Is It Legal To Use AI-Generated Images In Ads?

AI tools can now produce polished campaign visuals in minutes. If you're running ads, posting on social media or briefing a designer, it's very tempting to use an AI-generated image and move straight to launch.

The good news is that using AI images in advertising isn't automatically illegal in New Zealand. The real question is whether your business has the right to use the image, and whether the ad could mislead customers, copy someone else's brand or use a real person's likeness without permission.

With a few sensible checks, you can get a lot of the benefit of AI without creating avoidable legal headaches.

Can You Use AI-Generated Images In Ads In New Zealand?

Yes, you can usually use AI-generated images in ads in New Zealand, but only if the image, prompt, tool terms, website terms of use and final ad are legally safe for commercial use.

There isn't a special New Zealand law that bans AI images in advertising. Instead, the usual business laws and advertising standards still apply. The main ones to think about are:

• Copyright Act 1994 - whether the image copies protected artwork, photos, illustrations or other creative material.
• Trade Marks Act 2002 - whether the image uses or resembles someone else's registered brand, logo or packaging.
• Fair Trading Act 1986 - whether the ad is misleading, deceptive or creates a false impression.
• Privacy Act 2020 - whether you've used personal information, including identifiable images, in a way that needs consent or creates privacy issues.
• Advertising Standards Authority codes - whether the ad is truthful, socially responsible and clearly presented as advertising where needed.

Think of an AI image as a draft asset, not a finished legal-safe asset. Before you publish it, you should check where it came from, what it resembles and what promises the full ad makes to customers.

That last point matters. A harmless-looking image can become risky when it's combined with ad copy, product claims, influencers, logos or targeting.

Who Owns The Copyright In AI-Generated Images?

It depends on the tool terms, the human input and how the image was created.

New Zealand copyright law has an unusual feature: the Copyright Act 1994 recognises computer-generated works. Where a work is computer-generated and there's no human author in the usual sense, the author is treated as the person who made the arrangements necessary for creating the work.

That can help in some cases, but it doesn't answer every AI image question. For example, there may still be debate about whether a particular AI output is original enough, who made the necessary arrangements, and whether the platform's own terms change what you can do with the image.

For your business, the practical questions are:

• Did your team create the prompt and select the final output?
• Did an agency, freelancer or contractor create it for you?
• Do the AI tool's terms of use allow commercial use?
• Does the tool claim any ongoing rights in the output?
• Did the image draw heavily from a reference photo, competitor ad or existing artwork?

If an employee creates AI images as part of their job, your business will often be in a stronger position to use them. If a contractor or agency creates them, your contract should clearly assign or license the rights to your business. Templates often miss AI-specific issues, so it's worth tailoring your contractor and agency agreements to cover prompts, outputs, edits and approval records.

Can AI Images Infringe Someone Else's Copyright Or Trade Mark?

Yes, an AI image can still infringe someone else's rights if it's too close to their protected work, logo, packaging, character, product design or campaign style.

The tool creating the image doesn't remove that risk. If your final ad looks like it copies another brand's campaign, you may still be the business publishing the ad and benefiting from it.

Copyright issues can come up where an image closely resembles:

• a photographer's image or stock photo;
• an illustrator's style and specific composition;
• a film, game or comic character;
• a product image lifted from a competitor's website;
• a distinctive campaign visual, layout or artwork.

Trade mark and brand confusion issues can come up where an image includes or resembles:

• a registered logo or brand name searchable through IPONZ;
• distinctive packaging, colours or trade dress;
• a well-known sports team, event or sponsor brand;
• a competitor's store layout, uniform or product range.

A Worked Example

Say Maia runs a Wellington cafe and is preparing a winter campaign with 12 Instagram ads, 2 poster designs and a $4,000 media spend. She asks an AI tool to create a cosy coffee image with a famous black rugby jersey on the wall, a silver fern on the cup and a slogan that feels like a national team campaign.

The image looks great, but it creates several risks. The jersey, silver fern styling and campaign tone may suggest an official sporting connection. If there isn't one, the ad could create trade mark, passing off and Fair Trading Act concerns.

Maia changes the prompt to remove sports references, uses her own cafe branding, saves the tool terms and keeps the prompt record. The campaign still feels local and seasonal, but it no longer suggests a sponsorship she doesn't have.

Can An AI Image Be Misleading Or Breach Privacy Laws?

Yes, an AI image can be misleading or raise privacy issues even if it doesn't infringe copyright.

Under the Fair Trading Act 1986, your ads shouldn't mislead customers or create a false impression. This can happen when an AI image makes your product, premises, results or endorsements look different from reality.

Watch for images that suggest:

• your product is bigger, higher quality or more effective than it is;
• a person has used or endorsed your product when they haven't;
• your business has awards, certifications or partnerships it doesn't have;
• your venue, facilities or team look materially different from real life;
• a product is made in New Zealand when it isn't.

Privacy issues can also appear where the image is based on a real person. New Zealand doesn't have a single broad 'image rights' law like some countries, but using someone's face, body, voice or identity in an ad can still create legal risk. Depending on the facts, it may involve privacy, misleading endorsement, passing off, contract or employment issues.

If you use real customer, staff or influencer images as a reference, get clear written consent. Your consent should say what you can use, where you can use it, how long you can use it for, whether AI editing is allowed and whether paid advertising is included.

How Should You Check Stock Platform And AI Tool Terms?

You should check the terms before you use the image commercially, because some tools and stock platforms limit what you can do with AI content.

Don't assume that a paid subscription means you can use every output in every campaign. Platform terms can differ a lot, and they can change over time.

When reviewing AI tool or stock platform terms, check whether they cover:

• Commercial use - can you use the image in paid ads, packaging, merchandise, websites and social media?
• Exclusivity - can other users create or use similar outputs?
• Ownership or licence - do you own the output, or do you only receive a licence?
• Indemnities - does the platform give any protection if a third party claims infringement?
• Restricted content - are celebrity likenesses, political ads, medical claims, financial claims or regulated industries limited?
• Disclosure rules - do you need to label content as AI-generated?
• Training use - can the platform use your prompts, uploaded images or confidential material to train its model?

Be especially careful if your team uploads confidential product designs, unreleased campaign concepts, customer photos or staff images without a clear employee AI use policy. Those uploads may be personal information under the Privacy Act 2020, commercially sensitive information, or both.

Keep a PDF or screenshot of the terms that applied on the date you downloaded or generated the asset. If the terms change later, you'll want a record of what you relied on at the time.

Your Pre-Launch AI Image Checklist

A simple pre-launch checklist and generative AI use policy can turn AI image review into a normal campaign step, rather than a last-minute panic.

Before you publish, run through these checks:

• Prompt check - did the prompt name a living artist, brand, celebrity, competitor, film, sports team or distinctive style?
• Output check - does the final image look too similar to someone else's photo, logo, packaging or ad?
• Tool terms check - do the terms allow commercial advertising use in New Zealand?
• Trade mark check - have you searched obvious names, logos and symbols on IPONZ where there's a brand risk?
• Likeness check - could a real person be identified, or could customers think a person endorsed you?
• Claims check - does the image exaggerate your product, results, facilities or environmental claims?
• Privacy check - did you upload or use personal information, and do you have consent where needed?
• Record check - have you saved the prompt, date, tool, licence, edits, evidence of use and approval notes?

AI Image Approval Record Outline

Here is a practical outline you can adapt for your team. It isn't a finished legal document, and a lawyer or suitably experienced legal adviser should tailor it before you use it in your business.

1. Campaign Details - record the campaign name, channels, launch date and person responsible.
2. Image Source - name the AI tool, stock platform, agency or contractor used.
3. Prompt And Inputs - save the prompt, uploaded reference images and any negative prompts.
4. Platform Terms - attach the commercial licence terms or screenshots relied on.
5. Rights Review - note copyright, trade mark, brand confusion and likeness checks.
6. Privacy And Consent - list any people shown or referenced, and attach consent records.
7. Ad Claims Review - confirm the image matches the product, service and claims being made.
8. Final Approval - record who approved the image, what was approved and where it can be used.
9. Retention Period - decide how long records will be kept after the campaign ends.

This sort of record won't prevent every issue, but it gives your business a clear paper trail. If a platform, customer, regulator or brand owner later asks questions, you won't be relying on memory.

Key Takeaways

• You can usually use AI-generated images in New Zealand ads, but you need to check rights, tool terms and the full ad context.
• AI content and copyright in NZ can be more complex than standard stock images, especially where contractors, agencies or reference images are involved.
• Copyright, trade mark, privacy and Fair Trading Act risks can all arise from one AI-generated visual.
• Don't use prompts that ask for a specific artist, brand, celebrity, competitor or protected character unless you have a clear right to do so.
• Save your prompts, tool terms, licences, edits and approvals so you can show how the image was created and reviewed.
• A tailored AI image policy or approval record can help your marketing team move faster with fewer surprises.

If you'd like help with your AI image review process, advertising terms, agency agreements or privacy consent wording, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.