On February 18, 2025, the Ministry of Economy, Trade and Industry (METI) published a guideline document titled “Checklist for AI Use and Development Contracts.” This guide is designed to help companies navigate the contract negotiations with AI-related services vendors.
1. Overview
As the number of businesses exploring AI technology continues to rise, so do the potential legal issues and liabilities associated with its use. From inappropriate data collection to unsuitable AI judgments, the risks are real. Many businesses, especially those unfamiliar with AI, may struggle to ensure their contracts with AI technology providers include the necessary clauses to mitigate these risks.
This contract checklist is designed to provide a practical format that businesses, including those unfamiliar with AI utilization, can use to check contracts.
2. Key Checklist Items
When users provide inputs (such as prompts or raw data for learning) to vendors, and vendors deliver services (like analysis results or AI-generated products), the checklist suggests businesses to check the following items:
For inputs provided by users: Check 37 items including
- Usage Rights: Can the vendor use the inputs for purposes beyond providing the service? (A-3-2)
- Management Obligations: Is the vendor required to manage the inputs responsibly? (A-3-3)
- Third-Party Sharing: Can the vendor share the inputs with third parties? (A-4-2)
- Intellectual Property Rights: Does the vendor acquire any rights over the inputs? (A-5-1)
For outputs provided by vendors: Check 29 items including
- Defined Purposes: Are the defined scope of the outputs sufficient for the user? (B-1-1)
- Completion Obligations: Is the vendor obligated to complete the outputs? (B-2-1)
- Warranty and Information: Does the vendor have a warranty and information provision obligation regarding the outputs? (B-2-3)
- Third-Party Sharing: Can the user share the outputs with third parties? (B-4-1)
- Intellectual Property Rights: Does the user acquire any rights over the outputs? (B-5-1)
3. Additional Considerations
The document also highlights the importance of addressing:
- Personal information protection: If the inputs include personal data, obtaining consent for third-party sharing and addressing international data transfer is crucial.
- Security Issues: The security level of AI systems should be reflected in contract requirements, and vendors should disclose relevant materials.
4. Impact on Businesses
AI Technology Users
For business users eager to harness AI technology, this checklist provides a standard framework for entering into AI-related contracts. While it doesn’t cover every potential issue, such as guarantees about the data used by vendors, it serves as a simplified yet effective tool.
AI Technology Providers
For AI technology providers, anticipating user negotiations based on this checklist is essential. Providers must be prepared to address the items listed and ensure their contracts meet these standards.
5. Conclusion
The “AI Guidelines for Business” published in April 2024 laid the foundation for understanding legal issues related to AI. METI’s new checklist builds on this foundation, offering businesses clear guidelines for AI use contracts. Whether you’re an AI developer, provider, or user, this checklist can be your roadmap for contracting with third parties for use or development of AI in Japan.
