training data from reliable sources and ensure that the dataset is as complete as possible in order to minimise the risk of feeding AI models with biased data.

Overall, business owners should be wary of AI tools perpetuating harmful stereotypes and biases when hiring employees — this problem can be mitigated via careful and consistent review of AI tools used in the recruitment process.

To conclude, while AI can be of great help to businesses by making workflows and operations more efficient, business owners should bear in mind the ensuing potential legal issues relating to data protection, intellectual property, the reliability of AI and discriminatory hiring.

If you require further guidance on these issues, you may wish to consult a commercial/technology lawyer who can provide more detailed information on the legislation and guidelines surrounding these issues, assess the circumstances of your case and advise you on the appropriate course of action to take. This would be especially helpful if you are a business owner who would like to implement AI into your operations but you harbour concerns regarding the potential legal implications of using AI for your business.

You may kickstart your search for a commercial lawyer that best suits your needs via our Find a Lawyer service.

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