A data-use clause restricting the vendor from using: Which contract term most directly addresses this concern?
A data-use/training-rights clause directly restricts the vendor from using customer data to train its models.
The question
While reviewing a contract with an AI vendor, counsel wants to ensure the vendor cannot use the company's confidential input data to train or improve the vendor's own models. Which contract term most directly addresses this concern?
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- An indemnification clause requiring the vendor to cover losses if its model output infringes a third party's intellectual property.Almost right: indemnification shifts liability for IP infringement but does not itself govern whether the company's data may be used for training.
- A service-level clause guaranteeing a minimum uptime percentage and defining service credits when that availability is missed.Plausible but wrong: an SLA governs availability and performance, not the permitted uses of the customer's confidential data.
- A data-use clause restricting the vendor from using customer input data to train or improve its models without permission. ✓Correct: a data-use/training-rights clause is the term that directly forbids reuse of the company's input data for model training.
- A limitation-of-liability clause capping the total monetary damages the vendor can owe the company under the agreement.Plausible but wrong: a liability cap limits financial exposure but places no restriction on how customer data may be used.
The trap
Assuming any protective clause (like indemnification) governs data-training rights. How to remember it
A data-use/training-rights clause directly restricts the vendor from using customer data to train its models.
How many of these would you get right?
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Every answer, right and wrong, comes with its own explanation.
