Designing the Future: How AI Empowers Businesses & Where the Law Steps In

I. The Opportunity: What Barriers AI Breaks

Artificial intelligence is one way to level the playing field between well-established companies and startups.[1] This shift is visible in a new class or organization: AI-driven enterprises.[2] An AI-driven enterprise is a business that integrates artificial intelligence into every major area of its operations.[3] These enterprises accomplish more with far fewer resources and in far less time.[4] These businesses are also stealing market share from incumbent businesses, while using fewer employees and limited capital.[5] Moreover, this speed shows most clearly in the product development life cycle.[6] Developments that may have once taken years now take only days, hours, minutes, or even milliseconds.[7]

 Employee expertise is a key differentiator for small and medium-sized businesses, and the new skill bolstering a company’s competitive edge is AI literacy and proficiency.[8] Half of small business in the U.S. say that the rise of AI has inspired them to consider career paths that they have not previously thought of, like entrepreneurship.[9] Among those businesses that use AI, the tasks they use it for include marketing, promotions, improving customer experience, accounting, collecting customer data, managing inventory, payroll management, processing sales, identifying potential customers, and many more.[10] AI is also a very cost-efficient tool.[11] Around 41% of businesses use free AI tools, while about half of those paying for AI rely on flat-fee enterprise plans, with a median monthly spend of $250.[12] On top of that, small businesses are actively working to train their employees on AI tools in an attempt to invest in their human capital.[13] 

II. Areas Where Founders and Entrepreneurs are Likely to Get Caught Off Guard

Although AI has opened doors for many small businesses, six in ten of these employers worry about increased litigation and compliance costs from AI laws.[14] AI brings challenges

in governance and risk management.[15] Businesses that use AI must create a governance framework that describes how AI tools will be implemented and monitored in the workplace.[16] AI systems also raise significant confidentiality concerns.[17] Financial data, customer data, trade secrets, and other privileged information can find its way into AI models.[18] Businesses and employees should consider what they insert into AI and what protective measures they have taken to secure that information.[19] AI also raises important intellectual property issues regarding ownership, licensing, and infringement.[20] Lastly, the laws surrounding AI are rapidly changing and developing as these tools become more sophisticated.[21] Reaping the benefits of AI to launch and develop a business takes diligence.[22] Companies and founders should carefully weigh the legal implications of using AI in their operations.[23]

III. Unique Challenges Facing the Fashion Industry

For the fashion industry, copyright challenges are significant legal risks, and the law remains unsettled in that area.[24] Designers have often drawn inspiration from past styles, so it is difficult to pinpoint when AI-generated work becomes infringement.[25] For example, in Bartz v. Anthropic, a federal court found that training on lawfully acquired books was fair use, but that building a library from pirated copies was not.[26] Copyright protects works of human authorship, and purely AI-generated material is not protected; merely typing a prompt does not make the user the author of the output.[27] The D.C. Circuit later upheld the human-authorship requirement in Thaler v. Perlmutter in 2025.[28] Material that a human selects, arranges, or modifies can be protected, but only to the extent of that human contribution.[29] Fashion brands and startups may incorporate AI-generated content in a multitude of ways.[30] They might use it to develop advertisements, create digital models, or to make other content to promote their products.[31] If there is insufficient human creative input, it will be difficult for fashion entrepreneurs to protect their brand and to stop other brands from unauthorized use of the same content.[32]

Artificial intelligence is now rapidly penetrating every link of the value chain in the fashion industry.[33] First and foremost, AI is reshaping the fashion value chain for the better, making each stage faster, cheaper, and less wasteful.[34] When implemented strategically, AI can drive significant waste reduction and energy optimization.[35] Within the fashion industry, AI also significantly enhances productivity.[36] Predictive planning allows fashion producers to manage inventory more effectively, reducing waste and curbing the overproduction of raw materials.[37]

AI has additionally made the fashion industry more accessible, and tools like FLORA are helping new designers get started.[38] FLORA’s Fashion Studio is changing how fashion is designed by quickly producing concepts, colorways, and product details.[39] The goal is to bring AI-generated designs, technical development, and customer demand together early, so better choices are made before the expensive production stage.[40] Design teams use AI to speed up concept development at an early stage.[41] One designer in particular, Stacey Bendet of Alice + Olivia, has used AI to generate print ideas and speed up the design process before sampling.[42] Fashion marketing teams are using AI to create many other assets, such as campaign ads, which allows creative direction without the cost of full-scale photoshoots.[43] 

Generative AI may be commercially attractive to large companies.[44] One example is Shein, which is known for its use of AI in the analysis of fashion trends.[45] Generative AI challenges traditional ideas of originality in fashion because, like human designers, it can draw inspiration from existing designs and trends to create new work.[46] However, Shein found itself in hot water when artists began alleging that it copied and displayed their artwork on its website without authorization.[47] After pulling out vast amounts of data from across the internet to identify relevant trends, Shein purportedly uses its algorithms to identify products for its manufacturer.[48] Lawsuits against Shein have alleged that the company knowingly used AI ad algorithms to use copyrighted designs owned by others.[49] Cases like these are noteworthy considering the increasing use of AI models in fashion.[50]

Additionally, the public domain has always been a source of fashion inspiration.[51] However, because AI models are trained on massive amounts of data collected from the internet, including unlicensed copyrighted material, their legitimacy remains uncertain.[52] If AI models are trained on proprietary fashion images, products that entrepreneurs design with it may face legal challenges.[53]

IV. AI as a Tool, Not a Replacement for Creativity

When it comes to using artificial intelligence in many elements of launching a business, entrepreneurs should not let the use of these tools risk their creativity.[54] As technology evolves, AI must serve and enhance human creativity, not replace it.[55] If algorithms predict success on past popularity or if people rely on homogenized AI outputs, they may inadvertently suppress bold unconventional thinking.[56] Just as copyright infringement is concerning when relying on existing data, so is the erosion of creative thinking that fuels entrepreneurship.[57] Looking ahead, entrepreneurs should use AI as a supportive tool rather than overly relying on it.[58] AI can be a powerful tool to spark innovation, expand creative thinking, and bring bold ideas to life.[59] But when relied on too heavily, it risks replacing the human insight, authenticity, and originality that set great businesses apart.[60]

[1] See Betsy Vereckey, Why AI-Driven Enterprises Are the Future of Entrepreneurship, MIT Sloan (July 29, 2026), https://mitsloan.mit.edu/ideas-made-to-matter/why-ai-driven-enterprises-are-future-entrepreneurship.

[2] See id.

[3] See id.

[4] See id.

[5] See id.

[6] See id.

[7] See id.

[8] See Erica Sweeney, How AI Is Driving ‘Growth Engines’ for Small Businesses in 2026, U.S. Chamber of Commerce (Jan. 7, 2026), https://www.uschamber.com/co/run/technology/ai-powered-growth-engines.

[9] See id.

[10] See U.S. Chamber of Com. Tech. Engagement Ctr., Empowering Small Business: The Impact of Technology on U.S. Small Business 19 (5th ed. 2026), https://www.uschamber.com/assets/documents/Empowering-Small-Business-The-Impact-of-Technology-on-U.S.-Small-Business-Small-Business-Report-2026.pdf 

[11] See id. at 22.

[12] Id. 

[13] See id. at 23.

[14] See id. at 3, 16.

[15] See Timothy Warner, Artificial Intelligence in Business: Legal Issues to Consider, Cleveland Metro Bar Association (Oct. 2, 2026), https://clemetrobar.org/artificial-intelligence-use-in-business-legal-issues-to-consider/.

[16] See id.

[17] See id.

[18] See id.

[19] See id.

[20] See id.

[21] See id.

[22] See id.

[23] See id.

[24] See David M. McIntosh et al., A Tale of Three Cases: How Fair Use Is Playing Out in AI Copyright Lawsuits, Ropes & Gray (July 7, 2026), https://www.ropesgray.com/en/insights/alerts/2025/07/a-tale-of-three-cases-how-fair-use-is-playing-out-in-ai-copyright-lawsuits.

[25] See id.

[26] See id.

[27] See Christopher T. Zirpoli, Generative Artificial Intelligence and Copyright Law, Library of Congress (July 18, 2025), https://www.congress.gov/crs-product/LSB10922.

[28] See id.

[29] See id.

[30] See Kristyn Webb & Mallory Kean, How Will AI Impact the Fashion Industry’s Public Domain?, American Bar Association (Jan. 29, 2026), https://www.americanbar.org/groups/intellectual_property_law/resources/landslide/2026-winter/how-will-ai-impact-fashion-industrys-public-domain/.

[31] See id.

[32] See id.

[33] See Maximilien Abadie, The Impact of AI on the Fashion Industry, Forbes (Jan. 16. 2026), https://www.forbes.com/councils/forbestechcouncil/2026/01/16/the-impact-of-ai-on-the-fashion-industry/.

[34] See id.

[35] See id.

[36] See id.

[37] See id.

[38] See Angela Chan-Danisi, Fashion Is Moving At AI Speed. Its Supply Chain Isn’t, Forbes (Sept. 21, 2026), https://www.forbes.com/sites/angelachan/2026/09/21/fashion-is-moving-at-ai-speed-its-supply-chain-isnt/.

[39] See id.

[40] See id.

[41] See Brenda Barron, Fashion AI: 7 Key Use Cases in 2026, FashnAI (Feb. 23, 2026), https://fashn.ai/blog/fashion-ai-7-key-use-cases-in-2026.

[42] See id.

[43] See id.

[44] See The Chartered Institute of Trademark Attorneys, The Impact of AI on IP Law in the World of Fashion (last visited Oct. 14, 2026), https://www.citma.org.uk/resources/the-impact-of-ai-on-ip-law-in-the-world-of-fashion-mb24.html.

[45] See id.

[46] See id.

[47] See The Fashion Law, New Lawsuit Lifts the Lid on Shein’s AI-Powered Ultra-Fast Business Model (Apr. 14, 2024), https://www.thefashionlaw.com/a-new-lawsuit-lifts-the-lid-on-sheins-ai-powered-ultra-fast-fashion-model/.

[48] See id.

[49] See id.

[50] See id.

[51] See Webb & Kean, supra note 30.

[52] See id. 

[53] See id.

[54] See BBC, Is AI Good or Bad for Creativity: How Generative AI Is Transforming Human Ideation, Capitol Technology University (Dec. 10, 2025), https://www.captechu.edu/blog/how-generative-ai-is-transforming-creativity.

[55] See id.

[56] See id.

[57] See id.

[58] See id.

[59] See id.

[60] See id.