As with most LLM provider terms of service, Anthropic’s Commercial Terms of Service confirm that when you use Claude Code:
For anyone using Claude Code to assist with software development – whether for their own purposes or for a client – Anthropic’s confirmation of ownership supported by an indemnity is good news.
So far so straightforward. A trickier question is whether your Claude Code-generated software code benefits from any IP rights, and specifically copyright, in the first place.
In this article we look at the status of copyright protection of AI-generated software code in the UK, and also briefly look at the position in the EU and in the U.S. We conclude with some practical suggestions how to manage some of the risks involved.
UK
In common with most countries the UK provides ‘standard’ copyright protection for human author-created works. Under the UK Copyright, Designs and Patents Act 1988 (“CDPA“) copyright subsists in “original literary, dramatic, musical or artistic works” (CDPA, s.1), with literary work defined to include computer programs (CPDA, s.3). The originality of a work must meet the “author’s own intellectual creation” test which derives from the EC Copyright Directive 2009, and which the UK courts have confirmed continues to apply post-Brexit. Copyright continues for 70 years from the end of the calendar year in which the author dies (CPDA, s.12).
Unlike most countries however the UK has a separate regime for the protection of computer-generated works. A computer-generated work (CGW) is defined as a work “generated by a computer in circumstances such that there is no human author of the work” (CDPA, s.178). Copyright in a CGW continues for 50 years from the end of the calendar year in which the work is made (CDPA, s12(7)).
CGW cannot, by definition, be assessed by the “author’s own intellectual creation” test applicable when considering whether human-authored works has sufficient originality to be eligible for copyright protection. There is therefore some dispute about the circumstances in which the CGW regime will actually apply. The most widely held view appears to be that copyright protection is available to a computer-generated work which would be original had it been created by a human.
Where copyright does subsist in AI-generated code under the CGW regime, authorship (which with some exceptions also means ownership) is ascribed to the person who “undertakes the necessary arrangement to create the work” (CDPA, s.9(3)). Determining who makes the necessary arrangements in the case of Claude Code-generated software may not be straightforward; if the user provides detailed and well-defined prompts there is a strong argument that they have made the “necessary arrangement” and as a result they are the author; conversely where the user only communicates a general idea or concept via prompts and Claude Code makes the key structural and expressive choices in the code it’s likely that it’s Anthropic which has made the necessary arrangement and is the author. In most circumstances this will all be academic because the IP in the code vests in the customer under Anthropic’s Terms of Service. However software developers who are using Claude Code (or any other AI coding assistant for that matter) may want to check their client contracts, including any restrictions on sub-contracting the development work to third parties and any ‘original author’ warranties.
EU
The EU provides ‘standard’ copyright protection for human author-created works, including software, much in the same way as the UK does. The EU does not however have an equivalent to the UK’s CGW regime. As a result software code generated by Claude Code without human creative control will have no IP protection at all.
Furthermore, a recent decision by a Munich court has confirmed that even when a human is involved the level of creative control that a human must contribute in order for copyright to subsist is very high. The case concerned three AI-generated logos (one created with a single, simple prompt, one with a 1,700-character prompt, and one with the design of the logo refined on an iterative basis by successive prompts), all of which were held by the court to lack sufficient human creative control in order for copyright to subsist. The court did say that it’s possible for copyright to subsist in AI generated output but only if the human-created elements forming part of the prompts are so dominant in the output that the work can be regarded as the author’s own original creation.
U.S.
In January 2025 the U.S. Copyright Office (“USCO”) published Part 2 of its Report on Copyright and Artificial Intelligence. Its conclusions and recommendations included the following:
In March 2025 the USCO’s approach to AI-generated outputs was affirmed by the U.S. Court of Appeals for the District of Columbia in Thaler v. Perlmutter. The USCO’s approach has however not yet been considered by the U.S. Supreme Court.
For the time being the position in the U.S. is therefore not dissimilar in effect to that in the EU: copyright in Claude Code-generated software code can only be registered (i.e. subsist) where and to the extent that there is sufficient human creative control.
Managing the risk
Determining whether copyright subsists in the software that Claude Code has written for you, and if copyright does subsist deciding who the owner of the copyright is, will not always be straightforward. Although the outcome will depend on which legal system applies and the factual circumstances, you may want to consider the following:
Tags: AI, claude code, coding assistants, copyright, IP, software, software code
Posted in Commercial, Technology, Updates | No Comments »
04/06/26 – In Part 1 of Making progress with AI governance we looked at the key elements which are likely to form part of an organisation’s cross-functional AI Policy. In this Part 2 we focus on the procurement of an AI system (which could be generative and/or agentic) and consider some of the key questions and issues that a potential customer may want to keep in mind.
Due diligence
Questions that the customer may want to ask as part of the procurement process:
Supply contract
When negotiating the supply contract, the customer may want to pay particular attention to the following areas:
Ownership of AI output
Whether AI output can be copyright protected under English law is still a moot point. But to the extent copyright does subsist in the output, the supplier and the customer can agree that ownership in the copyright (and any other IP) vests in the customer.
If the supplier wants to use the customer’s data and output data for further training of the AI system, and therefore for the benefit of other customers, the customer will need to consider whether this is acceptable from legal and commercial perspectives. If it is, the customer will want to consider whether use by the supplier (and potentially by third parties) needs to be subject to anonymisation and confidentiality safeguards. The customer may also want to consider whether some form of compensation should be payable for its contribution to the development of the AI system.
IP Infringement
Infringement of IP may arise in two areas:
If the supplier is reluctant to give indemnities for 3rd party infringement claims, arguing that infringement by LLMs is out their control, the customer may want to point out that most of the LLM providers offer robust IP infringement indemnities as part of their Terms of Use, certainly for their professional, subscription-based AI models (see for example section K.1 of Anthropic’s Commercial Terms of Service and section 13.1 of the OpenAI Services Agreement).
Hallucinations and accuracy
As much as it goes against conventional contracting normal, the customer may need to accept that hallucinations are an integral feature of GenAI and that the supplier is unlikely to be able to provide warranties regarding the accuracy and completeness of the AI system’s outputs of the type that are commonplace in SaaS contracts. The exception to this is where the supplier has suggested that its AI system meets accuracy thresholds; if so the customer may want to repurpose these into contractual service levels, supported by meaningful service credits. The customer may also want to negotiate a critical service level failure threshold (e.g. accuracy falls below x% in n consecutive months), resulting in the customer having an early termination right.
Bias and discrimination
Depending on the nature of the AI system, the types of data on which it was trained, and how the AI system will be deployed, the customer may want contractual commitments regarding bias and discrimination, and the effectiveness of the AI system’s guardrails. For example if the AI system is to be used for screening and filtering CVs, the customer may want to require the supplier to measure rejection rates broken down by protected characteristics (including sex, race, disability, age) on a 6- or 12-monthly basis. The customer can incorporate the agreed bias testing benchmarks as contractual service levels, again supported by meaningful service credits and a critical service level failure/early termination trigger.
EU AI Act
If the customer will be using the AI system in the EU, or if the output of the AI system will be used in the EU, they will want the supplier to not only warrant the AI system’s compliance with the EU AI Act but also to help the customer comply with its own obligations regarding transparency, explainability of output and employee literacy as a deployer of the AI system. In practice the customer will want contractual commitments that the supplier will provide sufficient information and documentation regarding: how the AI system was developed, what data was used to train it, how it works; how the AI system is tested for bias; and how the AI system performs over time.
Tags: agentic AI, AI, AI system, AI tools, bias, generative AI, hallucination, LLMs
Posted in Commercial, Technology, Updates | Comments Off on Making progress with AI governance (Part 2): procuring an AI system
21/01/26 – As AI tools and systems scale from evaluations/POCs to live deployments, businesses will want to start thinking about AI governance – putting in place policies, practices and processes (more…)
Tags: #aigovernance, AI, aipolicy, ethicalai, governance
Posted in Commercial, Technology, Updates | Comments Off on Making progress with AI governance (Part 1): creating an AI Policy
05/01/23 – If you’re having a meeting or discussion with a third party which may involve you disclosing confidential information you should of course make sure that you get the third party to sign a non-disclosure agreement (NDA). Although the detailed terms of NDAs vary, they generally have two principal functions: to impose an obligation on the party receiving the information to keep it confidential; and to ensure that the receiving party only uses the information for a specific purpose, typically to consider whether to proceed with the transaction or arrangement that is being discussed.
But what if you disclose confidential information to a third party without having an NDA in place?
Although the circumstances were slightly unusual, this is what happened to fintech vendor Clearcourse when they were negotiating for the purchase of E-Novations in August 2020. The CEO and part-owner of E-Novations, Manoj Jethwa, left the meeting room to collect some papers from his office next door. During Mr Jethwa’s absence, the representatives of Clearcourse had what was later described as an ‘unguarded and candid’ conversation about the negotiations, their (unflattering) views of Mr Jethwa, and the likelihood of Mr Jethwa being fired if the purchase completed. Mr Jethwa heard the representatives’ conversation through the wall between his office and the meeting room. Mr Jethwa also took a screenshot of the live CCTV footage from the meeting room, but claimed that there was no audio recording.
Following completion of the purchase, a dispute arose in relation to the sale and purchase agreement. In response to an ultimatum from Clearcourse to settle the dispute, Mr Jethwa shared the CCTV screenshot, with the following text message: “You should know this doesn’t do you any favours. Whilst I walked out and what you both say should be of interest for social”. In other words, Mr Jethwa threatened to make public via social media the conversation that he had overhead from his office.
Perhaps surprisingly given the nature of the discussions it appears that the parties had not signed an NDA. Clearcourse therefore made a successful application to the High Court in April 2022 for an ‘interim non-disclosure order’ (or ‘INDO’) injunction, restraining Mr Jethwa from disclosing the overheard conversation or any recording of it. Shortly afterwards there was a full High Court hearing to decide whether the INDO should be continued, when the Judge confirmed that he was satisfied that Clearcourse would ‘more likely than not’ succeed with its underlying claims for breach of confidence and misuse of private information, and continued the injunction – for the full judgement see Clearcourse Partnership and others v Jethwa [2022].
Looking at these two types of claim in turn:
Breach of confidence
For a claim for breach of confidence, the claimant must establish that:
Circling back to the conversation overheard by Mr Jethwa during the course of the negotiations, the Judge was satisfied that a reasonable person ‘would appreciate that a conversation held behind closed doors, between individuals on the opposite side to him in a business negotiation on these subjects, was both private and confidential’. The Judge emphasised that the duty of confidence does not only arise when a person seeks out the confidential information, but also when confidential information ‘comes to the knowledge of a person in circumstances where he has notice, or is held to have agreed, that the information is confidential, with the effect that it would be just in all the circumstances that he should be precluded from disclosing the information to others’.
Misuse of private information
For a claim for misuse of private information the following two limbs must be satisfied:
In Clearcourse, the Judge (dealing with limb 1) held that Clearcourse’s directors ‘would regard their conversation, behind closed doors, as giving rise to a reasonable expectation of privacy’, and (dealing with limb 2) that there was no justification for the disclosure of it by Mr Jethwa, whether on the grounds of his right to freedom of expression or otherwise.
Key takeaways
Tags: #clearcourse, #confidentiality, #dutyofconfidence, NDA
Posted in Commercial, Updates | Comments Off on What do you mean they didn’t sign an NDA?
29/11/22 – The Information Commissioner’s Office (ICO) recently published new guidance on email marketing and phone marketing. The guidance is supplementary to the ICO’s Guide to the Privacy and Electronic Communications Regulations (PECR) and (124-page) draft Direct Marketing Code of Practice.
Direct marketing is a fiddly area, with different rules depending on whether you’re using email/text, phone, post or (perhaps less likely) fax, and also whether you’re marketing to companies, sole traders/partnerships, or individuals. This post takes a look at the rules for direct marketing by UK businesses of their own products and services, either by email or text/voice messaging services (such as WhatsApp or LinkedIn), or by phone. It is not exhaustive, and there are additional rules if for example you are selling pensions or claims management services, marketing to children etc.
What’s the relevant law?
The law applicable to direct marketing is set out in the Privacy and Electronic Communications Regulations 2003 (PECR) and to a lesser extent the UK GDPR and Data Protection Act 2018. The ICO provides extensive, plain English overviews of all areas of marketing law.
Direct marketing by email/messaging services
If you’re looking to market to a contact by email or using a text or voice messaging service then you either need to obtain the contact’s consent or you need to check if you can use the so-called ‘soft opt-in’ exemption.
Consent. For consent to be valid it needs to be freely given, specific, informed and unambiguous. In practice this means no pre-ticked checkboxes, and making sure the consent covers the type of communication you’re using – obtaining consent for marketing by email does not entitle you to send them a WhatsApp. The consent also needs to be separate from other consents, so you can’t include marketing consent in the tickbox wording used for accepting your terms of service.
Soft opt-in exemption. To use the soft opt-in exemption, you need to meet all of the following criteria:
A few things to bear in mind:
Direct marketing by phone
In short, you do not consent for making direct marketing phone calls, whether to individuals or to businesses, unless either of the following applies:
If the phone number is listed on TSP or CTPS you can still get consent to receive marketing calls. The ICO have suggested that any consent for overriding a TSP/CTPS listing should aim to meet the GDPR-style, opt-in standard that applies to direct marketing by email.
When making a direct marketing phone call, you must display your phone number (or a valid alternative number), say who is calling (and provide contact details if asked), provide clear information about the marketing, and make it easy for the recipient to object or opt out.
Tags: #marketing, #pecr, #softoptin, ICO
Posted in Commercial, Privacy, Updates | Comments Off on Direct marketing to business contacts
09/11/22 – When I’m asked by a client to help with an invoice that they’ve been chasing without success, they assume the next step is for me to fire off a letter before action, ideally threatening fire and brimstone, and then issue legal proceedings. There are times when this is appropriate, but there are also a number of options available to suppliers before, or even instead of, asking a lawyer to help. This article takes a brief look at some of the options.
Confirm when the payment actually became overdue
Your invoice may state ‘PAYABLE WITHIN 14 DAYS’, but unless you have previously agreed 14-day payment terms with the customer then this will not be enforceable – you cannot unilaterally add your payment terms to a contract that has already been formed. Instead check the invoicing and payment terms that were agreed with the customer. This should be straightforward if there’s a written agreement, or if the customer agreed to your Ts&Cs. If not, then it may be that the customer’s PO incorporated their purchasing Ts&Cs, and the customer’s payment terms apply.
Once you’ve confirmed the correct due date, check that you’ve done what the contract requires you to do, e.g. issued the invoice with the correct information included, sent the invoice to the correct contact at your customer, attached any required delivery receipts, timesheets, acceptance certificates etc.
Find out why the customer hasn’t paid
Sending repeated reminders and demands for payment is all well and good. But make sure to ask your customer why they haven’t paid your invoice. You may discover that there’s a problem with your product or service that you didn’t even know about, and that you can now look to fix. Or your customer may have a cashflow problem, in which case it may be in your interests to try to agree extended payment terms. If conversations are verbal, make sure to confirm them in writing.
Charge the customer for using you as a credit facility
Many commercial agreements have a late payment clause entitling the supplier to charge an agreed rate of interest on amounts which are overdue. Although these are mainly used when making a formal debt recovery claim, you can invoice the customer for contractual late payment interest at any time payment is overdue.
If your agreement does not have a late payment clause (or if the contractual late payment clause does not provide a ‘substantial remedy’), then you are automatically entitled to claim statutory interest plus fixed compensation under the Late Payment of Commercial Debts (Interest) Act 1998 (as amended). The rate of statutory interest is calculated as the Bank of England base rate plus 8% (so currently 11%), and can be charged from the date that the amount became overdue until the date of actual payment. The fixed compensation depends on the amount of the debt – it is currently £40 for debts of less than £1,000; £70 for debts of £1,000 or more, but less than £10,000; and £100 for debts of £10,000 or more. For these purposes each overdue invoice will normally constitute a separate debt. Again, you can invoice your customer for statutory interest and fixed compensation as soon as a payment becomes overdue.
A contractual late payment clause may include an obligation for you to give the customer advance notice before you invoice them for interest. There is no such requirement when invoicing for statutory interest and compensation, but it would normally be a good idea to do so.
Serve a statutory demand
If the amount owed is more than £750 and you don’t believe that the debt is disputed, then consider serving a statutory demand on the customer. Following service of the demand, the customer must either pay the debt within 21 days, or ask the court to set aside the statutory demand because the debt is disputed. If the customer fails to do either, you can ask the court to wind up the customer. Although a very effective credit control tool, the relationship with your customer is perhaps unlikely to recover.
Issue legal proceedings yourself
Money Claim Online (MCOL) is a portal operated by HM Courts & Tribunals Service for the recovery of debts of up to £100,000. It is intended to be used by non-lawyers as well as lawyers, and there are plenty of guidance notes to help users put together their claim. Fees range from 5% to just over 10% of the amount of the claim. As with all legal proceedings in the UK, before using MCOL you must first have tried to settle the dispute with your customer, including sending a letter before action with detailed information about your claim and giving the customer an opportunity to respond.
Tags: #baddebt, #creditcontrol, #invoice, #mcol #moneyclaimonline, #overdue, #statutorydemand
Posted in Commercial, Updates | Comments Off on Dealing with overdue invoices – some options
Issues to consider when drafting, reviewing or negotiating service levels include:
Service levels
Service credits
Tags: availability, chronic service level, service credit, service level, SLA, uptime
Posted in Commercial, Technology | Comments Off on Checklist: Service levels
12/03/20 – The UK government has issued a Statement in response to the Law Commission’s report on Electronic execution of documents. My article on the Law Commission’s report can be accessed here.
Key takeaways from the government’s Statement:
Tags: deeds, electronic signature, execution of documents, law commission, video witnessing
Posted in Commercial, Updates | Comments Off on Government’s response to the Law Commission’s report on Electronic execution of documents
22/10/19 – The Competition and Markets Authority (CMA) has made a provisional finding that Fender Musical Instruments Europe Limited operated a policy between 2013 and 2018 which required online retailers to resell Fender’s guitars at or above a minimum price. This practice constitutes illegal resale price maintenance (RPM) under:
The CMA’s findings are provisional, and no final decision will be made as to whether there has been a breach of competition law until the CMA has considered any representations from Fender.
In August 2019 the CMA issued a £3.7 million fine to Casio for illegal RPM in relation to online sales of digital keyboards and pianos.
Tags: competition law, resale price maintenance, reseller agreement, RPM, RRP
Posted in Commercial, Updates | Comments Off on CMA alleges resale price maintenance by guitar firm Fender
25/09/19 – Following a project focusing on uncertainties regarding the formalities around the electronic execution of documents, the Law Commission issued its report on Electronic execution of documents on 6th September 2019.
Key takeaways:
The Law Commission’s recommendations include:
Tags: deeds, electronic signature, execution of documents, law commission, video witnessing
Posted in Commercial, Updates | Comments Off on Law Commission’s report on Electronic execution of documents