Key Areas of Focus in Legal Due Diligence for AI Companies in Germany: Assessing Risks and Ensuring Compliance

Legal Due Diligence for AI companies is becoming increasingly important for investors as the market for AI technologies continues to thrive. The hype surrounding AI brings not only opportunities but also significant legal risks and compliance requirements.

Our experts, Dr Marc Seeger, Oliver Belitz, Dr Nils Lölfing, and Dr Simon Hembt, part of the market-leading Tech & Comms sector group, provide insights in their contribution to the professional journal M&A Review on the most critical legal issues under German and European laws that buyers should consider before acquiring an AI company.

1. The EU AI Act: Compliance is Crucial

The EU AI Act establishes new requirements that AI companies must meet. A lack of preparation may result in substantial fines or other legal consequences after the acquisition of the company.

2. Copyright: Who Owns AI-Generated Content?

A key aspect of Legal Due Diligence is determining who owns the rights to AI-generated content under German copyright law. In addition, buyers must ensure that the use of AI does not lead to any IP infringements in Germany.

3. Data Protection: GDPR-Compliant Use of Data

AI companies must demonstrate that they use personal data in a legally compliant manner during the development and training of their models in the EU. With appropriate technical and organisational measures, GDPR compliance can be ensured, reducing the risk of fines.