Using AI Tools and Implementing AI In-Game in Computer Game Development

AI tools in computer game development can dramatically accelerate production, reduce costs, and unlock new gameplay mechanics—from dynamic NPC dialogue to procedural quest generation. At the same time, AI introduces legal questions that can determine whether a game can be safely published, monetised, scaled internationally, and cleared by a publisher or investor during due diligence. This article provides a practical overview of the main risks: ownership and licensing of AI outputs, liability for in-game AI behaviour, platform compliance, player data, and how to structure contracts across the production pipeline.

Why AI in game development is legally more complex than in standard software

Game development is not “just code.” It is a mix of engine technology, plug-ins, art, audio, narrative, localisation, marketing assets, and often community content. AI touches most of these layers, which means legal risk accumulates quickly across the whole pipeline.

In a typical business application, disputes often concentrate on licensing, SLAs, and data protection. In games, you frequently also need to address:

• commercial usability of AI-generated art, music, text, and voice,
• licence compatibility across the entire stack (engine × middleware × AI tools × assets),
• liability for content generated at runtime (NPC dialogue, UGC, player interactions),
• platform rules and enforcement (distribution restrictions, content moderation, refunds),
• reputational impact, which can translate into measurable revenue loss within hours.

This is why AI can feel “easy” during production, while legal issues surface late—right before release, during publishing negotiations, or in investor due diligence. ARROWS law firm helps clients structure these projects in practice, including cross-border setups through the ARROWS International network. If you want to address the legal framework systematically, contact ARROWS law firm at office@arws.cz.

AI as a production tool: what you can commercialise safely—and what can backfire

AI is widely used because it speeds up production and reduces costs. The legal weakness is often the same: studios cannot reliably evidence the origin of outputs, and the licensing picture becomes fragmented across teams and suppliers.

What studios generate with AI—and where the biggest IP risk sits

Most commonly:

• concept art, textures, 2D/3D source materials,
• character drafts and animation supports,
• music, ambience, and sound effects,
• dialogue, quests, item descriptions,
• marketing creatives, banners, trailers,
• and partially, code (scripts, tests, refactoring).

In games, much of this content is individually monetisable and often licensed separately: soundtrack releases, artbooks, merchandise, ports, DLCs, and spin-offs. If rights are unclear, the costs of fixing it later can easily exceed whatever savings AI originally delivered.

This risk tends to become “real” when a publisher or investor requests warranties and liability commitments. ARROWS law firm sees these scenarios frequently in publishing deals and tech transactions; if you want to de-risk this early, contact office@arws.cz.

AI output and authorship: why it matters commercially

The question “who is the author” of AI-assisted output can be disputed—and for game studios it translates into practical business consequences:

• whether output qualifies for protection as a copyright work,
• who holds the exploitable rights,
• whether licensing and transfer is safe at scale,
• whether the project can pass publishing checks and investor due diligence.

Certain AI outputs may be considered “legally weaker” because they are generic, or because a studio cannot demonstrate a clear human creative contribution and origin trail. This is especially painful for art, music, and narrative—assets that publishers typically scrutinise hardest.

ARROWS law firm helps studios structure rights, documentation, and supplier arrangements so core assets remain commercially usable across regions and distribution channels. Contact: office@arws.cz.

microFAQ – Legal tips for AI-generated assets

1. Is it enough to “edit” an AI asset manually to make it legally safe?
   Not always. Manual edits can help, but they do not automatically eliminate licensing and origin risks—especially for high-value assets.

2. Which tends to be riskier: AI art or AI text?
   In practice, art and audio create higher exposure because they are easier to challenge, commonly licensed independently, and often central to a game’s brand identity.

3. Can a publisher reject a game because it uses AI assets?
   Yes—typically not because “AI is forbidden,” but because rights cannot be reliably warranted or the compliance/brand risk is too high.

AI inside the game: NPCs, generative dialogue, and dynamic content

When AI is part of the game itself, the issue is not only ownership—it is control and liability. In practice, there are two main risk categories:

1. AI behaves inconsistently or unpredictably (leading to complaints, refunds, reputation loss).
2. AI generates problematic content at runtime (platform enforcement, legal exposure, community backlash).

Generative NPC dialogue: a legal and reputational risk multiplier

Generative NPC dialogue is attractive commercially, but legally sensitive because content is created “live.” Typical problem scenarios include NPCs producing:

• discriminatory or harassing statements,
• extremist content,
• sexual content conflicting with age ratings,
• content that violates platform guidelines,
• text triggering third-party rights claims.

Even if the studio argues “the AI said it,” responsibility will usually sit with the studio as the publisher/operator of the system. This is why a defensible setup typically requires more than disclaimers—filters, moderation, logging, and an incident response workflow.

ARROWS law firm often advises on these operational safeguards alongside contractual protection, particularly where platform exposure and cross-border distribution are involved. Contact: office@arws.cz.

AI-generated quests and content: who warrants “quality” and “safety”

Dynamic quest, item, and description generation can lead to:

• broken quest chains,
• lore inconsistencies,
• age-inappropriate phrasing,
• “unintended messaging” that escalates in social media.

From a B2B standpoint (publisher, distribution partner), the legal focus is typically: what is a defect, how acceptance works, what SLAs apply, and who pays when AI causes operational damage.

microFAQ – Legal tips for in-game AI features

1. Is a simple “AI may be inaccurate” disclaimer enough?
   Usually not. You need a combination of design controls, operational processes, and appropriate liability allocation.

2. Does “human-in-the-loop” reduce risk?
   Yes—if it is real oversight. Formal or symbolic review rarely helps when an incident hits.

3. Can platforms intervene because of AI dialogue alone?
   Yes, if content violates platform policies or age-rating expectations. Technical controls must be backed by governance.

Licence chain management: engine, middleware, AI tools, and assets must align

Games are a classic licence-chain product. One weak link can trigger a domino effect. Typical parts of the chain include:

• engine licences (commercial thresholds, reporting duties),
• middleware (audio, physics, networking, anti-cheat),
• plug-ins and marketplace assets,
• AI tools used for production and runtime,
• open-source libraries.

The most common problem is not that licences do not exist. The problem is that they are dispersed across teams, compatibility is not mapped, and no one holds a single “master view” of what the studio is actually shipping.

Live-ops, modding, and UGC: when AI interacts with the community

Many games rely on community contribution: mods, maps, skins, events, UGC. AI adds additional layers:

• players generate AI-assisted content and upload it to the game,
• AI supports chat moderation or report handling,
• AI recommends content, effectively shaping user exposure.

This raises questions such as:

• who bears responsibility for UGC,
• what licence rights the studio needs from users,
• what moderation powers the studio must reserve,
• when “community content” becomes “published game content.”

JUDr. Jakub Dohnal, Ph.D., LL.M.

associate, managing partner

• dohnal@arws.cz

Mgr. Petr Hanzel, LL.M.

associate

• hanzel@arws.cz

Player data and AI: when telemetry becomes sensitive profiling

AI in games tends to process richer data than traditional analytics. It is not only “how many users finished level 3.” It often includes:

• behavioural patterns and reactions,
• content preferences,
• chat content,
• voice recordings or transcripts,
• matchmaking and anti-cheat signals,
• personalisation indicators.

Legally, this becomes an architectural issue:

• what qualifies as personal data,
• which lawful basis applies,
• how retention and access are managed,
• what is shared with third parties,
• whether data leaves the EU/EEA.

Games also have an added layer: players are commonly consumers, so data-driven “behaviour shaping” can intersect with consumer protection principles and fairness expectations.

ARROWS law firm advises on these frameworks regularly, particularly where the game targets larger EU markets and compliance needs to survive audits, complaints, or incident pressure. Contact: office@arws.cz.

Publishing agreements and investors: AI as a new “red flag” in due diligence

In publishing and investment rounds, AI increasingly shows up in standard checklists. Typical questions include:

• does the studio own rights to all assets, including AI-assisted outputs,
• is there evidence of licences and origin,
• are contractor agreements compatible with publisher requirements,
• are UGC and moderation rights enforceable,
• are player terms, refund flows, and complaint handling defensible,
• is vendor risk (AI APIs, cloud reliance) controlled.

Executive summary for management

• AI increases legal exposure in game development primarily around assets (art, audio, text), because origin and licensing are harder to evidence.
• The biggest commercial impact typically appears late—at release, during publishing negotiations, or in investor due diligence.
• In-game AI features (NPC dialogue, runtime generation) create liability and platform compliance risk: harmful content and inconsistency land on the studio.
• Live-ops and UGC require enforceable rules, moderation powers, and governance; otherwise platform action becomes a realistic threat.

Conclusion

Using AI tools and implementing in-game AI features in computer game development is now a competitive advantage—but it is not merely a technical choice. AI touches the most valuable parts of a game: content, distribution, reputation, and monetisation. The most expensive mistakes happen when there is no unified licensing position, no clear rights transfers from suppliers, weak contractor control, and no incident readiness for generative features.

FAQ – Most common legal questions on Using AI Tools and Implementing AI In-Game in Computer Game Development

1. Will a publisher request proof of origin for AI-assisted assets?
   Increasingly, yes—especially for art and audio. If this is handled at the end, remediation tends to be costly. If you face a similar issue, contact ARROWS law firm at office@arws.cz.

2. Do contractor agreements need to change because of AI?
   In most cases, yes. AI affects rights transfers, source delivery, and restrictions on using internal materials in prompts. If you face a similar issue, contact ARROWS law firm at office@arws.cz.

3. Who is liable if generative NPC dialogue becomes harmful?
   Liability will typically be assessed at the studio level as the operator and publisher of the system. Filters and moderation are critical. If you face a similar issue, contact ARROWS law firm at office@arws.cz.

4. What if an AI provider changes terms or increases API pricing?
   That is a classic vendor-risk scenario. Fallback design and contractual alignment are key. If you face a similar issue, contact ARROWS law firm at office@arws.cz.

5. Is in-game AI a GDPR issue?
   It can be—particularly with player profiling, chat, voice, or cross-border transfers. The lawful basis and transparency design matter. If you face a similar issue, contact ARROWS law firm at office@arws.cz.

Notice: The information contained in this article is of a general informational nature only and is intended to provide basic orientation in the topic. Although we strive for maximum accuracy, legal regulations and their interpretation evolve over time. To verify the current wording of the regulations and their application to your specific situation, it is therefore necessary to contact ARROWS law firm (office@arws.cz). We accept no liability for any damages or complications arising from independent use of the information in this article without our prior individual legal consultation and professional assessment. Each case requires a tailored solution, so do not hesitate to contact us.