Author: hughstephensblog

I am a former Canadian foreign service officer and a retired executive with Time Warner. In both capacities I worked for many years in Asia. I have been writing this copyright blog since 2016, and recently published a book "In Defence of Copyright" to raise awareness of the importance of good copyright protection in Canada and globally. It is written from and for the layman's perspective (not a legal text or scholarly work), illustrated with some of the unusual copyright stories drawn from the blog. Available on Amazon and local book stores.

Vietnam’s New IP Law: The General Direction Makes Sense but Regulatory Details will be Key

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Image: Shutterstock

On December 10, Vietnam’s National Assembly adopted an amended IP (intellectual property) law designed to update the legislation for the digital age, and especially to address issues involving the intersection of AI and IP. The next phase will be drafting of the regulations necessary to bring the law into effect by April 1, 2026. The law does several things; it will explicitly recognize IP as an economic asset allowing it to be used for financial and accounting purposes, and as collateral for loans; it clarifies that works autonomously generated by AI without substantive human creative input are not eligible for IP protection; and it allows the use of lawfully published works and data for AI research, testing, and training, provided that such use does not unreasonably prejudice the legitimate interests of rights holders and the resulting outputs do not infringe copyright. While all this sounds good on the surface, there are potential hidden problems with the AI research, testing and training provisions. In drafting the implementing regulations, Vietnam needs to be careful to not undermine its vibrant creative industries that depend on copyright protection to thrive.

The translated wording of the AI provision (Clause 5, Article 7) is rendered in English as follows:

“Organizations and individuals may use text and data related to intellectual property rights that have been lawfully published and made publicly accessible for purposes of scientific research, experimentation, training of artificial intelligence systems, provided that such use does not unreasonably affect the legitimate rights and interests of the author or the holder of intellectual property rights as stipulated by this Law.

For text and data that are subject to copyright and related rights protection, the use of such text and data under this Clause must also comply with the Government’s regulations.”

At first glance, this looks like another “standard” Text and Data Mining (TDM) exception, a carve out from copyright protection being pushed by the AI industry in a number of Asian countries, as I recently wrote about here. In that blog post, I noted that lawmakers and regulators in Asia are grappling with a common problem; how to incentivize the development of responsible AI while continuing to encourage and promote all-important content industries. Vietnam is facing the same issue. Throwing the cultural sector under the bus in the hopes of attracting some ephemeral hi-tech AI jobs is a false bargain. Strong cultural industries enable the development of strong content licensing markets for AI development, enabling a virtuous circle of further creativity. A strong cultural sector and strong, sustainable digital industries, especially those powered by AI, go hand-in-hand. To this end, Vietnam has put in some important guardrails, such as requiring that any copyright protected works used for AI training (1) be lawfully accessed and (2) be made publicly accessible for the purposes of training of artificial intelligence systems (among other uses). Additionally, language has been adopted from the Berne Convention “three step test” that requires the use to “not unreasonably affect the legitimate rights and interests of the author”. So far so good, but these features may not be adequate to protect the interests of Vietnam’s creative industries unless made explicit. This is where careful drafting of the regulations comes into play.

First, on lawful access, this is positive in that it rules out the use of pirated content to train AI systems (if enforced) and should make it illegal to bypass a paywall (digital lock, or technological protection method, TPM) to access content. However, this provision provides only relatively thin protection since lawful access can be obtained by purchasing the cheapest or lowest minimal access possible and then using that access to justify commercial exploitation. For example, an AI company could purchase exactly one copy of each book that it wants to ingest, or one copy of a sound or audio-visual recording.

With respect to the requirement that content be made “publicly accessible” before it can be used for training, this implies that any content not made publicly accessible should be off limits to AI developers. Therefore, disclaimers or terms of service specifying what uses are acceptable must be respected along with technical indicators, such as robots.txt protocols, that mark content that is not to be copied. Again, regulation will need to specifically deal with these points to avoid any ambiguity. On the basis of the “trust but verify” principle, AI developers should be subject to maximum transparency requirements and must be required to document all protected content used for training.

To give effect to the language taken from the Berne Convention requiring the use to not unreasonably affect the legitimate rights and interests of the author, this could also be addressed by regulation to make the meaning precise. For example, AI outputs that substitute for the originals on which they were trained clearly prejudice the rights and interests of the rights-holder. It is not enough that an AI produced output does not directly mimic the original; if it displaces it in the market, it is also damaging the economic interests of the author.

Finally, the law indicates that the use of text and data subject to copyright “must also comply with the Government’s regulations.” It is far from clear what this means. The use of text and data already must comply with the terms of the legislation as described above. This phrase would hardly seem necessary unless it is intended to provide some sort of general override that would invalidate the guardrails embedded in the law. This should be clarified in regulation or dropped entirely.

Vietnam has a lively and thriving cultural sector that is a key manifestation of its cultural expression and sovereignty. The Vietnam Creator’s Coalition has estimated that the arts, entertainment and recreation sector employed over 281,000 people and contributed VND 55,694 billion (USD $2.12 billion) to the Vietnamese economy. The cornerstone of this economic strength and growth is Vietnam’s copyright framework. The National Target Program for Cultural Development has set a target for the cultural industries to contribute 7 percent of the country’s GDP by 2030. If copyright protection is inadvertently gutted by poor application of the new law, those targets will be unattainable and the sector, an important instrument of national expression, will suffer.

The other element of the content protection environment in Vietnam that continuously undermines both domestic and international rightsholders is piracy. Vietnam is a known centre of audiovisual piracy, hosting numerous sites that operate more or less openly. It has been called out by USTR’s Special 301 report on many occasions, most recently again in 2025. Initially the worst offender was a pirate operation going by the name of 123Movies. More recently it has been Phimmoi and FMovies. Enforcement is weak and when a pirate site is shut down, usually after prolonged effort by rightsholders, it is not long before it is back in business. It is not just international rightsholders who suffer. The mass copying of the film “Red Rain” (Mưa Đỏ), the 2025 Vietnamese epic historical war drama adapted from a novel about the Second Battle of Quảng Trị in 1972, a fierce and protracted battle in the Vietnam War, is Exhibit A for the damage wrought by domestic piracy, as outlined by the British legal firm Rouse. The inability or unwillingness of the Vietnamese authorities to take effective action against openly operating pirate sites is a blot on Vietnam’s IP record and undermines the credibility of the stated objectives of the new IP law.

From the overall thrust of the law, it seems that Vietnam’s lawmakers want to protect the country’s valuable cultural assets and creative energy while providing scope for AI developers to have access to protected content under clearly defined conditions that respect the legitimate rights of creators. The regulations that will be drafted over the next few months need to make this explicit and apparent or else the intent of the law could be subverted. Robust action is also required to end the free ride being afforded to content pirates. It is often said that the proof of the pudding lies in the eating. In this case, the proof of the legislation lies in the drafting of sound regulations to implement the new IP law effectively, while taking meaningful action to curb the scourge of AV piracy.

Deloitte’s AI Nightmare: Top Global Firm Caught Using AI-Fabricated Sources to Support its Policy Recommendations

Close-up of the Deloitte building sign, with greenery in the foreground and a clear sky in the background.

Image: Shutterstock

As we start a new year, 2026, it is a given that artificial intelligence (AI) is going to be the big issue for authors, publishers and the copyright industries generally. The issue of whether it is legal to use copyrighted materials to train AI platforms without the consent of rightsholders will continue to be fought out in courts and legislatures. The use of AI to create content will also continue as an ongoing issue, both the extent to which assistance from AI renders outputs non protectable by copyright and whether content produced using AI is reliable and trustworthy. Deloitte, by revenue the world’s largest consulting firm has just learned that lesson in spades. As well it should.

Would you hire an expensive consulting firm that used AI to supplement its research, didn’t inform you it was doing so, and when it got caught serving up AI-fabricated citations claimed that the false documentation in no way invalidated its policy recommendations and conclusions? I wouldn’t but apparently the Government of Canada has no such qualms, according to a Canadian Press story. We are talking about Deloitte, one of the world’s four largest consulting and accounting firms (the others being PwC, EY and KPMG), a company that charges a premium for its specialized services, and which ought to know better. It’s not as if Deloitte was caught just once with its hand firmly embedded in the AI cookie jar. First it happened in Australia, where the company was forced to reimburse the client, Australia’s Department of Employment and Workplace Relations, for a report that was reportedly “riddled with fake citations, phantom footnotes, and even a made-up quote from a Federal Court judgment.” It also pulled the same stunt in Canada where it produced a report on health care for the Newfoundland and Labrador provincial government. The 500-page report contained at least four citations of research papers that do not exist. These were used, with others, to support recommendations related to recruitment strategies, monetary incentives, virtual care, and the impact of the COVID-19 pandemic on healthcare workers. However, as the Independent, a local digital news outlet reported, Deloitte, having been caught redhanded, stated it is “revising the report to make a small number of citation corrections, which do not impact the report findings.”

What a joke! Of course the fabricated citations impact the report’s findings, as any first year university student knows. Frankly, this is a disgrace and I think Deloitte should be put in the penalty box for six months to a year as punishment, i.e. no government should contract with them until they learn to clean up their act. The irony is that Deloitte advertises itself as providing consulting services to governments to enable them to use AI effectively. Consulting firms are supposed to bring new expertise and perspectives to management problems that governments, in this era of cutbacks, no longer have the resources to solve. They are expensive but provide a quick turnaround for public service managers who don’t have the in-house resources to deal with emerging issues, and who often don’t have the luxury of time to staff up to meet immediate needs. But the dirty little secret is that in many cases the consulting firms apply their cookie-cutter templates to inform their findings whether the template suits or not. They also employ junior staff to do much of the grunt work without, apparently, providing them with adequate supervision or guidance. But even if the labour-intensive task of finding citations to justify the “researched conclusions” of the commissioned report was subcontracted to an AI bot, someone senior at Deloitte signed off on the final product. It didn’t take the client or journalists very long to track down the fabricated citations, so why couldn’t Deloitte have run the same quality check? Because they couldn’t be bothered, I guess.

Despite having been caught, Deloitte may be big enough to shrug this one off, but I sincerely hope they have learned a lesson. Even one false or fabricated citation undermines the credibility of research. As I noted in a recent blog post (Delegating Research to AI is a Risky Proposition: The “Hallucination” Phenomenon-User Beware), “In our rush to embrace AI, many seem to have forgotten the value of human creativity and judgement”. Deloitte has egg on its face, and needs to wear this. A consulting firm is only as good as its reputation, and as far as I am concerned, Deloitte has just put its reputation through the shredder.

This is a cautionary tale, one that has enmeshed not only the world’s largest consulting firm, but various law firms that have been caught citing fabricated precedents. Students would be sanctioned for using AI this way (if they were caught) and academics would suffer major hits to their reputation. Research results and qualifications might be invalidated. If these are the sanctions for misuse of AI, then we should expect no less from entities like Deloitte and its ilk. Let’s hope there are no further AI fabrication horror stories in 2026. (A vain hope, I am sure).

The Year That Was: Looking Back at Copyright Issues in 2025

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Image: Shutterstock.com

In last year’s annual retrospective, I commented that just about the only significant copyright story in town was the impact of AI on copyrighted content. There were three primary dimensions, unauthorized use of copyrighted content for AI training, copyright infringing outputs produced by AI platforms and whether works produced by or with AI qualify for copyright protection. The first two elements, especially the unauthorized use of copyrighted content for AI training, continues to be the big story in 2025. Little has changed in terms of the fundamental issues, although this year there were two key court rulings in the US that provided some legal guidance. These were the Bartz v Anthropic and Kadrey et al v META cases, both decided within hours in the same courthouse in San Francisco, but by different judges. As I noted in a blog post at the time, in July, the results were a very mixed bag. (Hold the Champagne: The Two AI Training/Copyright Decisions Released in the US Last Week Were a Mixed Bag for AI Developers). While both judges found the copying of copyrighted works to train AI algorithms “transformational”, and thus tending toward fair use, in the Anthropic case the AI developer was castigated for initially using two pirate data bases (Library Genesis, aka LibGen, and Pirate Library Mirror, aka PiLiMi), as source material. This use threatened to result in hundreds of millions of dollars in statutory damages for authors whose works were included in these databases (if they had registered their works with the US Copyright Office). Thus, it was with no great surprise that the world learned in September that Anthropic had agreed to a $1.5 billion settlement to bring an end to the case. (When the End Does Not Justify the Means: Anthropic’s $1.5 Billion Lesson). In the Kadrey case, the judge suggested the plaintiffs should have made a stronger market dilution argument, which might have overridden the transformation finding. (New AI works produced based on unauthorized inputs of copyrighted works will devalue and dilute the market for the original works). That theory has yet to be fully tested.

While the Anthropic settlement seemed large in absolute terms, many criticized it as just another cost of doing business that failed to protect authors. But that is what licensing is, a cost of doing business. The damages could have been larger than the settlement, so Anthropic made a strategic decision to settle. Given the precedent, META must be worried given the clear evidence that its top executives gave the green light to use LibGen for training purposes despite internal warnings about the risk of doing so. (Is it Ethical to Use Pirated Content for Commercial Purposes? META Thinks So). The Anthropic decision gave impetus to ongoing licensing discussions between AI developers and content owners, especially large corporate rightsholders, like news media, music labels and big studios, such as Disney. The list of companies striking significant licensing deals with AI developers, either for AI training or outputs containing derivative content, is rapidly growing. Meanwhile lawsuits, such as New York Times v OpenAI, continue in lieu of settlement agreements.

Outside the US where the “fair use” doctrine along with its transformation interpretation doesn’t apply, there are also lawsuits against AI developers (in Canada and India for example). However, in these “fair dealing” countries AI developers are in a potentially tighter spot. In many countries there is no statutory exception to allow unauthorized access to copyrighted content for AI training, commonly known as text and data mining (TDM). Where there is such an exception (as in the UK or EU), it is confined to very specific circumstances such as non-commercial research, or else it requires that rightsholders be provided with an opt-out mechanism. Given these inconvenient facts (and their inability to rely on fair use arguments outside the US), AI developers have been mounting a full-court press to have TDM exceptions introduced into national legislation using the pretexts that a) everyone is doing it (which is certainly not true) and b) if governments don’t create an exception allowing TDM for AI training, all those AI development funds will flow elsewhere. In other words, throw rightsholders and creative industries under the bus in order to chase some ephemeral AI research funds. Australia has just rejected this binary approach, announcing that a TDM exception will not be part of its review of copyright laws to help address the needs of the AI industry. A number of Asian countries are reviewing the need for a TDM exception, but are rightly being very cautious not wanting to sacrifice the vital cultural and economic interests their creative sectors represent. Canada is another country without a TDM exception, a situation that has made OpenAI jittery since they are being sued in Ontario Superior Court by a consortium of Canadian news publishers for copyright infringement, bypassing Technical Protection Measures (protected paywalls) and breach of contract. OpenAI has been trying to get the case moved to the US by challenging the jurisdiction of the Canadian court, so far unsuccessfully.

Just as lawsuits in the US are providing the impetus for settlement discussions between AI developers and rightsholders, lawsuits against the AI industry outside the US will potentially have the same effect. The big story of 2025 is how many licensing agreements have been already reached. Even META, which in Canada and more recently Australia insisted it doesn’t need news content and would not pay for it, has reached a news media licensing deal with a number of companies including USA Today, People, CNN, Fox News, The Daily Caller, Washington Examiner and Le Monde. Back in 2021 META agreed to license news content in Australia as a result of the introduction of the Australian News Media Bargaining Code, but when Canada enacted a similar provision, it refused to do so and evaded the obligation to pay for local news by blocking it on its Facebook and Instagram platforms. Subsequently, when the Australian Code came around for renewal this year, META balked. Australia is still contemplating its next steps and while it is treading carefully, indications are that it is prepared to move against META.

One reason why Australia is moving carefully is the Trump factor. Trump’s erratic behaviour including the tearing up of the established rules of international trade is the second big copyright theme of 2025, after AI’s predations and encroachments. Not that Donald Trump knows much about copyright or understands it, but in his broadsides against trading partners and the international trading system, copyright industries inevitably become caught up in his web. Whether it is threatening tariffs on movies filmed outside the US, regardless of the fact that the largest slice of the box office comes from non-US sources and many films are either co-financed by offshore producers or require non-US settings (Trump’s Threatened Tariffs on Hollywood Films Produced Outside the US: The Medicine Could be Worse than the Disease), or taking aim at the policies of other countries that may have a digital or content component, like the Digital Services Tax in Canada,and its Online News Act, Trump is unpredictable and often off-target. His initial tariff measures against Canada included everything from steel to autos, based on the specious “national security” argument that there was a flood of fentanyl coming into the US from north of the border (actually about 0.2% of the total in 2024), but so far he has not specifically targetted the cultural industries. That may all change as the negotiations for renewal of the CUSMA/USMCA begin in the new year and as Canada struggles to redefine “Canadian content”.

There are industry groups in the US that claim provisions of the Online Streaming Act violate the terms of the CUSMA/USMCA by discriminating against US content providers, and that the only way Canada can justify these provisions is to invoke the cultural exception clause of the CUSMA. This would allow the US to retaliate in any sector with equivalent commercial effect. I have questioned this interpretation but we will probably never know who is right because the Online Streaming measures are unlikely to be challenged by the US prior to the start of CUSMA/USMCA renegotiations in early 2026. In those negotiations, the US will almost certainly take aim at various elements of cultural legislation like Online News and Online Streaming, along with other issues like dairy supply management. These may or may not be subject to negotiation as part of the renewal of CUSMA, if indeed the US or Canada are prepared to renew it.

Even if Canadian actions are consistent with the terms of the Agreement, this is essentially meaningless given the way the Trump Administration operates, as demonstrated earlier this year when Trump overrode various tariff free commitments in the Agreement on the basis of unilaterally declared national security concerns. These included the specious fentanyl trafficking claim mentioned above. Not only did the miniscule numbers give the lie to this assertion but the US claim somehow made Canada responsible for ensuring the security of the US border. As professor Fen Hampson of Carleton University has eloquently pointed out, the fate of CUSMA/USMCA depends not so much on where the economic interests of the United States lie, but on the fickle and unpredictable whims of Donald Trump personally.

As we head into 2026, there will be more Donald Trump uncertainty affecting copyright industries, more AI disruption, more lawsuits, more settlements and more licensing agreements to avoid lawsuits and settlements. That’s a pretty safe prediction based on looking back on 2025.

Flash Fiction at Christmas: The Bench

A wooden bench on a rocky surface surrounded by greenery and sparse trees, with a cloudy sky in the background.

Photo: Author

In just a couple of days, gifts that have been gathering under Christmas trees will be opened. Among them will be books of various genres; children’s books, novels, cookbooks, historical biographies, poetry and so on. While I doubt there will be many books of “flash fiction”, I am today offering a flash fiction Christmas present for everyone. Read on.

Well, you may say, that is all well and good, but what exactly is flash fiction? There are many ways for aspiring writers to take the plunge into getting published; sketching out a poem, working on a short story, tackling a novel. All have their challenges. Somewhere in the middle is “flash fiction”, a genre that has become increasingly popular in the digital age (when the ability to concentrate on any content seems to have diminished exponentially as more short-form digital content becomes available; tweets–remember them?–, Youtube reels, news snippets, AI summaries, and so on). Flash fiction resides somewhere between the short story and the microstory, with varying definitions. One I have seen limits the genre to 1500 words or less; other definitions place the limit at 300 words. My first engagement with flash fiction came recently when the Victoria Writers Society announced a contest for flash fiction entries not exceeding 500 words. I thought I would give it a try. I had joined the Society because they had been generous enough to let me speak to them about copyright, based on my book, In Defence of Copyright.

I was intrigued because I have never written fiction. While I routinely crank out a weekly blog (usually between 1200-1800 words, often struggling to keep it shorter rather than longer) I have always admired those who work for years on their opus. Writing a novel is no doubt a struggle unless you have the formula to churn them out like the late romance writer Barbara Courtland, who is reported to have produced over 600 titles that sold 650 million copies in various languages. She could produce a book in two weeks, always tied to the same formula of the impoverished heroine who meets her Prince Charming, marries (what did you expect?) and lives happily ever after. Of course, today AI can outdo that record, but I doubt if AI slop will ever be able to best Dame Courtland’s success.

Daunted by the task of attempting a novel, or even a short story, (and being inherently lazy), I thought that taking a run at creative writing within the limit of 500 words would be a good place to start. It wasn’t that easy. As Mark Twain is famously reported to have said, “I didn’t have time to write a short letter, so instead I wrote a long one.” Getting a story crammed into 500 words is a challenge. Apart from structuring the plot and ensuring a suitably arresting denouement, every word counts. It is a really good exercise to draft a piece and then go back and excise the flab. I found it amazing how much redundancy can be chopped. Editors already know this and are masters of making works more concise. Feedback was provided reminding entrants that;

“Each story still needs a clear conflict and a clear narrative arc, where the characters are changed or transformed in some significant way by the last sentence. An event simply happening or characters having an experience does not offer enough narrative movement to push a story along.”

After initially just thanking me for my efforts, to my great surprise the VWS then selected my entry, along with several others, to be published in their journal, Island Writer. You can judge for yourself whether the selection committee made a wise choice. While you could read my opus by purchasing the publication, for those readers outside the tight little circle of southern Vancouver Island, here it is. A Christmas present for you.

The Bench

“The chip path was soft underfoot. Ochre rays of the setting sun illuminated the salal and cedar ahead. A turn in the path and he emerged onto a headland where a gust of wind brought just a whiff of salt and seaweed. Across the water he could see the sun catch the snowcapped peaks of the Olympic range, tinting them pink. A large container ship, its lights sparkling, was highlighted against the darkening sea. Ahead he saw a viewing bench looking out across the water. At first, he thought there was no-one there, but then he saw a silhouette and realized someone was seated, facing the water, apparently reading a book. It was a woman.

He thought of the many times over the years he had walked this very path and inhaled this view. It had always revived and refreshed him, at times of stress or at times of reflection. He thought back on the different events in his life that had brought him to this place of repose. University studies, and the uncertainty that accompanies the future. Which career path? Will there be a partner to share the journey? Walking hand in hand with her, breathing in a whiff of fragrance from her hair. Putting their boy on his knee and pointing out to sea, looking at the freighters and sometimes a sailboat. Strolling in the evening with her before putting him to bed. Family picnics. Sitting on that very bench with the boy, now a teenager, listening to his growing pains, trying to offer counsel, building hope for the future. Celebrating his graduation with photos against a sea and mountain backdrop. Three generational family gatherings. And times of sadness too. Now once again, on this early April evening, he was alone. This was a place of a lifetime of memories.

The bench was just up ahead. He thought the woman was still there, but when he reached it as the shadows lengthened, she was gone. He knew this bench and its inscription. It had been there for years. Like most of the benches in the park, it had been donated in memory of someone who had once loved this spot. It said, “In loving memory of Lara Porter, April 1930-September 1995. This place brought her comfort”. Then he noticed the small book lying on the bench. It was a collection of poems by Dylan Thomas. It lay open at the work “Do Not Go Gentle Into That Goodnight”. He picked it up and read;

Do not go gentle into that good night

Old age should burn and rave at close of day

Rage, rage against the dying of the light

Flipping to the front of the book, he noticed the inscription. “To Lara, Much Love on your birthday, April 6, 1995”. Then the sudden realization. Today was the 6th of April. At that instant, the sun slipped beneath the horizon, continuing its journey west. He turned to see a radiant glow.”

There it is. The setting is Saxe Point Park in Esquimalt, overlooking the Strait of Juan de Fuca and looking across the water at the Olympic Range in Washington State. The story is a total fabrication. I did not grow up in Victoria and did not have a son. But there is a bench there inscribed in someone’s memory, but not Lara Porter.

It was an interesting exercise. Will I move on to a short story? I’m not sure. As I said, I am inherently lazy. But if you want to try your hand at writing, try a 500-word flash fiction. It’s a challenge, but fun. Go for it. Merry Christmas.

No Surprise: Ontario Court Asserts Jurisdiction in Canadian Media Lawsuit Against OpenAI

A judge sitting at a bench in a courtroom, wearing a black robe with a red collar, Canadian flags in the background.

Image: Shutterstock

The Ontario Superior Court has ruled it has jurisdiction to hear the case against ChatGPT owner OpenAI brought by a consortium of Canadian media companies led by the Toronto Star. The media enterprises, who include the Globe and Mail, PostMedia, CBC/Radio Canada, Canadian Press and Metroland Media Group, are suing the US company for copyright infringement, circumvention of technological protection measures (TPMs), breach of contract, and unjust enrichment as a result of OpenAI’s scraping of their websites to obtain content to train its AI algorithm. The allegations also cover OpenAI’s use of Retrieval Augmented Generation (RAG) to produce contemporary search results from paywall-protected content that augment ChatGPT’s AI-generated responses. When the suit was brought in November 2024, OpenAI had challenged the Ontario court’s jurisdiction on the basis, among others, that it had no physical presence in Canada. As pointed out by this legal blog, a court may presumptively assume jurisdiction over a dispute where one of five factors is present:

The defendant is domiciled or resident in the province.
The defendant carries on business in the province.
The tort was committed in the province.
A contract connected with the dispute was made in the province.
Property related to the asserted claims is located in the province.

The court found that OpenAI carries on business in Ontario notwithstanding its lack of a physical presence and was a party to contracts in Ontario as a result of tacitly accepting the terms of service regarding access to the media companies websites when it scraped them.

OpenAI wanted the venue of the litigation changed to the United States to take advantage of developments in US law regarding unauthorized reproduction of copyright protected content for use as AI training inputs. To date, while many cases are still ongoing, US courts have tended to support a fair use argument by AI developers allowing them to access copyrighted content without permission on the basis that the end use is “transformational”, resulting in a new product that does not compete with the original work. In Canada, the fair use doctrine does not apply and exceptions to copyright protection are either explicitly laid out in the law (e.g. for law enforcement or archival preservation purposes) or are governed by the fair dealing provisions of the Copyright Act. These require that an unauthorized use fall into one of eight categories (research, private study, education, parody, satire, criticism, review and news reporting) that is in turn subject to various court-interpreted criteria such as amount of the work copied, the purpose of the copying, market impact etc. AI developers have been lobbying for the introduction of a text and data mining (TDM) exception into Canadian copyright law, but so far this has been successfully resisted by Canada’s creative community. All this to say that it is more difficult for AI companies to avoid liability for unauthorized use of copyright protected material in Canada than in the US, thus the importance of whether the Ontario court has jurisdiction.

Back in September, on the basis of previous Canadian court rulings where courts ranging from provincial courts to the Supreme Court of Canada asserted jurisdiction over large digital US companies operating virtually in Canada, such as Google (who challenged Canadian legal authority over them on the basis of lack of a physical presence), I predicted (guessed would be a more accurate term) that the Ontario court would be loath to surrender jurisdiction simply because the company was headquartered in the US. The earlier cases were for defamation rather than copyright infringement, and my “prediction” was based more on a hunch than legal analysis, but I am satisfied that I called it right. OpenAI has no compunction about selling services and collecting revenues in Canada and presumably (I hope) pays taxes here, although it is not subject to the Digital Services Tax (DST) that the Carney government threw overboard in a vain attempt to placate Donald Trump. Recall that Trump had threatened to terminate trade talks if Canada proceeded to implement the long-planned DST, so Canada blinked. Trade talks resumed until Trump found another excuse to end the talks, in this case the anti-tariff ads on US television placed and paid for by the Ontario government to which he took offence. But there is no doubt that OpenAI does business here; it just doesn’t want to be subject to Canadian law and Canadian courts. It can’t have it both ways.

While this is a victory for Canadian sovereignty, just because the Ontario Superior Court has confirmed its jurisdiction, this doesn’t mean that once the substantive proceedings begin copyright infringement will be found. Lawyer Barry Sookman, in an analytical blog post on this topic, has noted that in determining whether the alleged copyright infringements occurred in Canada, “the court relied heavily on the Supreme Court decision in SOCAN for the proposition that the territorial jurisdiction of the CCA (Canadian Copyright Act) extended to where Canada is the country of transmission or reception.” However, “SOCAN applied the real and substantial connection test to the communication to the public right” whereas the alleged copying involved the right of reproduction.

Sookman continues;

“…that test does not apply to the reproduction right. (The Federal Court has) held that the only relevant factor is the location in which copies of a work are fixed into some material form. The locations where source copies reside or acts of copying onto servers located outside of Canada, are not infringements” (according to the cases cited).

Inside baseball information but important when it comes to determining copyright infringement. On the other hand, it seems to me that the infringement involved not just, potentially, the reproduction right (the copying) but also the communication right, because OpenAI, through Microsoft, provided RAG content to users in Canada and elsewhere purloined from behind the paywalls of the media companies. So, we will have to see. Lots of fodder for IP lawyers.

In the meantime, deep-pocketed OpenAI will appeal the jurisdictional ruling—and will likely lose again. The appeal will buy time for it to negotiate licensing deals with the complainants. This is increasingly the model in the US as AI developers, including OpenAI, are reaching licensing agreements with content owners, particularly media organizations. To date, OpenAI has signed licensing deals with the Associated Press, the Atlantic, Financial Times, News Corp, Vox Media, Business Insider, People, and Better Homes & Gardens, among others, while being sued (in addition to Toronto Star et al), by the New York Times and a collection of daily newspapers consisting of the New York Daily News, the Chicago Tribune, the Orlando Sentinel, the Sun Sentinel of Florida, San Jose Mercury News, The Denver Post, the Orange County Register and the St. Paul Pioneer Press. Even META, that arch-opponent of paying for media content–which it claims adds no value to its users– has struck a media deal with news publishers, including USA Today, People, CNN, Fox News, The Daily Caller, Washington Examiner and Le Monde. (One wonders if this will cause it to rethink its position of thumbing its nose at Canada’s Online News Act, where it “complied” with the legislation by blocking all Canadian news links).

In another content area, OpenAI and Disney have just agreed on a three-year output deal, allowing it to use Disney characters (subject to certain limitations) in its AI creations. (Meanwhile Disney is suing Google for using its characters in Google’s AI offering). Open AI is currently facing 20 lawsuits, including the Toronto Star case, and needs to resolve these legal challenges before its expected public offering next year or 2027. The spectre of impending lawsuits will inevitably lower the IPO price.

Most if not all of these lawsuits are going to end in settlements via voluntary licensing agreements, but that will only happen if OpenAI thinks the alternative (losing a major lawsuit) is a worse outcome. If it can wriggle out from the Toronto Star case by invoking some specious argument related to jurisdiction, it will. If it can’t it, will eventually open its chequebook and provide the Canadian media outlets some compensation for the valuable curated content it has hijacked. Canadian courts need to stay the course to help ensure that this happens.

Delegating Research to AI is a Risky Proposition: The “Hallucination” Phenomenon (User Beware)

A graphic showing a cartoon robot head on a computer monitor with the text 'The World is Flat Because I Say So' in a playful font.

Image: Shutterstock (author modified)

It seems everyday new applications and new threats emerge from the AI world. This applies in particular to creators who see growing AI challenges to their livelihoods; graphic art and album covers spat out by AI generators; voice actors replaced by AI clones; authors struggling to make their works known in a sea of AI-generated slop; now AI artists are even making the Billboard charts. At the same time, AI has many other functions and produces a host of products that have little to do with artistic creation. In particular, it can be used as a crutch to assist and enable research in a wide range of fields. Today it is routinely used by everyone from school kids to law firms to health care researchers. And that is where the risks of mainlining AI are the most evident, because of the propensity of AI platforms to fabricate plausible sounding misinformation.

In a blog post earlier this year (AI’s Habit of Information Fabrication (“Hallucination”): Where’s the Human Factor?) I discussed some examples of law firms caught submitting non-existent case precedents in court as a result of sloppy legal research using AI. Judges have very limited tolerance for this practice, which wastes valuable court time, and they are increasingly imposing significant penalties—that is, if the fabricated information is actually spotted. The problem is not going away. This website maintained by Paris-based legal scholar Damien Charlotin has compiled a database of more than 550 legal cases in 25 countries where generative AI has produced hallucinated content. These are typically fake citations, but also include other types of AI-generated arguments. The US wins the lottery at 373 cases, but Canada is second with 39. Even Papua-New Guinea has one case.

As you can well imagine, AI hallucinated results in health care could be fatal. As Dr. Peter Bonis, Chief Medical Officer at Wolters Kluwer Health points out, hallucination in the health care field has led to various consequences such as recommending surgery when it was not needed, advising that a specific drug could be safely stopped abruptly when this was known to be dangerous, avoiding recommending vaccinations based on known allergies even though it was safe to do so, proposing wrong starting treatments for patients with rheumatoid arthritis and so on. You get the picture. You don’t want your family doc using AI search for the remedy for whatever ails you. The fact that the models present incorrect information with such confidence, and that potentially dangerous incorrect information is embedded with a lot of correct information, makes proper use of AI outputs particularly challenging.

How is it that AI platforms consistently produce unreliable results? This MIT Sloan article identifies three elements;

Training data sources (the uneven quality of inputs, including pirated, biased and otherwise unreliable content)
Limitations of generative models (generative AI models are designed to predict the next word or sequence based on observed patterns and to generate plausible content, not to verify its accuracy)
Inherent Challenges in AI Design (The technology isn’t designed to differentiate between what’s true and what’s not true)

This is all pretty concerning if people are going to surrender personal judgement to AI and use it to cut corners without verification. One way to address part of the problem is to ensure the training data used is reliable and of high quality. That is where licensing of accurate, curated data and content as training inputs is important and that is why a licensing market is developing as AI companies seek out better quality data to distinguish their product from that of their competitors. This can be very helpful where the AI platform is limited to discrete areas of knowledge, such as in the medical field for example, where usage can be limited to professionals who are prepared to pay for a bespoke AI product and who are qualified to interpret the results properly. AI for the general public is another matter, and this is where most of the problems arise. Unfortunately, while improving the quality of training data helps reduce hallucinations, it does not completely eliminate them. As the New York Times has reported,

“Because the internet is filled with untruthful information, the technology learns to repeat the same untruths. And sometimes the chatbots make things up. They produce new text, combining billions of patterns in unexpected ways. This means even if they learned solely from text that is accurate, they may still generate something that is not.”

User beware. Nonetheless, better inputs lead to better outputs. As AI developers work to take their products to the next level by refining their training processes and making outputs more predictable and trustworthy, they will need access to curated, proprietorial content and closer collaboration with content owners. Dr. Bonis noted that for specialized areas like health care, AI companies will get better quality feedstock while creators of the content will receive funding allowing them to continue research. A virtuous circle.

Users bear a big responsibility to ensure AI is employed effectively. The mindless, unjudgemental use of AI to reach conclusions in areas where the user has little knowledge can be dangerous. By all means use AI as a tool to sort and categorize, but don’t rely on it to produce the answers on which substantive decisions will be based. Any sensible user of AI has a pretty good idea of the answer to the question before it is even asked. It is also a good idea to refine the question, so you narrow the range of possibilities.

Some proprietary AI models offer RAG (Retrieval Augmented Generation) where the AI will retrieve relevant information from trusted sources to supplement its preliminary analysis. This can increase reliability. However RAG, where the AI goes after specific inputs to bolster its results, can also expose AI developers to charges of copyright infringement, as is currently the case with Canadian AI company, Cohere, which is being sued by a number of newspaper publishers, including the Toronto Star, for copyright infringement. As Canadian lawyer Barry Sookman has pointed out in a recent blog, use of RAG can create risk for the AI platform. In the case of Cohere, when its RAG feature was switched on, it reproduced large amounts of almost verbatim text pulled directly from the litigating news sources. But if the RAG function was switched off, it produced fabricated information (hallucinations) yet still identified this false information as coming from an identified reliable news source, leading to charges of trademark dilution. The value of the brand was diminished by the attribution of false information to it. This trademark dilution issue is also part of the New York Times case against OpenAI.

At the end of the day, it is a case of user beware as a recent case in Newfoundland demonstrates well. The Government of Newfoundland commissioned an in-depth study on the future of education in the province. The 410 page report containing over 110 recommendations, authored by two university professors, was released with great fanfare at the end of August. No doubt a great deal of careful research had gone into producing the study over the 18-month production period. But then cracks started appearing in the edifice. It was chock full of made-up citations. The more people started checking, the more they found. The Department of Education and Early Childhood Development tried to whitewash the issue by saying it was aware of a “small number of potential errors in citations” in the report. But even one fabricated citation is one too many! If you search for the report online now you get the classic “404 Not Found” message. A lot of work has potentially gone down the drain, and possibly the credibility of two academics has been destroyed by careless use of AI. This is a cautionary tale that I have no doubt will be repeated.

In fact, it was repeated just a few days later. It seems Newfoundland is particularly prone to victimization by hallucinating AI platforms. After the education report debacle, new reports have surfaced that a $1.5 million study on the health care system conducted by none other than Deloitte also contains fabricated information included made up references. The opposition party is demanding the government insist on a refund.

In our rush to embrace AI, many seem to have forgotten the value of human creativity and judgement. Coming back to the creative industries and AI, some of those whose livelihoods may be threatened by this new phenomenon are bravely trying to find a silver lining. Some voice actors are generating an additional revenue stream by licensing their voice clips for AI training, and many graphic artists use AI as an assist. Are they putting themselves out of work in the long run or are they simply adapting? The jury is still out, but the generally low quality of AI produced art, music and literature, as well as the ongoing problem of hallucination, suggests that there will always be a need for real human input. Anyone planning on substituting AI for “real work” had better think again.

Pete Hegseth and Franklin the Turtle: There is a Parody, Just Not the One You Think

Cover of a fictional book titled 'Franklin Targets Narco Terrorists', featuring a cartoon turtle in military attire, using a weapon from a helicopter while targeting boats.

Image: X/@PeteHegseth. Not copyright protected (produced with AI)

Pete Hegseth, US Secretary of War (or is it still Defense?) has demonstrated a deft capacity for stepping firmly into one cowpoop after another. There was the fiasco of discussing imminent strikes against Houthi rebels in a Signal chat group that included his wife, brother and personal lawyer, along with a few others such as journalists not authorized to have access to such high security information. Now there is the issue of whether he issued a second kill order for two survivors of a drug boat that had just been targeted by the US military. As serious as this may be, his subsequent ridiculing of the incident by co-opting friendly old Franklin the turtle to make light of his actions demonstrates not only appalling judgement, but also a cavalier attitude to and ignorance of trademark and copyright law that you would have thought that a senior government official of cabinet rank might just take into consideration. But this was not a communique issued by the Defense Department, it was a personal tweet on X. If anything, it underlines the risks of senior government officials (from the President on down) using social media accounts to comment on government policy.

The fact that Hegseth saw nothing wrong with appropriating the trademarked and copyrighted character of Franklin for his own ends while manipulating it with AI, in the process potentially damaging the brand image of a well known and well-loved children’s literary and cartoon icon, shows the level of his ignorance, hubris and disrespect. The fact that he chose a Canadian children’s character may not have been an accident. Would he have taken on Disney by putting the bazooka into the hands of Snow White or Warner Bros by having Bugs Bunny finish off the alleged drug traffickers. Probably not, although it is apparent that his ignorance of the law runs pretty deep.

Franklin’s publisher Kids Can Press, based in Toronto, issued the following statement:

“Franklin the Turtle is a beloved Canadian icon who has inspired generations of children and stands for kindness, empathy, and inclusivity…We strongly condemn any denigrating, violent, or unauthorized use of Franklin’s name or image, which directly contradicts these values.”

Will they sue? Likely not, since Corus, which exploits the character created and copyrighted by author Paulette Bourgeois and illustrator Brenda Clark, is in deep financial trouble, but they probably could. If they did, Hegseth (who would be the defendant since he posted the image on his personal account) would no doubt claim the US fair use defence of parody. But is this a parody?

To qualify as a parody under fair use in the US, (Section 107 of the US Copyright Act), it must be used for criticism and comment (of Franklin). As outlined in detail in this interpretive post from the Washington, DC based Copyright Alliance, “both parody and satire use humor as a tool to convey a message, but each serves a different purpose. Parody imitates the style of a particular creator with deliberate exaggerations for comedic effect. Satire uses humor to comment on the world-at-large, particularly in the context of politics. While both parody and satire incorporate criticism and commentary, only parody may be considered fair use.”

In other words, Hegseth would have to rely on parody as a fair use defence for his unauthorized use of the copyrighted images and name of Franklin. But is he parodying Franklin the Turtle, the ultimate “nice guy”? Maybe that is his intent, “No more Mr. Nice Guy”. The character is also trademarked, leaving open the possibility of a suit on the grounds of trademark impairment. After all, if Franklin is at heart is a remorseless killer, do you want your kid reading the books or watching the animated shows?

There have been famous cases where US courts ruled in favour of a parody defence, notably what is referred to as the Campbell v Rose-Acuff Music case. As explained by the US Copyright Office, the plaintiff, a music publisher and co-owner of the Roy Orbison 1964 rock ballad “Oh, Pretty Woman”, accused the defendants, hip-hop group 2 Live Crew, of infringing Orbison’s song by releasing a 1989 parody version titled “Pretty Woman.” On appeal the US Supreme Court overturned a lower court ruling that had denied fair use because of the extensive amount of material copied. The USCO stated it is essential for someone doing a parody to be able to quote from existing material and use some of the elements of a prior work to create a new one that comments on the original. On the other hand a full-length knock-off/parody of Dr. Suess, “Oh the Places You’ll Boldly Go”, setting Suess characters into a Star Trek world, was ruled an infringement, again on appeal.

So, was Pete Hegseth’s unauthorized use of Franklin to promote his version of the war on drugs on his personal social media account a parody? We will probably never know.

Franklin’s Wikifandom site describes him as “…a young turtle with a big imagination, Franklin tends to be very kind and lovable, and he has a large circle of friends”. No one could mistake Franklin for Pistol Pete. Whether Hegseth’s unauthorized use of Franklin is legal as a parody is unlikely but won’t be litigated. However, there is one parody that is all too evident. That is the spectacular unsuitability of Pete Hegseth, who reached the exalted rank of major in the National Guard and who clearly doesn’t know much about the role he is in, nor does he care, posing as the Secretary of Defense (or is it War?). That’s the true parody.

The CRTC’s “Rube Goldberg” Definition of Canadian Content (CanCon): More Complicated..but Also More Flexible

An old television displaying the words 'CANCON REDEFINED' over a background of the Canadian flag.

Since it is frequently in the news, it’s worth asking the question. What is Canadian Content (Cancon)? It can be many things to many people. Unlike pornography, you don’t always know it when you see it. Blogger Michael Geist illustrated the problem well a few years ago with his Cancon quiz. If you want to do well in the quiz, select just about any production that the general public is likely to regard as Canadian– i.e. based on a book written by a Canadian, starring a prominent Canadian actor or notably taking place in Canada–as not qualifying as certified Cancon. Then select all the obscure productions you have never heard of including several with no identifiable connection to Canada as certified Canadian content. You will be a winner! This perverse outcome is because of the way the system is set up, as I have written about in previous blogs, such as this one (Unravelling the Complexities of the Canadian Content (Cancon) Conundrum).

In brief, up to now Cancon has been primarily defined by the number of points (out of 10) that a production accumulates, in addition to other factors such as the requirement that it be produced by a Canadian and reach a minimum 75% production expenditure in Canada (except for co-productions). Cancon is defined in regulation by no less than three entities, Telefilm Canada for co-productions, the Canadian Audio-Visual Certification Office (CAVCO), part of Heritage Canada, to determine eligibility for subsidies, and the broadcast regulator, the CRTC, with respect to meeting Cancon broadcast quotas. All use the points system, with some productions requiring 10/10 to obtain maximum subsidies, while most others meeting a minimum 6/10 requirement. Points are awarded for the positions in the production filled by Canadians, such as the writer, director, performers, director of photography, production designer, music composer and picture editor. For CAVCO productions, the copyright must also be held by a Canadian producer for a minimum of 25 years. The actual story and its setting are completely irrelevant. In short, it is more of an industrial than a cultural policy, based on the assumption that if Canadians are in charge, they will produce content that reflects Canada. It often doesn’t work out that way.

Now the CRTC has updated its definition of Cancon as part of the implementation of the Online Streaming Act, which brings streaming services in Canada under the oversight of the broadcast regulator. Foreign streaming services over a certain revenue threshold are being required to make a financial contribution to Cancon (although they are challenging this in court) and may be required to promote Cancon on their services (“discoverabilty). The CRTC cannot impose broadcast quotas on an à la carte streaming service, whether domestic or foreign, thus the financial contribution and likely discoverability requirements. The survival and promotion of Canadian content, both domestically and internationally, is at the core of the legislation. Thus, the CRTC’s new definition of Cancon is very relevant.

If you thought the definition was going to get simpler, think again. However, it has been updated to incorporate new positions in productions, like a showrunner, plus those responsible for costume design, make-up artists, and hair artists. But not all productions, especially those in Québec, have all these positions, especially the new category of showrunner. As a compromise, having a Canadian showrunner will be worth an optional 2 bonus points, but if you don’t have one you won’t be penalized. What exactly is a showrunner? There is a lengthy CRTC definition related to the position being the creative leader of a production, managing the production process etc. With respect to costume design, make-up and hair artists, if collectively all these positions are filled by Canadians the production will garner another bonus point. If a production does not utilize all of these positions, it must fill the ones that it does with Canadians to get the optional point. Is Canadian makeup and hair design different from non-Canadian? I wouldn’t have thought so, but there you go. As I said, it is an industrial policy as much as a cultural one.

Here is another example of what is starting to look like very much like a Rube Goldberg machine, with add-ons, exceptions, secret doorways and special conditions. For animated productions, the Commission will now award 2 points (instead of 1 point) for each of the key creative positions Director, and Scriptwriter and Storyboard Supervisor, when filled by Canadians. There are various other tweaks; for animated productions, the Commission will award the points noted below for the following key creative positions, when filled by Canadians; Director (2 points; previously 1 point); Scriptwriter and Storyboard Supervisor (2 points; previously 1 point); and First Voice (or first lead performer) and Second Voice (or second lead performer) (1 point each; previously 1 point for one or the other, but not both). It goes on. For animated productions, the Director OR Scriptwriter and Storyboard Supervisor, and either the First Voice (or first lead performer) OR Second Voice (or second lead performer), and Key Animation AND Camera Operator must be Canadian. There’s more, adding Visual Effects Director and Special Effects Director to the list of key creative positions in a film, adding one bonus point if both are Canadian.

If all this has your head spinning, be assured that this stuff is of intrinsic interest to the industry but of not much relevance to Canadian consumers. What Canadian consumers want are Canadian stories in Canadian settings. On this score, there is a bit of a breakthrough, recognizing the importance of these factors for the first time. It is only a small opening but is the first time that location depicted in a film has been included as a factor in assessing Canadian content, as well as points for the source of the story.

The Commission will award 1 bonus point where identifiable Canadian characters and identifiable Canadian settings are included in a production, but all lead characters (up to 5 main fictional characters in dramatic productions) must be identified as Canadian or members of First Nations, Inuit or Métis in Canada and all persons on screen in non-dramatic productions (presenters, musicians, dancers) might likewise be Canadian, First Nations, Inuit or Métis (as if the latter were not, by definition, Canadian). As for location, “The location of the story must be set in Canada. The story or narrative must take place entirely in an identified Canadian city/region/province/territory. The location can be identified by a Canadian landmark or by identification on screen or otherwise identified overtly in the narrative or text of the program.”

All this for one lousy point! If you want to incorporate a visual reference to a place outside Canada (for example, one’s homeland for immigrant Canadians) could you do it in a dream scene if the dreamer’s bedroom has a shot of the CN Tower through the window. Not clear. But it is a start toward recognizing that settings, characters and stories are relevant to Cancon. A bonus point will be awarded for a production based on a Canadian story and another point for using Canadian music.

Finally, on the copyright front where the current CAVCO policy requires a Canadian to control the copyright for 25 years, there is mixed news. In a recent blog post, I argued that the CRTC should not impose a Canadian copyright restriction if the goal is to get foreign streamers to produce more Cancon for distribution abroad. Content is softpower. Content exported abroad not only helps cover the cost of production, it projects an image of Canada to the world through Canadian stories. To penalize foreign producers by preventing them from acquiring copyright in productions they have financed or partially financed, should they wish to acquire it, is shortsighted in my view. The CRTC took account of this concern but also had to listen to the instructions it received from government requiring it to consider the need to support Canadian ownership of intellectual property.

The end result is a compromise; Canadians must retain at least 20% of the copyright ownership in a program. In other words, up to 80% of the copyright in a production can be held by a foreign enterprise. In such cases, however, the production must accumulate at least 80% of possible points and the director and screenwriter must be Canadian. Where there are greater degrees of Canadian copyright ownership, some of these requirements are relaxed. There will be no minimum copyright retention period. A recent blog on MediaPolicy.ca goes into more detail on this.

Finally, there is the question of AI, just about the only point in the CRTC decision picked up by the mainstream media. The new positions created to increase the point count have to be staffed by humans, not AI. The rest of the CRTC package was likely too difficult to compress into something readable for the average news consumer.

What does this all add up to? An incredibly complex and bureaucratic system yet that is, believe it or not, a bit more flexible with respect to defining Canadian content than previously. It is a result of the classic compromises that must be made between idealism and reality, between promoting Canadian content in a bubble and ensuring its presence in the real, competitive world. It attempts to strike a balance between heavy lobbying by domestic constituencies such as Canadian independent producers and licensed broadcasters, and the foreign streamers that increasingly dominate the market. It tips the balance a bit more toward being a cultural than an industrial policy, but from the point of view of the average Canadian, is about as arcane as a bureaucratic process can get.

As noted, it is a Rube Goldberg machine with many levers needing to be pulled to get to the desired end, often by the most complicated route possible. But the Commission had little choice given that the current Cancon policy was clearly outdated. Maybe at the end of the day, we will actually get more recognizable Canadian content that finds audiences both domestically and internationally, on a variety of platforms. And while purist Canadian nationalists may disagree, if the new policy encourages additional investment in Cancon from the streamers, that can only be a benefit to Canada.

If anyone is not familiar with Rube Goldberg and his penchant for drawing overly complicated solutions to simple problems, this link will provide more detail.

We need more Canada in the Training Data, but through Licensing not Loopholes

Canada Has a Choice When it Comes to AI Training Content

Scrabble tiles arranged to display the words 'LOOPHOLES' and 'LICENSING' on a game board.

Michael Geist, Canada Research Chair in Internet and E-Commerce Law at the University of Ottawa has argued, in an appearance before the Heritage Committee of the House of Commons, that “we need more Canada in the training data”. He is absolutely right, but just not in the way he proposes. Dr. Geist is what I would call a well-known skeptic when it comes to the intrinsic value of copyright, a copyright “minimalist” if you will (probably an understatement).

With respect to the unauthorized and uncompensated use of copyrighted content for AI training, he states that “in the context of AI, the application of copyright isn’t clear cut. The outputs of AI systems rarely rise (to) the level of actual infringement given that the expression may be similar or inspired by another source, but it is not a direct copy of the original.” Whether the outputs mirror the inputs is not the sole issue. In some cases, such as when music and images have provided the inputs, they do. This is an infringement of the reproduction right, and likely also an infringement of the distribution right and the right to produce a derivative copy (under US law). In Canada the right to create another work from an original work comes from the right of adaptation. However, even without a mirrored output, full reproduction still takes place at the input stage, creating an infringement unless the copies meet a fair dealing purpose and fulfill fair dealing criteria, even if the copies are later deleted. As Keith Kupferschmid, CEO of the Washington DC based Copyright Alliance has pointed out in a recent blog post discussing the copyright principles that apply in AI training cases,

“Some people mistakenly believe that in order to establish an infringement during the input stage, the copyright owner needs to establish substantial similarity between the ingested copyrighted work and AI-generated output and if no substantial similarity exists there is no infringement in this stage. That is incorrect.”

Even without mirrored outputs, full non-transitory copies of copyrighted works are being made at the ingestion stage of AI training. That is an infringement, just as making a photocopy of a complete work, such as a book, would be an infringement unless covered by an explicit exception such as preservation purposes by a library or archive.

Dr. Geist’s second line of argument is that if Canada makes it more difficult or costly to develop large language models, AI development will shift outside the country. This is a tried-and-true but tired pretext frequently employed by those seeking to justify the appropriation of copyright protected content in the name of “innovation”, as I pointed out in an earlier blog post. (CanLII v CasewayAI: Defendant Trots Out AI Industry’s Misinformation and Scare Tactics -But Don’t Panic, Canada). This is a race to the bottom, throwing the content industry under the bus on the pretext that everyone is doing it, even though that is untrue. One provision that has been selectively incorporated into the laws of some jurisdictions, like the UK and the EU, is an exception for “text and data mining” (TDM). Dr. Geist states this is why Canada also needs to introduce a similar statutory exception to promote AI.

However, not everyone is engaged in this race to the bottom. In fact, there are increasing doubts that establishing a statutory TDM exception for AI training is the best way to go. Australia has just firmly rejected the creation of a TDM exception in its copyright law even though it is also grappling with the same issue of how to incentivize AI training and research in that country. The UK’s current TDM exception is limited to non-commercial research purposes and in the face of strong opposition from its creative sector, Britain has put proposals to expand TDM on hold. Even the EU’s TDM law, which has two aspects, one limiting the data mining to non-commercial scientific research conducted by scientific research organizations or cultural heritage institutions while the other is a general purpose TDM that is open to commercial organizations, has guardrails. These include an opt-out provision whereby rightsholders can block ingestion of their content through technical measures, contract provisions or other means, in which case the TDM exception does not apply.

While opting-out by rightsholders is one way to limit the damage of unrestricted text and data mining, this is controversial because it places the onus on the rightsholder to take action whereas normally a party wanting to use someone else’s property would have to obtain permission in advance. Opting out is not a preferred solution for the creative community. It doesn’t work well in practice as rightsholders often lack the technical means or awareness to apply their opt-out rights. Because of this, the European Parliament’s Committee on Legal Affairs has just published a study examining how generative artificial intelligence interacts with European Union copyright law. The study recommends moving from opt-out to opt-in for rightsholders.

Thus, far from TDM being or becoming the norm, it is being rejected or constrained in a number of countries where the AI industry has been pushing it as the ultimate solution. The Canadian creative community, like the creative sector in Australia, has spoken out strongly against introducing a TDM exception into Canadian law. Indeed, there is no need to do so as licensing solutions allowing AI training and text and data mining are becoming more and more common, including in Canada. For example, the Writers Union of Canada is studying a proposed agreement between select nonfiction authors, HarperCollins, and Microsoft to license full texts for the purpose of training artificial intelligence. Licensing agreements have taken off big-time in the US and elsewhere as the AI industry begins to understand this is the safest way to protect their investments. Canadian creators risk being left by the roadside if Canada brings in a TDM exception that would allow AI developers to steam ahead, appropriating content without payment or permission and ignoring licensing requirements by hiding behind a TDM exception. The surest way to kill a nascent and growing licensing market is to give the AI sector a TDM loophole to exploit, removing any incentive to reach licensing agreements with rightsholders. The solution is licensing, not loopholes.

Dr. Geist stated in his testimony to the Heritage Committee that AI developers would take the view that if they had to pay for (i.e. to license) content from Canadian creators, they would simply exclude it. The record of licensing deals being reached elsewhere suggests this is completely off base. Instead, the record shows that when AI developers want reliable, curated content to make their product better than the competition, they are ready to pay for it. But they will never pay for it if they are given a blank cheque through a legislated loophole. He also claims the position of the creative community is “Don’t use my stuff”. Again, the record of licensing deals to date and in the pipeline disproves this characterization in spades. Rather than blocking use of their content, creators are saying, “If you want to use my content, let’s talk”. Finally, Dr. Geist managed to completely mischaracterize the position of the creative community with regard to licensing. He said in his testimony that creators are advocating for a change to copyright law to mandate payments for AI training use. On the contrary, the creative community is simply asking that existing copyright law not be gutted. There is no need to create a mandatory payment requirement; existing copyright law is fit for purpose in dealing with how those wishing to use copyrighted content for purposes that fall outside fair dealing can do so. Negotiate a licence.

If any proof is needed of how the creation of a loophole will kill a licensing market is, all one needs to do is look at the sorry state of educational publishing in Canada. The industry has been decimated, and many authors have lost their livelihood because of the ill-conceived educational exception that was introduced into Canada’s Copyright Act in 2012. With that loophole in place, educational institutions across the country, with the notable exception of Quebec, began to tear up the reproduction licenses they had held from Access Copyright, the copyright collective representing authors. The educational exemption as part of fair dealing criteria could still be fixed, but the educational sector, facing severe financial pressures, has a powerful lobby working against it. The financial pressures are real, but taking a free ride on educational publishers and authors is wrong.

What happened with educational publishing is a cautionary tale for Canada. It should not make the same mistake twice. The way to promote a strong AI industry, alongside vibrant content industries, is licensing, not loopholes. Building a robust AI/TDM licensing market is the way to get more Canada into the training data, not giving the AI industry a blank cheque to help itself to the proprietorial content of others. With voluntary licensing everyone benefits. AI developers get secure access to quality content; the creative sector is rewarded for its efforts and becomes a partner in developing responsible AI. It’s a shame that the Canada Research Chair at the University of Ottawa doesn’t understand this.

Poppy Day, 2025 (Willis Point, B.C. and Your Community)

Sign for Willis Point Community Centre and Fire Hall, indicating Remembrance Day service on November 11 at 10:45 AM, surrounded by trees and autumn foliage.

Around this time of year I usually write a post about Remembrance Day, throwing in some history of how the poppy came to be the symbol of remembrance of all those who served and all those who died in the First and Second World Wars but also in the series of wars that have taken place since, while making reference to some of the intellectual property controversies relating to the sale of poppies.

Earlier this week, we held a Remembrance Day ceremony at the Community Centre and Fire Hall in Willis Point, a small community about 20 kilometres north of Victoria, B.C. where I am fortunate enough to live. I am happy to report that we had a larger crowd than ever. About 75-80 people were there which, out of a community of 400, represents a 20% turnout of the entire population. Pretty damned good. The brisk, sunny autumn weather no doubt helped. We have no cenotaph as the community was not established until the mid 1970s, being just a collection of fishing cabins accessible only by water until the road was put through. However we have a Firehall and an active Volunteer Fire Department with a flagpole that serves just as well. A retired naval officer played the Last Post (beautifully), followed by the flag lowering, readings from Laurence Binyon’s “The Fallen”, a reading by a local high school student of John McRae’s moving poem, “In Flanders Fields”, the laying of the wreath by a uniformed officer of the Royal Canadian Navy, who fortuitously happens to also be a local resident. The Fire Department controlled the road. Then we all went inside for refreshments (use your imagination), displays of military memorabilia, and neighbourly chit chat.

A service member in uniform plays the trumpet during a Remembrance Day ceremony, with a wreath decorated with poppies in the foreground and a gathering of community members in the background, surrounded by trees.

Similar ceremonies took place at 11 am on November 11 in communities large and small across Canada, the UK, other Commonwealth countries and at Veterans Day events in the US. In Canada, after years of declining attendance, the crowds seem to be increasing, including at Willis Point. Perhaps the recent rising spike in Canadian nationalism, (driven in large part by Donald Trump’s 51^st state nonsense), and the significant contribution that Canada made in the two great conflagrations of the 20^th Century is a factor. Poppies were ubiquitous at our ceremony. No newscaster or politician in Canada can appear on air or in public without wearing one. I am sure that each minister has a designated poppy assistant whose task it is to replenish the lapel of the minister each time the poppy falls off, as it inevitably does.

This year a quick search of the internet did not turn up any of the usual stories about people selling “unauthorized” poppies, especially through online marketplaces, although they could easily be found with a quick Google search. The sponsored Remembrance Day poppy listings on my computer were from Etsy, Poshmark Canada, Ali Express and eBay. The eBay item appeared to be a genuine Royal Canadian Legion poppy, on sale for $4.50 (of which $2 was apparently going to be a donation to the Legion) but when one added the cost of shipping by Canada Post at $18.26 for delivery in 10 days, I doubt if the seller had many takers. I did notice one news report about Legionnaires selling poppies at a municipal polling station in Quebec being asked to leave because you cannot solicit people in a voting lineup. They were obviously a bit too eager to go after that captive audience. However, the Legion would be quick to say that it never “sells” poppies; it makes them available for a donation. And that donation is to a good cause, supporting various veteran’s welfare activities.

That is surely the reason why in both Canada and Britain, the Legion, (Royal Canadian and Royal British Legions) have trademark rights to commemorative poppies, in theory restricting their sale to these two organizations. They also both operate authorized retail outlets selling poppies, the Poppy Store in Canada and the Poppy Shop in Britain. Just about anything you might need with a poppy on it, they are likely to have. So shop where your purchase will do the most good.

In the US, I am told that poppies are usually worn on Memorial Day in May. Both the Veterans of Foreign Wars (VFW) and the American Legion produce poppies. The VFW markets its “Buddy Poppy” through its site and has trademarked the name Buddy Poppy. According to the VFW, the Buddy Poppy program provides compensation to those who assemble the poppies, provides financial assistance in maintaining state and national veterans’ rehabilitation and service programs and partially supports the VFW National Home. The American Legion promotes US Poppy Day, which will be on May 22, 2026. Indeed, it was an American woman, Moina Michael, who campaigned to make the poppy the international symbol for remembrance of Allied war veterans, and to use their sale for veteran’s welfare. Through her efforts the poppy was adopted as a common symbol of remembrance in the US, Britain, Canada, France, Australia, New Zealand and probably elsewhere. You can read about her, and some of the controversies surrounding the sale of Remembrance poppies in my original 2019 post here.

As for Willis Point, we will thank all those who contributed to the successful ceremony this year and look forward to doing it again next year.

Author: hughstephensblog

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