AI Model Licensing: Legal Agreements for AI Products

5–10 days

Typical timeline

EU · UAE · Global

Jurisdictions covered

Founders · CTOs · Counsel

Who we work with

Who owns what your AI generates? Most standard licenses are silent on output rights. That silence becomes a dispute the moment a client, investor, or regulator asks the question.

If your model was trained on third-party data, the licensing terms for that data govern what you can and cannot do commercially. Most founders discover this risk after signing.

Fine-tuning a foundation model creates a derivative work. Whether you can commercialise it, transfer it, or use it after termination depends entirely on the upstream license — which you may have agreed to without reading.

Your entire product runs on one provider’s API. If they change pricing, restrict access, or update terms — your business stops. Standard contracts offer no legal protection for this scenario, and most founders discover it only when the provider acts.

When you combine OpenAI, LLaMA, and a fine-tuned open-source model in one product, you’re operating under three different license regimes simultaneously. Conflicting conditions on commercial use, derivative works, or output rights create hidden exposure that standard software lawyers rarely identify.

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01

30-minute conversation to understand your product, model stack, and what the license needs to cover. We identify the key risk areas before we start work.

Day 1

02

We review your existing license terms, identify gaps, and draft or redline the agreement. For complex stacks involving multiple models, we map the licensing obligations across the entire chain.

Days 2–7

03

You receive final documents and we walk through every key clause together. We stay available for one revision round and follow-up questions.

Days 8–10

SaaS · EU/US

License risk assessment for B2B AI product

AI startup using OpenAI API + open-source models (LLaMA, Mistral) in a B2B SaaS product targeting EU clients.

Fintech · EU

Custom license agreement for proprietary LLM

Fintech corporation with own fine-tuned LLM selling AI-powered products to banks. Required control over output use and protection against model extraction.

Marketplace · US/EU

IP and EU AI Act compliance for AI model marketplace

AI platform where users upload data for fine-tuning and access third-party models. Complex IP ownership across input data, trained models, and outputs.

Question 1 of 4

What's your relationship with AI models?

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Typically, yes. API terms of service are not the same as a formal license agreement, and they are written to protect the provider, not you. For commercial products built on top of foundation models, a supplemental agreement or at minimum a legal review of the ToS is advisable. The key issues are output ownership, data handling, and what happens if the provider changes terms or terminates access.

It depends entirely on the license terms. Some foundation model licenses are silent on output ownership, which creates legal uncertainty. Others explicitly claim rights. A properly drafted agreement will specify that you own the outputs generated through your use of the model, subject to defined exclusions. This is one of the most commercially significant clauses in any AI licensing deal.

Usually yes, but with important restrictions. LLaMA 3, for example, has a commercial license with a 700M monthly active user threshold above which a separate agreement with Meta is required. Mistral models have different terms. Before commercialising any fine-tuned model, the upstream license must be reviewed against your intended use case, distribution model, and projected scale.

Training data provenance refers to the origin and licensing status of the data used to train an AI model. If a model was trained on copyrighted data without a proper license, using that model commercially could expose you to infringement claims. Several ongoing lawsuits in the US and EU concern exactly this issue. We assess training data risk as part of our licensing review.

The EU AI Act imposes transparency, documentation, and risk management obligations on AI providers and deployers. For licensing agreements, this means contracts now need to address who is responsible for AI Act compliance — the licensor or the licensee — and how compliance documentation (technical documentation, conformity assessments) is shared. Agreements that don't address this will require amendment as the Act's obligations take effect.

This is negotiable and strategically important. For international transactions, UAE law (particularly DIFC) and English law are commonly used. EU-based transactions typically use the law of the relevant member state. The governing law affects how disputes are resolved, which consumer protection rules apply, and how regulatory compliance is interpreted. We advise on jurisdiction selection as part of the drafting process.

For a straightforward single-model license, 5–7 business days from our initial call. More complex arrangements — multi-model stacks, enterprise licensing with sublicensing rights, or agreements that need to address EU AI Act compliance — typically take 10–15 business days. We provide a clear timeline after the initial consultation.

Yes. Many clients come to us with an existing agreement — either one they've been asked to sign or one they drafted themselves. We provide a written review identifying the key risk areas, missing provisions, and recommended changes. This is typically faster and less expensive than starting from scratch.