AI, IP, And The New Marketing Rules With Sharon Toerek

We dive into how AI is reshaping marketing law and what agencies can do today to protect work, clients, and brand trust. Sharon Toerek shares a practical playbook for policies, contracts, and IP strategy while courts and states sort out the rules.

• AI ownership and liability questions for agencies
• Copyright cases on training data and outputs
• State patchwork versus federal pressure on AI rules
• Practical guardrails and written AI policies
• Contract terms for AI use, warranties, and indemnities
• Insurance stack realities and cyber coverage gaps
• SEO, watermarks, and useful AI content
• IP triangle: trademarks, copyrights, trade secrets
• Attribution limits and proving substantial similarity
• Authenticity, disclosure, and consumer trust
• Refreshing contracts and policies more often

Guest Contact Information: 

Website: legalandcreative.com

LinkedIn: linkedin.com/in/sharontoerek

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Transcript

Welcome And Why Law Matters Now

SPEAKER_00 0:01

This is the unknown secrets of internet marketing. Your insider guide to the strategies top marketers use to crush the competition. Ready to unlock your business full potential. Let's get started.

SPEAKER_01 0:15

Howdy, welcome back to another funfold episode of The Unknown Secrets of Internet Marketing. I can't even talk today. Today has been one of those days. It's been one of those weeks. I hope everybody is doing well. There is a lot happening in the world of SEO, content, online marketing. Hopefully, through the past guests, I would encourage you to go check it out. We've had some phenomenal guests talking about what is happening with AI. And AI is really coming into this and changing the game. There's a lot of governance issues with how to use it, what's going on. So I thought it'd be really good to bring on someone that would talk about trademarking because we're starting to see a lot of that, copywriting, uh social media law, ad law, marketing to kind of uh build a framework around how we should be looking about these things. So, Sharon, welcome to the show.

SPEAKER_02 1:08

Thanks, Matt. Happy to be here.

SPEAKER_01 1:10

And this is Sharon with legalandcreative.com. So I'll let you talk more about it at the end. Uh, but uh tell us a little bit about your background and how you got got involved in this and kind of what you're seeing on on the horizon as far as uh what's happening today.

SPEAKER_02 1:25

Sure. Well, so I am the founder of Toric Law, which serves primarily independent marketing agencies in the United States. And so we help them basically in one of three areas: intellectual property, protection, enforcement, contract development and negotiation, and then regulatory compliance with all the rules and regs that govern marketing and advertising and things like that. Um, I'm an IP lawyer by training and uh started my career as an IP lawyer, began working more heavily in the marketing space, and then uh founded the firm that I own and run now to serve independent agencies in that area.

Sharon’s Background And Firm Focus

SPEAKER_01 2:06

Fantastic. Well, I'm so I'm so glad to have you on because there's uh so many things happening. I mean, what are the things I guess that are the biggest uh hiccup points uh for people right now that you see over and over again? Let's just get the the basics out of the way.

Big AI Questions For Agencies

SPEAKER_02 2:23

Yeah, I think, you know, I feel like I can't either host my show or talk with somebody on their show without saying A and I next to each other. And say I think that the in terms of the legal and regulatory landscape right now, uh everybody's got big questions about what will happen with respect to AI adoption, how it's going to impact intellectual property rights to work that gets created, um, what it's going to mean for things like content authenticity, content fakery, and then also what it means in you know in the advertising world, what it means in terms of creating honest and um you know, honest impressions of a brand to a consumer. And so um we're seeing a couple things, and there's a couple things we're watching right now from a regulatory and a legal perspective. Uh, we have copyright cases that we're seeing weave their way through the federal courts, the uh appellate courts right now to determine what are the guardrails and boundaries gonna be around these gigantic AI platforms' ability to digest content that somebody owns the copyright in, whether it's novel, a script, um, a marketing campaign, a logo, whatever it might be, um, what are the guardrails gonna be around their ability to digest into their training data all of that stuff? And then who is in the second question being, well, who is gonna be responsible if any infringement occurs on the other side with the output from AI? So that obviously raises a lot of intellectual property questions, a lot of ownership questions. I would say the big question I get on this point, just from our clients who happen to be owners and leaders of marketing agencies, is first of all, who owns the content if we're using generative AI to create it? And second of all, who's responsible if something goes sideways once the content is out there in the public and it does infringe on somebody else's IP rights? So I think I would start there and say those are the big questions that we see right now from a regulatory perspective around the impact of AI on creative work of all kinds.

Courts, Copyright, And Training Data

State Patchwork Vs Federal Pressure

SPEAKER_01 4:42

Yeah, I mean, there's not a ton of guidance. I know that in Texas, there's a law, a law that passed on the first where they're creating a council, which is kind of taking a leadership role. We got Colorado uh trying to uh provide consumer rights in in some different areas, and then of course, California uh and kind of adopting uh kind of GDPR kind of regulatory environment, which scares me because there's a lot of uh administrative overhang to be able to operate in in that environment. Um, there's a number of things that you hit on that I look at from a little bit different lens. Um, and also understanding like utilizing these tools internally, have having uh a program set up to uh evaluate these different tools, how to track what's happening. Um there's just a lot of concerns and and not a lot of clarity on on what's gonna happen. I mean, I'm even seeing with social media, uh uh there's a lawyer here here in Texas that just um took took them uh took uh Mark Zuckerberg in front of uh like I don't know, I don't know if it was the congressional or whatever, but he basically was asking about the algorithm causing depression, right? And they they're looking at that impact of that. And then I start thinking the algorithm with AI is influencing how people are interpreting brands, how people are looking at brands, what if what if from a regulatory environment it tells you to do something that there's a hallucinization, and then you you you take action based upon that, where are the legal implications there? So there's there's this whole box of things that I think is starting to get unpacked and and regulation is starting to catch up, but it's not there yet. I mean, so what are the what are the recommended even guardrails that you would say for people operating in this environment to start considering or looking at or trying to do their best to protect themselves? Um and and you you list a whole slew of other things that they need to be thinking about as well. And I mean, what's the guidance you're giving people?

Practical Guardrails And AI Policies

SPEAKER_02 6:50

Yeah, well, I do have some practical takeaways for anybody who's listening in terms of what are some things you can actually implement in in a business of any size to sort of start dealing with and getting your arms around this. But I would I, you know, to my reaction to what you just shared about the regulatory environment is that what we were expecting to see um with regulatory activity around AI was what we have seen historically regarding um the regulatory landscape for data privacy. And what I mean by that is that Europe is simple. There's GDPR, it covers most of Europe, and it's one set of standards, and they're strict, but once everybody understood what they were and and they haven't evolved much since they were enacted, it's a it's a playing field that people are getting more and more comfortable navigating. And in the US, though, we've never had a federal standard for data privacy. What we instead have is this state patchwork of data privacy laws. You know, we we play to California because that that is the strictest set of standards, the closest to GDPR. But there's state activity in other areas that is, you know, sort of catching up. So that's the landscape with data privacy. I thought that's what we would see for AI. And to some degree, it is what we're seeing. However, laid over that, you've got the federal government putting a lot of pressure on the state government and state governments in the United States not to regulate the use of AI. You've got some states still moving forward and and and doing so. Some states have laws regarding requiring disclosure if you've used AI in creating the content. Um, New York State has um synthetic content creation rules. Um, there are SAG-AFTRA union negotiations around the whole um issue of use of AI-generated content likenesses, et cetera, et cetera. So we're still seeing some patchy state-by-state regulations, but then we're seeing this tension between the federal government and the state. The federal government didn't get involved at all in preventing states from enacting their own data privacy rules. You know, go for it, is pretty much the approach they've taken. I doubt anybody said it that way, but that's kind of how it is rolled out. But with AI, the federal government has been very um specific, if you will, about um not wanting the states to get in their way in terms of whatever decisions we might make in the United States around governing usage of AI. So, what do you do about all that? As somebody who's trying to own a business and keep on top of all this and limit your risk, and there's a few things. First of all, um, you really should be, if you're a service provider, especially a professional service firm, for example, um, you should be having conversations with your clients, your vendors, your independent contractors around their AI use practices. What platforms do they use? Um, if it's your client organization, what platforms do they allow you to use? Um, what information are they giving you that has been generated out of AI because it may make its way into the NWork product, right? Um, what information are they giving you that is confidential or proprietary that they want to make sure you don't input into any AI platform? Um so have come having crucial conversations with key parties in your business life, whether that is strategic partners, clients, customers, whomever. Secondly, is have, even if it's a skeleton or an outline form at this point, progress is better than perfection. Have a written AI policy.

SPEAKER_01 10:47

Yes.

SPEAKER_02 10:47

Have one internally that you socialize with everybody on your team. Have an external facing policy that can be shared and shareable with people outside your organization about how you use AI, you know, and what your practices are around it. Um, and then I would say third, look at your contracts and ensure that you are addressing any responsibility or liability around AI usage. Um, you know, and we weren't doing this 24 months ago candidly, even in the, I mean, we we create and negotiate hundreds of contracts every year on behalf of our marketing agency clients. And 24 hours, 24 months ago, we weren't um addressing AI specifically. I mean, yes, we've always had indemnification and liability language, but but now we are addressing it specifically. And it's probably time for most of your listeners to be thinking about doing that as well. So those are three things to be thinking about. And and you know, and then beyond that, I would say um having the internal training conversations, even informally with your teams about risk management around adopting AI. Um these are things you can do and scale no matter what your resource levels are and no matter what size you are as a business.

Insurance Gaps And Cyber Coverage

SPEAKER_01 12:07

Yeah, I actually uh just did a uh a survey on on some of this stuff on kind of where where business owners are at uh that I'm gonna be publishing very soon. And uh real really interesting, I would tell you also, or I guess my question to you is I don't think that arrows and emissions insurance, the language covers any uh of this sort of thing, right? And so how how from like we're gonna probably start seeing cases pop up at some point of you know a misuse, and you got like shadow AI, and then like you're putting stuff in a GPT, and then you move companies, and then somebody else, you know, starts use like there's gonna be all these things that start to pop up. Um and and I think having a governance policy is is super important, but but I I mean, is there any kind of other risk protection that you can do if some of these things happen?

SPEAKER_02 13:02

Right. It's a great question. I mean, you know, uh the I just got this question actually when I was speaking to a group of agency owners um two weeks ago. It's funny that you asked it exactly the same way that uh a person at the meeting asked it. And there aren't any products yet that specifically address, at least to my knowledge, liability or responsibility around something going sideways um out of using generative AI or out of breaching confidentiality or data privacy. So you we're left with looking at our normal insurance stacks, right? Our our general liability, our errors and omissions. Cyber, I think, is probably the closest product to um uh have the potential to evolve into maybe covering specific AI situations. But uh there are no AI uh oops products out there yet. And so um you really just have to look at your insurance stack as a business, probably be looking at, I mean, measuring the degree to which you're going to be assuming the risk of giving some of these tools and um adjusting your coverage accordingly, so that maybe you're carrying a little bit more than you might have been a couple of years ago, um, with particular attention probably to your umbrella and your cyber insurance policies around this specific issue.

SEO, Watermarks, And AI Content

IP Strategy: Trademark, Copyright, Trade Secret

SPEAKER_01 14:29

Gotcha. You know, one of the things as as you talk about, right? 18 months ago, where were we? Um there was a number of podcasts that came out, and Google is starting to put watermarks on uh anything that you're using to generate, let's say images, for example. So you're generating a nano banana or whatever it's called. Uh uh, and you know, they're putting a little Gemini uh watermark on it, and then it gets tagged automatically when you publish that, that this was generated with Gemini, which I think is a great marketing strategy as well. I think putting the you know from iPhone is how it kind of went went viral as well. Um, and they did a podcast, they they have a webmasters podcast, and and they this was a couple years ago around images, and it was saying from a search engine standpoint, right? So there's the legal side of things and then there's the search side of things that AI generated images are are okay, right? Because they I I felt like they waved the the white flag a couple of years ago when people started generating content because it was like, is it human generated? Is it um well useful? They said useful content, if it's AI generated, it's not um you know, bad, or uh you know, now the term is AI slop, I guess is what people are are saying in the industry. But if it's useful and helpful it and it's generated, the search engines are going to index it. And then from an image standpoint, it is a unique image if it's not utilizing stock. So there is the issue of utilizing uh licensing on images, and now you can kind of move into uh AI generated image, and then there's not clarity exactly, but from a search standpoint, it's unique content, and that's how it's being treated, and so it's being viewed favorably by the search engines. And you know, I I don't know from a I really haven't dug into it too much on the uh AI systems from a image indexing standpoint of uh how how it's uh presenting those, but I would love to kind of move uh more back towards the traditional uh things that we can maybe cover kind of social media law, ad law, um, as well as maybe uh copyright law, which you know, I I think it AI is kind of the direct like I think 75% of all content's gonna be generated in AI, if not higher, very soon. Uh and that's gonna be a degradation on the models. And so that's why they're wanting human input and trying to trying to make sure these models don't collapse. But I'd love to kind of get your broader view as we fan out into some of your other um uh skills like experience sets to share some of that.

Proving Influence And Attribution Limits

SPEAKER_02 17:14

Right. Well, so one of the main, you know, one of my main personal passions and one and sort of the the foundation of my background that led me to decide to focus where we focus the work at my firm is you know, my honest um passion for intellectual property creation and innovation. I named my own podcast after the term innovation. I just I think that entrepreneurial companies who innovate um move the needle on commerce and they move the needle in our culture. And I think that the legal system should support creators and innovators. And so IP is a huge part of what we do at my firm, and whether that is helping to create a clear pathway for protecting IP, for example, in the trademark realm, where um, you know, companies are branding themselves or branding new products or services that they might want to put out into the market, um, whether it is enforcing um the trademarks uh that protect the brands of our clients, um, or whether it's monetizing the intellectual property, whether it's a trademark license, for example, in the franchise world, trademark licensing is a huge component of franchising, as one example, or uh, you know, and then sliding over from trademark to copyright. Um, there's another point of the IP. I use a triangle analogy for my rubric and evaluating the IP than any business has. There's brand, which is protected by trademark, then there's your actual content, the stuff that you create, um, most of which you sell. Um and there is a copyright strategy or a trade secret strategy, depending upon how you go to market with what it is that you're creating. If your market advantage is because it's your it's your unique secret sauce, then you know, copyright's probably not going to be the strategy for you. Trade secret protection is gonna be the strategy for you. But if it's work you're publishing, if you're a digital course creator, if you are um a movie maker, if you are a software developer creating open source tools, copyright may be the most valuable mechanism for protecting your work because your work's gonna be out there free for people to see and access. Um, and then the transactions point of the triangle: this is how you make money from the stuff that you create or innovate and then sell. And that could be a transaction into your business because you've used a strategic partner to help you create it, or you've used a contractor who doesn't work for you to help you create it, or it could be transactions out, which could be the way you make money by licensing your stuff. It could be the terms and conditions of a software license. So that's kind of the way we analyze the body of work and how you protect it. And I think as a rule, entrepreneurial companies tend to undervalue the amount of IP that they create. Um, they tend not to leverage it, maximize the leverage of it as much as they can. So this is just my point of view, and this is one of the reasons why we focus where we focus. And it just so happens that you know marketing agencies create a ton of IP. And so they're a good fertile ground for us for this kind of work.

What Counts As Infringement

SPEAKER_01 20:47

Yeah, no, commercial use is is really, I think, important when you're uh applying for these trademarks and patents and things of that nature. Um, I one of the things that's fascinating to me, again, going back to AI, is as I'm understanding how these algorithms work, your work that can be ingested can influence the output and influence the interpretation of what's being presented, but it doesn't always give clear reference to you. So it's kind of like it's the it's like bumping into you, but it's not calling it out, right? And it's just kind of moving it in a certain direction. So there's this real question of influence of how do you know that your work is influencing the AI and you're not getting cited? Um and and then I guess later on um the the legal framework to say, well, this is influencing this large language model or the the public model, uh how do you how would you even track that back? Like how would you even in your head try to figure out how If it was doing that or not, and how to measure it.

Trust, Authenticity, And Consumer Perception

SPEAKER_02 22:02

Yeah. Only through diligence, and this is the problem, right? The the attribution models are just not available to the average creator. And certainly none of the big AI, none of what I call big I big AI is going to help a creator whose content it has ingested to, you know, train its data sets by telling them, oh, this is where you'll find it and this is the output it showed up in. It's just not going to happen. So the average creator is either going to find an infringement because they've stumbled upon it or somebody they know has stumbled upon it, or they've or they've experienced actual confusion in the marketplace because somebody thinks they're another brand. Or they find their work, you know, um cribbed, you know, they find a substantial similarity between their original work and some other work that they see out there. So the the systems to help prevent the lack of attribution are not yet accessible. I'm not saying they don't exist because I, you know, I know in my heart of hearts that they that they do exist, but they're not accessible to the average creator. And so we're gonna have to wait and see how that evolves, and we're gonna have to wait and see how some of these court cases evolve in terms of the responsibility of some of these AI platforms for the outputs that infringe on the work that got appropriated and put into these engines, if you will, because that's the part of the equation that isn't being addressed yet in these lawsuits, at least with an opinion yet, that is helpful to creators right now.

Back To Basics: Contracts And Policies

SPEAKER_01 23:40

So, like a rule of thumb that um we've we've seen with uh content creation, whether it be writing or imagery um or graphic design, is is typically like over a 20% deviation difference, um, as like a rule of thumb. Have you like how would you measure it, or is that not a good rule of thumb to use?

SPEAKER_02 24:03

You mean for determining whether there's an infringement on a there's you know that's a helpful factor, but it's only one of multiple factors. It's not always the amount of the content that was appropriated, but it could be the part of the content. You could take 20% of somebody else's work and either have it be the most significant, 20% of that work be the heart of the work, um, or have it be, you know, the marginal part of the work. And so for that reason, when a court analyzes an infringement claim, it's looking at multiple factors. How much did you take? Was it at the core of what was taken? Um, will it impact the market for the original work? Um, which is one of the reasons why copyright law exists to protect the economic rights of creators. Um, and there are a host of other factors, which the court will all weigh, you know, they'll weigh them all, not anyone in front. I can tell you that, you know, the ability, losing the ability to monetize your own creation is something that would be very persuasive in situations like this. So um, but you got to prove the access and you have to prove the substantial similarity of the output. And most creators don't have the financial means and wherewithal to go through that forensic process.

SPEAKER_01 25:27

Do you think this is going to be a tort? Or do you think this is gonna be well?

How To Connect With Sharon And Close

SPEAKER_02 25:32

It is a tort. I mean, copyright infringement is a tort of of a type, if you will, but I think that do I think there'll be a specific cause of action? I think we're a long way from that happening. I like to always say that you know, technology always leads, business, you know, puts on its jogging shoes and runs after it, sometimes fast, sometimes not as fast. And then the law follows behind with push brooms and sweeps up the mess that gets left behind. And so the law is always gonna trail um the realities that businesses face adapting the technology. So I think it's gonna be a while before we are gonna see any meaningful progress on creator rights. Um, there are, you know, there's there are lawsuits. Um, I I have personal friends who are part of the anthropic suit right now because they're authors and their works were imported without permission um into um anthropic's engines. And so um, you know, but it's gonna take a while for creators to actually realize, you know, compensate being compensated for these kinds of things.

SPEAKER_01 26:41

So, Sharon, it it one of the other things that comes to mind is uh we had a client uh probably 24 months ago, roughly in in that range, and they're they're big company, uh publicly traded, and essentially they were still getting comfortable with AI, they were actually not comfortable with AI, and they were using a certain tool to determine if there was any AI written in in the article, and and basically we were submitting articles that were done by a human writer, and this was you know it was pretty nascent as far as like uh heavy usage, uh, but it kept coming back like 85 to 95 human writing, and they were rejected, they're like, no, this is AI written. And it made me think of like the the study that came out with like the Bible, and it was like, oh, the Bible had written this much AI. The reason AI, uh these these readers are determining that if it's AI because it's based on human writing, like there's certain kind of tells or giveaways of how content's structured, but but it was like we couldn't get the thing to not say that there wasn't a certain percentage of AI writing because it was based on human writing, and we kept kept getting content rejected. Uh and it, you know, it's just the the the the complete opposite end of what we're talking about now, right? But it was a it was a really uh interesting kind of uh thing that we were trying to tackle. And then I'm taking this uh ethics uh and compliance AI course from Oxford, and I asked the same question. I said, Can these AI uh detection devices like how accurate are they? And he basically said, with deep fakes and everything that's coming online, it's almost impossible to tell the difference as it gets better. And so how are we gonna know what's real and what's not real? And how are we gonna know what's AI and not AI um unless you you you have a basis to measure it against and and even like certain content structures and sentences, I'm sure you know there's a likelihood that some people are gonna form some sentences the same way.

SPEAKER_02 28:51

Yeah. I think at the heart of it, the question you're asking uh is before it's a legal question, it's a technology and an ethics question, right? Yeah, because these are these are issues that I am confident the technology will evolve to be able to assist and then they become more democratized, right? So more of us have access to them, more of us can afford them, more of us can access, you know, use them. Um, and then there's the ethics issue, which is, you know, and I have been, I don't know about you, Matt, but I have sat in live simulations at conferences where people cannot always tell the difference between AI generated and human generated content. But what is also equally true is that if they know or suspect that is AI generated, they don't trust it as much as they trust the human-created content. So brands are gonna have to decide the authenticity problem for themselves. They're gonna have to weigh and balance the amount of cost savings that can be achieved, the amount of time savings that can be achieved, with the potential for um consumer or end user mistrust of the end product. Because I've actually sat in simulations um at conferences for marketing agency owners where um a brief was created of marketing strategy responsive to the brief was created. They were split into two teams, a human team, an AI team. Um, and then the audience live voted on which one they thought was AI generated. It was 50% evenly split. Nobody could tell, basically, bottom line. Um, and then you know, results were mixed in terms of which strategy actually won the approval of the audience because they were competing against each other. So, but we do know is that the trust is not there, and and you know, that's a bigger issue than a legal issue. It's as like I said, as much as much an ethical issue as anything else. Um, we're gonna have to see, you know, hopefully some of the court cases will start to resolve some of the legal um challenges and that will create a higher degree of confidence for creators, and then we'll have some more clarity on some of this other stuff.

SPEAKER_01 31:05

Well, wow, this this has been great. I I feel like we need to have you back on as things evolve to kind of do it to to some of uh the developments that are happening. Um, is there anything that we didn't cover that you thought might be good to add into this conversation?

SPEAKER_02 31:23

I uh, you know, I think one of the points that I'd like to stress is this is a great time for establishing your foundation or revisiting your foundation legally in your business with your contracts, with your policies, um, with the protections you have in place for the critical pieces of intellectual property that you've created. It's time to make sure the basics are covered because um, and you need to revisit your basics a little bit more frequently than you used to have to because the regulatory landscape and the technology landscape evolve so much more quickly now. So that would be my parting shot, um, you know, to everybody. And again, these are things that you can do no matter what the what size your business is or what kind of resources you have in hand.

SPEAKER_01 32:11

Absolutely. And Sharon, how is best people to follow you, follow your work, get in touch with you, that sort of thing.

SPEAKER_02 32:18

Thanks. Well, first of all, I appreciate being on the show today. I've really enjoyed the conversation. Um, you can find me a couple of places. I'm very active on LinkedIn. It's uh Torek, T-O-E-R-E-K. Our firm, uh Torek Law, does business as legal and creative in the agency world. So legalandcreative.com. Um, and I'm also a podcaster. So uh the innovative agency is where I host guests who talk about innovation in the marketing agency world. So love to have you join us there.

SPEAKER_01 32:49

Fantastic. Well, everybody, thanks so much for listening. I know things are evolving, and this is really important, like she said, of what you need to be looking at and updating and thinking about. I think that there was really this push to understand it and then kind of prompt engineering, get trained on it, utilize it, interpret it, get it, get it, well, interpret it, but understand how the interpretation's happening, getting it utilized in your business. And now the compliance layer, the risk layer, um, really need to look at that, revisiting contract language because need to understand what the guardrails are, need to understand your indemnifications and protection. So I would encourage you all to reach out to Sharon or somebody like Sharon to revisit some of that stuff. And uh, I think this is really important. Until the next time, um, if you want to grow your business with the largest, most powerful tool on the planet, the internet, and now I think AI as the next revolution, reach out to EWR for more revenue in your business. We uh do provide all kinds of LM visibility tools. Uh, we're launching new products. Um, there's a lot going on. Uh, so go check us out at EWR Digital. You can also find out more at uh bestseo uh.com, bestseopodcast.com. Uh until the next time, everyone. My name is Matt Bertram. Bye bye for now.