Ask a creative team what licence their AI image models use and the most common answer is "it is open source". Usually it is not. Most popular image models are open weights, released under model-specific licences with terms that can surprise a business.
This is a governance gap, and it sits in pipelines that are already producing client work.
This is not legal advice. It is a summary of licence text with links, for your counsel to review.
Two Licences, Two Very Different Rules
FLUX.1 [dev]. Its Non-Commercial License v1.1.1 limits the model to non-commercial purposes and says use "for revenue-generating activity" does not qualify. Yet Section 2(d) says you "may use Output for any purpose (including for commercial purposes)", with exceptions such as training a competing model. Selling an image and running the model as part of a paid service are treated differently.
Stable Diffusion 3.5. Stability AI's Community License allows commercial use until you or your affiliates "generate more than USD $1,000,000 in annual revenue", counted "regardless of whether that revenue is generated directly or indirectly" from the models. Above that line, the licence terminates and an enterprise licence is required.
| Risk | Where it bites |
|---|---|
| Revenue-generating use of a non-commercial model | Agencies and in-house teams using FLUX.1 [dev] in paid production |
| Revenue threshold measured at company level | Any business over $1M, including through affiliates, using SD 3.5 without an enterprise licence |
| Add-on licences | LoRAs, ControlNets and upscalers with their own, sometimes stricter, terms |
| Copyrightability of outputs | Assets made from prompts alone |
The Licence Is Not the Last Word
A licence can only grant what the law allows. The U.S. Copyright Office's January 2025 report, Copyrightability, concludes that "prompts do not alone provide sufficient control" and that copyright does not extend to purely AI-generated material. Owning an output as against the model maker is not the same as owning enforceable copyright in it.
"Open Source" Versus "Open Weights"
The confusion starts with vocabulary. Open-source software licences, such as MIT, grant broad rights to use, modify and distribute code, including commercially. Many AI models are distributed differently: the weights are downloadable, but the licence is written by the model's maker and can restrict who may use it, for what, and above what revenue. Being able to download a file says nothing about what you may do with it.
That distinction matters inside a single tool. Vision Studio itself is MIT-licensed software. The models it runs are not covered by that licence; each carries its own. An organisation that approves a tool on the basis of the tool's licence has approved only part of the stack.
Three Scenarios Legal Should Review
- An agency producing client campaigns with FLUX.1 [dev]. The outputs clause permits commercial use of images, but the model is running as part of a paid service. Counsel should read the Non-Commercial Purpose definition against how the agency actually works.
- A subsidiary using SD 3.5 under the Community License. The subsidiary may be small, but the threshold counts affiliates. If the group exceeds $1 million in annual revenue, the free licence may not apply.
- A team stacking community LoRAs on a permissive base model. Each add-on has its own terms. One restrictive LoRA can make the whole pipeline non-commercial.
Licences Change
Model licences are revised, and a version number on the licence text is the clue. The FLUX.1 [dev] licence is published as version 1.1.1. A licence accepted for a project last year may not match the text on the model page today. Record the version and date accepted with each project, and recheck licences when models are updated or re-downloaded.
Who Owns the Inventory
Licence risk persists in many organisations because nobody owns it. Creative teams choose models, IT installs tools, and legal reviews contracts, but a model licence is none of those things. The fix is to assign it. A practical split: the team using a model records it and its licence version in a shared inventory; legal reviews new entries against the use described; and procurement or IT blocks tools that cannot show which models they run. That turns licence compliance from a heroic one-off audit into a routine step.
Common Misreadings
- "It is on Hugging Face, so it is free to use." Hosting says nothing about terms.
- "We only sell the images, so the model licence does not apply." Some licences restrict how the model is used, not just the outputs.
- "We are under the revenue threshold." Check whether affiliates count. In the SD 3.5 licence, they do.
When to Pay for a Licence
An enterprise licence is often cheaper than the risk it removes. If a model is central to revenue-generating work, or the organisation is near or above a free tier's threshold, a commercial agreement turns an ambiguous position into a contractual one. Weigh the fee against the cost of re-producing assets, or withdrawing them, if the free licence turns out not to apply.
The Audit
- Inventory every model in every pipeline, including LoRAs, ControlNets and upscalers.
- Classify each use: selling outputs, or running the model inside a revenue-generating service.
- Test thresholds at group level, including affiliates.
- Record the licence version accepted, with the project.
- Document human authorship for assets you need to protect.
Tooling That Surfaces the Terms
Licence risk grows when licences are invisible at the moment of choice. In Vision Studio, our open-source generation app, model search shows each result's licence before install, the one-click starter set leaves out FLUX.1 [dev] because of its non-commercial licence, and gated models such as SD 3.5 require the user to accept the licence on Hugging Face themselves.
The Takeaway
Open weights are a strategic asset for any creative operation. They are also contracts. Run the inventory now, while the answer is still a spreadsheet and not a dispute.
The creator-level guide to these licences is on the Vision Studio blog at vision-studio-x.com/blog/free-to-download-not-free-to-ship. Vision Studio is a free, open-source, local-first AI generation app built by Strategia-X. If you want a second pair of eyes on how your organisation adopts AI tooling, talk to us at strategia-x.com.
-Rocky
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