The Rise of AI Litigation: New Legal Challenges in 2025

Navigating the Complex Intersection of Artificial Intelligence and Law in Modern India!

The artificial intelligence revolution has fundamentally transformed how we live, work, and conduct business. However, as AI systems become increasingly sophisticated and autonomous, they are creating unprecedented legal challenges that traditional frameworks struggle to address. In 2025, we are witnessing an explosion of AI-related litigation across multiple domains, from copyright infringement to personality rights violations, fundamentally reshaping the legal landscape in India and globally.

The Current State of AI Litigation in India

India's first major AI copyright case, ANI Media vs. OpenAI, currently before the Delhi High Court, marks a watershed moment in the country's approach to artificial intelligence liability. This landmark case involves allegations that OpenAI illegally used copyrighted news content to train its large language models without permission, seeking ₹2 crore in damages. The outcome of this case will likely set crucial precedents for how AI-generated content and training data usage are regulated in India.

The legal challenges are not limited to copyright issues. Recent cases demonstrate the breadth of AI-related legal concerns:

Deepfakes and Personality Rights

The Delhi High Court recently addressed AI's role in defamation in the case of Manchu Vishnu Vardhan Babu v. Arebumdum & Ors., where an actor sued YouTube channels for using AI-manipulated videos that harmed his personality rights. The court issued interim injunctions restraining unauthorized use of the plaintiff's persona and ordered YouTube to remove infringing content within 48 hours.

Public Interest Litigation for Regulatory Frameworks

A significant trend in AI litigation in India is the use of public interest litigation (PIL) to push for comprehensive regulatory frameworks. Several PIL cases have been filed seeking judicial intervention to address challenges posed by AI, particularly deepfakes. The Delhi High Court has taken these concerns seriously, directing the Union of India to file detailed reports on measures taken to address AI-related issues.

Key Legal Challenges Emerging in 2025

1. Liability and Accountability Framework

One of the most pressing issues is determining liability when AI systems cause harm or make decisions leading to negative consequences. Traditional legal frameworks based on human agency may not adequately address the nuances of AI-driven actions. The question becomes particularly complex when AI systems learn and adapt over time, making decisions based on their own "learning" rather than direct human programming.

Current legal analysis suggests that liability should be attributed to the party that benefits most from the AI system's operation and has the technical capacity to control and minimize risks at the lowest cost. This approach follows economic analysis principles where responsibility lies with the entity having the most knowledge and capability to address issues.

2. Intellectual Property Disputes

AI training data transparency has become a critical battleground7. Tech companies face tough copyright questions as various stakeholders, including writers, media organizations, visual creators, and musicians, file lawsuits claiming unauthorized use of their creations to train AI systems. The core legal question revolves around whether AI companies' use of copyrighted works constitutes "fair use".

The courts are expected to determine whether AI-generated outputs infringe copyrighted works, requiring plaintiffs to allege either that outputs are actual copies of copyrighted works or substantially similar derivative works. This distinction will significantly impact how AI companies operate and train their systems.

3. Data Protection and Privacy Concerns

The Digital Personal Data Protection Act (DPDP Act) provides a principles-based framework for processing digital personal data, which includes AI technologies within its scope of regulation. AI use and deployment by corporations is becoming a topic of regulatory compliance, requiring proactive preparation involving processes and measures that comply with various regulations.

Recent advisory from the Finance Ministry to avoid using generative AI models, citing risks to government data confidentiality, highlights the growing regulatory scrutiny. This has led to PIL cases like Bhavna Sharma v. Union of India challenging AI applications for non-compliance with SPDI Rules and DPDP Act provisions

4. The Agentic Era and New Liability Models

2025 is ushering in the "agentic era" of AI, where sophisticated AI assistants act on users' behalf. This development raises critical questions about risk allocation and liability for AI agent actions. For instance, if an AI agent inadvertently makes wrong decisions or bookings, determining liability between developers, users, and the AI system itself becomes complex.

Regulatory Response and Framework Development

Government Initiatives

The Ministry of Electronics and Information Technology (MeitY) released AI Governance Guidelines in January 2025, outlining a regulatory roadmap for the AI industry. The Sub-Committee's recommendations include:

• A 'whole of government approach' to implement and coordinate AI governance

• Establishment of a technical advisory body to assess consumer risks

• Development of an AI incident database for real-world case guidance

• Industry engagement for voluntary baseline commitments

Legislative Gaps and Judicial Innovation

As of 2025, India does not have dedicated legislation exclusively governing AI11. Instead, the regulatory environment consists of policies, guidelines, and sector-specific regulations that collectively address different aspects of AI deployment. Courts have been filling these gaps through judicial innovation, but a more systematic legislative response is necessary.

The current wave of AI litigation highlights significant gaps in India's legislative framework, particularly regarding personality rights recognition and deepfake regulation. The Copyright Act, 1957, last amended before generative AI's advent, does not explicitly address issues like AI training data ownership or AI-enabled copyright infringement.

Recommendations for Legal Practitioners and Businesses

For Law Firms

1. Develop AI-Specific Expertise: Legal practitioners must understand AI technologies to effectively represent clients in AI-related disputes

2. Implement Ethical Guidelines: Lawyers must ensure AI tools are used responsibly without compromising client confidentiality or service quality

3. Stay Updated on Regulatory Changes: The rapidly evolving AI regulatory landscape requires continuous monitoring of legal developments

For Businesses

1. Proactive Compliance Programs: Implement robust compliance programs ensuring AI-driven activities adhere to intellectual property laws and ethical guidelines.

2. Clear Permission Protocols: Obtain explicit permissions before using AI-generated content involving real individuals

3. Transparency with Consumers: Maintain transparency regarding AI use in business operations to build trust and avoid misleading consumers

The Path Forward

The rise of AI litigation represents both challenges and opportunities for the legal profession. While AI technologies offer tremendous potential for enhancing legal research, document review, and case analysis, they also create new categories of disputes requiring specialized expertise.

The legal community must balance innovation with accountability, ensuring that AI development serves society's interests while protecting individual rights. This requires collaboration between technologists, legal experts, policymakers, and civil society to develop comprehensive frameworks addressing AI's unique challenges.

As we navigate this transformative period, legal professionals must embrace continuous learning and adaptation. The intersection of AI and law will continue evolving, creating new practice areas and requiring innovative approaches to traditional legal concepts.

The rise of AI litigation in 2025 marks a defining moment in legal history. How we address these challenges today will shape the future of technology, law, and society for generations to come.

For expert legal guidance on AI-related matters, copyright disputes, or emerging technology challenges, contact LallaNLalla.com. Our team combines 60+ years of legal experience with specialized knowledge in forensic science and technology law.

(caution : These articles cannot and should not be considered as a replacement of a professional legal advice as there are many intricacies that may not have mentioned here).

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