Issue 10
Viewpoint
lawsuit · United States
Eight US states sue OpenAI over alleged harms of ChatGPT to users
Eight US states, including Kansas, Nebraska, Montana and Iowa, have sued OpenAI over ChatGPT's alleged harms to users. Nebraska's attorney general says the company misled the public about the chatbot's safety; Kansas's attorney general says the states are not waiting for federal action.
Who is affected and how
- corporate lawyer
- The consumer protection and product safety risks of AI provider clients need to be reassessed in light of state attorney general actions.
- compliance specialist
- Chatbot safety claims and controls for minors should be documented, as they can be held to account at state level.
- lawyer
- Consumer protection suits brought by states represent a new type of case in AI liability practice.
law · European Union
AI Act digital omnibus pushes high-risk rules back to December 2027
Regulation 2026/1744 (the digital omnibus) amended the AI Act in July 2026: the strictest high-risk AI rules were pushed back to December 2027, and the deadlines for some obligations by 16 months…
compliance specialistCompliance timelines must be redrawn: high-risk deadlines have slipped, but transparency obligations remain.corporate lawyerClients need a map of which obligation takes effect when after the omnibus.regulation · European UnionEU starts enforcing AI Act, sends information requests to OpenAI and Anthropic
The EU said it has "started enforcing" the AI Act, sending information requests to OpenAI and Anthropic over incidents involving agents. Hassabis called the cases "early warning shots".
compliance specialistIncident-handling and reporting processes for AI agents must be documented ahead of AI Act supervisory questions.corporate lawyerFor clients that supply or use agents, the first steps of EU enforcement signal contractual risk.case · United StatesCharacter.AI files for Chapter 11 bankruptcy; Disney to buy some assets for $20 million
Character.AI filed for Chapter 11 bankruptcy protection on 13 October 2026, citing litigation over suicide-related cases and operational problems. According to NBC News, Disney would buy some of its…
corporate lawyerIn the bankruptcy of an AI startup, coordinating victims' claims with the sale of assets calls for a new type of deal structure.lawyerPending liability suits appear as claims in the bankruptcy proceedings, so it is worth tracking procedural deadlines.regulation · European UnionAI Act transparency rules: labelling AI content and deepfakes
The transparency obligations under Article 50 of the AI Act apply to chatbots, deepfakes and AI-generated content. A Hungarian summary sets out who must label what from 2026; one analysis argues that…
compliance specialistChatbots and generated content must be labelled under Art. 50, and the process must be put in place.corporate lawyerFor clients, it must be assessed which AI outputs fall under the labelling obligation.Hungary
regulationHungary's National Office for the Judiciary sets up AI and cybersecurity cabinetcaseOver 1,000 Hungarian musicians sign Artisjus AI manifesto against generative AIprofessionAI in Hungarian law firms: how much of the hype is true?lawyerThe actual state of AI use at domestic firms can inform adoption decisions.professionHungarian Bar Association journal puts AI and arbitration on its coverlawyerThe role of AI in arbitration practice is a topic of professional debate in Hungary.lawLithuanian lawmakers propose legal protection against AI voice cloning
More key stories of the week
ruling · United States
Ninth Circuit weighs AI training and copying as another court rejects fair use in first AI copyright appeal
The Ninth Circuit has reportedly taken a position on AI training and copying, while another court rejected a fair use defense in the first AI copyright appeal. Analyses examine fair use for both…
lawyerAppellate rulings are shaping what the fair use defense means, which affects clients' litigation strategy.corporate lawyerAn AI vendor's risk depends on whether its training data is legally clean.regulation · United KingdomEngland and Wales judiciary: AI must never decide the outcome of a case
The senior judiciary's position is that judges may use only approved tools, all outputs must be subject to human checking, and new uses must go through a review group. Judge Colin Birss warned that…
lawyerIn English proceedings, expect that the use of AI by courts and experts is governed by separate rules.regulation · European UnionFirst harmonised standard for the AI Act published, giving presumption of conformity
News appeared between 14 and 15 October 2026 of the first harmonised standard for the AI Act, which gives a presumption of conformity. Hungarian-language media also reported on it.
compliance specialistFollowing the standard can give a presumption of conformity, so internal controls should be aligned with it.corporate lawyerThe standard may become a new basis for clients' compliance plans.litigation · European UnionGoogle's Gemini copyright case returns to EU top court calendar as third referral
Google's Gemini copyright case is back on the EU top court's calendar; according to MLex, a third EU preliminary reference has been made against Google on Gemini training and publisher opt-outs. The…
lawyerThe third reference will shape the EU interpretation of AI training and the text-and-data-mining exception.ruling · European UnionTwo German courts hold Google responsible for false claims in its AI summaries
Two German courts have ruled that Google is liable for false statements in its AI summaries, with fines of up to €250,000 possible. Hungarian media reported on it on 18 October 2026.
lawyerGiven false claims in AI summaries, it is worth considering a personality-rights claim against the search provider as well.compliance specialistProviders can be held liable for the accuracy of generative search features, which affects product risk analysis.citizenPeople can also take action against Google over false AI statements.data protection · European UnionEDPB publishes €824.99 million GDPR fine against Uber; Noyb cites €2 billion in fines
The European Data Protection Board (EDPB) has published the Dutch data protection authority's €824.99 million GDPR fine against Uber over automated decision-making, the second-largest GDPR fine to…
compliance specialistGDPR compliance of automated decision-making needs priority attention, given the size of the top-level fines.corporate lawyerData protection impact assessments and transparency for AI-based decisions should be reviewed in light of the Uber case.regulation · United StatesUS proposals on liability for autonomous AI agents and the 'defect versus conduct' debate
A US House discussion paper would clarify liability rules for AI agents, and the Senate's AI LEAD Act would impose strict liability on AI services. Analysts say cases increasingly focus on…
corporate lawyerClients deploying AI agents should set out in contracts how liability is shared with the supplier.lawyerIn harm cases, both defective-product and negligent-conduct arguments may arise.compliance specialistMonitoring and logging agents after deployment also serves as a liability defence.data protection · United StatesState attorneys general seek consumer and data protections in Character.AI bankruptcy
Massachusetts Attorney General Campbell, followed by Michigan's Dana Nessel, joined the move seeking consumer protection conditions in the Character.AI bankruptcy. Selling the company's business or…
compliance specialistWhen an AI service is acquired, the transfer of users' chat data requires separate examination of data protection conditions.citizenChatbot conversation data may need protection even when the company is sold, and state attorneys general are acting on this.tool · globalMicrosoft launches Copilot for Legal with Bloomberg Law data
Microsoft introduced legal capabilities (Copilot for Legal) in Copilot around 15–16 October 2026, becoming the fourth major AI player in five months to build a legal vertical. Bloomberg Law data will…
lawyerLegal AI available within the Microsoft environment lawyers already use offers a new alternative alongside Harvey and Legora.corporate lawyerA new, large vendor has entered legal teams' tool procurement, and its data-handling terms need to be reviewed.lawsuit · United StatesJudge grants Apple limited expedited discovery in OpenAI trade secrets case
On 13 October 2026, a judge granted Apple limited, expedited discovery in its trade secrets case against OpenAI. Hungarian press described the lawsuit as OpenAI going to court and as a suspected…
corporate lawyerTrade secret protection and employee mobility controls should be reviewed in disputes involving AI companies.lawyerThe limits on expedited discovery show how much early access the parties may get in trade secrets cases.tool · globalHarvey and Legora launch same-named Intake tools within hours of each other
Harvey and Legora each announced a product called Intake for in-house legal teams on 14 October 2026, within hours of one another. Harvey's tool automates the handling and triage of legal requests…
corporate lawyerAutomated intake and triage of in-house legal requests is now available from two vendors.lawyerThe legal tech race may also affect how work is divided within in-house legal departments and what is instructed to outside firms.case · Asia21 Korean authors' books eligible for compensation in Anthropic copyright case, including Han Kang
According to a 16 October statement from the Literature Translation Institute of Korea, books by 21 Korean authors, including Han Kang and Hwang Sok-yong, are among the 482,460 works in the Anthropic…
In brief
perClass action: OpenAI let minors sign up without parental consent and used their data for trainingcompliance specialistAge verification for minors and documentation of parental consent should be reviewed in products.lawyerUsing minors' data for training purposes may form the basis of new class actions.lawDenmark bill would give people copyright-style protection over face and voice against deepfakeslawyerThe Danish proposal could serve as a model for EU rules on likeness protection.lawUS states enacted 144 AI laws across 40 states in 2025compliance specialistCompanies operating in several states need a state-by-state register of AI legislation.corporate lawyerIn the absence of federal regulation, state laws determine the compliance burden for clients.professionHogan Lovells Cadwalader announces firmwide AI strategy, signs with Harvey and LegoralawyerFirmwide AI adoption makes building and using lawyer-built agents part of daily practice.professionFreshfields weighs spinning off AI unit valued in the billionslawyerSpinning firm AI tools off into a separate business also raises questions of partner ownership and the handling of client information.corporate lawyerSpinning off tools trained on client materials raises confidentiality and ownership questions.regulationDOJ retreats from AI enforcement as Anthropic pitches its own AI safety bill to lawmakerscompliance specialistWith weaker federal oversight, compliance readiness toward state authorities needs to be strengthened.corporate lawyerThe debate over federal preemption may decide which state AI rules remain governing.professionAI-native law firms draw lawyers from large firmslawyerThe AI-native firm has appeared as a career path, which calls for rethinking the law firm business model and bar rules.regulationLaw Commission consults on expanding England and Wales product liability regimecorporate lawyerExpanding the product liability regime affects contractual risk management for software and AI suppliers.lawyerThe forthcoming rules could shape the legal basis of AI harm claims.rulingCompanies may be held liable when AI harms clients; tax court declines to sanction AI hallucinationlawyerAI-generated citations must be checked before filing, or sanctions or liability may follow.corporate lawyerA provider may be liable for AI used in client and professional services.regulationCalifornia leads in regulating lawyers' use of generative AIlawyerCalifornia lawyers must comply with the new obligations governing AI use.citizenA litigant may be entitled to know when their lawyer uses AI.regulationBig Tech presses EU to rework AI Act as enforcement lagscompliance specialistWith national supervisory authorities missing, the timing and substance of enforcement are uncertain.lawMassachusetts weighs the country's strictest AI safety law as Washington state also considers actioncompliance specialistUpcoming state rules are worth monitoring, as they may tighten the safety obligations of AI developers.corporate lawyerFor clients of frontier-model developers, tightening state regulation poses contractual risk.caseLawyer's AI-hallucinated citations cost client the case; attorney must pay nearly $39,000lawyerFabricated citations can bring financial sanctions and a lost case for the client, so verification is mandatory.lawUS states enact AI disclosure rules for advertising; lawsuit targets AI-altered influencer imagecompliance specialistAI alterations used in advertising must be labelled, with requirements that differ by state.lawyerInfluencer–brand contracts should set out the terms for AI alterations.caseGetty Images files for bankruptcy protectionperJamendo sues Nvidia again in California over commercial AI training on research music datasetdata protectionWho is liable when legal AI shares client data? Guernsey's data watchdog issues warninglawyerThe firm remains responsible for protecting client data even when it uses an AI provider.compliance specialistClient-data handling by AI tools should be restricted both contractually and technically.perDeepfake ad of Colorado state senator prompts first-of-its-kind court caselawyerThe case tests a new litigation toolkit against political deepfakes.citizenA legal route may open against fake ads featuring public figures.perUSA Today sues OpenAI for more than $250 million over ChatGPT copyright infringementlawyerThe high-value publisher suit sets a new benchmark for the scale of copyright claims.perCanadian news publishers sue Anthropic over alleged AI copyright infringementlawyerCopyright lawsuits over AI have now reached Canada.rulingChina's Supreme People's Court issues landmark guidance on AI disputescorporate lawyerFor clients operating in China, how courts handle AI disputes should be assessed in light of the guidance.lawyerThe Chinese judiciary's position on AI disputes can be cited in international cases.regulationBanking watchdogs step up AI scrutiny amid financial stability fears, sources saycompliance specialistFinancial institutions should prepare for supervisory scrutiny of their AI risk management.caseClaude gave police a false tip on an unsolved murder, and officers did not notice for two monthslawyerThe liability and personality-rights consequences of a false AI report need to be examined.rulingCourt orders new sentence after ruling AI-generated video of victim influenced judge in manslaughter caselawyerThe use of an AI video in sentencing can be grounds for appeal.toolZ.ai's GLM-Legal legal agent model scores 19.2% on Harvey's LAB benchmarklawyerThe measured performance of legal agents is still low (19.2%), so they should not be used in live work without review.corporate lawyerThe arrival of cheap, law-specific models may put pressure on prices in legal AI procurement.regulationMicrosoft's Brad Smith, Richard Hermer and 400 scientists call for tougher AI regulationcompliance specialistThe tightening direction of AI regulation is a factor in compliance planning.professionHarvey to open Japan office in early 2027 and names APAC vice presidentlawyerAn AI tool entering the Japanese legal market could change local firms' working methods and competitive position.professionLegal tech funding: Pandektes raises €13.5m, a Danish start-up €2m, Leela $4.6mcorporate lawyerNew AI legal research and compliance tools are reaching the market; run a pilot before buying.lawyerThe inflow of capital is accelerating the spread of AI-native providers.regulationNo copyright protection for AI works without human involvementlawyerHuman authorship is decisive in whether AI works can be legally protected.professionLaw firms turn their own expertise into AI technologylawyerBefore building their own document templates and professional knowledge into machines, lawyers must clarify whether client data may be used.corporate lawyerTurning expertise into tools raises new licensing and confidentiality questions.professionPaul Weiss and Columbia Law School launch joint generative AI initiativeprofessionJudges see promise and peril as AI moves into the courtstoolNew online tool checks lawyers' briefs for AI-hallucinated citationslawyerAutomated citation checking can be run before a brief is filed to reduce the risk of sanctions.perUnredacted Kentucky lawsuit details Character.AI chats encouraging self-harmlawyerThe disclosed chat excerpts can be cited as evidence in similar chatbot harm cases.professionAI-assisted arbitrators: a Swiss perspectivelawyerIn arbitration proceedings, lawyers must reckon with regulatory questions about the role of AI.law31 US states have laws against election deepfakes, but the patchwork works poorlycompliance specialistAI-labelling requirements for political ads differ from state to state.lawyerIn election deepfake cases, state laws are the governing rules.perReddit and Perplexity AI clash over law firm's role in data-scraping caselawyerThe law firm's role and questions of conflict of interest also arise in AI data-scraping cases.regulationAustralian voters back AI copyright changes if creators get paidperJudge doubtful in privacy lawsuit over Google's AI customer servicelawyerIn claims over data handling by AI customer service, judicial skepticism can be an obstacle.compliance specialistDisclosure and consent are key when calls are processed by AI.professionAI has not triggered a flood of legal malpractice claims, but insurers are watchinglawyerMalpractice insurers may ask for conditions on AI use, so a firm's internal AI policy matters.corporate lawyerThe insurers' approach may also shape the terms on which legal services are procured.professionAI threatens the junior lawyer pipeline as first AI-trained law graduates enter the workforceperAnthropic asks federal appeals court to review dispute with Trump administrationcorporate lawyerThe dispute between AI vendors and the US government also affects the risks of public procurement contracts.toolOpenAI and S&C develop Agreement Analyzer tool for contract analysislawyerA lawyer must still check the output of the contract analysis tool.corporate lawyerAn accelerator tool that can be tried out in contract review workflows.data protectionItalian regulator fines Wind Tre €16.7 million over unlawful telemarketingcompliance specialistChecks on telemarketing data processing and consents carry a significant risk of fines.rulingDelhi High Court protects Kangana Ranaut's personality rights against AI deepfakeslawyerIndian personality-rights precedents provide a reference basis in deepfake cases.perApple must face lawsuit over alleged YouTube video scrapingcaseFlorida judge suspended over AI deepfake phone callregulationUK ministers consider mandatory AI safety reportingcompliance specialistIf reporting becomes mandatory, AI developers may face new disclosure burdens.regulationUN adopts resolution on the human rights impact of AIcompliance specialistHuman rights-based AI assessment is gaining international support.professionASEAN and China explore e-courts and AI to strengthen judicial cooperation