Last Updated on 13/08/2025 by Damin Murdock
As Artificial Intelligence (AI) rapidly transforms industries, a critical question emerges for businesses and innovators: who owns the intellectual property created by AI systems? The legal landscape surrounding AI-generated IP in Australia is complex and still evolving. Understanding the default positions, critical distinctions, and emerging challenges is essential for protecting your valuable digital assets.
At Leo Lawyers, we provide clarity on these legal issues. We guide businesses through the complexities of AI IP ownership in Australia, helping them to secure their rights and manage risks effectively. This article outlines the current legal understanding, addresses key uncertainties, and highlights essential considerations for your AI development.
Understanding IP Ownership in AI Development: The Default Position
Under Australian law, the fundamental principle for employee-created IP generally states that copyright in works developed by employees in the course of their employment belongs to the employer. This principle extends broadly to computer programs and software developed by employees, forming the basis for much of today’s in-house AI system development.
Who Owns AI-Generated IP? Key Scenarios
The specifics of IP ownership in AI largely depend on how the AI system is developed and deployed.
- In-House Development
When AI systems are developed by a company’s own employees, the IP typically belongs to the employer company. Many companies structure their IP ownership through robust internal organisational arrangements, with specific entities designated as IP holders to ensure clear lines of ownership.
- Third-Party Development
When AI systems or components are developed by external third parties, IP ownership is determined by explicit contractual arrangements. Companies engaging third-party developers should therefore ensure a clear assignment of code and/or have in place valid licences for the use of any existing third-party IP incorporated into the AI system.
The Emerging Challenge: Ownership of AI-Generated Inventions
One of the most significant and debated areas in AI is the question of who should be considered the inventor when AI systems independently create new inventions. Current Australian patent law, for example, requires an inventor to be a natural person. This leads to ongoing uncertainty about AI-generated inventions.
Potential candidates for inventor status in such scenarios include:
- The programmer who coded the AI.
- The owner of the AI system.
- The operator who initiated the AI’s creative process.
- The individual who trained the AI model.
- The provider of the data used for training the AI.
- The AI system itself, if legal personality were to be granted to it.
This debate highlights a key challenge as AI’s creative capabilities advance.
Navigating the Future of AI IP: Essential Considerations for Businesses
As your business engages with AI development, proactive legal strategies are paramount to manage risk and secure your intellectual property.
- Documentation & Contracts:
All IP assignments must be in writing and signed by the assignor. Clear contractual arrangements should specifically detail IP ownership for all AI-related development, whether in-house or outsourced. - Risk Management:
Companies should maintain documentation of all AI IP ownership. Regular intellectual property audits may be necessary to ensure ongoing compliance and identify any gaps in protection as your AI systems evolve. - Evolving Legal Landscape:
The law concerning AI-generated IP continues to evolve rapidly. Businesses should actively monitor legal developments in this area, both in Australia and internationally, and consider implementing specific IP policies tailored for AI-generated works. - Commercial Implications:
Without clear IP protection frameworks for AI-generated works, companies might feel compelled to rely solely on trade secret protection. While valuable, this approach limits public disclosure and could inadvertently hinder broader innovation and collaboration within the AI field.
Conclusion
Ownership of AI-generated intellectual property in Australia is a complex and dynamically evolving area of law. While default positions exist for employee-created IP, the determination of inventorship for AI-generated inventions remains a significant legal challenge. Proactive documentation, clear contractual agreements, and vigilant monitoring of legal developments are crucial for businesses operating with AI.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to newsletter via our Website, and subscribe to our YouTube , LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
