California Enacts AI Transparency Law Requiring Disclosures for AI Content
In Short
The Background: On September 19, 2024, California adopted the California AI Transparency Act ("SB 942") to create transparency mechanisms that allow consumers to determine whether an "image, video, or audio content, or content that is any combination thereof, was created or altered" using generative artificial intelligence ("GenAI").
The Result: SB 942 imposes new obligations on persons creating, coding, or otherwise producing GenAI systems accessed within California, requiring them to provide a publicly accessible detection tool and make certain disclosures for content produced with GenAI.
Looking Ahead: SB 942 becomes effective on January 1, 2026, and will require that companies develop and adopt output generation and detection tools to facilitate watermarking and transparency for users, review their contracting practices with third-party licensees of GenAI platforms, and adjust their AI governance and risk management practices.
On September 19, 2024, California Governor Gavin Newsom signed into law, SB 942, a law aimed at providing transparency into content created or altered using GenAI. SB 942 primarily applies to a "Covered Provider," which is "a person that creates, codes, or otherwise produces a generative artificial intelligence system that has over 1,000,000 monthly visitors or users and is publicly accessible within" California. The law further defines a GenAI system as "an artificial intelligence that can generate derived synthetic content, including text, images, video, and audio, that emulates the structure and characteristics of the system's training data."
SB 942 imposes three core requirements:
- The Covered Provider must make available a free, publicly available GenAI content detection tool that allows users "to assess whether image, video, or audio content, or content that is any combination thereof, was created or altered by" the Covered Provider's GenAI system. The tool must allow users to upload content or provide a URL to the content needing detection. It also requires the Covered Provider to collect user feedback regarding the tool's efficacy in order to improve it.
- The Covered Provider must give users the option to include: (i) a non-hidden (i.e., manifest) disclosure for a GenAI image, video, or audio content that the user generates; and (ii) a hidden (i.e., latent) disclosure for any user-generated GenAI image, video, or audio content. Such hidden disclosure must be detectable with the tool under the first requirement.
- The Covered Provider must contractually require any third-party licensees of the Covered Provider's GenAI system to maintain the second requirement's disclosure capabilities. If a Covered Provider knows that a third-party licensee has removed the disclosure capabilities from the GenAI system, the Covered Provider must revoke the third-party's license within 96 hours.
The California Attorney General and city and county attorneys can enforce this law against Covered Providers through civil actions that include fines of up to $5,000 per daily violation and attorney's fees and costs. The California Attorney General and city and county attorneys can also bring civil actions against third-party licensees for injunctive relief and attorney's fees and costs if the licensee continues to use a GenAI system after a Covered Provider revokes it.
With SB 942, California joins Colorado, Utah, and Illinois in enacting similar AI transparency laws.
Three Key Takeaways
- Covered Providers must evaluate their GenAI tools to both: (i) detect whether user-uploaded or linked content was created by such Covered Provider's own GenAI system; and (ii) provide some indication, manifest or latent, to signal that its own GenAI system created the content.
- Covered Providers should review their third-party licensee contracts to include, as needed, provisions requiring compliance with these new transparency requirements.
- Third-party licensees of GenAI systems should consider reviewing their obligations to Covered Providers and take note of the injunctive provisions under SB 942.
