Month: May 2025

AI’s Habit of Information Fabrication (“Hallucination”): Where’s the Human Factor?

An illustration of a cartoonish robot face on a computer screen with the text 'THE WORLD IS FLAT' above it.

Image: Shutterstock (with AI assist)

It is well known that when AI applications can’t respond to a query, instead of admitting they don’t know the answer, they often resort to “making stuff up”—a phenomenon commonly called “hallucination” but which should more accurately be called for what it is, total fabrication. This was one of the legal issues raised by the New York Times in its lawsuit against OpenAI, with the Times complaining, among other things, that false information attributed to the journal by OpenAI’s bot undermined the credibility of Times journalism and diminished its value, leading to trademark dilution. According to a recent article in the Times, the incidence of hallucination is growing, not shrinking, as AI models develop. One would have thought that as the models ingest more material, including huge swathes of copyrighted and curated material such as content from reputable journals like the Times (without permission in most instances), its accuracy would improve. That doesn’t seem to be the case. Given AI’s hit and miss record of accuracy, it should be evident that AI output cannot be trusted or, at the very least, can only be trusted if verified. Not only is AI built on the backs of human creativity (with a potentially disastrous impact on creators unless the proper balance is struck between AI training and development, and the rights of creators to authorize and benefit from the use of their work), but human oversight and judgement is required to make it a useful and reliable tool. AI on auto-pilot can be downright dangerous.

The most recent outrageous example of AI going astray is the publication by the Chicago Sun-Times and Philadelphia Inquirer, both reputable papers (or at least they used to be), of a summer reading list in which only five of fifteen books listed were real. The authors were real but most of the book titles and plots were just made up. Pure bullshit produced by AI. The publishers did a lot of backing and filling, pointing to a freelancer who had produced the insert on behalf of King Features, a unit of Hearst. Believe it or not, it was actually licensed content! That freelancer, reported to be one Marco Buscaglia, a Chicago “writer”, admitted that he had used AI to create the piece and had not checked it. “It’s 100% on me”, he is reported to have said. No kidding. Pathetic. Readers used to have an expectation that when a paper or magazine published a feature recommending something, like a summer reading list, the recommendation represented the intellectual output of someone who had done some research, exercised some judgement, and had presumably even read or at least heard about the books on the list. How could anyone recommend non-existent works? The readers trusted the newspaper, the paper trusted the licensor, the licensor trusted the freelancer, the so-called author. Nobody checked. Where was the human element? The list wasn’t worth the paper it was printed on.

The same problem of irresponsible dependence on unverified information produced by AI is a growing problem in the legal field. Prominent lawyer and blogger Barry Sookman has just published a cautionary tale about the consequences of using hallucinatory AI legal references. Counsel for an applicant in a divorce proceeding in Ontario cited several legal references using the CanLII database (for more information on CanLII see “AI-Scraping Copyright Litigation Comes to Canada (CANLII v Caseway AI”) that the presiding judge could not locate—because they did not exist. He suspected the factum had been prepared using Generative AI and threatened to cite the lawyer in question for contempt of court, noting that putting forward fake cases in court filings is an abuse of process, and a waste of the court’s time. The lawyer in question has now confirmed that AI was used by her law clerk, that the citations were unchecked, and has apologized, thus avoiding a contempt citation. Again, nobody checked (until the judge went to the references cited).

This is not even the first case in Canada where legal precedents fabricated by AI were presented to a court. Last year in a child custody case in the BC Supreme Court, the lawyer for the applicant was reprimanded by the presiding judge for presenting false cases as precedents. The fabricated information was discovered by the defence attorneys when they went to check the applicant’s lawyer’s arguments. As a result, the applicant’s lawyer was ordered to personally compensate the defence lawyers for the time they took to track down the truth. The perils of using AI to argue legal cases first came to prominence in the US in 2023 when a New York federal judge fined two lawyers $5000 each for submitting legal briefs written by ChatGPT, which included citations of non-existent court opinions and fake quotes.

Another area fraught with consequences for using unacknowledged AI generated references is academia. The issue extends well beyond undergraduate student essays being researched and written by AI to include graduate students, PhD candidates and professors taking shortcuts. This university library website, in its guide to students on use of AI generated content, notes that LLMs (Large Language Models used in AI) can hallucinate as much as 27% of the time and that factual errors are found in 46% of the output. The solution is pretty simple. When writing a research paper, don’t cite sources that you didn’t consult.

This brings up the question of “you don’t know what you don’t know”. If your critical faculties are so weak as to not be able to detect a fabricated response, you are in trouble. Of course, some hallucinations are easier to spot than others. Some of the checking is to simply verify that a fact stated in an AI response is accurate or that a cited reference actually exists (but then it should be read to determine relevance). In other cases, it may be more subtle, with the judgement and creativity of the human mind being brought into play to detect a hallucination. That requires experience, knowledge, context—all of which may be lacking in the position of a junior clerk or student intern assigned the task of compiling information. This is all the more reason why it is important for those using AI to check sources, and to exercise quality control. Part of the process is to ensure transparency. If AI is used as an assist, that should be disclosed.

At the end of the day, AI depends on human creativity and accurate information produced by humans. Without these inputs, it is nothing. This brings us to the fundamental issue of whether and how copyright protected content should be used in AI training to produce AI generated outputs.

The US Copyright Office has just released a highly anticipated study on the use of copyrighted content in generative AI training. Here is a good summary produced by Roanie Levy for the Copyright Clearance Center. The USCO report is clear in stating that the training process for AI implicates the right of reproduction. That is not in doubt. It then examines fair use arguments under the four factors used in the US. Notably, with respect to the purpose and character of the work used for training, USCO notes that the use of copyrighted content for AI training may not be transformative if the resulting model is used to generate expressive content or potentially reproduce copyrighted expression. It notes that the copying involved in AI training can threaten significant harm to the market for, or value of, copyrighted works especially where a model can produce substantially similar outputs that directly substitute for works used in the training data. This report is not binding on the courts but is a considered and well researched opinion by a key player.

It is interesting to note that the report was released quickly in a pre-publication version on May 9, just a day before the Register of Copyrights (the Head of the Office) Shira Perlmutter was dismissed by the Trump Administration and a day after the Librarian of Congress, Carla Hayden (to whom Perlmutter reports) was fired. Washington is rife with speculation on the causes for, and the legality of, the dismissals. We will no doubt hear more on this. With respect to fair use in general, the study concludes that “making commercial use of vast troves of copyrighted works to produce expressive content that competes with them in existing markets…goes beyond established fair use boundaries”. The anti-copyright Electronic Frontier Foundation (EFF), of course, disagrees. (Which probably further validates the USCO’s conclusions).

The USCO study is about infringement, not hallucination or fabrication, yet both stem from the indiscriminate application and use of AI where the human factor is largely ignored and devalued. Human creativity and judgement is needed to set guardrails on both. Transparency as to what content has been used to train an AI model, along with licensing reputable and reliable content for training purposes, are important factors in helping AI to get its outputs right. Not taking an AI output as gospel but applying a degree of diligence, common sense, fact verification or experienced judgement are other important factors in deploying AI as it should be used, as an aide and assist to make human creativity and human directed output more efficient but not as a substitute for thinking or original research. Generative AI must be the servant, not the master. Human creativity and judgement are needed to ensure it stays that way.

© Hugh Stephens, 2025. All Rights Reserved.

How will Mark Carney’s Cabinet Appointments Impact Canada’s Cultural and Copyright Industries?

Group photo of Prime Minister Mark Carney's new Cabinet, featuring members seated and standing in a formal setting with a colorful mural in the background.

Image credit: Reuters

As Canada’s cultural community assesses the make-up of Prime Minister Mark Carney’s new Cabinet, two common phrases come to mind, “Hope Springs Eternel” and “Grasping at Straws”. The cultural and copyright industries have a number of legitimate concerns, which were well articulated in a pre-election brief published by the Coalition for the Diversity of Cultural Expressions (CDCE), as I outlined in an earlier blog post. Among the CDCE’s requests in the area of copyright was a plea for fair remuneration for writers and publishers for the use of their works in the education sector. There was yet another reminder of the need for the long-promised establishment of an Artists Resale Right in Canada, along with a reiteration of the request to extend the private copying regime to electronic devices (as is done in Europe), a measure that would help in restoring royalties in the music sector. The final copyright ask was to amend the definition of a sound recording to ensure that performers and record labels receive compensation for the audiovisual use of their works. CDCE’s brief also argued for “proper implementation” of the Online Streaming Act so that streaming services and social media platforms contribute financially to the production of Canadian content as well as support for retention of–and increased funding to–the CBC. There were also policy positions regarding the use of copyrighted content for AI training purposes.

What are the chances that all or any of these requests will be addressed by the new Carney government? One might think that with all the hoopla during the election about Canadian identity in the face of repeated attacks on Canada’s integrity by Donald Trump, there will likely be some significant measures taken to strengthen Canadian culture, although the Liberal election platform does not have much to say on Canadian cultural enterprises–other than the CBC. The CBC gets some love as a “cornerstone of our national identity” and will not only not be defunded, as threatened by the opposition Conservatives, but will get an additional $150 million cash infusion as well as having its funding put on a statutory basis. As a quid pro quo the national broadcaster will have to strengthen accountability and its commitment to local news, promote Canadian culture and combat disinformation. Increased funding (we don’t know how much) will be provided to the Canada Council for the Arts, Telefilm Canada, the Canadian Media Fund and the National Film Board. That is all good stuff, but there is not a whisper of copyright reform or of changes to copyright legislation in the platform.

The lack of any overt reference to copyright issues is probably understandable given the focus of the election, which was on standing up to Donald Trump and building the Canadian economy. It is not a bread-and-butter issue for most voters, important as it is to the cultural community. Therefore, we have to look beyond the Party Platform to the roster of appointed ministers and examine their backgrounds to see if there is any prospect of progress. On this score, the story is a bit more positive.

The two key ministers, the Minister of Industry, Science and Economic Development (which holds the statutory mandate for administering the Copyright Act), Mélanie Joly, and the new Minister of Canadian Identity and Culture, formerly labelled Canadian Heritage, (a ministry that has an important though subsidiary role to play on copyright), Steven Guilbeault, both represent Quebec ridings. This is significant given the importance of support for culture and cultural enterprises in the province and the influence of the creative community there.  Guilbeault is also Carney’s “Quebec lieutenant”, which gives him extra influence. Joly, most recently Foreign Minister, is a former Minister of Canadian Heritage herself, as was Guilbeault in a previous incarnation. Thus, they know the cultural files. The CDCE was quick to congratulate both on their election, noting Joly’s appointment was a “promising signal” with respect to copyright.

Maybe. But it is unlikely that either Joly or Guilbeault will pick up the copyright ball unless they are pushed to do it. If they do, given the minority government status of the Liberals, they will need the support of another party. The Bloc Quebecois, with 22 seats(or 23, depending on what happens in the riding of Terrebonne where the Liberals won by exactly one vote out of almost 50,000 votes cast), would be logical supporters for the kind of changes to the Copyright Act sought by Canadian creators represented by the CDCE.

While having familiarity with cultural industry issues from having spent time in the past as Canadian Heritage minister is a plus, the reality is that while both Joly and Guilbeault are strong ministers, both struggled during their previous tenures at Heritage. Guilbeault’s first love is the environment, a role he held for 4 years under Justin Trudeau as Minister of Environment and Climate Change, making him Public Enemy No. 1 for Alberta Premier Danielle Smith. Her new public enemy is the current Environment Minister, Julie Dabrusin, who served briefly as Guilbeault’s Parliamentary Secretary at Environment.  Dabrusin would have been an inspired choice for Minister of Canadian Identity and Culture given the role she played as Chair of the Standing Committee on Canadian Heritage that produced the report “Shifting Paradigms”. Among other things, her Committee recommended changes to the Copyright Act to narrow the problematic education fair dealing exemption that has done so much damage to writers and publishers in Canada. But it was not to be. However, she will do just fine as Minister of the Environment. As for being attacked by Danielle Smith, that is probably a badge of honour for any environment minister. The only scenario under which Smith would not attack a federal environment minister is if Carney pulled a page from Donald Trump’s playbook and appointed someone with such an anti-environment track record (like current EPA Administrator Lee Zeldin) as to effectively disqualify them from the job. But I digress.  

Joly and Guilbeault are not the only ministers who will play on copyright issues. Among the new ministers announced on May 13 was Evan Solomon, the Minister for Artificial Intelligence and Digital Innovation. This is a new Ministry (having an Minister for AI may be a world first) and it is not altogether clear what Solomon’s mandate will be, as pointed out by Michael Geist. This is especially true as he does not have a functioning department to inherit. There are lots of issues for him to resolve, including the salient one of how and on what conditions AI developers will have access to copyrighted content for training AI algorithms. Canada has no text and data mining exception in its copyright law, let alone a broad exemption for AI training such as AI developers are seeking in the US and elsewhere. Some Canadian AI developers have been quick to use the pretext that AI development will flee Canada if they are not given free and unfettered access to creative content of others, a self-serving scare tactic if there ever was one, as I wrote about here. The fact is all countries are wrestling with the issue of how to protect valuable cultural industries while enabling responsible AI to develop. Licensing is the most obvious solution.

The CDCE had three requests with respect to AI training.

  • no Copyright Act amendment to allow technology development companies to continue using protected works, productions, and performances to train generative AI systems without authorization or compensation
  • implementation of legally binding measures requiring the disclosure of training data used in AI systems, and
  • ensuring that all AI-generated content is clearly identified, so that the public is fully informed about the nature of the content it consumes

Solomon no doubt will become involved in these questions. His background is as a journalist, a prominent one at that. As such, one might surmise that he has some understanding of the role of content creators and the need to foster and protect creative expression. But he will be subjected to lots of attention from the tech community, so we will just have to see how it plays out.

When I read all these tea leaves, I have the uneasy feeling that the times are not particularly propitious for the kind of political leadership sought by the cultural industries in Canada, particularly those sectors needing some attention to the copyright file. However, as I noted at the outset, “hope springs eternal”. And if hope fades, one can always “grasp at straws”. There are quite a few of them lying around. But are there enough to build any kind of useful structure? That is the question.

© Hugh Stephens, 2025. All Rights Reserved.

Trump’s Threatened Tariffs on Hollywood Films Produced Outside the US: The Medicine Could be Worse than the Disease

A film reel with a reel of film unwinding next to the word 'TARIFFS' in colorful letters.

Image: Shutterstock (AI enhanced)

First it was autos, then steel and aluminum, then anything made in China—and now it’s movies and presumably television series and streaming production–that have become targets of Donald Trump’s tariff obsession. The fact that motion pictures and TV series are often multifaceted international productions, where financing, filming, editing, VFX and various elements of post-production take place in different locations, many of them not in the US, (although most US films see final production wrapping up at home) seems not to have occurred to the President. The production supply chain is complex for a number of reasons; specific locational needs for shooting, availability of sound stage and studios, financial incentives, access to specific expertise, and so on. (Lord of the Rings and the Hobbit were primarily produced and post-produced at Peter Jackson’s Weta Workshops in Wellington, NZ, for a good reason. Jackson and Weta are the best at what they do.)

The end result of this integrated supply chain for Hollywood is an industry that produces an amazing range of content. Last year there were 569 Hollywood films released in the US and Canada, less than 2019 but a considerable increase from the depths of COVID. This industry is one of America’s export successes. The movie industry generates about 70% of its revenues from foreign distribution, and is one of the leading export industries of the United States generating $22 billion in exports in 2024, with a net surplus of over $15 billion. However, it is true that actual filming takes place less now in California than in the past. A lot of production takes place in other US states, Canada, Australia, New Zealand, the UK and in other countries, owing largely to financial incentives provided plus the presence of experienced crews, good locations and specialized expertise.

But back to Donald Trump and his threatened tariffs. If your sole goal is to reshore all US film production, regardless of the benefits from, or indeed the requirements of, an integrated international supply chain, threatening to impose a 100% tariff on all non US produced films (however that would be defined) is the absolutely worst way to go about tacking the problems facing the industry. It causes havoc and uncertainty, creating a situation where people around Trump have had to tamp down the panic by stating that many measures are under consideration, not just tariffs. But chaos is what Donald Trump wants, because it gives him the sole power to undo the chaos by changing gears (backing down, rethinking, changing course—whatever you want to call it). Shoot first, aim later.

This is what has happened to date on Trump’s Canada and Mexico auto tariffs and the global tariffs he unveiled in his Rose Garden “game show” television performance in which he announced tariffs on everyone, from countries like the UK that run a trade deficit with the US to islands in Antarctica populated exclusively by penguins. And then, when reality kicked in, the “Liberation Day” tariffs were “paused”. Despite the current suspension, the outcome of Trump’s various tariff initiatives will be higher auto prices for US consumers plus empty shelves in Walmart as Chinese products find markets elsewhere. Trump’s modus operandi is to announce something outrageous initially, (without worrying about the details, impact or practicality), wait for the cataclysmic reaction, then recalibrate (but never admit to backing down) in an effort to pick up the pieces of crockery he has just broken, assuming that he is actually aware of the consequences of his actions, or cares. It is a strange way to make policy. Oh, I forgot. It is The Art of the Deal.

Not only does the tariff proposal reveal a stunning ignorance of just how the movie industry works, but it would open a door to retaliation from the very countries where US movies are generating large returns. It would also introduce the concept of tariffying service exports (movies, banking and insurance, consulting services, advertising etc.), an area in which the US excels and runs consistent surpluses. The US film industry has worked hard to keep markets open and has generally succeeded in maintaining an open market model where, apart from censorship, few barriers exist to the distribution of US films abroad. China is the notable exception, but even in China (where all film imports are strictly controlled by government agencies), US films enjoy considerable market share. (The Chinese also impose a revenue-sharing arrangement that is unique).

In the past there were various obstacles to the wide takeup of US films, from screen quotas in Korea (a requirement that cinemas had to dedicate a set number of days to the screening of Korean films) to various means of imposing duties on imports of films. The shift from physical prints to digital distribution meant the bypassing of border measures that imposed duties on the physical incarnation of films. Moreover, pushed by the US, the World Trade Organization adopted a moratorium on the imposition of customs duties on digital products back in 1998, a “temporary measure” that has been renewed regularly, currently extended to 2026. The moratorium has been opposed by some developing countries, notably Indonesia, India and South Africa, arguing that they face increasing losses of customs revenues from the increasing digitization of products. Countries with weak taxation regimes often need to rely more heavily on tariff revenues than more developed economies. How ironic then that the US is now putting itself in the same camp as those countries that can only raise revenues when products cross the border. With his talk of imposing tariffs on films (the ultimate intangible commodity) produced outside the US, Trump has just validated the international opposition to the customs moratorium and made it much more likely that many countries will start to find inventive ways to impose duties on services trade.

There could not be a more self-harming outcome for the United States given that, according to USTR, service industries account for over two-thirds of US GDP and 4 out of 5 private sector jobs. In addition, in 2020, the US generated a trade surplus of $245 billion in exports of services. USTR also notes that “services trade enhances competition and innovation, lowers costs, and improves choice and quality for consumers and businesses”. Tariffs on services trade will lead to retaliation and a shrinking of service markets dominated by the US.

Imposing tariffs on services, which are intangible, is not easily accomplished, explaining in part why it has not been done to date. To assess a tariff, a value has to be established for the service, which has to be assessed in some way. How would an import duty be calculated? For durable goods, there is a code that assigns a category to each product, with tariff rates assigned according to the code. The valuation of the product at the port of entry combined with the tariff rate determines the amount charged. How would a film be valued? Production costs? Or only the portion of production costs incurred outside the US? (Imagine the green eyeshade work this would require to determine how to allocate costs). Perhaps it would be assessed on US revenues, but then how would one know how a film will do at the box office? And if box office receipts were factored in, you can be sure that distributors would bypass the box office for streaming release. Would you penalize US filmmakers if they chose a foreign location for financial reasons alone or would they be penalized for, say, wanting to film a desert scene with Bedouins and camels in Morocco instead of on a sound stage in California? Should they instead fly in camels to some desert location in the US?

From an international trade perspective, the Trump Administration could choose to target the tax incentives offered by foreign jurisdictions by imposing a countervailing duty (instead of a tariff) on “unfair” subsidies, as is done is some other areas of trade. Normally, determining what is an “unfair” subsidy is not an easy task and is subject to well established rules and procedures, particularly bearing in mind that many US states also offer financial incentives to attract film production. Moreover, each film is a unique product. It cannot be compared to alleged subsidies to produce lumber 2×4’s more cheaply than in the US. There is an elaborate quasi-judicial process, with appeals and trade agreement commitments, governing the determination of an “unfair” subsidy. However, Donald Trump has shown scant regard for the established rules and prefers the unilateral route. In doing so, he will open a new can of worms as targetted countries look for ways to push back. While many details remain to be filled in, Trump has managed to sow chaos and fear (his prime objective, it appears) and has caused deep concern amongst those engaged in the film industry, in particular in Canada, the UK, in Australia, but also elsewhere.

As with much of Trump’s “policy by tweet”, there is a kernel of a problem to address. Production in California has been declining for a variety of reasons. Costs are one, and the incentives offered by other US states as well as those jurisdictions competing for production work like Australia, Britain and Canada and others are part of the reason. California has been reluctant to match the incentives. COVID, the introduction of AI, changing viewing habits and the Hollywood actors’ and writers’ strikes are also major factors. Trump appears to like simplistic solutions (to complex problems), regardless of the collateral damage or unforeseen consequences. When Trump’s “Hollywood envoy”, 86 year old actor Jon Voight, apparently mentioned limited tariffs as a tool that could be used to bring film production back to the US, Trump grabbed the gun and fired. Shoot first, aim later. It’s worth noting that Trump’s picks to be his eyes and ears on the Hollywood situation includes only aged male actors. Industry executives who actually understand how Hollywood works were apparently not welcome.

Could tariffs be actually imposed on films? Maybe, with great damage. Tariffs are a very blunt instrument. But damage has already been done in terms of undermining confidence in the business model that has worked well to date, and which has brought a lot of film production work to California, even if a lot of the actual filming takes place elsewhere. Given that Trump’s objective is to create chaos, and then use that chaos as leverage, a lot of damage can be done to the film industry generally, and to film workers both inside and outside the US. Be careful. The medicine could be a lot worse than the disease, for the film industry and for US service industries generally.

© Hugh Stephens, 2025. All Rights Reserved

Should We Throw Copyright Under the Bus to Compete with China on AI?

An illustration depicting a stick figure running away from a bus labeled 'AI,' while another figure labeled 'C' appears to have been hit or is lying on the ground.

Image: Shutterstock (author modified)

If this sounds about as responsible as “we should legalize theft of patents at home because patent infringement is rife in China”, then you may well ask where such a nonsensical and counterproductive idea came from. From OpenAI, the company behind ChatGPT, for one, the same company being sued by the New York Times for copyright infringement for copying and using NYT content without permission to train its AI algorithms.

Sam Altman, CEO of OpenAI, is one of the “tech bro’s” now cozying up to Donald Trump. He is a vocal advocate of allowing the AI industry unfettered access to copyrighted content as part of the AI training process. Last year, in a submission to the UK Parliament OpenAI claimed that it would be “impossible” to train AI without resort to content protected by copyright. Now, it maintains that allowing AI companies to scoop up copyrighted content without authorization or payment is not only “fair use”, a legally unproven proposition that is currently very much a live issue before the courts in the US and elsewhere, but is essential for “national security”. To cite a few choice tidbits from OpenAI’s submission to the Office of Science and Technology Policy (OSTP) filed in response to the Office’s request for submissions on the Trump Administration’s AI Action Plan;

“Applying the fair use doctrine to AI is not only a matter of American competitiveness—it’s a matter of national security… If the PRC’s developers have unfettered access to data and American companies are left without fair use access, the race for AI is effectively over… access to more data from the widest possible range of sources will ensure more access to more powerful innovations that deliver even more knowledge.”

And, one could add, more profit for AI companies.

In other words, if the US government doesn’t give AI companies free and unfettered access to whatever content it desires, regardless of whether it is protected by copyright (think curated news content, musical compositions and artistic works, not to mention the published works of countless authors), then China will win the AI race, threatening the national security of the US. Or so Altman’s argument goes.

The AI industry is already a practitioner of the art of helping themselves to OPC (other peoples’ content) without permission, then claiming fair use when they are caught doing it. That is what has led to the multiplicity of lawsuits now before the courts, brought by various authors and content owners. Raising the bogeyman of China and wrapping themselves in the flag by invoking “national security”, is a new wrinkle in the attempts by the tech industry to undermine established copyright law and to wriggle out from under their legal obligations.

“National security” is a convenient catchphrase and pretext in common use today to try to justify and legalize the unjustifiable and the illegal. Donald Trump invoked national security when he used the International Economic Emergency Powers Act (IEEPA) to override USMCA/CUSMA obligations made to Canada and Mexico, treaty obligations that he himself signed in his first term in office. The immediate excuse was the flow of fentanyl across the northern and southern borders of the US. Never mind that the amount of fentanyl seized by US border agents at the Canadian border came to a grand total of less than 43 lbs. for all of 2024, or just 0.2% of the total. (The equivalent for Mexico was 21,148 lbs). National security, and in particular playing the China card, is a political winner these days in Washington.

OpenAI’s position is all the more outrageous because it went into fits when the Chinese startup, DeepSeek, launched its new and much cheaper product, allegedly having used OpenAI’s capabilities to improve its own model. OpenAI cried foul and IP infringement, a case of blatant hypocrisy if there ever was one.

OpenAI and other generative AI companies that have built their training model on permissionless copying are clearly nervous about the possible outcomes of the numerous court challenges to its practices currently underway. Most of these cases are in the US although similar lawsuits have been launched in the UK, Canada, India and Germany. While it is impossible to predict the outcome of specific cases, in a recent decision (Westlaw v Ross), a US court rejected fair use as a defence in the context of AI training data. It did not accept that copying the content was a transformative use, but rather one that created a product that competed in the market with the original source material. Given the legal uncertainties, it looks like the tech industry is trying to hedge its bets by lobbying to have all AI training uses declared to be “fair use” based on national security considerations.

It gets worse than that. Another of the tech bro’s, Mark Zuckerberg, gave the green light to training of META’s AI model on pirated material. This was not accidental. Employees reported removing © marks from books downloaded as training materials.

In Canada, in a similar search for a rationale to explain away copyright infringement, a company that was helping itself to copyright-protected curated legal case data to build an AI based legal reference service, claimed that forcing it to license the content would stifle innovation and drive AI businesses out of the country. See CanLII v CasewayAI: Defendant Trots Out AI Industry’s Misinformation and Scare Tactics (But Don’t Panic, Canada). The AI developers’ strategy seems to be that if you don’t want to license and pay for IP protected content, (or perhaps the owner of the content prefers not to license it, as is their right) just take it and claim some overriding purpose, like protecting domestic innovation or national security.

But what about the argument that if China doesn’t respect intellectual property (IP), we need to adopt the same approach in order to compete? While Chinese courts in recent years have taken a much more robust position with respect to protecting the rights of IP owners, including patents, trademark and copyright, I am not going to argue that suddenly China has become a “rule of law” country. Rather, it is a “rule by law” state, the law being whatever the leadership of the Chinese Communist Party (CCP) decides it will be at any given moment. This is a fact. However, to suggest that the West, in particular the US, should adopt China’s legal modus operandi so as not to lose the so-called “AI race” not only undermines all the values and principles on which our society is based, including the principles of private property, fairness and transparency, but also dismisses three centuries of legal developments in the protection of IP, especially copyright. The evolution of copyright law has resulted in the creation of industries that contribute far more to the economic and cultural wellbeing of our society than any of the questionable outputs of the AI industry.

Yes, AI is here to stay. It can be put to beneficial or nefarious uses and has an undoubted strategic component. It can also be used to undermine and weaken human creativity. Is that the goal we are seeking?

It is worth noting that the tech bro’s have an easy and legal way out. In most instances, they can acquire access to the content they need legitimately. A market for licensing training data for AI development already exists and is further developing rapidly, as I wrote about earlier. Using Copyrighted Content to Train AI: Can Licensing Bridge the Gap? But just taking it and claiming “fair use” is easier and cheaper. And morally and probably legally wrong.

We have seen a lot of rogue policy making in Washington of late, from the illegal deportation of US residents, to the gutting of US government agencies, to the declaration of a tariff war against the world. It is time to take a more considered approach. Rash decisions in response to tech lobbying could lead to untold consequences and collateral damage to content industries that would be impossible to roll back and remedy. Thus, I was relieved to note that Michael Kratsios, Director of the US Office of Science and Technology Policy, the same OSTP to which OpenAI submitted its comments regarding AI training and national security, stated in a recent speech on American innovation that;

 “…promoting America’s technological leadership goes hand in hand with a threefold strategy for protecting that position from foreign rivals. First, we must safeguard U.S. intellectual property and take seriously American research security…”

That is a welcome recognition of the importance of IP as part of the process of innovation.

In this respect, the existing framework of copyright law has survived and adapted for over 300 hundred years. It has evolved with each new technological development, but the fundamental principle of giving an “author” of an original work the right to control how that work is used as well as the ability to earn a return from its use for a statutory period, with only limited exceptions, has remained unchanged. To undermine this principle in a flawed attempt to grasp the Holy Grail of AI leadership is self-defeating. Instead of sipping from AI’s Holy Grail we will be drinking from the poisoned chalice of IP theft.

Throwing copyright and the rule of law under the bus on the pretext that this is what’s needed to compete with China is not only self-serving, it is a sure path to ultimately losing the secret sauce of creativity and innovation. A country that steals IP rather than creating and respecting it will always lose the race.

© Hugh Stephens, 2025. All Rights Reserved