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.

© Hugh Stephens, 2025. All Rights Reserved.

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 51st state nonsense), and the significant contribution that Canada made in the two great conflagrations of the 20th 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.

© Hugh Stephens, 2025.

AI Training and Nurturing Cultural Industries in Asia: Finding the Right Balance

Text and Data Mining (TDM) Exceptions and Compulsory Licensing Solutions Carry Heavy Risks

A scale balancing two labeled blocks, one marked 'TDM' and the other marked '©', representing the debate between Text and Data Mining and copyright.

Text and data mining (TDM) is a hot topic in many countries. In jurisdictions where exceptions to copyright protection are embedded in legislation rather than determined by the courts on a case-by-case basis (as in the US), TDM has become a favoured vehicle of AI developers, although compulsory licensing has also been floated by some as a potential solution. AI developers see TDM as a loophole allowing access to copyright protected works for algorithm training without payment or permission. Compulsory licencing would establish a statutory regime requiring rights-holders to provide access to their content upon payment by users. While seemingly offering a middle ground, it is fraught with problems. Meanwhile, content industry stakeholders have been vocal on the need to protect their intellectual property, while in some cases resorting to legal action.

TDM has been on the front burner in the UK, Australia and Canada, and Asia is facing many of the same issues. From India to Malaysia to Japan, and from Korea to Hong Kong to Singapore, access to copyrighted content for AI training is front and centre although being played out in different ways. Some countries already have instituted limited TDM exceptions while others are reviewing options. In India, which has long used compulsory licences in the patent field, and which has provision for compulsory licences under certain narrowly specified circumstances in its Copyright Act, both TDM and wider compulsory licensing are being pushed by the AI industry. A common thread in all countries is the concern by rightsholders that their valuable proprietorial content is being or may be taken and reproduced to provide training inputs to a commercial process without authorization or compensation. These concerns are not misplaced.

Compulsory licensing is a “solution” (actually opposed by many in the AI industry who believe that all content should be “free”) that strips away the rights of content owners to determine how their valuable intellectual property will be used. In effect, it is a form of expropriation. While compulsory licences may set a price for use (which may or may not be seen as fair), they don’t address other issues that are normally included in licensing deals such as how the work is to be used, or any specific limitations related to the content. There is also the difficult issue of equitably distributing collected funds.

Voluntary licensing where rights-holders can opt-in is a fairer and more feasible solution, offering mutual benefit to both the content and AI industries. A growing voluntary licensing market exists for print, AV and music content—but AI developers have been slow to respond, a key reason being the mixed signals they are receiving from various governments. Rather than negotiate, the AI industry would rather push for a broad exemption legalizing the practice of helping themselves to protected content owned by others. The pretexts advanced are either a) they are not really copying (just turning content into data tokens is the argument) or, b) if they are, they should be allowed to continue doing so in the name of “innovation”. There is also the implicit threat that if laws and regulations are too protective of the creative sector, AI development funds will go elsewhere, to more compliant jurisdictions.

This argument does not hold water as many factors go into making investment decisions regarding facilities such as data centres, notably the availability and cost of talent, land, power, etc. It is worth noting that while Malaysia does not have a TDM exception in its copyright law (whereas Singapore does), investment is pouring into Johore Bahru–just across the causeway from Singapore–because of Malaysia’s relative competitive advantage in input costs. The AI industry’s “fear factor” threatens to start a race to the bottom as governments around the world don’t want to be left behind as the AI race heats up. While it is clear that AI will transform some industries and has the potential to increase productivity in many areas, it may lead to more job losses than gains whereas the cultural sector is both a key economic driver in all the Asian economies in question and an important pillar of national identity.

India

India is a good case in point. It is a well known cultural and technological powerhouse with a  creative economy that was estimated by WIPO to be valued at over $30 billion (USD) in 2023, with 20% growth in creative exports generating over $11 billion. Prime Minister Modi has called on the creative sector to further increase its share of GDP. Yet the TDM issue has raised its head in India, especially after OpenAI was sued by several Indian media entities for copyright infringement. In May Reuters reported that the Ministry of Commerce had set up an expert panel to examine the AI training issue. Both domestic and international content industries in India are concerned that creation of a TDM copyright exception or widening of compulsory licensing in India’s copyright law will undermine the incentive to create new content, and stall the development of a voluntary licensing market for AI training. Careless implementation of TDM or bringing in a misplaced compulsory licensing regime risks throwing out the baby with the bathwater.  

Malaysia

As in India, AI industry lobbyists in Malaysia have called for implementation of a TDM exception. The case of neighbouring Singapore is often cited, but Singapore is a particularly poor example to follow. Singapore’s overly-broad TDM exceptions, referred to locally as exceptions to facilitate “computational data analysis”, combined with severe limitations on use of contract law to control access to copyright protected works, have weakened Singapore’s creative sector and held back the development of licensing options. There is no need for introduction of a TDM exception in Malaysia. Kuala Lumpur can distinguish itself by offering an appropriate balance between AI development and fostering important cultural industries, encouraging the development of a mutually beneficial licensing market. Its other attributes have helped it to successfully attract significant high-tech investment without undermining its investment in content creation.

Japan

Japan, which has a TDM exception in its copyright law, is often held out by AI developers as a model for the kind of copyright law they would like to see replicated elsewhere, but the impression that anything goes in Japan with respect to use of copyrighted content is mistaken and based on misunderstandings. As I outlined in a blog post last year (Japan’s Text and Data Mining (TDM) Copyright Exception for AI Training: A Needed and Welcome Clarification from the Responsible Agency), Japan’s TDM exception does not apply if the user of the copyrighted data “enjoys” the content. As an example, this means that if a user derives benefit through using the copied material to create outputs based on the reproduced content, the TDM exception does not apply. As this website succinctly puts it, “Expressive intent invalidates the safe harbour.” As is the case elsewhere, the limits of the law are being tested in court. Yomiuri Shinbun, Japan’s largest paper, as well as Nikkei and Asahi Shinbun, are suing Perplexity AI for copyright infringement in Tokyo District Court. Meanwhile a market for licensing content is beginning to develop.

Korea

Korean content companies are also turning to the courts for redress against unrestricted copying by digital platforms. Korea’s three terrestrial broadcasters, KBS, MBC, and SBS filed suit in January against Korean tech giant Naver claiming the platform used their news content to train its AI application. The broadcasters had earlier put Naver on notice not to use their content without permission. Naver is, broadly speaking, the Korean version of Google. It has recently been reported that more lawsuits are pending against Naver, this time from the Korean Newspaper Association.

Korea does not have a TDM exception in its copyright law, but it has (at least in theory), adopted the US fair use doctrine as a result of the US-Korea Free Trade Agreement. However, although fair use was incorporated into Korean law in 2011, its has seldom been used and the Korean courts have been very reluctant to apply it, and where they have, the application has been very narrow, essentially limited to non-commercial use. To date there have been no fair use cases brought to the Supreme Court, and lower courts tend to rely on the specified exceptions that apply in Korean law. Because of this there have been attempts to introduce a TDM exception, and more are expected in the current National Assembly. Various versions have been proposed that are of concern to rightsholders, including broad interpretations that would not distinguish between commercial and non-commercial use. Korea, one of the cultural giants in Asia, needs to tread carefully if it wants to maintain this leading cultural export, while encouraging development of content licensing.

Hong Kong

Hong Kong does not have a TDM exception in its current copyright law but under pressure from the AI sector is considering the idea. The Intellectual Property Department launched a public consultation late last year, receiving input from stakeholders representing both sides of the argument and has come forth with recommendations to the legislature (Legco). It has proposed a TDM exception for both commercial and non-commercial use but with a number of limitations; 1) access to content must be lawful (i.e. no use of pirated content); 2) a public record must be kept of copyrighted works used in AI training (transparency requirement); 3) the TDM exception will not apply where licensing schemes (i.e. licences that have been issued by the Copyright Tribunal) exist; and 4) rightsholders can reserve their rights by opting out.

There are problems with this proposal, despite the limitations. Requiring rightsholders to opt-out stands the existing basis of copyright on its head, as it has in the EU (i.e. users normally need to obtain permission from rightsholders in advance) while the licensing provision provides limited relief.  While not as potentially destructive as some proposed TDM exceptions elsewhere, it is questionable if Hong Kong needs a TDM exception given that voluntary licensing alternatives are increasingly available. At present, the recommendations are with the Legco; given public skepticism about the proposal, legislation is not expected until 2026 at the earliest.

Conclusion

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. Cultural expression is particularly important in Asia as an expression of values, and throwing the cultural sector under the bus in the hopes of attracting some ephemeral hi-tech AI jobs is a false bargain. It’s like eating the seed grain from which the bounty of cultural creativity springs. Undermining the nurturing environment provided by sound copyright protection, whether through compulsory licensing or creation of TDM exceptions, is bad public policy.

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. Asian regulators need to exercise prudence and weigh the consequences of rash action. The winners will be those that find the right balance between encouraging innovation and fostering creativity.

© Hugh Stephens, 2025. All Rights Reserved

The Online Streaming Act: Dealing with US Industry Concerns (The Cancon Factor)

A vintage television set displaying the Canadian flag.

Image: Shutterstock

Last month I wrote about the spectre of US trade retaliation against measures impacting or possibly impacting US streaming services as the Canadian Radio-Television and Telecommunications Commission (CRTC) proceeds with implementation of the Online Streaming Act (formerly Bill C-11). The Computer & Communications Industry Association (CCIA), a US trade association that includes, among others, Amazon, Google, Meta and Apple, has taken aim at this process, claiming it is discriminatory and violates Canadian commitments under the CUSMA/USMCA, the trade agreement that replaced NAFTA. A core element of CCIA’s argument is that the very concept of Canadian content (Cancon) is discriminatory because it violates Article 19.4 of CUSMA which calls for “national treatment” of a digital product;

“No Party shall accord less favorable treatment to a digital product created, produced, published, contracted for, commissioned, or first made available on commercial terms in the territory of another Party, or to a digital product of which the author, performer, producer, developer, or owner is a person of another Party, than it accords to other like digital products”

What is Article 19.4 intended to cover? As an example, if rules are imposed prohibiting digital products from causing harm to children, the same rules should apply to both domestic and foreign products. However, do special requirements regarding Cancon audiovisual or music products (such as airtime quotas on radio or possible “discoverability” requirements for streamers) constitute discrimination against US digital products? Maybe. Is all music and AV content fungible or is Cancon somehow different, i.e. not a “like digital product”? If Cancon is “different”, what is it that differentiates it? That is not an easy question to answer because of the many criteria that go into determining whether a product is considered Canadian for regulatory purposes.

I took a stab a couple of years ago at explaining how Cancon is defined (“Unravelling the Complexities of the Canadian Content (Cancon) Conundrum”). For AV products, it is basically a combination of four elements; production control, copyright and distribution rights, creative positions and production spend. The CRTC definition and the definition used by the Canadian Audio-Visual Certification Office (CAVCO), which distributes certain tax credits, are slightly different with the latter being more stringent. For music there is the MAPL system. As explained by the CRTC, to qualify as Canadian content, a musical selection must generally fulfil at least two of the following conditions: M (music): the music is composed entirely by a Canadian; A (artist): the music is, or the lyrics are, performed principally by a Canadian; P (performance): the musical selection consists of a live performance that is recorded wholly in Canada, or performed wholly in Canada and broadcast live in Canada, and L (lyrics): the lyrics are written entirely by a Canadian. The CRTC is proposing that the “P” criteria be dropped owing to changing patterns in the music industry, notably the many Canadian artists recording outside Canada, such as in Nashville.

Qualifying as Cancon is complicated, but it has value. Cancon certification provides access to various subsidies and funds as well as providing a product that meets airtime and broadcast obligations, where and when they exist. In the aftermath of the enactment of the Online Streaming legislation, a key question is whether streamers (like broadcasters) will be required to meet certain content quotas, if indeed it is even feasible to impose content quotas on streamers. The different delivery model, where it is the consumer who “pulls” content from a broad menu rather than a broadcaster who “serves up” a given offering, makes it almost impossible to impose content quotas. Theoretically, you could require a streamer to make available a specified inventory of Cancon, or even to promote Cancon (referred to as “discoverability”), but there is no way of making consumers actually watch or listen to Canadian productions. Trying to apply a 20th century broadcast model of regulation to 21st century streaming is not a good fit. Regulators around the world are grappling with this reality. One of the arguments for imposing an expenditure requirement on streamers, both domestic and international, to support the creation of Cancon is to compensate for the lack of applicability of content quotas in a streaming environment.

A core feature of certified Cancon at present is that it cannot, by definition, be produced by a non-Canadian regardless of whether all the creative talent (writers, directors, performers, designers, composers etc.) and production spend would otherwise meet Cancon criteria. There is a complicated formula that awards points for creative roles filled by Canadians, with a specified number of points required to qualify under different programs.  The fact that a non-Canadian production may be a Canadian story filmed in Canada with Canadian actors is irrelevant with respect to Cancon certification. In short, the colour of the money (the production company) is a determining factor. Additionally, under CAVCO rules, a foreign studio or producer cannot hold the intellectual property, (the copyright) in a Cancon production. A Canadian production company must be the copyright holder for all commercial exploitation purposes for a minimum of 25 years.

As part of implementing the Online Streaming Act, the CRTC was instructed to review the definition of Cancon. The Commission subsequently held public hearings in which ownership of copyright became a key issue. Opinions ranged from expanding the CAVCO requirements to all forms of Cancon to eliminating copyright ownership as a factor. The streamers, who now have (contested) financial obligations to fund Cancon, generally prefer to own copyright in productions. It is not a surprise that they object to being required to fund Cancon productions while being denied the opportunity to own and exploit the rights. Supporters of a more restrictive Cancon definition point out that foreign streamers are free to license Cancon qualifying productions from the Canadian rightsholder. However, a restrictive definition tied to financing and copyright ownership eliminates the possibility of direct financing by foreign streamers and could mean they would in effect be paying twice, first by contributing to the Fund that financed the production and second, by paying to acquire the rights. Moreover, there is no guarantee that the rights would be available on acceptable terms.

Those advocating for a comprehensive Cancon definition that includes financing and IP ownership as factors argue this is necessary to create and maintain a viable Canadian industry. But such restrictions have two effects. First, if copyrights must be retained, this removes from Canadian producers/rightsholders the ability to sell the rights at a time of their choosing (and possibly use the funds to produce more Cancon). Not all productions will have a sustaining revenue stream over time. It should be left to the producer to judge whether to cash out now or license the product while retaining ownership. Second, requiring that the producer be Canadian for a production to be certified as Cancon disincentivizes foreign streamers from self producing content showcasing Canadian stories, artists, locations etc. They can do so but are denied all Cancon credit for such productions. The cost of such productions does not count against their required financial contribution (currently 5% of revenues) nor does the production qualify as Canadian content in terms of meeting existing (or possibly future) content quotas. If a goal of Cancon policy is to promote expressions of Canadian culture through creation of financially viable productions, disincentivizing foreign producers from putting their toes into the Cancon lake makes no sense. Production of Cancon by global enterprises like the streamers will help ensure global distribution, meeting both cultural projection objectives as well as exposing Cancon to new markets.

There is also the question of subsidies provided to producers of Cancon. Under current definitions, the US studios are not eligible to access funds earmarked to produce Cancon (even though they are required to contribute to these funds). This could be dealt with giving foreign studios “contribution credit” for self-financed Cancon productions. It’s worth noting the studios are already offered generous subsidies–euphemistically referred to as tax credits–to undertake non-Canadian production in Canada, and no-one complains about that, except Donald Trump. Trump has been rattling the chains over so-called “runaway production” and has threatened to impose tariffs on movies made outside the US.

While I think many of the concerns of the foreign streamers could be addressed through a more flexible definition of Canadian content, I am not confident the CRTC will see it this way given the policy instructions it received from the government at the time the legislation was proclaimed. Can it comply with this guidance while not painting itself into a CUSMA corner? The Commission is directed to take international commitments into account, although there is no specific reference to CUSMA, only the 2005 UNESCO Convention on Cultural Diversity.

From my perspective it is not realistic for US streamers to expect a free ride (and they probably don’t) but Canada and the CRTC need to avoid being too greedy. They should also be flexible in defining Cancon, focussing more on the promotion of Canadian stories, music and talent and less on maintenance of an industrial policy that relies on protectionism for a favoured few. A policy that calls on foreign streamers to invest in Canadian creativity, given the revenues that they generate in Canada, is not unreasonable; denying them the ability to take a direct ownership stake in the products to which they contribute funding would be short-sighted. The policy straitjacket that exists with respect to Cancon sets up a search for draconian solutions, like the CCIA’s threats. In short, remove the Cancon handcuffs and keep the required contributions reasonable. Give credit for funds expended on content that meets Canadian artistic and cultural criteria. I think this would help blunt the frontal attack from US audiovisual streamers. Music is more complicated. Meanwhile, Canada needs to be careful not to negate any trade obligations it has taken on and avoid being forced into the Article 32.6 “cultural exemption” corner. 

But wait, I have an idea! If all else fails, there is also CUSMA Article 32.2 (b). “Nothing in this agreement shall be construed to…. preclude a Party from applying measures that it considers necessary for the fulfilment of its obligations with respect to …the protection of its own essential security interests.” If Donald Trump considers that importing kitchen cabinets from Canada threatens the national security of the United States perhaps it is not such a stretch to conclude that the preservation of Canadian culture (whatever that is) is just as essential to Canada’s national security, justifying any measures one chooses to employ. Is this a serious option? You decide.

© Hugh Stephens, 2025.  All Rights Reserved.

In writing this opinion piece, I have drawn on my background both as a former Canadian government official who has had some dealings with international trade issues over the years, as well as past experience as an executive with one of the US companies which, at the time, controlled a major Hollywood studio. (Time Warner). However, whatever “solutions” I have proposed to address US industry concerns regarding Cancon are mine alone. I hope they are a useful contribution to the debate, but I want to be clear that I do not speak for the CCIA or the streamers.

Australia Stands Up for its Creative Sector: A Useful Lesson for Canada and Others

Two coffee mugs side by side, one featuring the Australian flag and the other featuring the Canadian flag.

Image: Shutterstock

Australia just took an important stand in the tug-of-war being waged in many countries over whether, how and to what extent tech companies can use copyrighted content (text, music, images and so on) to train AI platforms by reproducing the content and extracting its essence without permission or compensation to rightsholders. Attorney-General Michelle Rowland has announced that while Australia will be undertaking consultations on revisions to its copyright laws to help address the needs of the AI industry, a Text and Data Mining (TDM) exception has been ruled out. Some countries, like the UK, have TDM exceptions for limited purposes (such as research and non-commercial use) in their laws while several other countries have TDM under review. Existing TDM exceptions allow reproduction of copyrighted content without the authorization of the rightsholder for research, data analysis, and in some cases for AI training purposes.

There is currently no TDM exception in Canadian law but as I noted in a recent blog post (“Canada’s Creative Sector Uneasily Awaits the Carney Government’s Next Steps on AI Training”), pressure is building from the AI sector to incorporate TDM into Canada’s Copyright Act. The government currently has yet another consultation paper on AI out for public comment and the Canadian cultural sector is organizing to protect creator’s rights, specifically calling on the Canadian government to “ensure that the Copyright Act is not modified through an exception permitting Text and Data Mining (TDM) or any other exception allowing technology developers or users to use protected works…to train generative AI systems without authorization or compensation…”. In doing so, it is taking a leaf from the book of Australian creators who mounted strong opposition to a proposal from the Productivity Commission, (PC) an independent research and advisory body created by an Act of Parliament some 25 years ago, that proposed in a report in August that Australia adopt a TDM exception. To say that this proposal put the cat amongst the pigeons would be an understatement.

The Commission has a reputation for denigrating the value of intellectual property and seeing it as an obstacle to industrial development rather than as an essential partner. In 2015 it proposed shortening the term of copyright protection from the current life of the author plus seventy years (“life plus 70”), a generally accepted international standard, to just “life plus 15”, (far lower than the Berne Convention minimum and a standard not adopted anywhere) while introducing a US-style fair use regime into Australia. There was strong pushback then, (it didn’t happen) and there was strong pushback this year (see here and here, for example) when the PC proposed introducing a TDM exception. It was particularly criticized for its lack of consultation with the creative industries in developing this proposal.

Now the Australian government has put its foot down, ruling out TDM but indicating that it will look at alternative solutions. These include examining whether to establish a new “paid collective licensing framework” under the Copyright Act for AI, or whether to maintain the status quo through voluntary licensing, clarifying how copyright law applies to material generated through the use of AI (i.e. whether there should be copyright protection for outputs produced by or with AI) and looking at the establishment of a new small claims forum to address lower-value copyright infringement matters.

It is generally accepted that AI is here to stay and will continue to need vast amounts of content for training. In most cases, copyrighted content is the kind of curated, high value work that AI developers need but until now, have preferred to appropriate without permission rather than pay for through licensing. In effect they have decided to ask for forgiveness after rather than permission beforehand. This has led to a plethora of lawsuits globally, including the recent $1.5 billion settlement that Anthropic has agreed to pay out to settle a class action suit brought by authors in the US. “Forgiveness” can be expensive. Inside the US, AI developers are arguing their copying is fair use, although at the same time they are beginning to hedge their bets by licensing content from a number of sources, ranging from media to music to image companies. Outside the US, AI companies have been beating the TDM drum, hoping that creation of wide TDM exceptions will obviate the need to negotiate with content owners. Nonetheless, voluntary licensing is growing globally. However, the surest way to kill a nascent licensing market is to give the tech industry a “get out of jail free” card by introducing a broad TDM exception. Australia has just rejected that option. Canada and others considering introducing new, or broadening existing, TDM loopholes should do the same.

It is not clear where Australia’s AI and Copyright review will end up, other than to note that it will not include TDM. As I have noted above, among other things it will be considering “collective licensing”. Collective licensing could help address the problem of remunerating individual rightsholders, in contrast to licence agreements signed between AI developers and corporate entities like media companies. However, Australia needs to steer clear of compulsory licensing which strips away the rights of copyright owners. Compulsory licences authorize use upon payment of a statutory or negotiated fee but remove the right of a copyright holder to withhold consent for use, or to impose specific limitations. A voluntary licence framework is fair to everyone. Compulsory licensing is not.

Canada and Australia have many things in common, (as well as a number of differences of course, beyond poutine vs vegemite). Among their commonalities is the desire to protect and foster a unique cultural identity in the face of global cultural homogenization. This is even more important in Canada given the realities of the struggle faced by 6 or 7 million Francophones to preserve their culture in a sea of 375 million Anglophones. Canada followed Australia’s lead (although less successfully) in requiring major online platforms to contribute financially to (i.e. pay for the use of) news media content. It should do the same by putting the idea of a TDM exception firmly to one side and instead focus on encouraging the development of voluntary licensing market for copyrighted content when used in AI training.

© Hugh Stephens, 2025. All Rights Reserved.

US Retaliation Against the Online Streaming Act: How Real is the Threat?   

Illustration of the Canadian flag overlaid with yellow caution tape labeled 'TARIFFS', featuring American flags, symbolizing trade tensions between Canada and the USA.

Image: Shutterstock

As CRTC hearings on implementation of the Online Streaming Act (formerly Bill C-11) grind slowly forward as part of the Commission’s deliberations as to how foreign audiovisual and audio (music) streaming services may be required to meet Canadian content (Cancon) and discoverability requirements, while determining the extent of their financial contribution to various funds supporting Canadian content, affected US industry players are not sitting on their hands. As you would expect, they are deploying a range of tactics to fight back using their industry associations, the Motion Picture Association (MPA)-Canada, representing Netflix, Disney, Sony, Paramount, Universal, Amazon Prime and Warner Bros. Discovery, and the Computer & Communications Industry Association (CCIA), representing among others Amazon, Apple, Google and Meta, as their vehicles of choice.

MPA-Canada is currently appealing to the Federal Court the CRTC decision that its members must contribute 1.5% of annual revenues to the Independent Local News Fund, arguing that the studios do not produce news and should not be required to contribute to a line of business in which they are not active. Apple, Spotify and Amazon are also appealing the full 5% payment on the grounds it is a tax the CRTC is not mandated to apply. The 1.5% contribution to news is part of the CRTC’s initial decision that the streamers should, as a “downpayment”, contribute 5% of revenues to fund Canadian production.  The MPA has also undertaken a lobbying campaign to point out how much its members already contribute to production in Canada, (CAD$6.7 billion in 2023, more than the CBC, Canadian Media Fund and Telefilm Canada combined) even though much of that content does not count as CanCon under current rules.

To this “positive” argument, the CCIA by contrast has added a more hard line, “negative” approach, releasing a study that calculates the amount the CRTC’s compulsory contributions will purportedly cost the US industry. Assuming the levy stays at 5% of revenues (by no means an assured outcome as Canadian broadcasters are urging the CRTC to impose contributions of 20 to 30%, similar to the obligations they face), CCIA estimates this will cost US streamers between $2.19 billion and $6.96 billion (all figures USD) by 2030. The estimate of losses is bundled with CCIA’s claim that the financial obligations constitute a violation of the CUSMA (known as the USMCA in the US) because it creates a preferential regime for Canadian content “thereby discriminating against content classified as American or from a third country”. In the eyes of the CCIA, actions under the Online Streaming Act violate the principle of “national treatment” in which Party A agrees to treat the products and services of Party B “no less favourably” than its own products and services. In support of this claim, CCIA cites the Investment and Digital Trade Chapters of CUSMA/USMCA, Chapters 14 and 19 respectively. According to CCIA, the Online Streaming Act’s “inconsistency with core trade obligations is beyond dispute”. Given this “indisputable” fact, CCIA states that “if challenged, Canada can be expected to invoke its cultural industries exception (Article 32.6) as a basis for justifying the inevitable discrimination….”

Article 32.6 is part of the General Exceptions Chapter of the CUSMA/USMCA. It states, in part, “This Agreement does not apply to a measure adopted or maintained by Canada with respect to a cultural industry…” The production, distribution, sale, or exhibition of film or video recordings as well as audio or video music recordings are included in the definition of a cultural industry. As I have written elsewhere (NAFTA and the Cultural Exception) Article 32.6, while in theory exempting defined cultural industries from the obligations of the Agreement (the NAFTA provision was essentially rolled over into the CUSMA), has a sting in its tail. If Canada applies any discriminatory measures that violate the agreement using the cultural exclusion as the pretext, the US is fully within its rights to retaliate with measures of “equivalent commercial effect”, in any sector. The CCIA’s $2.19 billion or $6.95 billion numbers need to be viewed in this context.

The first question, therefore, is would Canada need to resort to Article 32.6 to justify measures taken under the Online Streaming Act? I argued in an earlier paper I wrote for the School of Public Policy at the University of Calgary that given the current structure of the obligations, Article 32.6 would not be in play because the measures in question are not inconsistent with CUSMA, given the Agreement’s precise wording. You can read the detailed arguments in the paper, but essentially my position is that neither the Chapter 14 Investment reference nor the Chapter 19 Digital Trade provision cited by CCIA are relevant because content streaming is covered by a separate part of the Agreement, Chapter 15, Cross-border Trade in Services. The terms of the Online Streaming Act, as applied by the CRTC provide “national treatment” to foreign streaming services. In fact, they impose lesser requirements on foreign streamers with respect to carriage of Cancon than they do on Canadian streamers.

But this interpretation is only my personal view. I have no idea is this is the interpretation of the trade policy gurus at Global Affairs Canada (I haven’t spoken to them and even if I did, they would be unlikely to tell me what their position would be on a hypothetical trade case) and is almost certainly not the interpretation favoured by officials in the Office of the US Trade Representative (USTR). And certainly not by CCIA. CCIA’s position is that a show or track streamed in Canada is a digital product, (even though it describes its members as providing “streaming services”). The Agreement is clear that there should be no discrimination against digital products of the other Party i.e. they should be accorded “national treatment”, although domestic products can be subsidized. On the other hand, if streamed content is not considered a digital product (nor an investment, which according to CUSMA cannot be subject to “performance requirements” as a condition of allowing the investment) but rather a cross-border service, the conditions applicable to delivery of the service are what counts. National treatment needs to apply to service delivery, and insofar as the Online Streaming Act is concerned, it does.

Whether streamed content is a digital product or a cross-border service clearly matters. If the US brought a CUSMA trade complaint against Canada–and if the CCIA view were to prevail–Canada would either have to change the way it treats US digital products carried by streaming services or defend its actions on the basis of the cultural exception, Article 32.6. If it did the latter, it would be opening itself to trade retaliation by the US, at an equivalent commercial level. In my experience and judgement, Canada would be most unlikely to resort to the exception to justify its actions precisely because of the consequences. The US would retaliate not just against the cultural sector, but in other areas that would set one industry or part of the country against another. To avoid this, the government would instead find some other way to comply with the Agreement by modifying the offending provision (as little as possible but as much as necessary), but doing so in a way, if possible, that still met all or most of its policy objectives.

It is also just possible, however, that Canada would be prepared to absorb the retaliation, calculated by CCIA to be between $400 and $500 million annually if the CRTC mandated contribution remains at 5% of revenues. This sounds like a big number but the random way the Trump Administration has been imposing tariffs on a range of Canadian products such as steel and aluminum (50%), lumber (45%), and autos (25%), industries where Canadian exports total tens of billions of dollars annually, makes $400 million in possible retaliation seem relatively minor. In effect, Trump’s erratic punitive behaviour has normalized trade retaliation–and devalued its effectiveness as a threat. But whatever response the Canadian government took, the first step would be to determine whether Canada was in fact in violation of the Agreement. If one Party considers that “an actual or proposed measure of another Party is or would be inconsistent with an obligation of this Agreement”, it can resort to the dispute settlement process. In the first instance, this involves consultation and if no resolution is reached, sometimes the constitution of a panel to decide the issue. (CUSMA/Article 31).

The CCIA itself cannot charge Canada with non-compliance, although it can raise the spectre of retaliation as it is doing. Only the US Government can bring a complaint, and at this stage it is not clear if it would be willing to do so. Given the range of trade disputes between the two countries, including unilateral tariffs on Canadian exports imposed by the Trump Administration on the basis of specious claims that Canada is a major source of fentanyl exports to the US (last year 0.2% of all fentanyl seized at the US border came from Canada; over 90% was from Mexico), or equally questionable grounds that exports of Canadian products ranging from aluminum to kitchen cabinets pose a national security threat to the US, the bilateral trade relationship hardly needs more issues. It will depend on the extent to which the streamers in the US have the ear of the Trump Administration. Given Trump’s insistence that Canada drop its planned Digital Sales Tax if it wanted to keep the current bilateral trade talks going , it is certainly within the realm of possibility that USTR would take up the CCIA’s case.

There is one other wrinkle to the cultural exception clause. Even if Canada does not justify its actions on the basis of Article 32.6, potentially the US could unilaterally declare it considers Canadian measures to fall under that provision and move to initiate retaliatory measures. If it did so, Canada would then be entitled to demand a panel to determine whether Article 32.6 is applicable, and if so, whether the retaliation met the “equivalent commercial effect” test. However, the key issue would still be to determine whether Canada had violated its commitments under the Agreement. If there is no violation of CUSMA’s terms, the cultural exception is moot. If all this has your head spinning, welcome to the green eyeshade world of trade practitioners.

CCIA, in pushing back against the provisions of the Online Streaming Act, has resorted to the threat of trade retaliation as one more tool in its policy toolbox. That is to be expected. With this in mind, the CRTC will be carefully reviewing how much leeway it has in trade policy terms and needs to keep Canada’s CUSMA commitments in mind when implementing policy. In a following blog posting I will outline what I think Canada and the CRTC need to consider.

© Hugh Stephens 2025. All Rights Reserved.  

Canada’s Creative Sector Uneasily Awaits the Carney Government’s Next Steps on AI Training

Blasting a Wide TDM Hole in the Structure of Copyright is Not the Answer

A cartoon-style illustration showing a fist breaking through a brick wall labeled 'COPYRIGHT', with the fist wearing a band labeled 'TDM', surrounded by explosive graphical effects.
Image: Author (via DALLE-E)

The ongoing wrestling match-cum-dance between the creative sector and AI developers over the uncompensated and unauthorized use of copyrighted content for AI training is being played out in different ways in different countries. In the US it is largely a legal play in the courts at the moment, with mixed results for both sides. However, President Trump has made concerning public comments siding with the AI industry, saying it is impractical for AI developers to pay copyright holders for AI training (and besides, China doesn’t do it). Congress is still considering its options. In Australia, the Productivity Commission, never a friend of intellectual property, has just issued an interim report recommending the adoption of a Text and Data Mining (TDM) exception in Australia to boost development of the AI industry locally. The Australian creative sector mobilized quickly and has pushed back hard against this proposal, with the government now saying that it has no plans to amend the Copyright Act. In the UK, where there is a TDM exception but only for non-commercial purposes, the Starmer government quickly adopted a pro-AI strategy, part of which was to propose an expansion of TDM to include commercial purposes, although subject to an opt-out for rights-holders. That ignited a major storm among leading British creatives from Paul McCartney and Elton John on down. Through a unified campaign, British creators were able to gain support in the Upper Chamber (House of Lords) to slow down the legislation. As a result, the TDM issue has now  been earmarked for further consultation and study. One thing is certain, the creation of a wide TDM exception is a sure way to stifle a nascent but rapidly developing licensing market for copyrighted content used for AI training.

It seems as if TDM, or more permissive TDM, is testing the boundaries of copyright just about everywhere. So, what about Canada? Canada has no TDM exception in its copyright law and, unlike the US, has clearly defined fair dealing exceptions that do not lend themselves to expansive court interpretation. Like other countries, it is trying to figure out how to not get left behind as the AI race accelerates. Canada initially had a first mover advantage in terms of AI research, given the work of Geoffrey Hinton, Yoshua Bengio and others, but recently it has been falling behind, notably lacking native startups. The cluster effect is not happening, with Canadian innovation going elsewhere for commercialization. To address these challenges, the new Carney government has appointed a dedicated Minister of Artificial Intelligence and Digital Innovation, former journalist Evan Solomon. This is the first time such a position has existed. One of Solomon’s first acts was to accelerate launch of an AI strategy beginning with a new consultation released on October 1 (closing at the end of this month), in the form of a survey to “help define the next chapter of Canada’s AI leadership”. This survey asks many relevant questions regarding AI and how it could be best developed in Canada but manages to mostly steer clear of the thorny question of AI training and copyright. The only question tangentially related to this issue is the following;

“Which infrastructure gaps (compute, data, connectivity) are holding back AI innovation in Canada, and what is stopping Canadian firms from building sovereign infrastructure to address them?”

Clearly this consultation is not going to turn over the TDM rock, at least not directly.

In the past couple of years, the government has issued two consultation papers on AI, one in 2021 and another last year as well as a “What We Heard” report. This report, issued earlier this year, summarizes the “great divide” between AI developers and the content industry. It’s first observation was that “Creators oppose the use of their content in AI without consent and compensation” but then goes on to say that “User groups support clarifications that TDM does not infringe copyright”.

After a couple of other observations about the centrality of human authorship and the need for transparency surrounding the use of copyright-protected works in the training of AI, the paper observed that there is “no consensus about whether existing legal tests and remedies are adequate”. That is the nub of the issue. There is no consensus, and while the courts are struggling with this issue (including in Canada, as I wrote about here and here), what Canadian creators fear is the introduction of a wide TDM exception in the name of maintaining “Canadian competitiveness”.

The launch of the new AI strategy and the evolution of the way in which copyrighted content is described in government consultation documents is indicative of the pressures on the government to shore up Canada’s AI strategy. It is interesting to note the shift in the definition of TDM from 2021 to today.

The definition provided in the 2021 consultation document described TDM as follows;

“The process of conducting TDM may require the making of reproductions of large quantities of works or other copyright subject matter to extract particular data and information from them. This process may be carried out using scientific or text-based data, as well as images, sounds, or other creative works.”

In the most recent consultative document, that definition has evolved;

“Text and data mining (TDM) consists of the reproduction and analysis of large quantities of data and information, including those extracted from copyright-protected content, to identify patterns and make predictions.”

Note the shift from “works” to “data”.[i]  It’s a subtle difference but is hugely significant because data and facts are not protectable under copyright whereas the creative elements of original works are. The cultural sector is rightly concerned.

The Coalition for the Diversity of Cultural Expressions (CDCE), a major arts and creatives lobby group, is currently pressing Ottawa on a number of cultural issues, including AI. Among its AI asks are to;

  1. Ensure that the Copyright Act is not modified through an exception permitting Text and Data Mining (TDM) or any other exception allowing technology developers or users to use protected works…to train generative AI systems without authorization or compensation;
  2. Adopt national legislation on generative AI that requires developers of generative AI systems to disclose the training data they use; and
  3. Adopt legislative provisions requiring public identification of content that is purely AI-generated.

Against these demands is the pressure coming from AI advocates who will argue that if the US loosens restrictions on use of copyrighted content for AI training, Canada will have no recourse but to follow. In other words, as goes the US, so goes Canada (or for that matter, the UK, Australia and others). Thus, what is happening in the US courts, and perhaps in Congress, is of critical importance for the creative sector everywhere including, in particular, Canada.

The issue of AI training on copyrighted content will need to be resolved sooner or later. Licensing solutions are developing quickly and if Canada can wait a bit longer it may be able to adopt licensing as the preferred solution (although the “What We Heard” report noted that “Some (intervenors) argued that licensing is an unnecessary burden because it may not be clear that copyright is engaged or that works used in TDM are being reproduced in the first place.”). There is pressure on the Carney government to take early action since AI industry developments are moving at lightning speed. With the TDM train gaining momentum in Canada and elsewhere, Canadian creators are understandably uneasy about what is likely to happen next.  

As the CDCE notes, culture is a major economic and social pillar in Canada. In 2023, it generated $63.2 billion in value added and employed 669,600 people. Throwing all that under the bus in the name of remaining competitive on AI is a flawed choice, a point also made by the creative sectors in the UK, Australia and elsewhere. However, with the AI horse well out of the barn, copyright cannot be seen as an obstacle to innovation, an accusation freely levelled at it by some in the AI industry. Rather, it must be seen as a partner in innovation, which is where licensing comes in.

Blasting a wide TDM hole in the protection and incentive structure that copyright provides the creative sector is not the answer. The creative sector is watching and waiting anxiously.

© Hugh Stephens, 2025. All Rights Reserved

[i] I am indebted to Erin Finlay, partner at Stohn Hay Cafazzo Heim Finlay LLP for drawing these changing definitions to my attention

When Will AI Developers Take Responsibility for the Products They Provide Their Subscribers?

What They are Doing Really Bugs Me

Illustration comparing a Midjourney-generated image of Bugs Bunny on the left with Warner Bros. copyrighted images of Bugs Bunny on the right, featuring different styles and settings.

Image: US District Court Filing

I confess to having been a lifetime fan of Bugs Bunny, that “Wascally Wabbit”, and not just because I worked for Time Warner at one point in my career. His insouciance, his ingenuity and his cultural achievements (have you seen Bugs perform opera or conduct a symphony orchestra?) are legend. Thus it was with some interest that I read the headline in my morning newspaper “Warner Bros. sues AI Company over Images of  Bugs Bunny and other characters”. It was based on a generic AP report that appeared in many journals across North America. The AI company in question is Midjourney. Hollywood Reporter has done a deeper dive comparing images produced with Midjourney’s AI program to copyrighted Warner Bros. (WB) images, drawn from the lawsuit submission. This is not the first confrontation between Hollywood and Midjourney. In June Disney and Universal brought a similar suit alleging that the AI company’s image generator produces near replicas of its copyrighted characters.

Just in case you forget what Bugs looks like, Warner Bros. (technically now known as Warner Bros. Discover) has a complete description in its lawsuit;

Many of the Looney Tunes characters are ubiquitous household names, and these characters have expressive conceptual and physical qualities that make them distinctive and immediately recognizable. Bugs Bunny, for example, is a playfully irreverent anthropomorphic gray and white rabbit, who has a star on the Hollywood Walk of Fame. Bugs Bunny has an overbite that showcases his two long front teeth, oversized feet with white fur, and is often depicted eating a carrot.

Does this description look anything like the image produced by Midjourney, as reproduced in the filing (see paragraphs 85 and 86), which I have pinched as the image for this blogpost. Scroll up or down to see the full range of characters at issue, ranging from Tweetie to Batman.

Midjourney’s response to the earlier lawsuit, and now to Warner Bros. is that they are not responsible for any copyright infringement that may occur. You see, it is the users of their service who are to blame. Not them. According to their court filing:

“The Midjourney platform is an instrument for user expression. It assists with the creation of images only at the direction of its users, guided by their instructions, in what is often an elaborate and time-consuming process of experimentation, iteration, and discovery.

Midjourney users are required by Midjourney’s Terms of Service to refrain from infringing the intellectual property rights of others, including Plaintiffs’ rights, Midjourney does not presuppose and cannot know whether any particular image is infringing absent notice from a copyright owner and information regarding how the image is used.”

Warner Bros. points out that Midjourney could easily control infringing outputs by (1) excluding WB content from training its AI system (2) rejecting prompts from users requesting WB characters and (3) using technical means to screen images. But instead, Midjourney has become a vending machine for WB content, selling a commercial service powered by AI that was developed using infringing copies of WB works and then allows users to reproduce or download infringing images or videos. These outputs directly compete with WB copyrighted content.

Midjourney’s defence strikes me as similar to arguments used by the manufacturers of guns. “Guns don’t kill people. People kill people.”  Except that there are a number of limitations on the kind of gun you can sell, and its capabilities. While the law varies from jurisdiction to jurisdiction, what is common are restrictions on selling automatic and semi-automatic weapons. The reasons are obvious. While there is a use for some kinds of guns (gun clubs, hunting etc.) there is no legitimate need for unlimited lethality. Not all gun purchasers (like AI software users) can be trusted so limitations are placed on what gun manufacturers are allowed to make available to the public. Similarly, while there are many uses for image-generating AI platforms, there are also legal limits to what is acceptable, such as when AI is used to create child porn. AI companies have agreed to set and enforce guardrails against this, and are clearly capable of doing so. Since, regrettably, not all users can be trusted, to simply to ask them to acknowledge and abide by Terms of Service is inadequate. So, if AI companies can stop some categories of use, they are equally capable of marketing a service that avoids copyright infringement. Enough of the “blame the user” nonsense. Design and market a service that conforms to the law.

Another good example of the “blame the user” excuse is META’s creation of “flirty chatbots” using virtual images of celebrities such as Taylor Swift, Scarlett Johanson, etc. According to Variety, quoting a report from Reuters who researched the issue, the celebrity AI chatbots  “routinely made sexual advances, often inviting a test user for meet-ups.” In some cases, when they were asked for “intimate pictures,” the chatbots “produced photorealstic images of their namesakes posing in bathtubs or dressed in lingerie with their legs spread.” Many of these chatbots, which clearly violate the right of publicity of the subjects, were user produced. But users could not produce these images, and cross the line into illegality, unless they were enabled to do so by the program produced by META. META claims that the production of such images violates its rules, which prohibit the direct impersonation of public figures. But of what use is a rule if it is not enforced?

If AI developers design products that are easily misused and then enable (even encourage) their users to do so, it is high time for them to accept responsibility. They are able to establish guardrails; they just don’t want to as it is easier to free ride, while attracting as many users as possible. Midjourney is a good case in point, but Warner Bros has just fired a shot across their bow. Just as Bugs did in Captain Hareblower.

© Hugh Stephens 2025. All Rights Reserved.

Confiscating Creator’s Rights: Australia’s Slippery Slope

A police officer in uniform is carefully holding a brown package marked with a copyright symbol.

Image: Author (via Dalle-E)

Confiscation is a strong word, but I can’t think of any more appropriate term to describe what has just happened in Australia regarding the copyright of film footage taken by two employees (Chris Delforce and Harley McDonald-Eckersall) of Farm Transparency International (FTI). FTI is an animal rights organization well known for its crusade against animal cruelty in Australia. The two illegally trespassed into the slaughterhouse facilities of Game Meats Company (GMC) and then installed pinhole cameras in the ceilings of the abattoirs. The resulting footage was to be used to further expose industry practices which FTI claims constitute animal abuse. It was sent to the Department of Agriculture, Food and Fisheries (DAFF) who forwarded the complaint to GMC, which triggered GMC’s lawsuit. It was also sent to Seven Network, who decided not to show it after the lawsuit was launched.

The Department (DAFF) declined to prosecute the company, although in court a GMC employee is reported as describing the alleged abuse as “a brief aberration … just a small glitch in a process”. The confrontation between FTI and the meat industry has been ongoing for a number of years, and the industry has employed various tactics to combat FTI’s use of film footage to expose slaughterhouse practices. Keeping the public’s eye away from how their lamb chop, hamburger or pork sausage got from farm to fork is one way of avoiding consumer pushback against the distasteful but necessary process of animal slaughtering. Such footage is not for the faint-hearted.

However, this blog post is not about the rights or wrongs of eating meat or animal slaughtering practices; it is about copyright. And, believe it or not, copyright is very relevant to this controversial topic.

Recall that copyright is established when an original work is created. There is no need for registration or validation, but the work must be fixed in some form (e.g. a book, image or film) and normally must have at least some element of creativity (although in Australia originality is not required for films). For films, holding copyright confers certain exclusive rights, such as the right to reproduce or make a copy, to have the film screened in public, and to communicate the film to the public through means such as broadcasting, streaming, or downloading. Once copyright is established, it lasts a long time (the life of the rights-holder(s) plus 70 years in Australia), and is impossible to renounce. Holders of copyright can issue various forms of Creative Commons licences authorizing use under various scenarios, but the copyright still exists. It is very “sticky”. In Australia, the copyright in films is normally held by the person who is the maker of the film, that is, the person who makes the arrangements for the film to be made. This could be the director, or the person who commissions the film. If a company commissions a film, the company could be the rights-holder. It could also be the person doing the filming, if it is a small-scale production and the person doing the filming is also the producer. The Australian Copyright Council has an excellent background paper outlining all the ins and outs of copyright ownership in films. In the case under discussion, the copyright owner was FTI. While the issue of who has copyright in a film can be complicated, one thing is very clear. The person being filmed does not own the copyright, any more than a person receiving a letter owns the copyright in that letter. It belongs to the author. But the Federal Court of Australia has just stood this principle on its head.

In August the full Federal Court upheld the appeal of Game Meats Company (GMC) against a lower court ruling. The lower court had concluded that while FTI had trespassed on GMC’s property (and was assessed significant damages for having done so), the filming that had taken place was not held in trust for the owner of the property, i.e. GMC. This somewhat convoluted wording meant that Game Meats did not own the copyright in the film and that the film was not made on its behalf. (This seems obvious since it was FTI doing the filming, but that was the wording of the decision). However, the Federal appeal court reversed this decision and awarded the copyright to GMC in the form of a “constructive trust”, to be maintained in force until such time as the copyright in the film was compulsorily assigned to it. As part of the decision, FTI was required to execute an assignment in writing of the copyright in the images and footage to Game Meats and permanently delete all copies of the images in its possession and control. In other words, FTI was required to turn over its copyright to the entity that it had filmed, thus ensuring that the new owner of the footage would ensure it never saw the light of day. In short, FTI’s copyright was confiscated.

As far as I am aware, this is the first time that the legal concept of “constructive trust” has ever been applied to a copyright case, in Australia or anywhere else. So, what is a constructive trust? There are many definitions, but here is one that seems to capture the essence quite well;

“A constructive trust is imposed by law to remedy a situation in which someone has been unfairly deprived of property or wronged through misconduct such as fraud, misrepresentation, or a breach of fiduciary duty in relation to specific property or assets. This type of trust comes into existence to uphold equitable property interests, regardless of whether the parties intended to create a trust relationship.”

There are two key elements here, (1) there must have been some misconduct committed by the defendant and (2) restoration of “equity” demands that the property in question be transferred to the wronged party. It is often used in disputes over estates where one party argues they have been unjustly deprived of certain proceeds of the estate to which they had contributed for many years. It was not designed to deal with copyright disputes but that is how it has been used by Game Meats Company, now upheld by the full appeal court. This is an unfortunate precedent.

This case could lead to a very slippery slope regarding freedom of expression and freedom of the press. Hijacking copyright to stifle press coverage could easily result in unintended consequences. GMC, now the assignee of the copyright will, of course, not sanction any release of the footage. Any media outlet that does so could face severe legal consequences. Moreover, this decision sends a very threatening message to investigative journalists, photographers, film makers and others. Could the constructive trust ruling be expanded in future to impede researchers who were “virtually trespassing” by using drones or telephoto lenses? There are privacy and defamation laws to deal with this sort of situation, but what if the door is now open to seizing the copyright? What about surreptitious footage shot by documentary filmmakers or investigative TV reporters? The public interest demands that journalism be given some leeway to pursue investigations and shed light on contentious issues. It is self-evident that entities being investigated are not going to facilitate filming of their activities.

The Australian weekly, the Saturday Paper, quotes Macquarie University journalism professor, Peter Greste, who is also executive director of the Alliance for Journalists’ Freedom, saying the case “gives all sorts of subjects of media investigation an opportunity to threaten legal action and shut down otherwise important and legitimate journalistic investigations”. From a legal perspective, the appeal court’s ruling appears to be on shaky grounds. It is based on some non-binding opinion (obiter) in a 2001 case in which the Australian Broadcasting Corporation (ABC) successfully argued against an injunction sought by Lenah Game Meats, an opossum meat processer, that had sought to prevent ABC from showing footage the broadcaster had obtained from an anonymous source. ABC had subsequently learned its source had obtained the footage illegally. Apart from questionable legal precedence cited by the Federal Court in its current ruling, the decision itself constitutes a significant threat to responsible freedom of expression and freedom of the press at a time when both are under attack.

While privacy and prohibition against trespassing are important, there are other ways to deal with content obtained through illegal means such as legislation already used against FTI in New South Wales, the Surveillance Devices Act, or by seeking an injunction against publication because of “irreparable harm”. Undermining the Copyright Act and the fundamental principles of copyright is not the way to go. Australia has always had a strong tradition of journalistic freedom and a culture of encouraging creativity. The court’s FTI decision runs against that tradition and is a retrograde step. Let’s hope it is appealed–and subsequently overturned, reserving copyright law for the purposes for which it was intended.

© Hugh Stephens 2025. All Rights Reserved

Update: On December 4, 2025 the High Court of Australia granted leave for FTI to appeal the decision of the Federal Court of Australia.

So, You Want to Get in Touch with Echovita? Good Luck (But Please Don’t Phone Me)

Image Credit: Le Journal de Montréal

I first wrote about obituary piracy back in 2019, and then more recently (here and here) about the online obituary company, Echovita which, to be clear, does not engage in copyright infringement. This is because it manages to stay just within the law by taking information from obituaries on funeral home websites and posting rewrites based on the basic, non-copyrightable facts regarding the deceased, even though the family or funeral home has not granted permission for them to do so. While full obituaries describing a person’s life can be protected by copyright law, basic facts are not protectable. Echovita takes full advantage of this, frequently to the anguish of bereaved family members and the annoyance of funeral homes. Not only does Echovita post the rewritten obituaries without seeking permission from either the family or the funeral home (which is legal), they also not infrequently get basic facts wrong. This is likely explained by use of AI in reviewing and rewriting thousands of obituaries a day. Predeceased relatives have been recorded as mourning the deceased. Pets have been identified as friends of the departed. And since Echovita’s business model is to monetize the obituaries by selling memorial items such as flowers, tree plantings etc. on their obituary site, they cut into a revenue source of the funeral homes who host the “authorized” obituaries. To date, no jurisdiction has enacted any law prohibiting the practice of monetizing obituaries without the consent of the family. Whether there should be such a law is another matter.

On its website (FAQ), Echovita explains how an incorrect obituary can be removed or edited. However, the bereaved family needs to initiate the remedy by completing an online form. Apart from this contact sheet on its website, there appears to be no other way to get in direct contact with Echovita. No doubt they prefer it that way. It’s easier to filter complaints, and you don’t have to deal with irate family members phoning to complain about mistakes in an unauthorized obituary of a loved one. I am not sure what Echovita’s error rate is. It may be quite small but given that it scrapes obituaries from websites all over North America, even a small error rate could be significant in absolute terms. And if it is the obituary of your loved one that has been mangled, it is very significant, and hurtful. All I know is that since I wrote my most recent blog posting on Echovita in July, I have started to receive phone calls from distressed family members from various parts of the US. Since I don’t answer phone calls that I don’t recognize, they usually leave a voice message, often very irate and threatening legal action if a particular obituary is not taken down forthwith.

At first, I was puzzled as to why I was getting these calls, but I attribute it to AI. People who feel victimized by Echovita want to take action quickly and to vent. This is understandable. Simply filling out a request on a website to have an unauthorized obituary corrected or removed (three days is the apparent standard) is not as satisfying as speaking to someone right now. You won’t find Echovita’s phone number anywhere but if you do a deep enough internet search on the company, my previous blog postings on Echovita will come up and, I surmise, AI will produce my phone number in response to a request for a “phone number associated with Echovita”. When I get called like this, I phone back, express my condolences and explain that unfortunately they are shooting the messenger. The first question is always, “how can I get in direct touch with Echovita?”. Here is what I know.

The company is run by someone called Pascal (aka Paco) Leclerc. I know this from various press articles, such as this one a few years ago in Wired and more recently in the Toronto Star. I also know this because after my most recent blog posting on Echovita, (Echovita is Still Going Strong: The Sleazy (but Apparently Legal) Business of Monetizing Obituaries Without Consent) I received an email apparently from him as CEO of Echovita requesting removal of my “inaccurate and misleading” blog post. It went on to say that; “Your article contains statements and implications that are factually inaccurate, misleading, and potentially damaging to our reputation. Echovita operates fully within the law, follows industry norms, and provides a free, valuable service to families by making obituaries more accessible and offering optional remembrance tools.”

This was (part of) my response;

“I publish a blog discussing copyright issues, often using current legal cases or media coverage to illustrate the topics under discussion, presenting my opinions on issues such as copyright piracy, use of copyrighted content by AI development companies and other copyright-related issues. My viewpoint is pro-creator and pro-copyright, as stated on the blog.

One topic on which I have written concerns piracy of obituaries, given that an obituary is usually a creative work that can be protected under copyright. In the case of Echovita, I have commented that Echovita’s business model of scraping obituary websites, extracting the basic unprotected facts concerning the death, and then republishing the basic information, is legal and avoids copyright infringement in contrast to the practices of another entity, Afterlife, that was found to have engaged in “obituary piracy”. I also noted that Echovita’s business practices are controversial and have upset many family members of the departed because the republished obituaries (more correctly, death notices), have been published without the consent or even in many cases the knowledge of those who may have originally published the obituary in a newspaper or on a mortuary website.

Because of the lack of consent or contact with the family, mistakes have been made in the death notices published by Echovita. While Echovita undertakes to correct any such mistakes, it is incumbent on the family to request the correction. I contrasted Echovita’s business with Legacy.com, which operates a similar website but does so on the basis of obituary content licensed from newspapers and with the consent of those placing the obituaries. Please indicate which parts of the above summary, or indeed information that I included in the blog post are inaccurate or misleading. I strive for accuracy and would be happy to correct any such misinformation on the blog.”

That was a couple of months ago. I have not heard back.

Echovita’s position is that it is providing a “service” to families (albeit one that they did not, in most instances, request). Its stated “mission” is to “make public information more easily accessible, free of charge”. While it has had plenty of complaints directed at it, one of Echovita’s responses is to encourage voluntary use of its site. For example, it advertises that users can add photos, personalize a text or authorize the original obituary for publication.

All for free! (whether you want it or not).

Here is an excerpt from one of its blurbs;

“Grief is universal and so is the need to remember. By centralizing obituaries online and making them easy to find and share, Echovita fills a critical gap between funeral homes, grieving communities, and the permanence of the internet. No family should lose a tribute because a newspaper shut down or because a paid notice couldn’t be afforded.”

Touching, n’est-ce pas? The problem is not the voluntary option. The problem (the moral problem, not the legal one) is the unauthorized republication and monetization of death notices of deceased family members without the consent, or in many cases, even knowledge of family members, compounded by making errors in republication. This business model is another offshoot of the internet where it costs very little to collect and digitally republish information, potentially reaching a market of millions to provide third party services on the platform. And it’s all perfectly legal.

But what if someone wants to actually talk to a real person at Echovita, say Paco Leclerc or one of his employees, to express some concerns?  Well, good luck to that.

According to the website Zoominfo.com, Echovita is headquartered in Quebec City, Canada, at 8967 1ère Ave, Quebec, Quebec, G1G 4C5, Canada. If you go to that address on Google Street View, a building with name Funerago on it appears. Funerago.com has a website (and a phone number). It is an online platform offering basic cremation services and is associated with another entity called Funera which provides somewhat more expensive cremation services. Funera is located at the same addresss. Testimonials on Funera’s site thank Paco Leclerc for his help and understanding. The Wired article back in 2021 that I referenced above mentions that Leclerc intended to invest in a new business called Funerago so there is clearly some connection between Funerago and Echovita, including a common business address. So, of course I called Funerago and asked to speak to someone, anyone, about Echovita. All the person who answered would say was that someone would call me back. I left my phone number.

If they call, I will have a contact number for Echovita, one that I would be happy to share. But it’s been a couple of weeks and I am still waiting. The silence is deafening. I don’t expect to be called anytime soon.

© Hugh Stephens, 2025. All Rights Reserved.