Tag: China and Copyright

Copyright Litigation in China: Some Interesting AI-Related Decisions from Chinese Courts

A wooden gavel resting on a circular base in front of a red backdrop featuring the flag of China.

Image: Shutterstock

These days just about any information in North America related to China, especially regarding intellectual property (IP), is highly negative. The narrative is along the lines of “China is an adversary with deliberately lax IP laws who has stolen and continues to steal our IP, etc.”. This characterization of China is reinforced by our political leaders (When asked during the Leaders’ debate what was the greatest security threat to Canada, Prime Minister Carney replied with one word. “China”). Donald Trump continues to have an obsession with China, the latest manifestation of which is the recent announcement that the US will revoke the visa status of an undetermined number of Chinese students currently studying in the US. (Over a quarter of a million students from China are currently studying at American colleges and universities, many simply seeking an alternative to studying in the hyper-competitive environment at home). The “China as IP thief” narrative is supported by government publications such as the annual Special 301 Report produced by the Office of the US Trade Representative (USTR) which this year had ten full pages on China. One excerpt will suffice to give you the flavour of the report. “In 2024, the pace of reforms in China aimed at addressing intellectual property (IP) protection and enforcement remained slow…Concerns remain about longstanding issues, including technology transfer, trade secrets, counterfeiting, online piracy, copyright law, patent and related policies, bad faith trademarks, and geographical indications.” Well, that covers the waterfront. One wonders how Chinese brands, innovators and creators manage to survive in such an environment.

This is not to dismiss the darker side of China’s long IP history. Have there been cases of industrial espionage involving China? Yes, certainly. There have also reportedly been more than 1200 intellectual property theft lawsuits brought by US companies against Chinese entities in either the US or China over the past 25 years. There is no question that IP protection in China is not all it could and should be, or that some Chinese companies and other entities have been aggressive in seeking to acquire IP by less than transparent means. But that is not the whole story. While the number of IP infringement lawsuits against Chinese entities over the years sounds like a lot, this business website estimates that the number of IP litigation cases globally totals around 12,000 annually. There are several thousand patent litigation cases alone in the US each year. A lot of US companies sue other US companies in the patent, trademark and copyright field. And Chinese companies sue Chinese companies.

In the past, Chinese IP laws had loopholes, were often weakly enforced and were dealt with by courts that had scant knowledge and training in IP matters. That is rapidly changing as China not only climbs the innovation ladder, but has come to dominate it in some areas, such as EV’s and EV batteries, cashless payment systems, renewable energy and others. It is rapidly catching up in generative AI. While this has been happening, Chinese courts have been producing some interesting and increasingly sophisticated decisions when it comes to AI and copyright. China–like other countries–is grappling with several aspects of this issue. There is the question of finding the right balance between protecting creators and innovators while using domestic creative works to spur AI training, development and research. Another element is the extent to which AI assisted or created works qualify for copyright protection. There is currently no Text and Data Mining (TDM) exception in Chinese law to allow AI training on copyrighted content nor is there a definitive interpretation as to whether content produced by AI can be protected by copyright. However, several court decisions, which we examine below, have shed some light on this complex question.

Dreamwriter Case

In one of the earlier cases, which I wrote about back in 2020, (the Dreamwriter case), a Chinese court (in Shenzhen) ruled that an automated article written by an AI program (Dreamwriter), created by Tencent, which had been copied and published without permission by another Chinese company, Yinxun, was nevertheless subject to copyright protection because it met the originality test through the involvement of a creative group of editors. These people had performed a number of functions to direct the program, such as arranging the data input and format, selecting templates for the structure of the article, and training the algorithm model. The article was ruled to be a protectable work, and Yinxun was found to have infringed.

Li v Liu Case

The relatively loose interpretation regarding the degree of human engagement required to protect the output of an AI program in the Dreamwriter case has been supported by other Chinese courts. In the prominent Li v Liu case, the Beijing Internet Court ruled that Mr. Li, who had created the image of a young woman using the AI program Stable Diffusion, had provided “significant intellectual input and personalized expression” in creating the image through a series of prompts. As explained in detail by this article from Technollama, the prompts (along with a number of negative prompts) were sufficient for the court to decide that Li had met the standard of creative expression.

These were Li’s prompts;

“ultra-photorealistic: 1.3), extremely high quality highdetail RAW color photo, in locations, Japan idol, highly detailed symmetrical attractive face, angular symmetrical face, perfect skin, skin pores, dreamy black eyes, reddish-brown plaits hairs, uniform, long legs, thighhighs, soft focus, (film grain, vivid colors, Film emulation, kodak gold portra 100, 35mm, canon50 f1,2), Lens Flare, Golden Hour, HD, Cinematic, Beautiful Dynamic Lighting”

Liu, who had been sued by Li for using the AI generated image without authorization, was found liable for infringement and fined 500 CNY (about USD75).

At that time (late 2023), this decision was considered ground-breaking for image-based works given the position of the US Copyright Office (USCO). USCO had denied copyright registration to several generative-AI created image works owing to insufficient human creativity. (see If AI Tramples Copyright During its Training and Development, Should AI’s Output Benefit from Copyright Protection? Part One: Stephen Thaler and Part Two: Jason Allen). Since then (in January of this year) the USCO has taken a more nuanced position, permitting registration of an AI assisted work (an image called A Single Piece of American Cheese, created by graphic artist Kent Kiersey). Although Kiersey used InvokeAI to create the work, in the view of the US Copyright Office, sufficient human creativity was involved through the “selection, coordination, and arrangement of material generated by artificial intelligence”.

Plastic Chair Case

If China has been in the forefront of acknowledging that human control over AI tools used to generate content qualifies the works for copyright protection, a more recent case has reset the pendulum somewhat. As recounted in this blog by UK-based market research firm IAM, very recently a court in Jiangsu Province dismissed a copyright infringement claim brought by a designer against a company that manufactured, without a licence, children’s plastic chairs based on her AI-based designs. The designer, Feng Runjuan, had created three designs using the AI program Midjourney and posted them to social media, including the prompt she had used. Her prompt was “Children’s chair with jelly texture, shape of cute pink butterfly, glass texture, light background“. The company manufacturing the chairs approached Feng to license the designs but was unable to reach an agreement with her. They then went ahead anyway (without a licence) to produce chairs that bore some similarity to the original designs, using Feng’s original prompt with some tweaks. Feng sued. There was little doubt that the chair manufacturing company had used her prompts to produce the chair design, but the key question was whether the AI generated designs qualified as original works meriting copyright protection.

Feng was unable to reproduce the original images using her prompts owing to the randomness of the AI program. This suggested to the court that it was the AI program making the design decisions, not the person providing the prompts. As outlined in the IAM article referenced above, the court held that a user must provide a verifiable creative process that shows the:

  • adjustment, selection and embellishment of the original images by adding prompts and changing parameters; and
  • deliberate, individualised choices and substantial intellectual input over the visual expression elements, such as layout, proportion, perspective, arrangement, colour and lines.

It concluded that the original images did not qualify as original works and thus they could not be protected. Feng’s lawsuit failed.

So now we have a situation where one Chinese court has ruled that the prompts generated by Li in what I will call the “young girl image” case constituted sufficient intellectual input and personalized expression to qualify for copyright protection, even though the actual image was generated by an AI program, whereas another court has denied copyright protection for a work also produced with prompts, albeit simpler and far fewer. The difference seems to be the degree of human involvement in creating the prompts, although the fact that Ms. Feng in the plastic chair case was unable to reproduce the original images seems to have also weighed against her. As anyone who has ever used an AI program will know, identical prompts will produce different images owing to the way the program works. Does that disqualify the artist? I would hope not, but the degree of control is clearly a key factor, as both the rulings of Chinese courts and the recent USCO decision to register the work A Single Piece of American Cheese would seem to show. Both Chinese court decisions are defensible, demonstrating careful and reasoned consideration, and are helpful in establishing parameters for use in determining whether works are AI assisted or AI created.

Ultraman Case

Another area where Chinese courts have left their mark is on the topic of AI liability for copyright infringement. In what is known as the “Ultraman” case, a Chinese court (the Guangzhou Internet Court, upheld on appeal by the Intermediate Peoples’ Court in Hangzhou) delivered a ruling of contributory infringement against a company that provided AI generated text-picture services through its website. The complainant was the Chinese licensee of the Japanese company that owns the rights to the cartoon character Ultraman. When the defendant’s website (effectively a chat-bot capable of generating AI images at its users’ request) was asked to generate an Ultraman-related image, it generated a character that appeared to be substantially similar to the claimant’s licensed Ultraman. The court had to decide whether the defendant had infringed the plaintiff’s reproduction and derivative production rights and if so, what remedies were applicable.

In its ruling the court decided that even though the defendant did not directly infringe the licensee’s rights, its failure to exercise a reasonable duty of care to prevent infringements (for example, by cautioning users or providing adequate filtering or blocking mechanisms), rendered it liable for contributory infringement. It was ordered to compensate the claimant the amount of CNY 10,000, about USD1500 (considerably less than the damages sought of CNY300,000). Here we have another sophisticated and well reasoned decision, which appears to have been the first instance globally of recognizing the liability of an AI platform for contributory copyright infringement. It does not create any legal precedents but is a useful contribution to the emerging debate.

These cases well illustrate the growing sophistication and complexity of IP rulings in China and are reflective, in my view, of an economy that is rapidly moving up the innovation and creativity ladder. When it comes to IP protection in China, is the glass half empty or half full? I would argue the latter, even though this may not be the most popular interpretation these days. One thing that I am willing to predict with certainty is that we can expect more interesting and thoughtful IP legal decisions from the Chinese legal system in the months and years ahead.

© Hugh Stephens, 2025. All Rights Reserved.

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

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

Image: Shutterstock (author modified)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

© Hugh Stephens, 2025. All Rights Reserved