Artificial intelligence companies are exploring locating their data centers on satellites.
Satellites address many of the constraints on terrestrial data centers generated by the demands of AI. Sunlight provides power, the cold temperature provides cooling, and the location in orbit avoids land-use restrictions. This is not just the topic of keynote speeches, IT and defense-tech companies are already researching or prototyping systems that would train and run AI models in orbit.
Whether these projects succeed or not, the legal issues they raise are not hypothetical. They create bona fide questions for contract drafting, licensing, enforcement, data governance, and compliance. Now is the appropriate time for companies and their data professionals and legal counsel to identify and plan for the risks. One goal should be to update their legal frameworks before the first commercially viable “data centers in the sky” come online.
This article outlines the key issues we are thinking about as the line between Earth-based and orbital data center computing begins to blur, and space-based infrastructures challenge legal infrastructures and data governance.
1. “Worldwide” Licenses and Limitations
Many commercial licenses, including IP licenses — whether for datasets, media assets, technology assets, or AI model-training materials — use “worldwide,” “throughout the universe,” or “in all territories now known or hereafter devised” to define the scope of rights. In legal practice, “worldwide” traditionally means Earth: nation-states and their territories. Space operates under a different legal regime, largely shaped by the 1967 Outer Space Treaty, which treats outer space as a global commons and assigns control based on the country that launches or registers the spacecraft.
If data is processed, copied, or stored on satellites, courts may be forced to decide whether space-based computing falls outside the scope of a “worldwide” license. A licensor could argue that the licensee exceeded the grant by moving data “off-planet,” creating an unintended new use. Moreover, even defining the equivalent of “territory” as “throughout the universe” raises questions as well as addressing them.
The legal issues and regulatory rules involving data governance and legal rights in data centers in orbit have antecedents. Thirty years ago, the rise of cable and satellite TV forced the entertainment industry to revisit how the scope of license rights were defined, because existing agreements assumed that the use of content would be defined by national borders. Companies in the industry adopted new agreements to respond to the new form of content distribution. A shift to orbital AI computing will trigger a similar round of contract revisions. It will require lawyers and data professionals to develop innovative solutions. As suggested above, companies need to draft new contracts and update existing contracts to use explicit language covering “orbital,” “off-planet,” or “extraterrestrial” uses to avoid ambiguity later as to the scope of use. Other legal issues are outlined below.
2. Where Does IP Infringement Occur?
Traditional intellectual property law is grounded (pun intended) on geographic location and national boundaries. Satellite-based data centers raise new questions: Where is an unauthorized copy of copyrighted material made for legal purposes, and which jurisdiction’s laws apply? A location in space complicates these legal issues and has implications for data governance.
When AI data training and inferences are drawn from output generated on a satellite, infringement might theoretically occur in:
- the country where the satellite was launched
- the country where it is registered
- the country operating the ground station
- the location of the user who submitted the data
- or outer space itself, which is not under any nation’s sovereignty
The Law of the Sea as extended to commerce in space is another source of law. The issues listed above create uncertainty not only about which law applies, but also about where a lawsuit can be filed. Defendants may challenge jurisdiction, venue, or the applicability of national statutes to activities conducted in orbit. Plaintiffs may struggle to argue that U.S., EU, or other IP laws reach off-planet copying.
This is the kind of ambiguity requires that companies and lawyers proactively address these legal issues by using contract language specifying choice of law, venue, and enforcement rights, regardless of where computing physically takes place. Arbitration is a common dispute resolution procedure in technology agreements, and aspects of traditional arbitration provisions should also be reconsidered. Because arbitration is a creature of contract and subject to the parties’ private agreement, we predict a rise in its use.
3. Enforcement and Evidence: How Do You Inspect a Satellite?
On Earth, IP enforcement against infringement relies on tools like forensic imaging, seizure of hard drives, discovery of server logs, and on-site inspections. Space breaks these tools. A court cannot easily order the seizure of a satellite. Inspecting hardware in orbit is not possible without specialized spacecraft. From a user’s perspective, retrieving logs may depend entirely on a vendor’s operation. Even if a company promises access, operational constraints or international jurisdictional barriers may prevent it. This creates a litigation discovery gap. Evidence of training data, model checkpoints, or logs might exist only on orbital hardware that a plaintiff cannot access. Defendants could argue that they cannot retrieve evidence due to technical or safety limitations.
To avoid evidence “floating out of reach,” data companies should seek contractual rights to all processing logs and intermediate data. Lawyers should also ensure that audit rights, including virtual audits, extend to off-planet infrastructure. The problems that arise on Earth will also arise in space, and with additional complications.
4. Data Privacy and Localization Are Suddenly Complicated
Many jurisdictions require that personal data remain within national borders or meet strict compliance conditions in cross-border transmission. Examples include the EU’s GDPR, China’s Personal Information Protection Law (PIPL), India’s DPDP Act, and Brazil’s LGPD.
Because a satellite is not located in any national territory, if an AI provider processes regulated data in orbit, its customer may be held to violate cross-border transfer restrictions, especially if the vendor failed to disclose that some AI operations occur off-planet, and this may subject the customer to potential liability. For lawyers, this raises questions about the scope and enforceability of indemnification rights.
In due diligence in corporate transactions and in contractual negotiations, companies should begin updating their information security requirements, privacy impact assessments, and compliance audits to ask, “Does any processing occur on orbiting or extraterrestrial infrastructure?” In addition, under U.S. law, the transmission of certain data or technology to a foreign country or to a foreign national can constitute an export subject to regulatory restrictions, sanctions, and penalties. Companies should also start mapping out whether any of their datasets, models, or training materials fall under export-control restrictions that might apply differently once computing occurs off-planet.
5. Contractual and Insurance Gaps Increase in Importance
Most cloud contracts and cyber insurance policies assume all processing happens on Earth. They do not address such things as satellite collisions, radiation damage, solar storms, loss of access due to orbital debris, or the failure of a satellite-to-Earth data link.
If a model or dataset is lost in orbit, is that a force majeure event, or an insurance covered event or negligence by the operator? These questions will eventually be litigated but consideration of them should begin now.
6. Practical Steps to Prepare for a Future that is Closer than It Seems
Satellite data centers will not arrive overnight. Neither will they wait for lawyers and data professionals to catch up. Even early pilot projects raise issues that ripple back into today’s contracts, privacy frameworks, compliance assessments, and risk allocation models. Moreover, lawyers and data professionals must work together to address the issues raised in this article. The data and legal issues are interrelated and cannot be addressed as siloed problems.
Forward-looking companies can take practical steps now:
- Update license scopes
Add explicit language permitting (or prohibiting) orbital data processing - Clarify jurisdiction
Specify choice of law, venue, and enforcement rights for any data processed off-planet - Strengthen audit and inspection rights
Ensure logs and evidence never exist exclusively in orbit - Revise privacy and vendor-management policies
Review export-control implications require disclosure of orbital infrastructure and validate compliance with localization rules - Address liability and insurance gaps
Review indemnity and force majeure language for space-specific risks
Conclusion
Orbital data centers may be in operation in the near future, but the legal questions they raise are already here and should be considered now. As AI systems become more energy-hungry and the terrestrial constraints on data centers grow tighter, the incentive to push data and computing into orbit will increase. Lawyers and data professionals who begin preparing now will be better positioned to navigate this shift to best protect their clients and companies.
William Tanenbaum is the Chair of the AI & Data Practice Group and an intellectual property and technology partner at the law firm of Moses & Singer LLP. He is ranked as a “leading name in AI,” a “go-to” data lawyer, a “Thought Leader Global Elite in Data Law” (one of only five in the U.S.) and as one of the “Top 10 Pioneering Tech Lawyers Shaping NY’s Legal Landscape.”
Robert Rosenberg is a partner at Moses & Singer who practices intellectual property law, entertainment and media law and AI and data law. He was previously Executive Vice President and General Counsel at Showtime Networks, among the other positions he held before joining the firm. He is recognized as a legal and digital strategy leader who plays a pivotal role in driving growth and innovation in the media and other industries.
