Balancing AI Innovation and IP in the Toy Industry

Justin Pierce: 00:13

If you're a business leader or general counsel, you already know AI isn't just another tech trend. It's the next frontier, reimagining and reshaping how companies operate and compete. With that transformation comes complexity around intellectual property, data rights, regulatory oversight, litigation exposure, and brand integrity. This podcast is designed to give you clarity. I'm Justin Pierce, cochair of Venable's intellectual property division.

Justin Pierce: 00:43

In this season, I'll talk with colleagues and industry leaders about how AI is reshaping business, ecommerce platforms, toy companies, industrial automation, luxury brands, beyond, and the legal strategies companies need to protect innovation while moving fast. Our goal is simple, to help you turn our legal insight into your competitive advantage. Welcome to season two of AI and IP, The Legal Frontier. This week, we're talking about AI innovation and IP in the toy industry.

Justin Pierce: 01:23

Hi. I'm Justin Pierce, a partner at Venable and co chair of the firm's intellectual property division. As AI tools rapidly reshape creative industries, companies built on intellectual property face a unique balancing act. For toy and entertainment brands, AI can accelerate ideation, prototyping, and speed to market, but it also raises complex questions about copyright ownership, data governance, and child facing technologies. In this episode, we sit down with Spin Master, a global children's entertainment company, and Venable's AI Solutions Hub lead, to explore how the toy industry is adopting AI thoughtfully, moving quickly, but with guardrails firmly in place. We'll discuss what responsible AI governance looks like in practice, and how creative companies can innovate without falling off the cliff.

Justin Pierce: 02:19

With me are Kalvin Sie, vice president and associate general counsel at Spin Master, and my colleague, Meaghan Kent, a partner at Venable and a seasoned IP litigator. Kalvin, Meaghan, welcome.

Meaghan Kent: 02:33

It's great to be here.

Kalvin Sie: 02:34

Hey, Justin. Glad to be here.

Justin Pierce: 02:36

Let's get started. Kalvin, you are a veteran in the toy industry, and you've had a very interesting legal career. What's your current role and position at Spin Master?

Kalvin Sie: 02:49

Yeah. I'm VP legal associate general counsel at Spin Master. So it's it's actually my thirteenth year at Spin. So I guess veteran is a right word to to describe where where I'm at in my in my journey so far here.

Justin Pierce: 03:02

Excellent. Can you tell us a bit about how you got there? What brought you to Spin Master?

Kalvin Sie: 03:07

Yeah. I mean, children's entertainment is definitely fun and exciting, but I started off as any corporate lawyer would in private practice on Bay Street here in Toronto. After I spent a years few years cutting my teeth, learning how to be a lawyer, the chance came about for me to hop in house. And so it's been, yeah, thirteen years since.

Justin Pierce: 03:33

You know, with that kind of time period behind you, you've got quite a vantage point, not just of your company, but of the toy industry and some of the changes and growth that's happened within that period of time.

Kalvin Sie: 03:44

Oh, yeah. For sure. I mean, when I first joined Spin, we were still privately held. And so went through the adolescent teenage years, as we sometimes call it when we went public. And since then, it's been upwards and onwards in terms of, growth, acquisition by acquisition, but also in terms of how the other, players in our space.

Kalvin Sie: 04:09

But, we've grown from a toy company, to a entertainment company in terms of making movies and TV shows and also, have a pretty strong digital arm as well. So TED, as we like to call it, toy entertainment and digital.

Justin Pierce: 04:25

Great acronym. Really shows the growth from toy industry to media and entertainment. With that, Meaghan, thanks again for joining us. Can you tell us about your position at Venable?

Meaghan Kent: 04:36

Yeah. Happy to, Justin. So I'm an intellectual property attorney focusing primarily on copyright and trademark counseling and litigation, which in the last few years has been really focused on artificial intelligence and copyright issues, been advising clients on on those issues, which has expanded to AI governance and AI policies. And then within the firm, I am the chair of our AI Solutions Hub, which is our, group of folks focused on AI governance for the firm and what different AI tools we're adopting as attorneys.

Justin Pierce: 05:12

Thanks, Meaghan. With that, let me turn to Kalvin. We know what you're doing with respect to AI issues, Meaghan. But Kalvin, in your particular role, what aspects of AI do you oversee, supervise, or manage?

Kalvin Sie: 05:28

Going back to to late '22 , I've been involved with helping to craft the AI policy and, broadly speaking, our AI governance toolkit. And now we're on to the AI rollout phase of the tools that we wanna, go forward with both at an enterprise level and also some of the more niche tools that we're considering to help our different business groups and stakeholders. So with the the unleashing of GPT, I think, 3.5 in that research preview back in November and December, I guess, of '22, and it's been a crazy ride, since since then.

Justin Pierce: 06:07

That means really since one of the earlier frontier model versions you've been involved with AI as a user and now obviously integrating it with your business. That's good to hear. With that, I wonder how did you develop some of the skill set and background in AI policy or AI governance?

Kalvin Sie: 06:28

I think first and foremost, I have an interest in technology and technology law in general. I think it helps that for my generation, I joke around with my kids quite a bit to say, my wife and I, we started using the Internet when the Internet was first born. Right? From ICQ days, through to MSN Messenger. This is like dialing up 144288 modem.

Justin Pierce: 06:57

Right.

Kalvin Sie: 06:58

So but with that, I think there's definitely the ability to embrace technology and change as it comes forward. So definitely not scared. And I think that's really important to be able to, want to experiment and want to learn. The governance work is unique to the types of tools we see in terms of language models and video models and now world models and robots, but governance overall as a lawyer or attorney is not really that strange.

Kalvin Sie: 07:29

So kinda mixing both worlds and then going from there.

Justin Pierce: 07:33

Given your vantage point, what are some of the exciting or interesting ways you've seen AI being adopted or used in your industry or at the company?

Kalvin Sie: 07:42

First and foremost, there's a lot of talk around truth in productivity gains and efficiency. So I think to some of the tools that we've evaluated and some of the tools that I've talked to my friends and other folks in the industry about, the ability to really capture the power of AI is, in a lot of ways, increasing your speed to market. So, that that goes for anything from quickly summarizing meeting notes. A very kind of low hanging fruit level to really moving quickly and having the ability to generate a 3D model, the same day that you have a sketch and drawing and using the technology to to do that as opposed to in the in the older days where you'd have to perhaps farm it out to a third party just as an example.

Kalvin Sie: 08:36

So, yeah, tremendous amount of speed there. I would say creativity and ideation wise, a a big explosion in terms of the the ability to quickly iterate and version. That's another area that we've seen a lot of growth. And as Meaghan probably will tell you, along with that growth is a minefield in terms of intellectual property rights protection. So, kind of double edged sword there for sure.

Justin Pierce: 09:01

I bet. So as you're moving fast. Let me turn to Meaghan. Hearing that, what are some of the exciting and interesting things that you've seen, with your clients, particularly those in the the toy industry?

Meaghan Kent: 09:11

Yeah. Especially in the toy industry. I agree that ideation and that creativity and then testing out different ideas pretty quickly, and creating those 3D models or variations of the ideas and toys is a great use case. I would say that the toy industry, I don't know if you'll agree, Kalvin, has been a little bit slower to adopt some of these tools than some other industries, I think for a couple reasons. One is the importance of copyright to the value of the company and everything that they're creating.

Meaghan Kent: 09:47

Where copyright is concerned, there's no copyright protection for generated content when you're using generative AI, and so there has to be a lot of caution for creative companies in using Gen AI tools. So they're moving a little bit more slowly, and a little bit more cautiously, which is fair and is a good thing for them to be doing. The other issue is that it's a child facing company. As Kalvin was saying, it's children's entertainment.

Meaghan Kent: 10:15

So you have to be very thoughtful about the data, the private information that they're gathering and using, and then also the sort of public perception of AI and this sort of mixed bag on what parents want their children exposed to. So going beyond just what the businesses are using, but if they're using AI in toys or in entertainment, being a little bit more cautious.

Kalvin Sie: 10:38

I think, Meaghn, that's what I've seen firsthand, but also, in the toy industry in general , cautious, slow, not first, but hoping not to be last either. And I think that's one of the key takeaways, for what we've seen here.

Justin Pierce: 10:55

I like that. The middle of the pack approach.

Kalvin Sie: 10:58

Yeah. For sure.

Narrator: 11:01

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Justin Pierce: 11:36

So obviously, we've been talking a bit already about some of the aspects of governance like the toolkits, having policies. Meaghan, you have a unique role in that area within the law firm. Can you speak to us a little bit about that aspect of AI governance and and policy and kind of control and use, from your perspective as an outside counsel and in your role at the law firm?

Meaghan Kent: 12:03

From a law firm's perspective, of course, we're thinking about our client obligations. There is confidentiality, attorney client privilege. So we're very thoughtful about client data and how we're using that data and ensuring that we're only using enterprise level tools. So I think that goes to the point I made earlier that's similar for a children's entertainment company thinking about their customers' data. We're in the same boat where we're being cautious. We have to be very mindful of what we're doing with the data. So having governance in place and setting guardrails is really critical for us, and that's what we've done so as not to stagnate the adoption, but to make sure that we're doing in a very responsible and ethical way.

Justin Pierce: 12:50

Kalvin, similar question. And I think with your journey and with the journey of your company moving not just in the toy space, but more to entertainment and media, AI governance must play a significant role. How is that managed at your company and how have you seen it managed within your industry?

Kalvin Sie: 13:10

I think the the best in class approach that I've seen, across many different players, they would have first and foremost an AI council or AI task force or committee set up. I think that's really important because it allows for consistent oversight across the organization. So not only does the left hand know what the right hand is doing, but also you have one centralized, authority to help manage and and set the tone.

Kalvin Sie: 13:47

And, the other thing is having that strategy from the top down approach. You can then have all the other key stakeholders involved knowing how to move quickly. Because to Meaghan's point, especially for in house counsel, but for outside counsel as well. It's not that you want to, stop from someone from sprinting. If you're sprinting and you're headed potentially off the cliff, you probably want put a fence there so you're guiding them so that they can still sprint alongside the cliff. I don't know if that's the best analogy. We definitely don't want folks falling off the cliff, but also don't want them to just stop. Stagnation is is not the solution.

Justin Pierce: 14:29

Right.

Meaghan Kent: 14:29

Love that analogy. I'm going to use that for sure.

Justin Pierce: 14:33

I do like that image. It gives you some guardrails, but still allowing somebody to move fast. You just don't want something catastrophic to happen. With that, I wonder, Kalvin, who should own AI risk in companies, and you've been in a company that's grown over the years. Sometimes it's a particular executive, particular person.

Justin Pierce: 14:54

Sometimes it's different functions like legal, IT, security, privacy, people who do product and design, and then a myriad of different approaches there. In terms of who owns that decision making, who owns the risk, what's your thought on best practices there?

Kalvin Sie: 15:11

I think if you have a council set up, I think that lends itself to a very natural funneling, if you will, of who has oversight, at least at the at a very high level. For our company and for other companies, especially ones that are very large, you'll have different stakeholders in different areas. For example, while legal may own the policy, the other stakeholders in the toy or digital or entertainment area naturally, the accountability needs to reside with them. And so, to answer your question, it's it's a mixed approach.

Kalvin Sie: 15:48

I know smaller companies who perhaps are in a more niche industry may have one AI council or task force make all the determinations. I think it's also a function of budget. If you if you have one AI budget for the entire company versus the AI spend, if you will, being a part of each stakeholder, each area's different cost center, again, naturally, it it makes sense that they would hav, accountability, and that they would reside with the with that business center.

Justin Pierce: 16:20

Right. So moving from that, I'd like to get into some of the AI related challenges and risks in your industry. Looking at the toy and media industry as it's focused on kids, at least from that aspect, what do you think are some of the biggest challenges and risks that at least concern you the most, Kalvin?

Kalvin Sie: 16:41

Gosh. I mean, if we're talking about children and public facing, AI chatbots, for example, or inclusion of AI technology in toys, that's a that's a whole area that to Meaghan's point, I think the toy industry in general is slow or slower to to move forward with. Obviously, that's also dependent on which jurisdiction you're in. Maybe this is not just, again, toy industry, but it affects others as as well. It's hard to tell sometimes, especially with the technology, what's real and what's not real. So that has a couple of different implications. There's the deep fakes and and ads and scams and that sort of thing. But also from an IP protection standpoint, having the ability to really anchor down on fundamental data providence principles. And I know there's a couple of different players trying to solve for that right now in the industry, with the C2P standard for for example.

Kalvin Sie: 17:45

But, that whole area of making sure that we know where things came from and what's real and what's not real is not only relevant for IP protection in the children's entertainment and toy industry, but but across the board.

Justin Pierce: 18:03

So maybe in other words, the importance of technology to fight against deep fakes wherever they may pop up or may wherever they may appear.

Kalvin Sie: 18:12

It's an arms race. Right? It's like using AI to fight AI. Yeah.

Justin Pierce: 18:17

Certainly something I've heard about. Meaghan, your thoughts on that just given how many, players in the toy industry you represent?

Meaghan Kent: 18:24

I totally agree. It's a technology concern and coming up with standards as an industry because the regulation though it's being talked about, is very slow moving at the moment. So it really comes down to the industry working together and and sort of setting the the the baseline for itself.

Justin Pierce: 18:42

That's good to hear. Kalvin, you mentioned, as we just talked in that last exchange about AI being used to fight AI. That makes me think, have you seen any success with the use of AI tools to address any of the issues that we've discussed so far, whether it's deep fakes or I know sometimes counterfeiting or knockoffs. That's another version of not knowing whether something is real or not can impact the toy industry.

Kalvin Sie: 19:08

Counterfeits and knockoffs have have plagued our company and industry since forever. It's, again, another one of those double edged swords where it's almost like the more successful your brand is, the more that it's gonna get knocked off. We've actually seen quite a number of embedded AI tools, for example, in the ability to police, and do a takedowns on our ecommerce and online marketplaces, and also in trademark registrations. So those tools are sometimes, net new, but oftentimes, especially in the last, I'd say, year and a half or two years, have been added on as additional AI offerings or modules in existing products. And so that's been actually quite helpful.

Justin Pierce: 19:55

That makes me wonder, are there any success stories that you can talk about in terms of whether it's in the field we just talked about with protecting the brand or just at large with regarding the use or leverage of AI tools that you can share?

Kalvin Sie: 20:12

Not being first and definitely not being last, but the middle of the pack sort of approach for us, at least, allowed us to really make sure that we were starting off on our AI journey on the right foot. I know a lot of people, especially in our company, but also other companies, wanted to move quicker than we actually did. And that's for good reason because, again, you you want to be able to not only keep up but capitalize and take advantage, and and make sure you're ahead of the pack. But I would say it's a success story because one of the benefits is that the others that have gone first, you see where they foot faulted. Where the pitfalls are and how to avoid them. And so I think that's a blessing in disguise for sure and one of the success stories for us. The other thing I'll say is getting people in your company not only excited about AI and and not being afraid of it, but also having the proper education programs and lunch and learns in place not only helps them in making sure that they understand what role AI is to play in enhancing the value they add, but also, society at large. It's not like you can hide under a rock and. This AI tsunami is coming whether we like it or not. So it's better to embrace it.

Justin Pierce: 21:42

Meaghan, your thoughts on that? I really have to credit Kalvin and Spin because they've been very thoughtful about AI adoption within the company to the point of protecting their intellectual property because it's just so critical to the business. But the way they've done it, not only setting guardrails, but really working hand in hand with the design teams and the teams that will be using the AI to understand how it's going to be used, helping them incorporate the different, guardrails that are being set, so giving them practical guidance. Not just setting a policy that no one understands, but working with them to explain what the policy really means and what it's going to mean as you're working through that design process to have a human in the loop. What does that actually look like? They've been very good and very thoughtful about working with their design teams on that.

Justin Pierce: 22:35

Kalvin, your answer earlier about including things like education and increasing awareness is interesting because I think that actually goes to the culture shift that you have to make in a company that's using AI. A lot of times, organizations don't talk about that aspect. We fall right into the trap of just talking about the technology and not the people who have to implement it. Are there other things that you've seen happen at Spin or in the industry that you think went to that issue of going right to the culture, mindset, education of employees or contractors around AI that was helpful?

Kalvin Sie: 23:13

I think probably the best way to put it is everyone is is reading the headlines and everyone has a certain degree of anxiety. It's actually quite a genuine response in being truthful to say, hey, we're all in the same boat here. We're we're trying to figure out how to, again, add value, what our role is here, and to do what's best for the company.

Kalvin Sie: 23:36

So I think for myself and and what I've tried to do, both outside of Spin, but also within Spin, for the last three years or so, is to make sure people understand the power which they now have with the technology that's before them. But also not to be scared of the speed of technological advancement. And I think keeping abreast of key developments in the area where the world is headed really helps guide where we want to be as a company. And, know, again, where we see us adding the the most value in in terms of making sure we're going forward on the on the right foot.

Justin Pierce: 24:21

Excellent. So as we close here today, we've covered a lot of different issues. Kalvin and Meaghan, I'd like to go through some takeaways. One that I see here, we just touched on it a little bit, is the importance of being able to move quickly within reason, move with guardrails, that's governance. And governance is something that strikes me as it's not a limiting thing.

Justin Pierce: 24:44

It helps you have that thoughtful planning, whether it's middle of the pack or the opposite, of moving fast and breaking things that we've heard other companies use, which I think is very appropriate in a children's facing toy industry. Other takeaways, Kalvin? Meaghan?

Kalvin Sie: 25:00

To really hammer the point home, if companies are thinking about responsible adoption, having an AI policy first and foremost, is key. Setting up an AI task force or AI council is also very important. And AI governance in general. I would say to have that framework, that's clear and and also easy to understand, allows for everyone in the company to then be able to move quickly and really go. Right?

Kalvin Sie: 25:34

Thank you. Megan?

Meaghan Kent: 25:36

I'll just add one other point, which is Kalvin mentioned he'd been using these tools since 2022. Not all of us are as early adopters as Kalvin necessarily is, but I'll say that if we're going to be advising clients in this space and we're gonna be advising the business teams in this space, we need to use the tools. So we need to start to become adopters of these tools and just get in there and really learn what their capabilities are in order to be able to really set those appropriate guardrails.

Justin Pierce: 26:03

Great points. Excellent conversation today. Thank you, Kalvin, and thank you, Meaghan.

Meaghan Kent: 26:09

Thank you, Justin.

Kalvin Sie: 26:10

Thank you. Anytime.

Justin Pierce: 26:12

That's about all we have time for today. I want to thank Kalvin Sie and Meaghan Kent for sharing how creative companies can adopt AI responsibly, protect their intellectual property, and build governance frameworks that allow teams to move fast without losing control. You can read more about how Venable is helping businesses navigate the AI frontier by visiting venable.com/ai. Please join us next week when I talk to my Venable colleagues, Kristen Ruisi and Maria Sinatra about how brands, celebrities, and rights holders can adapt their protection strategies, leverage AI responsibly, and stay ahead of infringement in an increasingly synthetic digital landscape.

Justin Pierce: 26:59

I'm Justin Pierce. Thanks for listening to AI and IP, the Legal Frontier.