The Role of Intellectual Property in the AI Era: Copyright, Ownership and Legal Risks for Businesses

For decades, Intellectual Property (IP) law has been built around a simple assumption: humans create, and the law protects.

In the era of AI and Artificial intelligence, that assumption is being tested. Machines can now generate text, images, software code, videos and designs in seconds—forcing businesses to rethink what ownership, originality, and protection really mean.

This article explains how the role of IP has changed in the age of AI, what remains the same under Malaysian law, and what entrepreneurs need to watch out for when using AI-generated work.

What is Intellectual Property (IP)?

Intellectual Property (IP) refers to legal rights that protect creations of the mind, such as brands, inventions, designs, and creative works.

In simple terms, IP is how the law protects the value of ideas once they are turned into something usable in business. Not every idea is automatically protected. To enjoy legal protection, a creation must fall into the correct Intellectual Property category and meet the legal requirements set by law.

The Main Types of Intellectual Property You Should Know

At a practical level, most businesses deal with four main types of IP:

1 ) Trademark

Protects brand identifiers such as names, logos, slogans, and symbols.

Example: Your company name or product logo should be registered as a Trade Mark.

2) Patent

Protects new inventions or technical solutions that are novel, useful, and inventive.

Example: A new process, machine, or technical method may be protected by a Patent.

3) Industrial Design

Protects the visual appearance of a product, not how it works.

Example: The shape or surface design of a product can be registered as an industrial design, in some countries, this is known as design patent.

4) Copyright

Protects original literary and artistic works such as articles, software code, images, music, and videos.

Example: Website content, design drafts, or source code may be protected by Copyright.

One important point in Malaysia: unlike Trademarks or Patents, Copyright arises automatically once a work is created. Registration (also known as voluntary notification) is not compulsory. However, registering your copyright is still strongly encouraged because it provides an official record that helps prove ownership if a dispute arises later.

Before using AI or creating any content, ask yourself what kind of IP am I creating? The answer determines whether you should register a Trademark, apply for a Patent, or rely on Copyright protection.

Why IP Becomes Even More Important in the Age of AI

Artificial intelligence changes how fast and how easily content is created, but it does not remove the need for IP protection.

With AI tools generating text, images, code, and designs in seconds, businesses are creating more content than ever before. However, faster creation also means higher legal risk. Without a clear understanding of Intellectual Property, companies may:

• assume AI-generated content is “free to use”,

• overlook ownership issues, or

• unknowingly infringe someone else’s Copyright, Trademark, or Patent rights.

In the AI era, IP is no longer just a legal ownership issue—it is a business risk management issue.

How Copyright Traditionally Works Under Malaysian Law

Under Malaysian law, copyright is built on the assumption that creative works are created by humans, not machines.

Before we talk about AI and ownership, it is important to understand how Copyright is supposed to work under the existing legal framework in Malaysia.

What Counts as Copyright in Malaysia?

Copyright protects original creative works once they are expressed in a tangible form.

Under the Malaysian Copyright Act 1987, copyright can exist in works such as:

• literary works (articles, books, software source code),

• artistic works (drawings, illustrations, photographs, designs),

• musical works,

• films, sound recordings, and broadcasts.

For literary, artistic or musical works, two basic requirements must be met in order to be eligible for, according to Section 7(3) of the Copyright Act:

1. sufficient effort has been expended to make the work original in character; and

2. the work has been written down, recorded or otherwise reduced to material form.

Copyright does not protect ideas by themselves, according to Section 7(2A) of Copyright Act. It protects the expression of those ideas.

So, if AI helps you write or design something, copyright only becomes relevant once the output is expressed in a concrete form, such as text, images, or code, not at the idea stage.

Who Is a “Qualified Person” Under the Copyright Act 1987?

Copyright only subsists in Malaysia if the work is created by author who is a “qualified person.”

(See Section 10(1) of the Copyright Act)

Under the Copyright Act 1987, a qualified person means:

• an individual who is a Malaysian citizen or permanent resident, or

• a body corporate that is established in Malaysia and has legal personality under the laws of Malaysia.

AI systems do not have citizenship, nationality, or legal personality. As a result, under current Malaysian law, Artificial Intelligence cannot be a qualified person.

If you want copyright protection in Malaysia, make sure a human or a Malaysian legal entity can clearly be identified as the creator or owner of the work.

Why AI Cannot Own Copyright in Malaysia?

The entire copyright system is designed around human creativity and responsibility.

When the Copyright Act 1987 was drafted, the law assumed that the creativity comes from humans, and humans can be held legally responsible for infringement.

Because of this, at the moment, the law does not recognise machines, software, or AI as authors.

This human-centered approach is not unique to Malaysia. Many countries follow the same principle, which is why AI-generated works are now creating legal uncertainty worldwide.

Until the law changes, copyright protection in Malaysia remains firmly anchored to human authorship, even if AI is involved in the creative process.

What If the Work Is Generated Entirely by AI?

Purely AI-generated works sit in a legal grey area.

If an AI system generates content with little or no human creativity, there is a real question as to whether copyright exists at all. Malaysian courts have not ruled on this issue yet, but the current legal framework strongly suggests that human creativity is a prerequisite for copyright protection.

In practice, this means businesses should be cautious about assuming ownership over content that is fully machine-generated.

To strengthen your copyright position, ensure there is clear and meaningful human input, such as creative choices, editing, or judgment, beyond simply pressing “generate.”

The Stephen Thaler Case (US): A Useful Reference, Not Binding Law

Courts in other countries have already rejected the idea of AI as a copyright owner.

In the United States, a computer scientist named Dr. Stephen Thaler attempted to register copyright for an artwork created entirely by his AI system, known as The Creativity Machine, without any human creative input. The US court ruled that copyright does not exist unless there is human authorship.

While this US decision is not binding on Malaysian courts, it provides a useful reference point. It shows how courts are likely to interpret copyright laws that were originally designed around human creators.

Given the lack of local case law in Malaysia, foreign decisions like this may be considered persuasive, though not binding.

Do not rely on AI alone if you intend to commercialise or enforce copyright.

How Much Human Involvement Is “Enough”?

There is currently no fixed legal threshold for human involvement under Malaysian copyright law.

The Copyright Act 1987 does not spell out:

• how much editing is sufficient,

• whether prompt-writing alone counts as creativity, or

• whether selecting from multiple AI outputs is enough.

What the law generally looks for is human skill, judgment, and creative decision-making. The more meaningful human choices involved in shaping the final work, the stronger the argument that the work is human-authored.

Treat AI as an assistant, not the author. Make sure a human makes real creative decisions, such as structure, style, selection, and refinement, before using the output.

What Happens If AI Generates Most of the Work?

The more dominant the AI’s role, the weaker the copyright claim may be.

If a work is generated largely or entirely by AI, and human involvement is minimal, there is a real risk that:

• copyright may not exist at all, or

• ownership may be difficult to prove in a dispute.

  
  

This does not automatically mean the work is illegal to use, but it does mean your ability to enforce copyright, license the work, or stop others from copying it may be limited.

Can AI-Generated Content Infringe Copyright or Trademarks?

Short Answer: Yes, Infringement Can Still Occur. AI-generated content can still infringe Copyright, Trademarks, or other Intellectual Property rights.

This is one of the biggest misconceptions about Artificial intelligence. Many people assume that because a machine created the content, liability somehow disappears. In reality, the law does not work that way.

The law focuses on the final output, not how it was created.

Whether content is produced by a human, a designer, or an AI system, infringement can arise if the final result is:

• substantially similar to an existing Copyright work,

• confusingly similar to a registered Trade mark, or

• falls within the scope of claims of an existing Patent.

AI did not change these legal principles. It simply made content creation faster and easier.

Before using AI-generated content commercially, treat it the same way you would human-created content—review it for potential IP conflicts.

AI can accelerate creativity—but it does not remove legal responsibility.

If you are using AI or Artificial intelligence to create content, software, designs, or branding, it is important to make sure your Intellectual Property rights are properly protected and that you are not unknowingly exposing your business to Copyright, Trade mark, or Patent risks.

If you have questions or need assistance on protecting IP for AI-generated work, contact us for a practical, business-focused discussion before you commercialise your output.

Written by,

Lawrence Tan 

Registered Trademark, Patent and Design Agent

LL.B (HONS), CLP

Advocate & Solicitor

Disclaimer: This article is for general information only and does not constitute legal advice.