Using Artificial Intelligence in App Development: Who Owns the Intellectual Property?

Artificial intelligence (AI) is now widely used in app development. Developers increasingly rely on AI tools to generate code, images, text, recommendations, and other functionality that accelerates development and reduces cost. However, the use of AI raises a critical and often misunderstood question:

Who owns the intellectual property in an app developed using AI?

This issue has significant legal and commercial consequences. Developers who fail to address IP ownership at the outset may discover — often too late — that their most valuable assets are difficult to protect, license, or commercialise.

The Legal Starting Point: Intellectual Property Is Built on Human Authorship

Under copyright law in Australia and most comparable jurisdictions (including the UK, EU, and United States), copyright protection is based on human authorship.

As a general rule:

• AI systems cannot own intellectual property

• Copyright subsists only in works created by a human author

• Content generated entirely by AI, without meaningful human creative input, may not be protected by copyright at all

This creates a fundamental risk for app developers who rely heavily on AI-generated outputs.

If a work has no recognised human author, it may:

• fall into the public domain immediately, or

• attract no enforceable copyright protection.

How AI Is Used in App Development (and Why It Matters for IP)

Not all uses of AI carry the same legal risk. Ownership depends heavily on how AI is used within the development process.

AI as an Assistive Tool

Examples include:

• Code suggestions or completion

• Debugging assistance

• Design refinement

• Refactoring or optimisation support

In these cases, the AI functions as a tool. The human developer retains creative control and authorship. The IP risk is relatively low provided human authorship is clear and documented.

AI Generating Content Used Directly in an App

Examples include:

• AI-generated images, icons, or illustrations

• AI-written in-app text or marketing copy

• AI-generated audio or music

Where AI outputs are used substantially unchanged, or where human involvement is minimal, ownership becomes uncertain. Copyright may not subsist, or may be difficult to enforce.

Apps That Themselves Generate AI Content

Examples include:

• AI writing tools

• Image or video generation apps

• Chatbots or generative assistants

• Recommendation or content-creation platforms

In these cases, developers may own the app code and infrastructure, but not the outputs generated by the AI. This has serious implications for licensing, terms of use, and commercial representations.

Who Owns AI-Generated Outputs?

Ownership of AI-generated material depends on three overlapping factors.

Copyright law

Most legal systems require human authorship for copyright to exist. Purely AI-generated content may be unprotected.

The AI provider’s terms of use

AI providers (such as OpenAI) may grant users contractual rights to use outputs. However, these rights arise from contract — not from copyright law — and may change over time.

Human creative contribution

The more a human:

• controls the creative direction,

• selects and curates outputs,

• edits, refines, or transforms results,

the stronger the argument that the final work is a human-authored creation capable of copyright protection.

Common Intellectual Property Risks When Using AI

Developers frequently encounter problems by:

• Assuming AI-generated content is automatically “owned”

• Treating AI outputs as core proprietary assets

• Failing to document human authorship and decision-making

• Relying on AI-generated branding, logos, or key creative elements

• Ignoring risks arising from AI training data and similarity to existing works

Best Practice: Protecting IP When Using AI in App Development

Developers can significantly reduce risk by following established best practices.

Treat AI as a Tool, Not an Author

The safest legal position is to ensure that AI is used assistively, with humans making the final creative and technical decisions. AI should support — not replace — human authorship.

Ensure Meaningful Human Creative Input

To strengthen copyright protection:

• Edit and refine AI-generated text

• Combine and restructure outputs

• Apply original expression and judgment

• Avoid using raw AI outputs without modification

Maintaining records of this process can assist in demonstrating ownership if disputes arise.

Avoid Relying on AI-Generated Content as Core IP

Key commercial assets should, wherever possible, be:

• human-created,

• commissioned under clear IP assignment agreements,

• and capable of independent protection.

This is particularly important for:

• app names and branding,

• logos and icons,

• signature imagery,

• proprietary content libraries.

Review AI Provider Terms Carefully

Developers should:

• confirm commercial-use rights,

• understand output ownership provisions,

• monitor changes to terms,

• avoid tools that restrict downstream licensing.

An app’s IP position should not depend solely on a third-party AI provider’s contractual terms.

Address AI Use Clearly in Contracts and App Terms

Where apps generate AI outputs for users avoid promising exclusive ownership unless it can be delivered, clarify whether outputs are protected by copyright, allocate risk transparently between developer and user.

Secure Human-Created IP Around the AI

Even where AI is involved, developers should ensure source code ownership is clearly assigned, databases are protected, confidential information is kept confidential; and branding is protected through trade mark registration.

The strongest commercial protection usually sits around the AI, not in the AI outputs themselves.

A Note on Assigning or Licensing AI-Generated Content

As a matter of law, it is generally not possible to assign exclusive rights in content that does not attract copyright protection. Where AI-generated material is unprotected licences may be contractual only, exclusivity may not be enforceable; and representations to customers and investors must be carefully framed.

Conclusion

AI can dramatically improve the efficiency of app development, but it does not automatically create protectable intellectual property. Developers who fail to address ownership, authorship, and licensing risks early often encounter serious problems at the point of commercialisation. Best practice is clear means that humans should be kept firmly in the creative loop, treat AI as a tool, protect human-created assets aggressively; and ensure contracts reflect legal reality.

Need Advice on AI and Intellectual Property?

If you are developing or commercialising an app that uses AI and need advice on:

• intellectual property ownership,

• AI tool licensing,

• app terms and disclosures,

• investor-ready IP structuring,

Greyson Legal can assist with practical, commercially focused legal advice tailored to technology businesses.

E: mail@greysonlegal.com

P: 0411 248 885