Christian Stanfield – Until recently, the United States was widely considered to be the global leader in the development of artificial intelligence models. The recent release of AI models developed by Deepseek, a Chinese AI startup, has sparked controversy in both the AI and business communities in the United States The company claims its models rival, or even outperform, those of OpenAI (developer of ChatGPT – based in California) at a fraction of the cost. As a result, investors have sold off shares in U.S. tech companies previously considered U.S industry leaders. At the same time, Deepseek’s rise has raised national security concerns, specifically regarding American information and data being intercepted by the Chinese Communist Party. Considering this revelation, a key question that arises is: What can the United States do to protect its own interests? More specifically, what can be done from a legal perspective?
A recent bill proposed by Senator Josh Hawley seeks to impose significant fines, and, in some cases, jail time, for using the Chinese platform. The bill’s goal is to “prohibit United States persons from advancing artificial intelligence capabilities within the People’s Republic of China and for other persons.” The proposed bill would prevent the importation of “technology or intellectual property” developed in China, with anyone violating the restrictions facing up to 20 years in prison. Individuals could also be fined up to $1 million, while for businesses it could reach up to $100 million. The specific penalty imposed would be dependent on a variety of factors, such as the severity of the violation, the presence of malicious intent, and/or whether someone was merely aiding/abetting someone who violated the act. In fact, bans on the Chinese platform have already been implemented in the United States. Notably, the U.S. Navy has banned Deepseek for all uses, while NASA has banned the platform on government-issued devices and networks.
While the U.S. government looks to protect the interests of the American tech industry, OpenAI (developer of ChatGPT) has additionally accused Deepseek of committing what is essentially intellectual property theft. Specifically, OpenAI is accusing Deepseek of using a method known in the AI industry as “distilling,” which involves training a smaller model to mimic the capabilities of a larger, pre-trained one by leveraging its outputs. David Sacks, who leads AI ethics discussions for the White House as an independent advisor, suggested that “substantial evidence” points to intellectual property theft through distillation. However, AI legal scholars have cast doubt on whether OpenAI would have any legal recourse at all. Mason Kortz, a Professor at Harvard’s Cyberlaw Clinic, stated that “There’s a doctrine that says creative expression is copyrightable” and “there’s a huge question … whether the outputs of a generative AI can ever constitute creative expression or if they are necessarily unprotected facts.” In other words, we don’t fully know whether a court’s determination would be AI’s output is considered creative expression or unprotected facts. This would certainly have a profound impact on any legal dispute between OpenAI and Deepseek.
According to Anupam Chander, a professor of technology law at Georgetown University, a breach of contract claim is more likely, with OpenAI claiming that Deepseek violated OpenAI’s terms of service. Both Chander and Kortz, however, acknowledge that there are hardships with this approach as well, because OpenAI terms-of-service violations are extensively resolved through arbitration. Notably, both Chander and Kortz pointed out that there are no examples of developers who have “actually tried to enforce these terms with monetary penalties or injunctive relief.” Simply put, even if OpenAI were able to bring this dispute to court, it’s unclear whether a judge would rule in their favor. Given the complexities of enforcing intellectual property laws across international borders and the lack of clear legal precedent, OpenAI may struggle to take meaningful legal action against Deepseek. As a result, any significant response is more likely to come in the form of government regulations or bans rather than private litigation.
