Tech & Sourcing @ Morgan Lewis

As artificial intelligence (AI) becomes increasingly embedded in development services, outsourcing arrangements, and other commercial and technology transactions, customers and vendors are confronting a deceptively simple question: How should risk be allocated when a deliverable is created using AI?

Join intellectual property (IP) partner Colleen Ganin for Fashioning the Law: A Panel Discussion and Q&A, presented by Volunteer Lawyers for the Arts and Morgan Lewis. Colleen will be joined by Ayisha Morgan, General Counsel of Elite World Group, and David Eshmoili, General Counsel and Corporate Secretary of David Yurman, for a discussion of the legal and business issues shaping the fashion industry, from brand protection and intellectual property to the growing impact of AI on fashion and creative businesses.

Modern brand partnerships raise contract questions around exclusivity, reputational risk, how influencer and celebrity content can be used after it is posted, and how the parties will measure performance. Part 2 of this Contract Corner series examines how parties can address those issues in their agreements.

As AI continues to be incorporated into service offerings, outsourcing arrangements, and other commercial transactions, companies may find they are contracting for more than a discrete technology tool. They may also be creating an operational dependency on a provider’s AI models, data practices, supporting technology, and continued performance.

Brand partnerships are expanding beyond traditional sponsorships and celebrity endorsements into arrangements that can combine licensing, content creation, product development, distribution, and data sharing. As those relationships become more complex, contracts need to clearly define the partnership, control of brand assets, and what happens to jointly created materials when the relationship ends.

Cyber insurance traditionally assumes a familiar sequence: an attacker gains access to a system, data is stolen or operations are disrupted, and a claim follows. Autonomous systems may complicate every step, including whether the event qualifies as a cyber incident at all.

Signing up for a streaming service might be faster than choosing what to watch, with only a few taps unlocking a month of movies, a season of sports, or enough airline Wi-Fi to make a long flight feel shorter. That convenience, however, rests on a recurring contract that may continue after the vacation ends, change price while it remains in effect, and provide less control over content than the word “subscription” suggests.

A February 2026 IT disruption illustrates how technology dependencies can affect cruise operations. Carnival Cruise Line said the issue arose during planned maintenance and affected embarkation, disembarkation, and other technology tools. Reports of the disruption also identified impacts to Wi-Fi and the Carnival HUB app, while navigation and safety systems remained operational.

A traveler asks an AI concierge to book a quiet oceanfront hotel in Naples for the weekend. Only after the confirmations arrive does the traveler discover that the bot selected Naples, Florida, while the flight is headed to Rome. The hotel is nonrefundable. As AI concierge services move beyond suggesting restaurants and into booking flights, hotels, rental cars, and activities, errors can quickly result in actual charges and disputes over responsibility. When a bot selects the wrong dates, overlooks a cancellation restriction, or books a hotel it was intended merely to recommend, the question becomes who is responsible for the error and the resulting costs.

On 2 August 2026, the transparency obligations in Article 50 of the EU AI Act began to apply. Relative to Article 50, the EU Digital Omnibus (which amended the EU AI Act) only deferred certain specific obligations. As such, the bulk of the Article 50 obligations are already applicable to organizations subject to the EU AI Act. Below is a high-level overview. An upcoming accompanying LawFlash will examine the obligations and exceptions contained in Article 50, the Commission’s Guidelines, and the Code of Practice referenced below in more detail.