Will the Year of the Rabbit be the Year of Contentious Copyright Litigation over AI-Generated Content?

Credit: Author

According to the Chinese zodiac, the Year of the Rabbit (this year) is supposed to represent “relaxation, quietness and contemplation”. This “Rabbit Year” is predicted to be “calm and gentle”. (Good news for the people of Ukraine, if true).  However, when it comes to the thorny issue of copyright and content generated by artificial intelligence (AI), the Year of the Rabbit may end up being the Year of Contentious Litigation.

First out of the gate in 2023 are two cases, one where Getty Images is suing Stability AI in the High Court of London (UK) and the second in the US where artists Sarah Andersen, Kelly McKernan, and Karla Ortiz have brought a class action suit against AI powered art services Stable Diffusion (owned by Stability AI), Midjourney and Deviant Art. Technically these cases were not initiated in the Year of the Rabbit, but in the last days of the preceding Year of the Tiger. The date of Chinese New Year varies each year, being determined through a complex calculation involving both solar and lunar cycles, but it always falls sometime in January or February. In 2023, that day was January 22. Anything in this calendar year that occurred before that date took place in the Tiger Year. As can be imagined by its name, the Year of the Tiger is associated with “courage and bravery” and the “defeat of evil”. (Another Ukraine analogy). It certainly takes courage to take on large AI platforms as the artists have done. As for defeating evil, I don’t think that is the characterization I would have for AI, although there is no doubt that it can be put to evil purposes. In fact, this is already happening with the production of artificial photo-substituted images of celebrities and others, and use of AI platforms like ChatGPT to produce misinformation.

Okay, let set aside the theme of the Chinese zodiac for a moment, and focus on the point of this blog post, which is to look at what is happening on the litigation front with respect to AI-generated content. There are fundamentally two principal issues involved. First, whether AI-generated content (images, writing, music) infringes the copyright of creators by building its database through the scraping and ingestion of millions of copyrighted works off the internet without licence or authorization. Second, whether the producers of AI-generated content (that is, users manipulating the platform, not the platforms themselves) have any claim to copyright on the works created. It is all very unclear, which is exactly the point of the litigation.

In the case of Getty Images, the company already licenses content to technology companies to help them train artificial intelligence systems to generate AI products, but Stability AI did not bother to seek a licence. Stability AI is just one of a number of companies that has emerged in the AI generated image space, as I wrote about in an earlier blog. (AI and Computer-Generated Art: Its Impact on Artists and Copyright). Both Microsoft through its investment partnership with OpenAI (DALL-E2 and ChatGPT) and Google are developing AI platforms, although they have been relatively cautious with their release owing to issues with NSFW content as well as copyright issues. DALL-E2 and ChatGPT have been released as trials while Google has been holding back on the public release of its latest AI generated image product, Imagen. In contrast, Stability AI’s founder, Emad Mostaque, seems to subscribe to the “better to ask for forgiveness after rather than permission before” school of thought. A couple of months ago, I wrote about Mostaque and his laissez-faire approach to copyright and AI. (AI Generated Art: Another “Technical Breakthrough” Calling Out for Responsible Management and Regulatory Oversight).

Given Mostaque’s approach, the fact that Stability AI chose not to acquire licences–yet clearly ingested some images owned by Getty (the company’s watermarks even show up on some of the AI generated works)–is not surprising. Getty’s goal is no doubt to provide AI companies with a sharp reminder that licensed images exist for AI training. As for the artists’ lawsuit, its basis and likelihood of success is less clear. Dr. Andres Guadamuz of the University of Sussex, editor of the Journal of World Intellectual Property, has criticized the basis of the case as being technically inaccurate. (see below for more information)

The artists’ suit against Stability AI, MIdjourney and Deviant Art is based on the factual reality that the “data” that feeds the AI art generating algorithms consists of millions of images scraped without authorization from the internet, many of them under copyright and at least a few of them belonging to the plaintiffs. Specifically the suit declares that Stability AI through its application “Stable Diffusion”, “downloaded or otherwise acquired copies of billions of copyrighted images without permission”. It then “caused those images to be stored and incorporated…as compressed images”, referred to as “Training Images”. The training images were then used to train the algorithm. The “new” images produced by Stable Diffusion’s algorithm are argued to be derivative works produced from the training images. The suit states that ultimately the platform is basically a complex collage tool that creates art works “in the style of” based on real artists’ works without compensation or permission leading to “blatant and enormous infringement” of copyright while producing works that compete in the marketplace with the works of the original artists. Accordingly, the suit accuses the defendants of direct and vicarious copyright infringement, violation of the DMCA (by removal of Copyright Management Information), violation of the right of publicity and unlawful and unfair competition. Relief sought is in the form of statutory and punitive damages, costs, and permanent injunctive relief. If successful, this suit would throw a major spanner into the works of AI machines producing works based on data (consisting of images, written works, and music as examples) ingested without licence or permission from the internet. It would require much smaller data sets based on licensed or public domain content. Another option would be for the AI platforms to allow and make it easy for artists, writers and musicians (“authors”) to opt out of the database.

The tech industry does not want to have to tailor its databases or be subject to any restrictions on data mining. Scooping it all up (for free) is the model it prefers. In arguing their case, the defendants will claim fair use, insisting that the resultant work is not derivative but rather the result of a transformative process. They will also no doubt claim that what the algorithm produces is not a copy of the artists’ work, even though it may be “in the style of”. However, although not an exact copy, the question will be whether it reproduces a “substantial” part of the original work? Another defence argument will probably be that not all the ingested works necessarily fall under copyright, the output being an amalgam of millions of images, some protected, some not.

In addition to legal arguments rebutting the complaint, there are also technical arguments to consider. In his article critiquing the lawsuit from a technical perspective, Dr. Guadamuz argues that the scraped inputs do not form a “collage”. He states they are a combination of links to images (not the images themselves) combined with text descriptions, all of which are themselves narrowed by the descriptor that is inputted into the model. If the user is seeking an image that uses the word “cats”, all data that does not relate to cats is discarded. Thus, he argues, it is inaccurate to claim that AI generated art draws on a database created from every image ever ingested. He concludes that the artists involved in the suit will therefore not be able to prove that their work was infringed.

However, one problem for those arguing that text and data mining fall under fair use is the reality that the resulting “new image” can and often does substitute for the original work (which may have been included in the training data), thereby negatively affecting the author’s ability to economically exploit the work. The interpretation of fair use and fair dealing in relation to text and data mining (TDM) is still very fluid.

The UK, for example, is currently reviewing its existing TDM exception. (Britain’s Proposed Approach to Text and Data Mining (TDM) for AI: How Not to do It (A Lesson for Canada and Others). The original proposal from the Intellectual Property Office (IPO) was to allow TDM “for any purpose” and to specifically eliminate any possibility of licensing content for text and data mining. It was argued that this broad exception would promote “innovation”, but the proposal aroused huge opposition from Britain’s artistic community. Recently the Communications and Digital Committee of the House of Lords studied the IPO proposals and concluded that “The Intellectual Property Office’s proposed changes to intellectual property law are misguided. They take insufficient account of the potential harm to the creative industries.”  Even the Minister responsible has said she thinks it is likely the IPO’s proposed changes will not proceed. For its part, the IPO now has indicated it will continue consultation. While there are potentially legitimate reasons for some TDM exceptions, allowing it for “any purpose” is damaging and misguided, and hopefully the IPO’s proposals as they stand will be substantially modified.

Many academics have argued they need access to TDM material to be able to conduct research. In some countries, such as Canada, there is currently no TDM exception in copyright law, an issue that may be reviewed in the next update of the Copyright Act, expected in the next year or so. However, there is a big difference between providing open access to copyrighted content to enable sampling of works to produce research that does not reproduce the original work and in no way competes with it, (and is used for non-commercial purposes), and using copyrighted works to produce derivatives that can substitute for or compete with the originals. Any TDM exception needs to be narrowly focussed to achieve the end of enabling legitimate research while avoiding a free-for-all that would undermine the interests of rights-holders.

Apart from the question of whether AI platforms should be able to ingest copyrighted content (note that what is often described as “data” actually consists of pre-existing copyright protected works) without authorization, there is the issue of who can exercise rights to “new” images created by the algorithm. Who created them? Was it the algorithm/platform or the user who “created” them by inputting minimal textual instructions. “Create a work of a dog eating ice cream in the style of…..”. There is not much originality of expression there although longer, more complex prompts/instructions could theoretically qualify. This is another point that will require clarification. On the other hand, if the user cannot claim ownership because of failure to meet the test of originality, could the rights be held by the creators of the algorithm? And if it was an algorithmically generated image, was there any human creation involved? If not, according to the US Copyright Office, such a work is not eligible for copyright registration. Finally, any discussion of possible copyright protection for an AI-generated image must address basic questions related to the legitimacy of the inputs used to generate it. Has the output become a “poisoned” derivative work because of infringement at source?

These and other questions will need to be weighed by the courts. The decisions will have a major impact on artists and other creators, the way in which AI develops in the years ahead, and even the role of AI content in modern society. The Getty and class action lawsuits are but the first shots in what will be a long campaign. The Year of the Rabbit is unlikely to be “calm and gentle” on this issue. Next year, 2024,  is the Year of the Dragon and it is supposed to represent “good luck”. One has to ask, “good luck for whom”? The courts will have an important role in answering that question.  

© Hugh Stephens 2023. All Rights Reserved.

Update: The day this blog post went live the UK minister responsible for the IPO, George Freeman, declared in Parliament that the British Government was no longer planning to introduce the proposed unlimited TDM exception into UK copyright law.

Where do US interests lie when it comes to Canada’s Online News Act?

Back in November, US Trade Representative Katherine Tai met virtually with her Canadian counterpart, International Trade Minister Mary Ng. According to the account of the meeting released by USTR, among the issues raised was impending or proposed Canadian legislation related to digital platforms;

“Ambassador Tai expressed concern about Canada’s proposed unilateral digital service tax and pending legislation in the Canadian Parliament that could impact digital streaming services and online news sharing and discriminate against U.S. businesses.”

The critics of the pending legislation, particularly Bill C-18, the Online News Act, jumped on this statement as proof that the US might retaliate if the Bill is passed, sounding the klaxon of doom. In case anyone missed it, C-18 is designed to implement a negotiation process (backed up by government enabled compulsory arbitration if negotiations fail) for compensation for the use of news content by “digital news intermediaries” (which for sure include platforms such as Alphabet/Google and Meta/Facebook, and possibly others in future) and designated news businesses in Canada. It is based on Australia’s example where that country introduced a News Media Bargaining Code requiring the platforms to negotiate payment with news providers for providing access to Australian news. If a suitable deal was reached, the platforms could avoid designation under the Code. Not surprisingly, incentivized by the threat of legislation, the platforms managed to strike deals with most media outlets in Australia, although not without some initial game-playing and resistance by both Google and Facebook. The Canadian legislation is designed to do much the same, although with more transparency and more guidance on where the money is to be spent (on newsrooms).

The platforms have pulled out all the stops to oppose the Canadian legislation, which they probably see as writing on the wall for what is likely to happen eventually in the US. Facebook has threatened to block posting of Canadian news on its site in Canada, a tactic it also employed in the US to fight back similar legislation (Journalism Competition and Preservation Act, JCPA) being considered in Congress. (The JCPA almost made it through the US legislative mill last year, having been attached to the National Defense Appropriations Bill, but in December of 2022 the platforms and others mounted a counter-offensive that succeeded in getting the news provision dropped from the Defense Bill at the last moment).

Another tactic the platforms have used is to dredge up various claims that C-18 violates Canada’s commitments under the new NAFTA, the USMCA (or CUSMA in Canada), or the Berne Convention. An industry association to which both Google and Meta belong (Computer & Communications Industry Association, or CCIA) produced a White Paper arguing that if enacted, C-18 would violate Canada’s international trade obligations in several ways. The CCIA’s paper not only misconstrued key elements of C-18, its analysis did not stack up in terms of demonstrating any denial of national treatment to US companies, as I outlined in a previous blog post and article, (Bill C-18, the Online News Act: Does it Violate Canada’s Trade Agreement Obligations?).

One voluble critic of C-18 made much of the fact that the USTR read-out of the meeting contained the reference to Canadian legislation that I reproduced at the top of this blog post, whereas the Canadian read-out did not. (Michael Geist, A Tale of Two Readouts). Suggesting that there was some sort of subterfuge by Canada on this is just plain silly.  For its part, the Canadian statement mentioned topics that did not make it into the US read-out such as softwood lumber and the need to maintain a well-functioning dispute settlement system within the WTO, both areas where Canada is not happy with US positions. (The latter refers to the current US position on the WTO’s dispute settlement system which has led it to block future appointments to the WTO’s Appellate Body). Regardless of the relative merits of the issues discussed, it is standard practice in reporting on such meetings that each side highlights the issues it has raised, not those brought up by the other side. The fact that the Canadian statement did not include Ambassador Tai’s comments on digital legislation is not even worth commenting on—unless you want to make a big deal out of nothing.

More important is the import of what USTR Tai had to say. Was the fact that she “expressed concern” over legislation that “could…discriminate” against US businesses an “Oops, we’ve got it wrong, and had better change the legislation” moment for Canada? Hardly. It is true that USTR was laying down a marker, as it frequently does, expressing its view that US businesses should not be discriminated against, especially when there are national treatment commitments that could be infringed. And of course, Trade Minister Ng “reassured” Tai that Canada’s legislation is consistent with its trade obligations. This is standard back-and-forth positioning between countries when measures that could affect the interests of the other are under consideration.

Of particular concern to the US is the position of Canada and a number of other countries regarding a proposed Digital Services Tax (DST). DST’s have been proposed in many countries because some large companies operating digital platforms have managed to avoid being taxed in many jurisdictions where they generate considerable revenue, yet have no or minimal physical presence. Note that many, indeed most, of these companies are incorporated in the US. The DST is designed to tax companies doing business digitally but with no physical presence by imposing a levy based on a percentage of income (usually around 3%) earned in respective jurisdictions. The EU has been particularly active in this regard, and some countries have already imposed a digital tax. In 2020 the US imposed retaliatory tariffs on French luxury goods because France had imposed a DST that captured some US companies.

The OECD has been working for some time on an international agreement on profit-shifting that would address the issue of digital companies doing business in countries without a physical presence. If implemented, the agreement would avoid imposition of digital services tax by individual jurisdictions. That process is going slowly, but a draft Convention has now been reached. The US, however, has not yet signed on. The Biden Administration is onside but the problem, as always, is getting the deal approved by Congress. Given this situation, a number of countries, Canada included, have prepared DST legislation and are prepared to enact it if a suitable agreement is not finalized soon. It is against this backdrop of shadow-boxing that USTR Tai “expressed concern about Canada’s proposed unilateral digital service tax”. Since Canada is also developing the Online Streaming Act (to bring streaming content under the Broadcasting Act) and the Online News Act, C-18, why not throw them in too as areas of “concern”? But does this mean that this is setting the stage for a trade challenge by the US to C-18? Most unlikely.

Apart from the fact that C-18 is of far less concern to the US Government than the digital tax issue (the main issue with the DST is that if other countries tax US-based digital companies unilaterally, there could be less revenue for the US Treasury), there is also a huge difference in the impact and design of the legislation. While C-18 will likely target a couple of large US-based digital players, it will also benefit any US news companies that have qualifying news bureaux in Canada. Bloomberg and the NYT come to mind. The Online News Act is not discriminatory legislation aimed at US companies; rather it is legislation designed to reign in and require payment for content by mammoth internet platforms that exist as virtual monopolies. And the goal of this legislation has support in the US.

The fact that the interests of the United States and those of Google and Facebook are not one and the same was clearly highlighted in the form of a letter written to USTR Tai in mid-December by Danielle Coffey, Executive Vice President and General Counsel to the News/Media Alliance (NMA), a US industry association representing over 2000 publishers nation-wide. (News/Media Alliance Reminds USTR of the Importance of High-Quality Journalism). The NMA has been actively pushing for similar legislation to C-18 in the US and has been an active proponent of the JCPA (Journalism Competition and Preservation Act). Even though the JCPA just failed to secure adoption in the last Congress, the NMA will continue to advocate for it.

In its letter, the Media Alliance expressed its “serious concerns” over the comments that Tai made to Trade Minister Ng about C-18. The NMA letter says, “We believe this…fails to represent wider US business interests, in addition to contravening the public policy concerns underlying Canada’s C-18 and similar efforts elsewhere , including the United States”.

The letter goes on to say;

“Numerous studies, reports, and investigations have shown without question the ways that (a few dominant) platforms impose unfair terms on news publishers and other actors in the online ecosystem and reap the majority of the benefits, including digital advertising dollars and user data. The legislative measures – in Canada, other countries, and the United States – aim to correct these market failures and rebalance the online marketplace by making sure the platforms cannot benefit from publisher content without compensation. They are focused on tackling specific business practices by those with the most power – regardless of their national origin. The fact that many of the dominant companies engaging in these damaging practices, and therefore affected by the legislations, are incorporated in the United States does not make these laws discriminatory.”

It continues;

“Publishers in the United States stand firmly with our international partners in supporting laws to combat market abusive business practices in the online ecosystem, including the Online News Act. Not only do many of our members have readers or operations in Canada, we strongly believe that such laws correspond with the public policy objectives of the United States to protect the free press.”

Finally, it concludes with; (emphasis added)

“We strongly believe that the Office of the USTR should represent the whole of the United States, not the interests of a few large companies… we urge you to refrain from taking positions that benefit one sector of the U.S. economy at the expense of others.”

That last sentence says it all. Important US interests align with the objectives of C-18. This is yet one more reason why the US Government will not be bringing retaliatory trade action against Canada for implementing the Online News Act.

© Hugh Stephens, 2023. All Rights Reserved.

More Public Domain “Triumphs”: Winnie the Pooh “Blood and Honey”, and The Great Gatsby (Zombie Version)

Credit: Generated on Stable Diffusion by author

Every year around the beginning of January, a lot of public domain hyperbole hits the airwaves with stories about how our lives are about to be enriched now that such-and-such a work is no longer under copyright protection but has fallen into the public domain. It will now be free for anyone to use for remixing, reissue, republication, alteration, distortion…etc. Usually this “excitement” is fed by groups such as the Center for the Study of the Public Domain at Duke University, which has carved out a niche for itself as the go-to place for any reporter who wants a quick sound-bite or commentary to do a public domain story. The Center has proclaimed January 1 of each year as “Public Domain Day”.

This year is no exception, except that in Canada the “celebrations” have been put on hold because Canada has just extended its term of copyright protection by an additional twenty years, bringing its duration of copyright into alignment with that of its major trading partners, the US, EU, UK, Japan, Korea, and Australia. This has led to some hand-wringing in certain circles, such as the Canadian Association of Research Libraries, (which nonetheless has a fair point about access to orphan and out-of-commerce works, an issue that has yet to be addressed by the government,) to outright vitriol and misinformation from anti-copyright voices like TechDirt. (“Canada Steals Public Domain Works from the Public”). We are informed by other copyright skeptics that the works of former Canadian Prime Minister Lester B. Pearson, who died in 1972, will now not be in the public domain for an additional twenty years. (Is that the sound of silence that I hear?).

Much of the ballyhoo around “Public Domain Day” turns on the ability of anyone to “copy, share and build upon” previously copyrighted works (to quote the Duke Center). With copyright no longer applying to A.A. Milne’s 1926 book “Winnie the Pooh”, which entered the public domain in the US last year (although it’s been in the public domain in Canada since 2007) and Arthur Conan Doyle’s “Sherlock Holmes”, which became a public domain work in the US on January 1 of this year (public domain in Canada since 1980), no licence, payment or permission is required to use, copy or adapt these works. Not only do the rights-holder’s economic rights over the work cease to exist, but so too does the ability to control any use of the work. In many cases, the rights are held by the author’s descendants, such as their children and grandchildren. One of the reasons for granting a period of protection post-mortem lasting for approximately two generations after death is the premise that to protect the integrity of the work, control over its use should be vested in those who have a living memory of the author.

With Milne’s first book now in the public domain, the door has opened to the “copy, share and build upon” phenomenon so dear to the folks at the Duke Public Domain Center, resulting in such new creations as the movie “Winnie the Pooh: Blood and Honey”. I haven’t actually been able to bring myself to watch it but according to the New York Times, “the pudgy yellow bear turns feral. In one scene, Pooh and his friend Piglet use chloroform to incapacitate a bikini-clad woman in a hot tub and then drive a car over her head”.  Great stuff. Duke’s Center for the Public Domain also touts the creation of Ryan Reynolds’ “Winnie-the-Screwed” ad for Mint Mobile and a comic strip in which Pooh celebrates his nudity as proof of the benefits of the Bear of Little Brain entering the public domain in 2022. When F. Scott Fitzgerald’s “The Great Gatsby” entered the public domain in the US in 2021, the Duke Center gushed that ,“There were …new works such as Michael Farris Smith’s prequel Nick, which tells the backstory of Nick Carraway, a graphic novel adaptation, The Gay Gatsby, The Great Gatsby Undead (the zombie edition), and reports of an animated movie as well as a Gatsby musical by Florence Welch from Florence + the Machine.” Wow. I am sure that F. Scott would have been delighted. What new interpretations of the sleuth of Baker Street can we await in 2023 thanks to Conan Doyle’s “The Case Book of Sherlock Holmes”, the final set of twelve of his short stories, now being in the public domain?

Those who make a big deal of celebrating the arrival of works into the public domain every January 1 are consciously feeding the misconceived narrative that a work under copyright is a work that is largely inaccessible to the public. The opposite is true. Copyright exists as an incentive for the production and dissemination of works. Without it, there would not only be much less creativity, but creative works would increasingly become the exclusive domain of those who are independently wealthy or subsidized in some other way (such as by having an academic position). Alongside this utilitarian purpose are certain moral rights allowing the author to protect the integrity of their work.

Those who want to see as much content put in the public domain in as short a time as possible, like the Canadian Association of Research Libraries to judge by its public positions, seem to regard copyright protection as an inconvenience to be bypassed or neutralized whenever and however that can be achieved. I mean, just think how much easier it would be for hunters and hikers if there was no private property and they weren’t ever impeded by “No Trespassing” signs. They could do whatever they want. The same mindset seems to apply in many of our academic institutions and in the library sector.  Others who want classic works in the public domain as soon as possible include publishers who specialize in re-issuing books where copyright has expired. There are many, but in Canada Broadview Press has been particularly vocal. This of course does not stop Broadview or other publishers like them from copyrighting the derivative editions they have just put on the market.

Let me conclude by saying that I am not opposed to the public domain, nor do I subscribe to the theory that copyright should last forever, a position advocated by some. For better or for worse, it is not a perpetual property right and there is no question that the existence of copyright can pose an impediment in some cases where a work is long out of print and the rights-holder cannot be located. These situations can be dealt with through specific exceptions, much as fair use and fair dealing allow for specified unauthorized uses that do not damage the rights of the author. However, the narrative that the public domain liberates content from the shackles of copyright is utter nonsense, although the way that some organizations and some journalists portray it, you would think that is exactly what happens.

It is pretty clear that Disney, the current holders of A.A. Milne’s copyright, would not have authorized the Winnie the Pooh horror film, nor would the F. Scott Fitzgerald estate, who control that writer’s copyrights, have greenlighted the zombie, gay or prequel editions of Fitzgerald’s work. If now having such (copyrighted) works available to the public is a breakthrough in creativity, as the Duke Center seems to believe, then so be it. To me, these “triumphs” are hardly a convincing demonstration of the wonders that await us once a work enters the public domain.

How about Sherlock Holmes meets Godzilla? Oh, Godzilla is not yet in the public domain? Damn! That would have been a major contribution to creativity and culture. How can we possibly live without it?

© Hugh Stephens Blog, 2023. All Rights Reserved.  

Why Can’t Canada Produce Top Quality Localized TV Drama like the Aussies Do?

Source: http://www.shutterstock.com

Canada’s Online Streaming Act, (Bill C-11) the draft legislation that will bring online streaming content under the purview of the Broadcasting Act, will continue its slow progress through Parliament in 2023. Review in the Senate last year led to a number of amendments, one of which dealt with the definition of Canadian content (Cancon). That amendment added a provision that no factor is determinative in establishing Cancon standards or equitable contribution rules. It is unclear at this point whether the government will accept any of the amendments adopted by the Senate or will reject them and send the Bill back to the Red Chamber for further review.

The Bill has many provisions and objectives but one of them requires the broadcasting regulator, the CRTC, to update the arcane formula that determines what content qualifies as “Canadian”. An amendment that would give the CRTC the flexibility to weigh various elements in determining what constitutes Cancon, rather than being bound by an outdated and inflexible formula, would be welcome. That is the approach taken in Australia, and this more flexible definition seems to have been successful in producing content that is recognizably and unabashedly Aussie.

As an example, I have just started watching the Australian “political thriller” Total Control, being broadcast and streamed on my local public television provider, Knowledge Network. It is a gripper, with great character development, contemporary storyline, and realistic settings. Most of all, it proudly and unabashedly Australian. For those not familiar with the show, it is the story of an Aboriginal woman, Alex Irving (played by Deborah Mailman) who achieves national prominence because of her bravery in stopping an act of gun violence. As a result of that, she is approached by the office of the Prime Minister of Australia (a women, played by Rachel Griffiths) to fill a vacancy in the Australian Senate. (While the Australian Senate, unlike the Canadian Senate, is an elected body, if a vacancy occurs due to a senator’s death, resignation or expulsion, a replacement can be appointed by the Governor of a state to complete the term. This was the case in this scenario). The government in the show has a narrow majority, and the PM is concerned about her future political career and the possibility of an internal coup. Given recent Australian political history, this is entirely plausible.

The new Senator has to deal with the pressure of adapting to her new political role while championing her people and the region she represents. The show is set in Canberra, where the corridors of power in Parliament are displayed both through the interactions of the protagonists and the physical settings of the offices and chambers, and in the outback, where Alex Irving lives. As a Canadian who has visited Australia, including the Parliament in Canberra a few times, it spoke to me. I can imagine that for Australians it is a story that has resonance. Certainly, the show has enjoyed generally positive reviews in Australia and is now being distributed globally. While acclaim has not been universal, what no-one can deny is that this is an Australian production that tells Australian stories in an Australian way. Australia has long been known for the excellence of its productions in telling Australian stories (and I am not talking about Crocodile Dundee), as well as producing Hollywood-style product for the international market. It has a thriving film industry and as a country that has managed to project its culture globally, it punches above its weight.

Canada also has a strong film industry, the largest part (in terms of value) based on Foreign Location Shooting (FLS), which brings many benefits. But when it comes to projecting Canadian culture through film productions, Canada punches well under its weight. In fact, you could say it has barely climbed into the ring. I cannot recall a Canadian drama where Canada’s political culture was a central part of the story. Ottawa and the Canadian Parliament never seem to appear on screen. Many of the themes explored in Australian productions such as the clash between Indigenous and “settler” cultures are similar to those in Canada, yet I don’t see this being explored in televised Canadian drama. Instead, we get clones of US shows (“Family Feud Canada”) or productions, like the award-winning Schitt’s Creek, where any possible indication that the show was filmed in Canada has been airbrushed out—all on the dubious premise that if it is to be sold in the US market, it must look American if it is to appeal to US audiences. (I am not convinced this is the case. When I look at the offerings provided by Netflix, they include US shows to be sure, but also Nordic, German, Spanish, Korean and Australian. Squid Game, produced in Korea with a Korean soundtrack, was Netflix’s most watched show. They even have some “Canadian” films on their platform, although not all of them meet the legal definition of “Canadian content”). I find it interesting that Australian shows seem to revel in their “Australian-ness” while Canadian shows generally go to great lengths to hide any reference to their Canadian origins. What accounts for this difference?

Some will say Canada’s geographical proximity to the United States is the biggest factor. It certainly is one reason why a lot of FLS production takes place in Canada, and there is no question that the sheer weight and quality of US content can easily overwhelm competing voices. But if that is true in Canada, it is also true in Australia, New Zealand, and perhaps to a lesser extent in the UK, just to name the leading English-speaking markets. To provide support to local production, Canada, Australia and the UK (as well as the EU) all have local production incentives linked to content requirements. Canada’s are particularly convoluted and confusing, as I wrote recently (“Unravelling the Complexities of the Canadian Content (CanCon) Conundrum”). Canada’s financial incentives for “CanCon” are essentially tied to who produces, directs, and finances a production. It matters not if the story has any Canadian connection whatsoever.

Blogger and commentator Michael Geist has had fun with his Cancon quiz in which readers are invited to guess whether a given production qualifies as Canadian content. (Hint: anything with any obvious relationship to Canada in terms of storyline, location or author doesn’t qualify whereas any production you have never heard of likely does). Most people don’t do too well on the quiz. Obscure co-productions with Norway or Ireland qualify but Disney’s “Turning Red, about a Chinese-Canadian girl growing up in Toronto, starring Canadian actor Sandra Oh, does not qualify nor does a production like “Ultimate Gretzky” or Margaret Atwood’s “Handmaid’s Tale”. The current Cancon policy is designed to support jobs in film production, not to promote identifiably Canadian stories. It is an industrial policy, not a cultural policy. The biggest single impediment to a production qualifying as Cancon, and thus being eligible to receive production incentives as well as meeting Cancon airtime broadcasting quotas, is the requirement that the copyright must be held by a Canadian. This eliminates all productions financed by international producers, from Amazon to Netflix to a Hollywood studio. The only exception is a treaty co-production—but there is no co-production treaty with the US.

Australia also has content quotas for commercial television broadcasting.[i] While less onerous than Canada’s, they are designed to do essentially the same thing by ensuring that a certain amount of Australian content is shown on primetime TV. Australia is also considering extending the quotas to online streaming (Subscription Video on Demand—SVOD) services as is happening in Canada with Bill C-11, the Online Streaming Act although, as in Canada, there is some pushback. The big difference between Australia and Canada, however, is not how content quotas are applied, but in how national content is defined. I have already referred to the unnecessarily complex and confusing formulae for deciding on Canadian content. It is based on four key elements (production control, copyright and distribution rights, creative positions and production spend) and calculated using a complicated points system, where productions must get a minimum of 6 points out of a possible 10 (10/10 for access to some funding), based on the following;

The writer gets 2 points; the director gets 2 points. Either the writer or the director must be Canadian. The highest and second highest paid performers each get 1 point and one of these two must be Canadian. For live action productions the other 4 points go to the Director of Photography, the Production Designer; the Music Composer and the Picture Editor.”

Simple it’s not.

Australia, like the UK, takes a broader view of what constitutes Australian content. According to Screen Australia and the Government of Australia in its “Producer Offset Guidelines”, the SAC (Significant Australian Content) Test—which is applicable for the producer offset (tax rebate) and compliance with quotas–covers the following;

  • the subject matter of the film
  • the place where the film was made
  • the nationalities and places of residence of the persons who took part in the making of the film
  • the details of the production expenditure incurred in respect of the film
  • and any other matters that we consider to be relevant.

More detail is provided on each element. For example, in assessing the subject matter of the film, the following factors are taken into account;

  • did the project originate in Australia or was it developed by Australians?
  • is the project under Australian control?
  • were Australian citizens or residents involved in the project’s development?
  • is the project based on an Australian story?
  • is the project about Australian characters?
  • is the project set in Australia?
  • does the project reflect a cultural background that is particular to Australia or Australians?
  • does the project reveal some aspect of Australia’s or Australians’ cultural background or experience?
  • are there other relevant factors which are specific to the individual project?

To be sure, as in Canada, factors such as the nationality of the main players in the production (executive producer, producer, writer and director, lead cast members, creative heads of department such as the director of photography, production designer, editor, costume designer, sound designer and composer; and other cast, crew and service providers) are all considered. Australian “creative control” has set criteria set in legislation. However, for me the single most important element of the assessment is the statement that “The SAC test is a holistic one and no single element is determinative”. In other words, there is no rote formula and unlike the Canadian definition, an element of judgement actually enters into the assessment. Hopefully C-11 will give the CRTC that flexibility when it passes.

If Canada had a content definition that placed more emphasis on the story, location and talent rather than on the production and source of funding, would it result in more shows like Total Control?[ii] Richard Stursberg has argued for a different way to assess Canadian content. Stursberg is the former head of English services (TV, radio, digital) at the CBC, former CEO of Telefilm Canada, and former chairman of the Canadian Television Fund. He has written in his book, “The Tangled Garden (A Canadian Cultural Manifesto for the Digital Age)”, and more recently in an op-ed in the Globe and Mail, that Canadian content should look, sound and feel Canadian. He cites the British content definition that takes into account (by according points on the scorecard) things such as whether the program is clearly set in Britain, is based on British subject matter, and offers an interpretation of British culture, heritage or diversity. The definition does not require production companies to be British-owned and controlled, simply that the company be incorporated and pay taxes in Britain. The Harry Potter films, set in Britain and based on the work of English author J.K. Rowling, but produced and distributed by Warner Bros., qualify. A similar production in Canada would not.

According to the Minister responsible for bringing forth C-11, Pablo Rodriguez, one goal of the Online Streaming Act is to modernize the definition of Canadian content. If a redefinition leads to the production of more shows and films that are recognizably Canadian through their stories and settings, that would be very welcome from my perspective. It would also incentivize the big US producers to produce content that looks Canadian, at the same time unleashing the power of their global distribution systems to promote Canadian content since they would have skin in the game by being able to invest in and earn a return on certified Cancon, which could in turn be used to meet content quotas where they apply. More production would create more work for Canadian writers, actors, film-makers, etc. not just for FLS production but also to produce recognizably Canadian stories. That would be both good business for the studios and help meet Canadian cultural objectives of telling Canadian stories in a recognizably Canadian way. Maybe one day, I will be able to watch a drama series about an Indigenous legislator from Canada’s “outback” (Saskatchewan?) dealing with political issues in the corridors of power in Ottawa, set in a recognizably Canadian setting, along the lines of Total Control in Australia.

© Hugh Stephens, 2023. All Rights Reserved

[i] Total Control was aired on the Australian public broadcaster, ABC, which is governed by its Charter, rather than by content rules that apply to commercial broadcasters. However, its Charter requires it to “to broadcast programs that contribute to Australia’s sense of national identity, inform and entertain, and reflect the cultural diversity of the Australian community…”. 


“Controlled Digital Lending”: Could Canadian Universities Find Themselves Out on a Limb?

In my year end blog post looking back at significant developments for copyright and creators in 2022 and looking forward to topics that will be at the top of the agenda in 2023, I identified questions over the legality of a contrived and unproven concept, so-called “Controlled Digital Lending” (CDL), as one of the big issues likely to be clarified this year.

Back in June 2020, four major publishers (Hachette Book Group, HarperCollins Publishers, John Wiley & Sons and Penguin Random House), all members of the American Association of Publishers (AAP) filed suit against the Internet Archive for Systematic Mass Scanning and Distribution of Literary Works”. The Internet Archive (IA), an organization that brands itself as “a non-profit library of millions of free books, movies, software, music, websites, and more”, provides a number of services including archiving the internet through its “Wayback Machine”, archiving television programs and audio recordings, and digitizing documents and books, both those in the public domain and others still protected by copyright.  Although registered as a US non-profit, it was founded and still led by Brewster Kahle, a multimillionaire entrepreneur and digital “guru”.

The publishers’ lawsuit was provoked by the IA’s decision to create a self-described “National Emergency Library” in March 2020, during the peak of the COVID pandemic. The Emergency Library expanded the untested theory of Controlled Digital Lending (CDL), championed by the Archive, by eliminating even the pretence of limits on the numbers of digital copies of books that could be borrowed, in effect eliminating all wait times. As I noted in an earlier blog post (“Are Authors the Enemies of Authors and Publishers?”), COVID was the pretext used by the Archive for pushing the envelope on CDL. Under the IA’s interpretation of CDL, a digital scan of a book can be substituted for the original work by a lending library as long as the library holds the requisite number of physical copies. As is the case with legitimate lending of licensed e-books, there is no need for the borrower to physically collect the work; it is all done digitally including terminating the loan once the book is due.

The issue of scanning a book without authorization in order to provide a substitutable digital version is clearly at odds with the law, especially when it comes to US case law which has been very clear and consistent on this point. As authors and publishers point out, it is a form of copying that destroys the licensing market for e-books. Despite this obvious fact, this has not stopped advocates, like the Internet Archive, from claiming that the practice is somehow fair use under US law. Until COVID hit, the Archive purported to follow what it characterized as normal lending rules by allowing only as many digital copies into circulation as it physically held in its inventory, with a digital copy having to be “returned” before a new copy could be loaned out. However, in reality it exercised no actual controls, simply asserting that it was following the correct “own to loan” ratio. Then, with the arrival of COVID, the Archive dropped all pretence of controls and announced that it was suspending the normal practice of maintaining a wait list and would allow unlimited digital copies to go into circulation.

While a few initially misguidedly lauded the Archive for taking measures to assist consumers who were self-isolating because of the pandemic, it didn’t take long for authors and publishers to push back, pointing out that this unilateral move was a case of giving away someone else’s property without consultation or permission. Although the possibility of litigation had been simmering for some time, the IA’s declaration of the “National Emergency Library” was the precipitating event leading to the filing of suit by the publishers. The IA then ended the Emergency Library program prematurely and Kahle appealed to the publishers to settle the dispute in the boardroom rather than the courtroom. The hypocrisy of this appeal was not lost on authors and publishers who had been trying for years to engage the Archive in meaningful discussions. Both sides moved for summary judgment, and those motions are currently pending in front of the judge.

So, how does this all affect Canadian institutions? Some Canadian universities and research libraries are avid devotees of CDL and have worked closely with the Internet Archive. The IA established a Canadian branch, Internet Archive Canada, in 2016. In fact, when the National Emergency Library was announced in 2020, among the major sources of digital books being offered for unlimited lending was the collection of Trent University, in Peterborough ON. Another keen Canadian university proponent of CDL is the University of Alberta.

Using an invented doctrine such as CDL to skirt both authors’ rights and the commercial market is clearly seductive to many libraries, but it ignores the basic rights of the authors and publishers who created the works. Unauthorized CDL copies are not “free goods” to expand the reach of libraries, or to reduce wear and tear on books, or to cut storage and handling costs, but this is what some very reputable institutions seem to think. For example, when it wanted to downsize its physical collection, the National Library of New Zealand turned to the Internet Archive to digitize its holdings. The institution decided it would simply turn over large parts of its collection to the Archive to be digitized—and then seemed somewhat nonplussed when this scheme was attacked by New Zealand writers and publishers whose copyrighted works were being “volunteered” for digital copying without any reference to them as rights-holders. After initially stubbornly insisting that what it was doing was good public policy, the National Library finally backed down in the face of mounting political opposition.

Like most things that sound almost too good to be true, they usually are–and CDL is no exception. In this case, there is a major “inconvenient truth”. To engage in CDL, in many instances a library has to make an unauthorized copy of a copyrighted work. Of course, they could license a digital version (e-book) from a publisher if one is available, but that would involve additional payment and the need for licence renewal after a specified number of uses. (Books wear out and get replaced; digital copies don’t).

As for the unauthorized copy, CDL advocates argue this is a case of technological neutrality—doing the same thing (lending a book) by a new technological means, akin to format shifting—but format shifting is carefully defined under the law. CDL proponents also claim that the making of the (unauthorized) copy is a fair use (in the US context) or a fair dealing (for research, private study, or education purposes) under Canadian law. However, another inconvenient truth is that the unauthorized copy often substitutes for the normal exploitation of the work in the market and constitutes unauthorized distribution. Even if there is not currently a licensed digital version of the work available in the market, the making and distribution of an unauthorized copy undermines any economic incentive to produce a legitimate digital version for licensing. In short, there are some fundamental questions regarding the legality of CDL. The Hachette v Internet Archive case in the US is surely going to provide some clarity on this question in terms of US law.

Meanwhile, Canadian institutions and libraries that have embraced CDL should be wary. Its proponents in Canada argue that it is “likely legal” and if not, it should be[i]. They argue that since there is no language in the Copyright Act that specifically prohibits CDL, it must be legal. Except we all know it doesn’t work that way. The courts play an important role in interpreting the application of legislation when there is uncertainty. Depending on how the Hachette case turns out in the US (and it will surely be appealed no matter which party prevails), there are potential knock-on effects for Canada and other countries, with attendant risks for libraries that have embraced the IA’s version of CDL. (One relevant point is whether the Internet Archive even qualifies as a library. It earns over US$30 million a year from its digitization services).

Genuine libraries will be watching. There is already a provision in Canada’s Copyright Act (Section 30.1.1) allowing Libraries, Museums and Archives to digitally copy copyright protected published and unpublished works in order to maintain and manage their collections. Examples include copies for insurance purposes, preservation of a rare or unpublished work that is deteriorating or damaged or making a copy in a new format if the original format is obsolete. However, this does not authorize distribution or CDL and does not apply if “an appropriate copy is commercially available in a medium and of a quality that is appropriate…”.

Libraries engaged in digital lending can mitigate their risk by licensing legitimate digital works (e-books) when they are available, by focusing on works already in the public domain or by obtaining permission to make and distribute digital copies of works still under copyright and–while still potentially carrying some risk–lending only out of print titles, especially those long out of print. It worth noting that the US publishers are not suing the Internet Archive for its digitization project or for all the digitized books in its collection. They are suing it for the use of 127 specific works, although the Archive reportedly has over 3 million digitized books that are in-copyright in its inventory.

Authors, publishers, libraries and readers are all part of the same ecosystem, as I wrote in an earlier blog about e-books. (“Books, e-Books, Authors, Publishers and Libraries: A Complex Relationship”). They are interdependent. Technology is changing but that interdependence has not changed. Some libraries and librarians don’t like the terms on which e-books are made available, but forcing compulsory licensing or worse, doing an end run on the licensing market by making unauthorized digital copies through the Internet Archive and then distributing them without authorization, is not the answer. At the end of the day, libraries, while playing important roles in both local communities and scholarship, are customers that support the creation of more books by participating in the legitimate marketplace. The Internet Archive has been on a crusade to break the system, and although it calls itself an open library, it is not really a library at all. However, real libraries have been courted by, and in some cases succumbed to, the blandishments and digital services of the Archive and seem to think that CDL is the solution. It is not the answer from the perspective of those who create the content, authors, those who distribute it—publishers– and anyone who values the right to earn a living through creating. As the Copyright Alliance, a US-based advocacy group representing over 2 million individual creators and over 15,000 organizations in the United States., put it;

“…While the Internet Archive masquerades as a library, it does not behave like one. Legitimate Libraries pay for the eBooks they lend, helping to support authors, publishers and the creation and dissemination of books. Internet Archive doesn’t pay authors for books – it simply takes the books, copies them and distributes them without any permission, and without compensating the authors or publishers who created the books in the first place. To be clear: this lawsuit is about stopping systematic theft. It is not about library lending.”

It was no doubt inevitable that CDL would end up before the courts, especially given the cavalier attitude of the Internet Archive toward digital copying and lending compounded by eliminating all pretence of limits through its self-described National Emergency Library. We probably won’t know the results of the court case for some time, but if the Internet Archive is found liable for copyright infringement, this will inevitably have an impact on the question of CDL’s legality elsewhere. Canadian research libraries and universities that are big users of the Internet Archive model need to think and act carefully if they don’t want to find themselves out on the end of a long and fragile limb.

© Hugh Stephens, 2023. All Rights Reserved.

[i] https://summit.sfu.ca/item/18093; see Ariel Katz and Patrick Pang, “Is Controlled Digital Lending Legally Permissible”.

This blog post has been edited and updated for clarity, including noting that the court’s decision on summary judgement is still pending.

Looking Back on 2022 and Forward to 2023: What was and will be important to Copyright, Creators and Content Industries?

As year-end approaches, I like to look back at the main themes that emerged over the past 12 months affecting copyright, creators and the content industries, drawing from my blog posts throughout the year. Some of the same issues I highlighted last year, such as payment to news content providers by online news aggregators (Google) and social media platforms (Facebook) for use of news content, and the education fair dealing exception that has decimated the educational publishing market in Canada, are still very current—and unresolved. The biggest new issue that emerged in 2022 is generative AI, presenting considerable challenges from both a copyright and ethical perspective while offering new applications to assist in creative writing, composing music and producing art. Authors and publishers also continued to wrestle with the issue of digital licensing and the end-run on copyright mounted by proponents of “Controlled Digital Lending”. Finally, progress was made on one particular copyright-related issue, implementation of copyright term extension in Canada, bringing the duration of copyright protection into line with that of the US, EU, UK and Australia, among others, along with a commitment by New Zealand to do so in future.

Generative AI and Copyright

The big story of 2022 was the emergence of generative AI, especially AI generated art. It was only in July of this year that OpenAI’s DALL-E text to image generator was made available to the general public in a beta version. Then on August 22, Stability AI’s tool, Stable Diffusion, was released to the public, at no cost, with no barriers and, significantly, no content controls. I was a little slow off the mark (after all, it was late summer, and I was at the cottage) but I got around to writing about this phenomenon in October (“AI and Computer-Generated Art: Its Impact on Artists and Copyright”). This technology raises several questions from a copyright perspective, not to mention a range of ethical issues arising from the potential for abuse from misuse of AI generated images.

The copyright related concerns come from both the inputs and the outputs of the technology. On the input side, the models are based on the ingestion of literally millions of examples scraped from the internet by internet-indexing projects such as Laion, a research-based “non-profit” based in Germany. Many of the ingested images are works protected by copyright–designs, paintings, photographs, just about anything available online–whether watermarked and protected or not and all without permission from the rights-holder. While Laion claims to be a non-profit motivated solely by the “democratization” of machine learning, the fact that it sells its data to outfits like Stability AI (a process often referred to as “data laundering”) has raised questions as to its degree of altruism.

Whether this form of ingestion is infringing from a copyright perspective remains to be seen. Its proponents in the US claim it falls within fair use parameters, even though the copying is unlicensed while licensed databases exist, and despite the fact that in some cases the results of the AI generated product act as substitutes (or have the potential to act as substitutes) for the original work, in effect displacing the original. In other countries, the legality of this kind of text and data mining (TDM) is questionable. The UK is currently floating a process to open up TDM and create a broad exception allowing its use for any purpose, while denying rights-holders the ability to opt out or license their works. I wrote about this dangerous proposal (“Britain’s Proposed Approach to Text and Data Mining (TDM) for AI: How Not to do It (A Lesson for Canada and Others)”, highlighting it as a negative example for Canada and others countries contemplating legislating a TDM exemption. It has been vigorously opposed by British cultural entities and associations. While arguments can be made for a limited TDM exception for non-commercial research purposes where licensed alternatives do not exist, the kind of TDM exception proposed by Britain would throw out the baby with the bathwater, sacrificing the interests of rights-holders on the supposed altar of AI “innovation”. Just about the only country that has implemented this kind of broad TDM exception is Singapore—and it is probably fair to say that Singapore has a lot less invested in its cultural industries than the UK, or Canada, or many others. In the face of widespread pushback, the UK government is reportedly reviewing the proposal and may go back to the drawing board. This has not stopped some proponents of wider exceptions and weaker copyright protection from advocating for a new international treaty that would allow for broad TDM exceptions. This will be an issue to follow in 2023.

Quite apart from copyright questions relating to the inputs used by the AI application, there are all sorts of questions related to the outputs, i.e. the content produced by the technology. Are the AI-generated works subject to copyright protection if they are a result of upstream infringement? Are they sufficiently original to qualify? What if there is no meaningful human intervention in their creation? All these issues remain to be worked out.

Finally, quite apart from copyright considerations, there can be serious ethical issues related to AI generated content. Unless carefully moderated, the technology can and is being used by some to create abusive images, some sexual, some violent, or to misappropriate a person’s image or publicity right. There are already many forms of online abuse, and generative AI adds to the possibilities. As I wrote last week, AI Generated Art: Another “Technical Breakthrough” Calling Out for Responsible Management and Regulatory Oversight, if industry won’t self-regulate (and it won’t), then governments will have to do it. (“Grappling with Online Safety Legislation: How to Hold the Platforms Accountable”)

E-Book Licensing

Another challenge faced by rights-holders in 2022, in this case authors and publishers, was the challenge to e-book licensing mounted in several US states, along with the issue of “Controlled Digital Lending”. In February I wrote about a new law passed by the Maryland state legislature imposing a compulsory license requiring publishers to license e-books to public libraries at a price to be determined by the government.  (“Books, e-Books, Authors, Publishers and Libraries: A Complex Relationship”). Apart from being a violation of the US Constitution, which reserves copyright legislation to the US Congress, the Maryland law was an egregious seizure of property. The Association of American Publishers sought an injunction to halt implementation of the legislation, relief that was ultimately granted. That has not put the issue to bed, however. Copyright opponents, sadly including some in the library sector, are trying to extend the “first sale doctrine” (referred to as “exhaustion” in Canada) to digital copies of works.

Under a first sale doctrine, once a work is purchased it can be used in whatever way the owner wishes without further reference to the rights holder (except for copying). The best example is a hard copy book which can be resold or loaned without reference to the rights-holder, although it cannot be reproduced except in accordance with fair use or fair dealing limitations or under licence. Licensed digital editions of works are different from works that are sold. They are licensed for a specific time or for a specified use under certain conditions. They are not “sold”, and the licensor (publisher) retains certain rights as to the use of the licensed work. In the case of libraries, most publishers make available under licence a predetermined number of digital copies that may be loaned for a set number of times. From a publishers’ perspective, there are good reasons for these limitations; for example, the fact that a digital copy never wears out and thus never has to be replaced, as well as the elimination of the “friction” associated with physical borrowing. This “friction”, the nuisance elements associated with having to collect and return a book, is one of the factors that lead many people to purchase rather than to borrow. An e-book is a different product from a physical book, with different market characteristics. The producer of that work, the publisher, is entitled to determine the terms on which it is made available to the public. And this is where “Controlled Digital Lending” (CDL) enters the picture.

Controlled Digital Lending

CDL is an unproven theory interpreting copyright in such a way that libraries are free to make and lend a digital copy of a book as long as they have legally purchased and retain a physical copy of the same work. It is very popular in the library community because it allows these institutions to bypass the e-book licensing process. On its surface, the theory can seem plausible (only one digital copy can be in circulation for each physical copy, which is retained in storage, and a digital copy has to be “returned” before it can be reloaned.) However, an “inconvenient fact” is that for CDL to take place, an unauthorized digital copy of a work has to be made, a copy which can then compete with the authorized, licensed, digital version of the work in the form of an e-book. Although digitization of works is authorized for libraries, museums and archives under copyright laws in most countries for specific purposes, such as historical preservation, obsolescence of technology, etc, it is not okay to simply do an end run on a licensed product. In fact, in Canada the copyright exception for preservation is explicitly ruled out if an appropriate copy is commercially available. A lot has been written by academics to justify the CDL theory, but it has never been tested at law. This is about to change in 2023 with Hachette v Internet Archive (IA).

Hachette is the lead plaintiff along with several other publishing houses, supported by the American Association of Publishers, in a case against the Internet Archive (IA) regarding Controlled Digital Lending. The origin of the case lies with the decision of the Internet Archive to lift all CDL controls on its online Open Library during the initial phases of the COVID pandemic in early 2020 in order to create a so-called “National Emergency Library”. The Archive, which has as its core business the digitization of documents and books as well as archiving websites and television programs, brands itself as a “non-profit library”, although it is not really a library at all. In effect, in 2020 the IA unilaterally made available thousands of copyrighted works without authorization, discarding even the fig-leaf of Controlled Digital Lending. Not surprisingly the publishers sued for infringement. The IA then wound up its Emergency Library, but the suit has proceeded and is now before the Southern District Court of New York. The Internet Archive has established a branch in Canada. A number of Canadian university research libraries subscribe to the theory of CDL and have made their collections available to the IA for digitization. It will be interesting to see how this issue plays out in 2023 in both the US and Canada.

Copyright in Canada: Lots of Unfinished Business

On the copyright and content front in Canada, there is lots of unfinished business. In my first blog post of this year (“What Lies Ahead for Canada in 2022 from a Copyright and Content Perspective?”)  I outlined the considerable “to do” list; Copyright Act amendments; Broadcasting Act amendments to incorporate streaming content (the Online Streaming Act); payment for unlicensed use of news content by internet platforms (the Online News Act) and digital safety legislation (the Online Harms Act). Of this list, only one subset was actually achieved, an amendment to the Copyright Act to extend Canada’s term of copyright protection. No other action has been taken to date to update the Copyright Act despite a commitment in the 2022 budget speech to do so. (“Copyright References in the Budget: Good Intentions Are Welcome but Early Action is Needed”). As a result of this lack of action, a coalition of 25 author, publisher and copyright groups held a “Day of Action” in late November to urge the government to follow through on its commitment to “ensure a sustainable educational publishing industry, including fair remuneration for creators and copyright holders”. (“The “I Value Canadian Stories” Campaign: Time to Get Serious About Copyright Reform”).

As for the Online Streaming Act (Bill C-11), Online News Act (Bill C-18) and the Online Harms legislation (not yet introduced), they are still works in progress. The public discussion paper for the Harms legislation attracted plenty of negative commentary, leaving the government to go back to the drawing board to take account of the input. It should be introduced in 2023 while C-11 and C-18 should complete the Parliamentary process next year. (C-11/Online Streaming has cleared the House of Commons and is currently being reviewed in the Senate, with the Committee process now complete, while C-18/Online News has completed Committee review in the House and passed third reading just prior to the Christmas break. It will now be reviewed in Committee by the Senate). All have controversial aspects and will be watched closely by copyright stakeholders in 2023. It promises to be an interesting year on a number of fronts–AI generated content, Controlled Digital Lending, and copyright updating and related legislation in Canada. Stay tuned.

© Hugh Stephens, 2022. All Rights Reserved. 

AI Generated Art: Another “Technical Breakthrough” Calling Out for Responsible Management and Regulatory Oversight

A quarter of a century ago, the internet was going to bring us wonderful things. The hubris of Silicon Valley was incarnated in the cyberlibertarian rantings of so-called internet guru John Perry Barlow and his “Declaration of the Independence of Cyberspace”. The hi-tech whiz kids actually began to believe in their own infallibility and in the innate goodness and benefits of cyberspace. They had drunk so much of the Kool Aid their eyes were orange. Any reasonable restraint placed on the internet was deemed to be a stifling of innovation and a violation of free speech. The internet was going to be liberating, democratizing, enhance creativity and our quality of life, spawn new industries and on and on. The constraints of the offline world, the laws and regulations that help balance society and keep excesses in check, were argued to be inappropriate for this new world.

Section 230 of the Communications Decency Act of 1996 was passed at the time, with lawmakers unaware how loosely it would be interpreted by the courts. This is the much-misused piece of legislation that internet platforms in the US have hidden behind to avoid any civil legal responsibility for malicious, defamatory and otherwise illegal content on their platforms, whether they are aware of that content, promote that content or refuse to take any action to delete or moderate that content. Section 230 has been widely recognized to be in need of amendment, despite the supposedly transformative role that professor and journalist Jeff Kossoff gives it in his recent book, “The Twenty-Six Words That Created the Internet”. Those 26 words (“No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider”)–which constitute the formula that has immunized the platforms from civil liability for harmful material on their platforms–has been largely responsible for some of the most negative aspects of the internet.

Some of the internet hype back in the 1990s was true, but a lot was not. There is no question that the internet has brought about a huge transformation in the way we communicate, disseminate information, buy and sell, and even think. Unfortunately, as noted above, it has come with a lot of collateral damage. When this occurs, it is the role of legislators and regulators to mitigate the harm, to establish guardrails, to amplify the good while minimizing the bad, in short, to protect society, because we have learned that the industry cannot be trusted to do so on its own volition. We are now on the cusp of that situation when it comes to generative AI, including AI generated art.

Several commercial platforms that convert text prompts entered by users into images that resemble art or photography are becoming more widely available to the general public, as I discussed in this earlier blog on AI-generated art. This technology poses two major issues from a copyright perspective. First, to generate their images, the AI machines ingest without permission a vast number of images scraped from the internet, many of them protected by copyright. Without the raw material produced by human artists, the algorithms would not be able to generate anything that resembles human-produced art. Yet at least some of this AI-generated output is likely to compete in the market with the works of artists who unwittingly fed the AI machine. The unauthorized scooping of copyrighted content not only destroys any potential market for licensing content for data mining purposes, it also threatens to destroy the livelihood of many current artists, designers and illustrators. Whether this is legal is still to be determined. In the US there has been no clear fair use ruling that would permit this vacuuming up of copyrighted content. In other countries, text and data mining exceptions either do not exist in copyright law (as in Canada) or are restricted to non-commercial research purposes (as in the EU). As AI develops, the rights of creators must be kept in mind and protected.

A second copyright concern, at the moment largely theoretical but soon no doubt to be real, is the question of who exercises copyright over AI-generated works. It is accepted in almost all jurisdictions (the UK is an exception) that for a work to be granted copyright protection, it must be fully or partly created by a human, along with the other normal attributes required of a copyrighted work (originality, creativity and fixed in a material form). Even if AI assists in the creation of the work, there must be a “human hand” in control. In fact, the US Copyright Office recently questioned the copyright registration of a graphic novel, requiring the applicant to demonstrate that there was “substantial human involvement” in the creation of the work, after artist Kris Kashtanova went public stating that she had obtained a copyright registration on her fully AI generated graphic novel, thus creating a precedent. (She hadn’t). The USCO subsequently stated it would cancel her copyright and she is now appealing, claiming that she was the artist after all, albeit “assisted” by AI.

There is yet another copyright angle to creation of art through AI that has been explored by copyright blogger David Newhoff. He has examined the question of whether the crafting of “prompts” to generate art through AI could be considered sufficiently original and creative to qualify for authorship, and thus copyright protection. He is prepared to consider that a carefully constructed prompt might qualify as an original literary work, much as a line of code in a software program might qualify, but not the resulting work because that is the work of the algorithm, not the person creating the prompts. The Infolaw blog in the UK has also carefully considered this question. There are no straightforward answers.

While these copyright questions remain to be resolved, equally serious generative AI issues arise from the way in which the final work is used and the nature of the content it incorporates. Coming back to my original premise that the internet cannot be left on autopilot and expected automatically to become a force for social good, the same is true for generative AI, especially AI generated art. While generative AI has the potential to save time and money for business and creators and even improve content, there is also plenty of potential for abuse. This is surely going to happen unless the enablers of this technology establish some rules. You can easily imagine how the technology could be misused, producing everything from misappropriated personal images doing undesirable things to manipulated images putting people, including prominent people, in situations and places where they have never been, not to mention copyright infringement and a host of other abuses. There are already reports of videos of ISIS beheadings and non-consensual porn powering AI generated art. And the sex industry is no less present in the world of AI-generated content than it is in other facets of the internet as reported by TechCrunch, which profiled a new, AI enabled site devoted exclusively to porn, Unstable Diffusion.

Because of the potential for abuse, platforms such as OpenAI and Midjourney have built in guardrails, various filters and controls that will constrain (but probably not entirely prevent) misuse of generative technology. Google, which is developing its own platform, Imagen, is holding back public release for now until it can figure out how to ensure appropriate use. However, Stability AI’s platform, Stable Diffusion, which is open source and free to the public, launched with no such controls. According to the New York Times, Emad Mostaque, the founder and chief executive of Stability.AI, has pushed back on the idea of content restrictions, arguing that “radical freedom” is necessary to achieve his vision of a democratized AI untethered from corporate influence. Mostaque is quoted as saying, “We trust people, and we trust the community”. This is a disaster waiting to happen.

Does Mostaque’s attitude stem from naïvité, or just irresponsibility? I would call it both, plus arrogance and maybe some crass commercial advantage. This laissez-faire, “let it all hang out” attitude will inevitably result in “the community” (or fringe parts of it) abusing the technology, but it will also give Stability AI some additional market share. Even though some platforms have tried to set guardrails, the nature of the industry is that, in the end, the standard is set by the lowest common denominator. Already OpenAI is modifying some of its early controls as a result of Stability AI’s lack of discipline. The inevitable abuses may result in the hammer of legislation being brought down, despite Mostaque’s ramblings objecting to control by big tech, or governments. Generative AI won’t just stop at still images. Mostaque is already talking about extending it to video, audio and other formats. Music is the next creative industry to face the AI challenge. Given the speed at which this technology is developing and being rolled out, with very few controls and limited screening of content, the law of unintended consequences will be quick to assert itself.

If AI platforms have no responsibility for the content they enable users to create, just as internet platforms enjoy immunity in civil law from the consequences of the content they enable users to distribute, the benefits of the technology could well be outweighed by its negative side-effects. The latest AI-enabled application to cause concern is Lensa, a Stable Diffusion powered tool that takes your selfies, retouches them and produces an art image with a version of you. Teenagers love it. But not only are users giving away their facial data, which could be misused, the images that Lensa generates from the Stable Diffusion database are often overly sexualized or misogynistic.

Despite all the concerns, there were some signs at the end of last month that the “responsibility” message may be starting to seep through, or at least awareness that there could be some legal consequences. In November, Stable Diffusion tweaked its model to remove the ability to mimic specific artists or to generate nude and pornographic content and realistic portrayals of celebrities. Perhaps Mostaque’s unlimited trust in people and “the community” was tempered by a dose of reality? Yet when there was pushback from parts of “the community”, Mostaque responded that because Stable Diffusion is open source, users are free to add these features back at their discretion. It seems he is more concerned with Stable Diffusion’s potential legal exposure than the impact of unrestrained applications of AI.

Some clear ground rules need to be established now, before things get out of control, rather than waiting for the inevitable abuses to occur. If industry won’t do it—and industry won’t because there will always be a new disruptive upstart seeking to gain misguided competitive advantage by ignoring the rules—then governments will have to. Even though the US Congress has been unable to get its act together to reform Section 230, governments around the world are finally waking up to the need to control online abuses. Introduction of online safety legislation is underway in the EU, UK, and Canada. Australia already has such legislation. New Zealand has developed a voluntary code. Abuses from AI generated images will have to be addressed within this framework.

If we have learned any lessons from the cyberlibertarian philosophy of some of the early protagonists of the internet (a philosophy still espoused by some, such as the Electronic Frontier Foundation), it is that the rules, incentives and punishments established by society to guide the behaviour of some for the benefit of all, apply every bit as much to the internet, cyberspace and AI as they do to other aspects of life. If, as Mostaque claims, “people” and “the community” could be trusted to do the right and sensible thing, we would have little need for the apparatus of the state other than to deliver services. Sadly, that is not how life works.  

AI-generated art is on the cutting edge of the next wave of technology-enabled abuse unless action is taken now to place some responsibility on the shoulders of the enablers. If you invent a weapon, load it, hand it to an anonymous user and show them how to fire it, you must take some responsibility for the results. We have seen it happen already with misinformation and abusive content on the internet. Generative AI is the next big challenge. Let’s make sure this time we get it right.

© Hugh Stephens, 2022. All Rights Reserved.

The “I Value Canadian Stories” Campaign: Time to Get Serious About Copyright Reform

Used with permission

At the end of November, on November 29 to be precise, the “I Value Canadian Stories” coalition launched a “Day of Action”. The objective was to draw the attention of the Trudeau government, in particular the two ministers responsible for the Copyright Act, Innovation, Science and Industry Minister François-Philippe Champagne and Heritage Minister Pablo Rodriguez, to the need to move urgently on promised copyright reform.

The coalition came into being in 2017 and brings together over twenty-five author, publisher and copyright groups from across the country to deliver a key message: the Federal government must restore fair compensation to creators and publishers for the use of their works by the education sector.

This is an issue I have written on multiple times. It goes back more than a decade when the elementary, secondary, and post-secondary education sectors in English Canada began to opt out of licensing content from the collective society representing authors and publishers, the Canadian Copyright Licensing Agency, known as Access Copyright. Instead, they developed their own “fair dealing guidelines”, using as cover the new education fair dealing exception introduced into the Copyright Act in 2012. In effect, the universities declared that the content they had previously licensed from Access Copyright was now free for the taking under the education fair dealing exception. For the most part, they simply stopped acquiring and paying for licences, depriving authors and publishers of substantial revenues, in effect requiring the educational publishing sector to subsidize Departments of Education and institutions of higher learning. In Quebec, most educational institutions continued to pay for licences from Access Copyright’s Quebec counterpart, Copibec, with the exception of Laval University. The result in both cases was litigation. In Quebec, eventually, Laval settled with Copibec. Unfortunately, Access Copyright was not able to achieve the same outcome in its area of jurisdiction, the rest of Canada.

The Access case (against York University) eventually went all the way to the Supreme Court of Canada (SCC) which delivered a damaging decision in July of 2021.  While not accepting York’s claim that its copying practices were fair (although also not ruling that they weren’t), the SCC upheld a decision by the Federal Court of Appeal that had overturned a key aspect of an earlier court ruling that had gone in favour of Access Copyright. The original decision not only found that York’s dealings were unfair, but it required York to pay the interim “mandatory tariff” for copying published materials in Access Copyright’s repertoire.

This “tariff” (royalty payment) had been established by the Copyright Board of Canada, a quasi-judicial administrative agency whose role is “to establish fair and equitable tariffs and licences through timely and fair processes”, including setting tariffs in situations where a collective society and users cannot agree on royalties. The Board’s intervention had been invoked because many post-secondary institutions (including York) had declined to obtain a licence from Access Copyright for reproducing content that the copyright collective represented even though they were reproducing material from the collective’s repertoire. Access Copyright sought to enforce the interim tariff established by the Board against York in the Federal Court, which found that the interim tariff was enforceable. However, York appealed, and the Appeal Court ruled that tariffs set by the Copyright Board are enforceable only against users who willingly agree to be bound by the tariff. This decision, upheld by the SCC, has in effect undermined the principle of collective licensing of published materials in Canada.

If this is all rather complicated and “inside baseball” to most people, suffice to say that as a result of the SCC decision, authors and publishers are now urging the government through Parliament to fix the loophole in copyright law that has led to this outcome. The root of the problem is the ill-considered decision to include “education” as a fair dealing exception when the Copyright Act was updated in 2012. When combined with the SCC’s decision reversing the previously-accepted interpretation of the mandatory tariff regime, we have a perfect storm of bad news for authors and publishers, and for collectives like Access Copyright.

That is the story behind the “I Value Canadian Stories” campaign. Earlier this year, in the 2022 Budget document, the Trudeau government provided some measure of hope that the problem would be fixed, but to date there has been no action. I wrote last week (“It’s Official! Canada Extends its Term of Copyright Protection”) about one of the two copyright references contained in the budget document. That provision announced the fulfillment of Canada’s commitment in the USMCA/CUSMA trade agreement to extend its term of copyright protection by twenty years. An amendment to the Copyright Act to this effect was subsequently incorporated into the Budget Implementation Act, omnibus legislation that bundled a number of unrelated legislative issues, including copyright, into the budget bill for administrative and legislative convenience.  Since this was a very limited and targeted amendment to the Copyright Act which did nothing to redress the problems described above, the budget bill also contained the following wording as reassurance to the copyright community:

The government is committed to ensuring that the Copyright Act protects all creators and copyright holders. As such, the government will also work to ensure a sustainable educational publishing industry, including fair remuneration for creators and copyright holders, as well as a modern and innovative marketplace that can efficiently serve copyright users.”

That was a useful statement–but since then nothing has happened, and creators and publishers continue to be denied payment when their work is copied in educational institutions outside of Quebec. The one-off amendment to the Act to extend the term of copyright duration has now been done, driven by the deadline built into CUSMA, but of the broader amendments needed to fix the education loophole (as well as to address a number of other copyright-related issues about which there has been Parliamentary review as well as discussion papers circulated for public comment), there has been not a word. In principle, the Copyright Act was due for an update five years after the previous revisions, in other words in 2017. Two years after that, two Parliamentary Committees held hearings to review aspects of the Act, and made a series of recommendations, some of them contradictory. Since then, there have been discussion papers on issues such as artificial intelligence, online intermediaries, text and data mining, orphan works and so on. The pot is starting to bubble, but there are still no signs that the government is ready to introduce legislation.

The ”Day of Action” was undertaken by writers and publishers groups from across Canada. Quebec writers’ and publishers’ associations were particularly active during the “Day of Action”, even though Copibec and Laval reached an accord on licensing in 2018. What explains the continuing interest of Quebec-based authors and publishers? First, they are denied payment of education royalties in the rest of Canada in the same way as Access Copyright’s members are short-changed. Second, they are concerned that Quebec educational institutions could follow the lead of universities in the rest of Canada and stop paying creators and publishers by walking away from licensing agreements. Not being a legal requirement, it could be renounced in future.

Lobbying took place on Parliament Hill on November 29. Blank books were distributed, graphically underlining that this could be the fate of the publishing industry in Canada in future if the royalties issue is not resolved. The decline in revenues to the industry from educational institutions has been staggering, estimated at over $200 million since 2012, with  four educational publishers ceasing operations in either the K-12 or post-secondary sector in Canada, and others shifting out of production of Canadian educational materials for Canadian students.

The campaign featured individual writers with their works, and a letter writing campaign to Minister Champagne. It was a reminder that the creative community expects the government to follow through on its commitment to “ensure a sustainable educational publishing industry, including fair remuneration for creators and copyright holders”. One way in which this could be done would be to narrow the education fair dealing exception so that it applies only when a work is not commercially available, as per the Recommendation (#18) made by the Heritage Standing Committee in its report “Shifting Paradigms.

The Trudeau government needs to get moving. Although in a minority situation, its “confidence and supply” agreement with the opposition NDP should give it two plus years to update the Act, and redress the injustices introduced a decade ago. If Canada’s educational publishing sector is to survive, if Canadian students are going to be provided with culturally relevant content as part of their learning, and most important, if Canada’s authors and writers are to be dealt with fairly and justly and be provided with the financial means to continue to create Canadian stories, the Copyright Act needs to reflect these priorities.

As the campaign letter to the government stated so succinctly:

“Fix the Copyright Act now. Save the livelihoods of Canadian creators and publishers. And put a stop to great Canadian content disappearing”

© Hugh Stephens 2022. All Rights Reserved.

It’s Official! Canada Extends its Term of Copyright Protection

The announcement itself was a bit of an anticlimax. It was something that had been in the pipeline for months but until the publication of the Order-in-Council dated November 17 (released on November 23), it was still hanging as a piece of unfinished business. The wording was short, if a bit convoluted:

Her Excellency the Governor General in Council, on the recommendation of the Minister of Industry and the Minister of Canadian Heritage, under section 281 of the Budget Implementation Act, 2022, No. 1, chapter 10 of the Statutes of Canada, 2022, fixes December 30, 2022 as the day on which Division 16 of Part 5 of that Act comes into force.

Here is my translation of the legislative-ese;

The Canadian government has finally pulled the trigger on the implementation of legislation that amended the Copyright Act to extend the term of copyright protection in Canada from “life of the author plus 50 years” to “life of the author plus 70 years”, with effect from December 30, 2022.”

This amendment had been enacted as one of the numerous unrelated pieces of legislation bundled into the omnibus 2022 Budget Implementation Act introduced on April 7. It was, as I wrote at the time, “The Copyright Needle in the Budget Haystack”. That Act finally passed Parliament and was given Royal Assent in June of this year but the provisions of the legislation relating to copyright were not officially “proclaimed” (put into force) until the release of the November Order-in-Council, bringing the amendment into force on December 30, 2022.

The change was made as a result of  a commitment made by Canada to the US and Mexico in the updated NAFTA agreement, the USMCA (referred to as the CUSMA in Canada). The text of the CUSMA required that Canada bring the extended term into effect no later than 2.5 years after the date of implementation of the new NAFTA Agreement, which was July 1, 2020. In other words, the extension of Canada’s copyright term of protection had to be brought into effect before the end of 2022.

Initially, it was not clear what form the provision would take. Copyright opponents lobbied to have an obstacle placed in the way of a straightforward extension by adding an “opt-in” provision in the form of a registration requirement imposed on the rights-holder in a narrow window before the original term of “life plus 50” expired. Failure to pro-actively assert the right to extension would result in copyright protection lapsing under the current “life plus 50” rules. As I pointed out in an earlier blog posting (“The Anti-Copyright Hyperbole Fails to Sway the Canadian Government”), this was a really bad idea. No other country has ever done this when implementing copyright extension. To do so would probably be a violation of Canada’s commitments under the Berne Copyright Convention, would impose an unnecessary and costly burden on rights-holders, and would create an unnecessary bureaucracy to implement and maintain a registration regime. Not only would the registration trip-wire impact rights-holders, it would also lead to confusion among users because of uncertainty as to which works still fell under copyright. Finally, it could possibly have led to a trade challenge from the US which could have argued that Canada had reneged on a CUSMA commitment.

Canada is always meticulous in seeking to ensure that the US lives up to the letter and spirit of its treaty commitments. The proposed US tax credit for electric vehicles that originally was to have been limited only to US made vehicles is a recent case in point. If Canada wants to ensure the US implements CUSMA in good faith, it needs to do so itself. In short, the additional registration requirement was not a realistic option. Fortunately, and sensibly, the Canadian government refused to countenance it.

However, that has not stopped copyright opponents from dredging up this tired old proposal, and from repeating the canard that copyright extension will lock up content for another two decades by delaying certain works from falling into the public domain. They will in all likelihood also repeat the false narrative about a longer term of copyright costing Canada hundreds of millions of dollars.

Canada will now join the more than 80 countries that have implemented an extension of copyright duration. This will bring Canada’s regime into alignment with most of its major trading partners including the US, the twenty-seven members of the EU, the UK, Japan, Korea, and Australia. New Zealand has also agreed to join the new international consensus as a result of its trade agreement with the UK. Canada will now be part of this club with a harmonized term of protection.

An extended term has several advantages for rights-holders, both in Canada and abroad. First, Canadian rights-holders (authors, publishers, film-makers, songwriters, musicians and so on) will benefit from the longer term of protection not only in Canada but also in the twenty-seven member states of the EU and in the UK. This is because those countries apply the extended term (an additional twenty years beyond the Berne Convention minimum of “life plus 50”) on the basis of reciprocity only. Canadian rights-holders will thus benefit from the full “life plus 70” term of protection for their works in the EU once Canada aligns its term of protection with the EU standard. The situation with the US is a bit different. Canadian rights holders already enjoy the benefit of the longer term south of the border, but US rights-holders are denied equal treatment in Canada. With Canada’s amended term, US rights-holders will get the benefit of the extra period of protection in Canada, and that alignment will bring about equality of treatment between US and Canadian rights-holders in both countries. There will also be a general benefit from harmonization of terms, which is one of the reasons the EU originally decided to go with the revised “life plus 70” standard.  A number of EU member states either had terms that were shorter than “life plus 70” or longer, leading to a patchwork quilt of protection regimes and legal confusion. Harmonization with the EU was also the primary reason the US adopted a longer term in the 1990s, not to give the Walt Disney Company longer protection for the original Steamboat Willie cartoon, as copyright detractors love to pretend.

In its consultation paper on copyright extension, the Canadian government laid out the benefits of copyright extension from the perspective of its supporters;

“A longer general term of protection will increase opportunities for Canadian rights holders to monetize copyright-protected content, thereby encouraging investment in the creation, acquisition and commercialization of such works. It will also harmonize Canada’s general term with that of our major trading partners, allowing Canadian rights holders to compete internationally on a levelled playing field.”

It also noted that “user stakeholders” had expressed concern about the twenty-year hiatus in works entering the public domain once the copyright term is extended. Works that would have fallen into the public domain in Canada on January 1, 2023 will now enjoy an extra twenty years of protection. While this had led to some hand-wringing, most users of copyrighted works won’t notice any difference. The main impact will fall on publishers, like Broadview Press in Canada, whose business model largely depends on reprinting works that have just fallen out of copyright and into the public domain. Broadview will now have to wait a couple of decades before pouncing on the next work to enter the public domain in Canada.

Economists have long argued over the modelling to determine net benefit or loss from stronger copyright protection. While a longer term for an existing work clearly carries no additional economic production incentive for the author since the work is already in existence, a longer term can provide an additional incentive for the creation of new works. Moreover, a longer term can also spur investment in existing works still under copyright through publication of new editions, and innovation in new formats including digitization, restoration and re-release of earlier works, such as films and other AV content. However, from my perspective, the most important benefit is that Canadian rights-holders, creators and creative industries, will now play on a level playing field with their competitors in most advanced nations. As of midnight, December 30, 2022, Canada will officially join the “life plus 70” copyright club. It’s about time.

© Hugh Stephens, 2022. All Rights Reserved.

Britain’s Proposed Approach to Text and Data Mining (TDM) for AI: How Not to do It (A Lesson for Canada and Others).

Source: http://www.shutterstock.com

Last month I wrote about the emerging phenomena of AI-generated art through widely available programs such as DALL-E 2, Stable Diffusion and others, and of the threat they pose to artists, designers, photographers and all those who depend on the protection of copyright to earn their livelihood. This also includes musicians and writers. Artificial Intelligence (AI) is now being used to create “sound-alike” music where users can sing in their favourite performer’s voice, and commercial AI programs can be purchased to write marketing copy, and even novels. Allowing the widespread misappropriation of copyrighted content to produce AI-generated products that compete on a commercial basis with the original creation, while at the same time using unauthorized inputs from the original works to help produce the competing product, is a misuse of AI. It is also a counterproductive policy that threatens to undermine the fundamental basis of economically significant cultural industries. Furthermore, it is just plain wrong, stealing the work of creators in a misguided attempt to boost “innovation” and development of AI.

The UK’s Proposed Limitless TDM Exception

This issue is playing out right now in the UK and poses an immediate threat not only to creators and copyright industries in Blighty but globally, given the negative precedent this will set if it becomes law in Britain. The UK government recently unveiled the results of its public consultation on AI and Intellectual Property. Among the more startling recommendations was the proposal on text and data mining. As stated in the discussion paper (Section 58-61).

“The Government has decided to introduce a new copyright and database right exception which allows TDM for any purpose (emphasis added)…Introducing an exception which applies to commercial TDM will bring benefits to a wide range of stakeholders in the UK…The benefits will be reducing the time needed to obtain permission from multiple rights holders and no licence fee to pay…Rights holders will no longer be able to charge for UK licences for TDM and will not be able to contract or opt-out of the exception.”

Frankly, this is nothing short of outrageous. It reeks of the British government’s desperate desire to prove that Brexit was not the colossal mistake it clearly was by trying to out-manoeuvre the EU. This proposal would make the British TDM exception broader and less restrictive than the existing EU law (which allows TDM only for non-commercial research purposes), all in the name of promoting innovation. What it is really doing is trying to steal data mining jobs from other jurisdictions on the backs of creators and copyright industries. If this misguided policy comes into effect, the vibrant British cultural sector will pay the primary price, although respect for copyright will be weakened generally. Not surprisingly, British artists have spoken up. Equity’s Audio Committee wrote to the Minister responsible pointing out the catastrophic effect the exemption could have for UK based performers and their professional work if implemented. As an example, the Committee’s letter stated that any video or sound recording that is publicly available could to be mined for free by third parties, without the consent of the copyright owner, to generate new AI content.

DACS (the Design and Arts Copyright Society) stated that the new TDM exception will “drastically weaken copyright protections for copyright holders in the UK, which supports the livelihoods of workers and businesses across the creative and cultural industries.”  Stressing that it was not opposing the development of AI, DACS noted that licensing copyright-protected works is a vital revenue source for visual artists at all stages of their careers. The UK government’s paper admits that if implemented the new TDM exception will put out of business those who have built business models around data licensing, but apparently that’s not the government’s concern. It’s all about incentivizing AI research, you see, and damn the consequences. While TDM is often undertaken for purposes other than development of AI, the wording of this proposal would allow an exception for any purpose, in other words specifically enabling TDM to feed AI algorithms.

Arts and culture are major economic drivers in most developed economies and the UK is no exception. The creative economy in the UK is a major provider of exports, employs over 2 million people and contributed over £115 billion in 2021 to the British economy, according to the report “Creative Industries: Trade challenges and opportunities post pandemic” prepared for the UK’s Department of International Trade. Are these benefits and these jobs to be sacrificed on the altar of “AI innovation”? It is a remarkably short-sighted proposal and probably contravenes Britain’s international obligations under the Berne Convention and TRIPS[i]. To date, no law has been introduced to give effect to this recommendation and given the current disarray in which the British government finds itself domestically, its implementation will hopefully be delayed, allowing for sober second thought.  

Developments in Canada Regarding TDM

While hopefully this ill-conceived recommendation will be reconsidered, it is a cautionary tale that should be borne in mind by Canada and other states that may be contemplating legislating a TDM copyright exception. (In the US, TDM is governed by fair use under Section 107 of the Copyright Act. While each case is decided on its merits, it is unlikely that a court would make a determination of fair use for unauthorized use of copyrighted material for TDM purposes if a TDM licence was available and/or if the final work produced from the inputs harmed the market for the original work by competing with it commercially). It is all too easy to trample creators’ rights—in the process gutting a thriving industry that contributes immensely to national economic and cultural well-being—in the misguided rush to clamber aboard the AI train. If a TDM exception is considered necessary, it should be narrowly tailored to deal with the specific needs of academic research, while staying consistent with international treaty commitments, and not be used to create a product from text mining that will unfairly compete with the work of the original creator.

In Canada, an update to the Copyright Act is overdue by several years. As part of that process, two Parliamentary Committees were struck in 2019 to review the Act. One of those committees, the INDU Committee, recommended that what it called “Informational Analysis” (TDM by another name) be permitted under the Act, (Recommendation 23), either by adding it to the list of specified fair dealing purposes or by creating a specific exception. A consultation paper on a “Modern Copyright Framework for Artificial Intelligence and the Internet of Things” was released by the Department of Innovation, Science and Economic Development in July of 2021, inviting public comment. TDM was one of the issues raised. No recommendations have as yet come forth as a result of this consultation.

There is pressure from academic circles to circumvent the licensing conditions that many publishers maintain when permitting use of their materials even though publishers often grant rights to use materials for research purposes without charge, or with minimal conditions such as attribution or on the condition that the new product does not create a substitute for the original. In other cases, rights-holders may exercise their right to require a licence fee, which can be an important revenue source in some copyright-related industries, such as publishing. I can understand that from an academic point of view, it may be frustrating to have to contact multiple rights-holders to get permission to use content, or to find that access to some materials is blocked or constrained by licensing requirements. Reasonable arguments can be made that some forms of TDM are necessary for research and innovation, which could include AI. Could these not be restricted solely to public domain materials? Ideally, but not always.

Dr. Lucie Guibault of the law faculty of Dalhousie University (Halifax, NS) has examined the issue of TDM in Canadian law and concludes that it is not currently legal under either the exception for temporary reproduction (Copyright Act, Section 30.71) nor under fair dealing, notwithstanding that it could meet the enumerated purpose of “research”. This is primarily because of the amount of reproduction that takes place—basically all of a work. With respect to the argument that researchers should restrict themselves to public domain works, she points out this is not always practical, referring as an example to the work of academics such as Professor Andrew Piper of McGill University who as part of his research analyzed the plots and popularity of contemporary novels, all of which are copyright protected. (Note, however, that Piper’s work was not to create a database for AI purposes, but rather to analyze a range of works and draw conclusions from that data analysis).

Prof. Guibault’s solution is to introduce a text and data mining exception into Canadian law, along the lines of what has already been done in the EU (restricted to non-commercial research purposes), although she believes that the non-commercial limitation is too restrictive. She bases her argument on the fact that a TDM exception will have no impact on the economic interests of the rights-holder nor in any way affect the normal exploitation of the work. That would suggest a narrow exception and would rule out the kind of data scraping that is producing AI-generated art through DALL-E 2 and other programs. It would also rule out the kind of limitless TDM exception proposed by the British government.

One really important issue to bear in mind when promoting an academic, “non-commercial use” exception is that of data laundering. This occurs when data is collected by a non-commercial entity, such as the German non-profit LAION, which in turn then provides the data to a platform that exploits it commercially. In this case it was LAION that provided the data on which Stability.AI has built its AI-generated art tool Stable Diffusion. The dangers of data laundering are well covered in this article.

As countries come to grips with the need to promote AI research and development, they need to avoid a “race to the bottom” when it comes to shedding protection for copyrighted works. Allowing holus-bolus unauthorized copying and scraping of copyrighted material to feed AI research destroys any market for licensing content while in some cases producing AI-generated works that unfairly compete with the original work of creators. This erodes economic incentives for authors and artists and undermines copyright-based industries that provide substantial employment and contribution to GDP, in addition to nourishing the cultural soul of nations.

AI is here to stay. It is a legitimate research tool and can bring new products and services to market. Creators themselves often use it. In the rush to embrace AI, policy makers must not ignore the critical role that copyright has played for over two centuries in spurring creativity and creating economic and cultural welfare. As technology has developed, copyright has adapted. It has not been thrown under the bus. Respect for copyright must remain one of the cardinal principles taken into account when designing and implementing policies to promote AI.

© Hugh Stephens, 2022. All Rights Reserved.

[i] TRIPS-Trade Related Intellectual Property Agreement, an agreement among members of the World Trade Organization.

This paper has been updated to add a reference to the Government of Canada discussion paper on Modern Copyright and Artificial Intelligence, and the Internet of Things, published in July 2021.

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