Tag: Copyright

After Blocking News in Canada, Meta Challenges Australia (Again)

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It was inevitable. After Meta pulled the plug on news content on its platform in Canada as its way of complying with the obligations of the Online News Act, Australia, the model that Canada sought to emulate, was surely next in line. On March 1, Meta announced that it plans to stop paying publishers of news content in Australia, and will not renew its current agreements with Australian media once they expire. Most will expire this year.

Canada had modelled its Online News Act (Bill C-18) on Australia’s News Media Bargaining Code, albeit with “improvements”. Rod Sims, who was head of the Australian Competition and Consumer Commission (ACCC) at the time the Commission designed the Code (later incorporated into legislation as the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021), was invited to testify before the Canadian Parliamentary committee examining Bill C-18. In his testimony, Sims talked about the success of the Code, its benefits for not just large media players but also many smaller “country” outlets, estimating the benefits to be north of A$200 million per year to journalism in Australia. He added that the institution of the Code “has transformed the journalism landscape in Australia. It’s gone from pessimism to optimism.”

Inspired by the results of the Australian legislation (which, by the way, ended up not designating either Google or Facebook under the Code, since they managed to come to sufficient “voluntary” agreements with Australian media), Canada moved ahead, basing its legislation on the Australian law but adding a couple of additional features. One was to increase transparency with regard to deals that would be struck under the law. Another was to require self-designation by platforms (while making it apparent that only Meta/Facebook and Google) met the criteria, allowing them an exemption if they reached acceptable deals with media. In this way, the companies could not avoid designation and would be subject to the law, something they strongly opposed, even though both had already engaged in voluntary programs on their own terms to provide some financial support to selected media outlets.

Just as happened in Australia, (see “Google’s Latest “Stoush” with Australia: What’s the Lesson from Germany’s Failed Effort? and “Facebook in Australia: “READY, FIRE, AIM”) both platforms pushed back strongly against the draft legislation, threatening to block news for Canadian users. (Facebook briefly and disastrously blocked news for Australian users during its campaign against the Code, but ultimately backed down). First, in the fall of 2022 Facebook said it might have to block postings of news on its Canadian platform, followed by Google which  threatened to block search for Canadian news in Canada by Canadian users. By the summer of 2023, when the Online News Act became law without any of the amendments proposed by the platforms, Meta upped the ante by declaring that it would end news availability on Facebook and Instagram for all users in Canada prior to the Act taking effect, set for December 2023. Again, just as in Australia, Canadian government leaders were public in their condemnation, accusing Meta of threatening and irresponsible behaviour. Alas, it was all to no avail. It appears Meta had already made its decision to not provide financial support for news content in Canada, and to end the few existing agreements that it had undertaken in the past. At the time, it indicated it would also be taking similar action elsewhere. Rather than submit to the legislation by negotiating with media entities, it complied (in letter if not in spirit) by blocking links to Canadian media. Negotiations with Google continued and eventually a compromise of sorts was reached whereby Google agreed to contribute to a fund which would be used to support journalism in Canada.

This was a somewhat pyrrhic victory (the fund will be about $100 million, less than half what had previously been estimated), but a victory nonetheless in the eyes of at least some of the news media. One can debate the overall success of the legislation (see MediaPolicy.ca’s “The Online News Act is law: a buzzer-beater win or epic miscalculation?”), but along with more government financial support, the Google funded pot will be welcomed by many smaller media outfits. Ironically, establishing a fund rather than requiring negotiations between the platforms and media for payment for content was an early proposal by some commentators. Now this has come to pass more by accident than design. Criteria for disbursing from the fund have been tweaked so that broadcast media, and in particular the CBC, who employ the bulk of news journalists in the country, get less than their proportional share would otherwise indicate.

The lesson for Canada, and now for Australia, is that the big digital platforms will not hesitate to play hardball if they feel their global interests are threatened. While Australia, followed by Canada, was first off the mark with legislation designed to level the playing field between a stressed journalism sector and the monolithic platforms, the response of the platforms was governed more by potential precedent than the specifics of those markets. The existence of draft legislation at the federal level in the US, (the Journalism Competition and Preservation Act, aka JCPA) as well as at the state level in California and Illinois, has not escaped the attention of Meta and Google. (Even the watered-down compromise settlement that Google made with Canada has led to some lip-smacking speculation in the US as to the amount of funding that could flow to US media). It appears that Meta, in the face of cost cutting and loss of market share in 2022, had made a business decision that if it had to pay for access to news content, it would do without. To what extent this is a wise business decision remains to be seen, but the company has clearly made a business decision in this regard. This decision may or may not affect Meta’s bottom line, but it will have the effect of leaving the platform as a purveyor of less than reliable information from nonprofessional sources. However, doing the most socially responsible thing as opposed to maximizing profits by cutting costs is not what Meta is about.  Having made its decision, it will need to unwind its commitments to Australian media, which it is now in the process of doing.

What does this mean for Australia and what can the Australian government do about it? Writing about this in Canada’s National Post, Rod Sims, now professor at the Crawford School of Public Policy at ANU, outlined some choices the Australian government needs to face. It could move to designate Meta under the Bargaining Code and force it into the negotiation and arbitration process. That would likely lead to Meta taking precisely the action that it took in Canada. The government could amend the legislation, but to what end? It could publicly criticize Meta, accusing it of unfairness and bad behaviour. It has already done this, with Prime Minister Albanese saying that what Meta is doing is “not the Australian way”. That will have zero influence on Mark Zuckerberg and the people who run Meta.

At the end of the day, Australia can stand up to Meta, and let the chips fall as they may, or it can allow Meta to free ride on Australian news content, accepting that there may be social benefits in allowing this to happen. A recent report by the Australian Broadcasting Commission (ABC) points out that Facebook is the largest social media platform for general news and half of Facebook’s users in Australia report using the social media platform for news. (Regardless of this, Meta’s beancounters give news no value to the platform). According to a University of Canberra report cited by ABC, 45% of Australians get their news from social media as opposed to less than 20% from print sources. The largest source of news is still TV at 58%. (The numbers are greater than 100 because many consumers get their news from more than one source).  In one sampling, 14% of Australians got their news from Instagram! While I find this personally appalling (indirectly revealing my age), that is the reality of our society today. Better that consumers find reliable, curated news somewhere–but we still need to recognize that responsible journalism needs to be paid for. Meta, apparently, has no desire to be a part of that equation. Without the infusion of responsible, curated journalism, Facebook will become an even greater home for misinformation than it already is. But does Meta care? Clearly not. Consumers need to be encouraged to find their news sources elsewhere. Easier said than done.

The Australian government is no doubt pondering how to respond in the best interest of Australia. Allowing Meta to wriggle out from its obligations under the Bargaining Code would not necessarily undermine the deals struck with Google, who appears to have accepted that its overall interest is best served by some form of accommodation. Having Microsoft, which has publicly stated it is willing to subject itself to both the Australian and Canadian legislation, breathing down its neck is undoubtedly a factor in this. Even if the Google deal won’t be undone, it is still galling that Meta can get away with it. Canada had to swallow that reality, yet stood up to Meta. What will Australia do? It’s a tough call.

© Hugh Stephens, 2024. All Rights Reserved

More Balanced Interpretation of US “Transformation” Fair Use Test gives Rightsholders Better Leverage to Protect their Works

Photo: Author

A couple of recent cases in the US involving (mis)appropriation of copyrighted photographs indicate the tide may be changing with respect to the interpretation of what constitutes fair use, moving from a very liberal interpretation of “transformation” that has been used in recent years to justify unauthorized reproduction of copyrighted works by making them into “something (allegedly) new”, to a more balanced interpretation where the rights of the original creator/rightsholder are given greater weight. These cases are Andy Warhol Foundation v Goldsmith, decided by the US Supreme Court in May of 2023 and now, just last week, two cases (Graham v Prince and McNatt v Prince) in New York District Court. These involved photographers Donald Graham and Eric McNatt who had sued prominent appropriation artist Richard Prince and two well-known galleries, Gagosian and Blum & Poe, for copyright infringement. A final judgment was entered in these cases wherein Prince was found liable for willful infringement of the photographs, required to pay damages totalling five times the value of the infringing works he sold, plus paying the plaintiff’s legal costs, while also being restrained from reproducing, modifying, or distributing the contested artwork that was developed from the appropriated photographs. This is a big deal for photographers and other creators whose work is appropriated by others without authorization on the pretext of “transformation”. It could even have a ripple effect outside the US.

Last week my blog post was about photography, looked at through a historical lens from a copyright perspective. Photographers initially had a struggle to gain copyright protection for their works, at least in the US, but for many years now have enjoyed the benefits of such protection. However, just because photographs are recognized as copyright protected works doesn’t mean that infringement does not occur on a regular basis, or that photographers have not had their work appropriated without authorization as a result of court rulings interpreting what constitutes fair use (in the US).

For those readers not immersed in the minutiae of copyright, what follows is a brief explanation about fair use in the US and fair dealing in Canada. (Others may choose to skip to the next paragraph). Fair use is the provision in US law that allows users to reproduce parts of copyrighted works without permission or authorization from the rights holder, subject to various limitations and conditions. Unlike in Canada or a number of other countries where legal exceptions to copyright are based on a specified list of “fair dealing” purposes, the US fair use list is only illustrative. There is a four-part test in the US that courts use to judge whether an unauthorized use constitutes fair use. The four factors that are weighed are; (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. The “transformation test”, which has been an important factor in determining fair use in the US in recent years, comes in under the first category of the purpose and character of the use. Transformative use has been interpreted by US courts to mean the addition of new expression or meaning to an original work to create something new with a different purpose. Parody, which is both a fair dealing exception in Canada and one of the illustrative fair use categories in the US, is such an example where the original work is transformed to give it a new and different meaning. But transformation in the US can involve much more than just parody. The 2015 Google Books case (Authors Guild v Google Inc) where Google was sued for copyright infringement for unauthorized scanning and display of copyrighted works was decided, in Google’s favour, on the basis of “transformation”. The US Court of Appeals found that, “Google’s making of a digital copy to provide a search function is a transformative use, which augments public knowledge by making available information about Plaintiffs’ books without providing the public with a substantial substitute for matter protected by the Plaintiffs’ copyright interests in the original works…”. Notably Google, in settling an earlier case with US publishers, had agreed to limit the public display of a copied work to no more than 20 percent of its contents. The transformative use argument has been used as a fair use defence in a number of US copyright cases, including some involving photography. In these cases, the entire photograph was taken without authorization but then “transformed” by the addition of some new content.

One notable such case is Cariou v Prince, finally decided on appeal in 2013. In this case, Richard Prince successfully claimed fair use for his adaptation of photographs taken by French photographer Patrick Cariou. Prince did a series of paintings that incorporated photos of Rastafarians taken from Cariou’s book “Yes, Rasta”. The Appeal Court found that Prince’s paintings were not only sufficiently transformative to be different works, but they did not compete with the original in the marketplace. This case was part of a trend where US courts successively widened the interpretation of fair use based on a liberal application of the transformation principle.

The antidote to Cariou is the more recent Warhol v Goldsmith case, mentioned above. In this case, celebrity photographer Lynn Goldsmith sued the Warhol Foundation for copyright infringement in 2017 after she learned that her 1981 photograph of the noted singer-songwriter-musician Prince, who died in 2016, (not Richard Prince the artist, just to confuse things), had been used by Warhol (who himself died in 1987) to create a series of 14 silk screen images back in 1984. At the time, Goldsmith had been paid $400 by the publisher Conde Nast for a one time use of her photograph as an artist’s reference for Warhol to create an image for a Vanity Fair article about Prince, Purple Fame, published in November 1984. However, she was unaware that Warhol had created a whole series of prints from her photo. Years later, Vanity Fair paid the Warhol Foundation $10,000 for use of another of the prints in the series, Orange Prince, in an article to mark Prince’s death. Goldsmith was neither paid nor credited. She sued (actually countersued) for infringement after the Foundation sought a declaratory judgment that the creation of the series was fair use. It was an uphill battle for Goldsmith against a very wealthy and well-known Foundation, but in the end she won. The US Supreme Court decided in May of 2023 that Goldsmith’s copyright had been infringed—but only in the one instance regarding the use of Orange Prince, which was seen as a market substitute for Goldsmith’s original photograph. The ruling was 7-2 with Justice Sotomayer writing “Goldsmith’s original works, like those of other photographers, are entitled to copyright protection, even against famous artists”. 

The doors of transformative use, swinging wide open for the past couple of decades, had just closed a bit. It is not irrelevant to note that the transformative use argument is the main fair use defence put forward by AI developers to justify their unauthorized scraping and ingestion of copyrighted content to train generative AI algorithms. Now, on the heels of the Warhol v Goldsmith decision, we have the outcome of the two photographer’s cases against Richard Prince and the galleries. This suggests that the seemingly open-ended “transformation” standard in the US is changing, or at least that the Supreme Court’s Warhol decision is sending a message that open season on photographers (and other creative works) by appropriation artists may be coming to an end.

One of the two photography cases against Richard Prince goes back almost eight years, to about the time that Prince prevailed in the Cariou case. Graham, whose 1998 photograph “Rastafarian Smoking a Joint” was appropriated by Prince, launched his suit in 2016. McNatt’s suit, for infringement of his photograph of musician Kim Gordon, came four years later. Last year Richard Prince tried to get the cases dismissed, but the judge refused. Prince had added very little to the photographs, mostly some gibberish text, yet the “artworks” were sold for substantial sums and exhibited in the prestigious Gagosian Gallery, a co-defendant.

The cases did not go to trial by jury. On January 25, a final judgement was entered by the parties and accepted by the court in which Prince agreed to pay the damages, which were far in excess of what statutory damages would have been. While Richard Prince’s attorneys are claiming that the artist did not admit infringement, the fact that he decided to avoid going to trial and agreed to the damages is a pretty realistic appraisal of what the likely outcome of a trial would have been. Unlike a “settlement”, which the two photographers refused, a “final judgement” is not subject to a confidentiality agreement as to the terms. According to legal counsel representing the photographers, they rejected a confidential settlement (where damages could have been higher) because they wanted the appropriation issue exposed. They succeeded.

It is impossible to know precisely what impact the Warhol/Goldsmith case had on this outcome, but it is surely not coincidental that after almost eight years of litigation (in the case of plaintiff Graham) that Richard Prince decided to put this behind him and cut his losses just months after the Supreme Court’s decision. After Warhol, the Prince case marks another example of some restoration of balance to the interpretation of transformative use. It is not enough to simply add a few features to an original work, and claim it is somehow “transformed” into something entirely different. The lawyer representing the photographers described this as a David versus Goliath case, where a couple of individual photographers took on a major artist and gallery–and won. This demonstrates that fair use as applied in the US clearly has limits and that even the rich and famous can be called to account.

It remains to be seen whether this trend, which started with Warhol, will continue but it is a positive sign for artists wanting to protect their work from unauthorized reproduction and appropriation. The Warhol case has no direct legal impact outside the United States, of course, but it has been taken note of elsewhere. It could mark a turning of the tide. Proponents of further widening copyright exceptions in Canada by modifying fair dealing criteria to be illustrative, as in the US, rather than prescriptive as is currently the case, (by inserting “such as” when describing fair dealing categories) will take little comfort from this. The false allure of more permissive unauthorized copying propped up by the US transformative use doctrine has already seeped across many borders. Now perhaps the counter trend will also spread.

With respect to the Warhol case, one Canadian IP lawyer has stated “I think SCOTUS’s application of fair use to the facts, in this case, will be persuasive to Canadian courts when they have to apply fair dealing to similar facts.” While the transformation doctrine does not directly apply in Canada, it has some applicability with respect to parody. We shall see in time what the long-term impact may be. But from the perspective of creators everywhere, reinserting some much-needed balance into the US fair use transformation standard is a welcome and important development as copyright law continues to evolve.

© Hugh Stephens, 2024.

Artificial Intelligence and Copyright: The Canadian Cultural Community Speaks Out

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The extended period set by the Canadian Government (through Innovation, Science and Economic Development Canada, ISED) for response to its consultation paper on Artificial Intelligence (AI) and Copyright closed on January 15. We will start to see a flurry of submissions released by participants while ISED digests and assesses the input it has received. One of the first is the submission from the Coalition for the Diversity of Cultural Expression (CDCE), which represents over 360,000 creators and nearly 3,000 cultural businesses in both French and English-speaking parts of Canada. CDCE’s membership includes organizations representing authors, film producers, actors, musicians, publishers, songwriters, screenwriters, artists, directors, poets, music publishers—just about every profession you can think of that depends on creativity, and protection for creative output. The CDCE submission highlights three key recommendations, summarized as follows;

  • No weakening of copyright protection for works currently protected (i.e. no exception for text and data mining to use copyrighted works without authorization to train AI systems)
  • Copyright must continue to protect only works created by humans (AI generated works should not qualify)
  • AI developers should be required to be transparent and disclose what works have been ingested as part of the training process (transparency and disclosure).

While none of these recommendations are surprising, and from my perspective are eminently reasonable, I am sure we will also see a number of submissions arguing that, “in the interests of innovation”, access to copyrighted works is not only essential but should be freely available without permission or payment. OpenAI, the motive force behind ChatGPT—and the defendant in the most recent high-profile copyright infringement case involving AI (When Giants Wrestle, the Earth Moves (NYT v OpenAI/Microsoft)—has already staked out part of this position. In its brief to the UK House of Lords Select Committee looking into Large Language Models (LLMs), a key technology that drives AI development, the company says;

“Because copyright today covers virtually every sort of human expression–including blog posts, photographs, forum posts, scraps of software code, and government documents–it would be impossible to train today’s leading AI models without using copyrighted materials (emphasis added). Limiting training data to public domain books and drawings created more than a century ago might yield an interesting experiment, but would not provide AI systems that meet the needs of today’s citizens.”

OpenAI claims that it respects content creators and owners and looks forward to continuing to work with them, citing among other things, the licensing agreement for content it has signed with the Associated Press. But failure to reach a licensing deal with the New York Times is really the crux of the lawsuit that the media giant has brought against OpenAI and its key investor Microsoft. If reports are true that OpenAI’s licensing deals top out at $5 million annually, it is not surprising that licensing negotiations between the Times and OpenAI broke down over such lowball offerings.

As for the CDCE submission to ISED, it recommends that the government refrain from creating any new exceptions for text and data mining (TDM) since this would interfere with the ability of users and rightsholders to set the boundaries of the emerging market in licensing. No copyright exemption for AI is what the British government has just confirmed, after playing footsie with the concept for over a year. Apart from the examples of the licensing deals that OpenAI has with the Associated Press and German multimedia giant Axel Springer, the CDCE paper notes a range of other recent examples of content owners offering access to their product through licensing arrangements, including Getty Images, Universal Music Group and educational and scientific publishers like Elsevier. The paper also urges the government to avoid interfering in the market when it comes to setting appropriate compensation, leaving it to market players or, where the players can’t reach agreement, to the quasi-judicial Copyright Board.

In my view, licensing is going to be the solution that will eventually level the playing field, but to get there it will require that major content players lockout the AI web-crawlers while pursuing legal redress, as the NYT is doing. This will help to open the licensing path to smaller players and individual creators who don’t have the resources available to employ either technical or legal remedies. (The issue of what has already been ingested without authorization still needs to be settled). As for the tech industry’s suggestion that creators can opt-out of content ingestion if they wish, CDCE rightly points out that this is standing the world on its head, and would be contrary to longstanding copyright practice. Not only is it impractical in a world where what goes into an AI model is a black box (thus the imperative for transparency) but it is like saying a homeowner has to request not to be burgled, or else can expect to become a target.

On the question of whether AI generated works should be granted copyright protection, CDCE points out the double-standard of proposing an exception to copyright for TDM for inputs while claiming copyright protection for AI generated outputs. The need for human creativity is a line that has been firmly held by the US Copyright Office, pushing back on various attempts to register AI-generated (as opposed to AI-assisted) works. Canada has not been quite so clear cut in its position, owing to the way in which copyright is registered (almost by default, without examination) in Canada, as I pointed out in this blog post (A Tale of Two Copyrights). While AI generated works have received copyright protection in Canada (Canadian Copyright Registration for my 100 Percent AI-Generated Work), this is more by oversight than design, given the way the Canadian copyright registration system works.

Thirdly, we turn to transparency, a sine qua non if licensing solutions are to be implemented.  If authors don’t know whether their works are being used to train AI algorithms, or can’t easily prove it, licensing will fall flat. CDCE calls for publication of all content ingested into training models, disclosure of any content outputs that contain AI, and design of AI models to prevent generation of illegal or infringing content. This is similar to requirements already under consideration in the EU.

CDCE also makes the important point that it is not just copyright legislation that defends individual and collective rights against the incursions of AI and big AI platforms. While the Copyright Act offers some protection to creators, privacy legislation is important for all citizens. As the UK Information Commissioner has pointed out in a recent report, the legal basis for web-scraping is dependent on (a) not breaching any laws, such as intellectual property or contract laws and (b) conformity with UK privacy laws (the GDPR, or General Data Protection Regulation), where the privacy rights of the individual may override the interests of AI developers, even if data scraping meets other legitimate interest tests.

Finally, there is the question of the moral rights of creators that can be threatened by misapplication of AI, whether it is infringement of a performer’s personality or publicity right, distortion of their performance or creative output, misuse of their works for commercial or political reasons or any of the other reasons why copyright gives the creator the right to authorize use of their work.

Quite apart from the question of AI, there are of course other outstanding copyright questions that need to be resolved urgently, including the longstanding issue of the ill-conceived education “fair dealing” exception that has undermined if not permanently damaged the educational publishing industry in Canada. This exception needs to be narrowed to allow users continued unlicensed access to copyrighted materials under fair dealing guidelines for study, research and educational purposes but to limit institutional use to situations only where a work is not commercially available under a license from a rightsholder or collective society. While this issue requires looking back and fixing something that is already broken, policy making with respect to AI and copyright needs to anticipate the future and “do no harm”, while requiring AI developers to open up their black boxes and respect existing rights. This should be achieved by maintaining and protecting the rights of creators in ways that will facilitate market-based licensing solutions for use of copyrighted content by AI developers, while ensuring that creative output remains the domain of human beings, and not machines.

© Hugh Stephens, 2024.

When Giants Wrestle, the Earth Moves (NYT v OpenAI/Microsoft)

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There is no better way to start out the New Year, 2024, with a commentary on Artificial Intelligence (AI) and copyright. It was the big emerging issue in 2023 and is going to be even bigger in 2024. The unlicensed and unauthorized reproduction of copyright-protected material to train AI “machines”, in the process often producing content that directly competes in the market with the original material, is the Achilles heel of AI development. To date, no one knows if it is legal to do so, in the US or elsewhere, as the issue is still before the courts. The cases brought to date by artists, writers and image content purveyors like Getty Images have not always been the strongest or best thought out. In one instance, the plaintiffs had not even registered the copyright on some of the works for which they were claiming infringement, a fatal flaw in the US where registration is a sine qua non in order to bring an infringement case. That may have been the most egregious example of a rookie error but in general the artists’ and writers’ cases have not gone too well so far, although the process continues. Some cases are on stronger grounds than others. Here is a good summary. The Getty Images case will be an interesting one to watch. And now the New York Times has weighed in with a billion-dollar suit against Open AI, and Microsoft. The big guys are now at the table and the sleeves are rolled up. The giants are wrestling.

What is at issue could be nothing less than the survival of the news media and the ability of individual creators to protect and monetize their work. It could also open a pathway to legitimacy for the burgeoning AI industry. The ultimate solution is surely not to put a halt to AI development, nor to put content creators out of business. It is to find a modus vivendi between the needs of AI developers to ingest content in order to train algorithms that will “create” (sort of) content–assembled from vast swathes of input–and the rights of content creators. While training sets are generally very large, some of the input can be very creator-specific and the output very creator-competitive. This is where the New York Times comes in.

The Times, like any enterprise, needs to be paid for the content it creates in order to stay in business and create yet more content. If its expensively acquired “product”, whether news, lifestyle, cooking, book reviews or any of the other content that Times’ readers crave and are willing to pay for, can be obtained for free through an AI algorithm (“What is the most popular brunch recipe in the NYT using eggs, bacon and spinach”, or “What does Thomas Friedman think of…..”), this creates a huge disincentive to go to the source and undermines journalism’s business model, already under severe stress and threat.

The Times is one of the few journals that has managed to thrive, relatively speaking, in the new digital age at a time when many of its competitors are dying on the vine. According to Press Gazette, the New York Times is the leading paywalled news publisher, with 9.4 million subscribers. (Wall Street Journal and Washington Post are numbers two and three respectively). You need to pay to read the Times, and why not? But paying for access does not give you the right to copy the content, especially for commercial purposes. (The Times offers various licensing agreements for reproduction of its content, with cost dependent on use). Technically, all it takes is one subscription from OpenAI and the content of the Times is laid bare to the reproduction machines, the “large language models”, or LLMs, used by the AI developers. The Times has now thrown down the gauntlet. Its legal complaint, 69 pages long, makes compelling reading. If there ever was a “smoking gun” putting the spotlight directly on the holus-bolus copying and ingestion of copyright protected proprietary content in order to produce an unfair directly-competing commercial product that harms the original source, this is it. It’s a far cry from earlier copyright infringement cases brought by some artists and writers.

While you can read the complaint yourself if you are interested (recommended reading), let me tease out a few of the highlights. After setting out the well-proven case for the excellence of its journalism, the Times’ complaint notes that while the defendants engaged in widespread copying from many sources, they gave Times’ content particular emphasis when building their LLMs, thus revealing a preference that recognized the value of that content. The result was a free ride on the journalism produced at great expense by the Times, using Times’ content to build “substitutive products” without permission or payment.

Not only does ChatGPT at times regurgitate the Times’ content verbatim, or closely summarizes it while mimicking its style, at other times it wrongly attributes false information to the Times. This is referred to in AI circles as “hallucination”, something the complaint labels misinformation that undermines the credibility of the Times’ reporting and reputation. Hallucination is a particularly dangerous element of AI produced content. Rather than admitting it doesn’t know the answer, the AI algorithm simply makes it up, complete with false references and attributions all of which make it very difficult for the average reader to separate fact from fiction. This misinformation is the basis of the Times’ complaint for trademark dilution that accompanies various other copyright related complaints of infringement. Concrete examples of such misinformation are provided in the complaint.

So too is ample evidence of users exploiting ChatGPT to pierce the Times’ paywall, by asking for the completion of stories that have been blocked for non-subscribers. There are concrete examples of carefully researched restaurant and product reviews that have been replicated virtually verbatim. Not only is the Times’ subscription model undermined, but the value it derives from reader-linked product referrals from its own platform bleeds to Bing when the product is accessed through Microsoft Search enabled by ChatGPT. Examples are given of full news articles based on extensive Times’ investigative reporting being reproduced by ChatGPT, with only the slightest variations. These are not composite news reports of what is happening in Gaza, for example, but a word-for- word lifting of a Times’ analysis of what Hamas knew about Israeli military intelligence. The Times’ complaint makes for chilling reading. AI’s hand has been caught firmly in the cookie jar.

What does the Times want out of all of this? The complaint does not specify a dollar amount, while noting the billions in increased valuation that has accrued to OpenAI and Microsoft as a result of ChatGPT. However, it asks for statutory and compensatory damages, “restitution, disgorgement, and any other relief that may be permitted by law or equity” as well as destruction of all LLM models incorporating New York Times’ content, plus, of course, costs. If the Times gets its way, this will be a huge setback for AI development as well as for OpenAI and Microsoft, but of course it may not come to that. The complaint notes that the Times had tried to reach a licensing deal with the defendants. OpenAI cried foul, expressing “disappointment”, and noting that they had been having “productive” and “constructive” discussions with the Times over licensing content. However, to me this is a bit like stealing the cookies, getting caught red-handed and offering to negotiate to pay for them, then crying foul when your offer is rebuffed. The Times has just massively upped the ante, making the potential licensing fees much more valuable.

The irony is that the use of NYT material by OpenAI or indeed other platforms like Google or Facebook potentially brings some advantage and drives some business to the Times, while obviously also providing commercial benefits to the AI program, search engines or social media platforms. The real question will be how that proprietary content is used, and how much is paid to use it. A similar issue is being played out in another context, most recently in Canada with Bill C-18 where news media content providers wanted the big platforms (Google and Meta/Facebook) that derive benefit from using or indexing that content to pay for accessing it. The result in Canada was both a standoff and a compromise. Facebook blocked Canadian news content rather than pay for it, while Google agreed to create a fund for access by the news media in return for being exempted from the Canadian legislation.

The NYT-OpenAI/Microsoft lawsuit is a different iteration of the same principle. Businesses that gain commercial advantage from using proprietary content of others should contribute to the creation of that content, either through licensing or some other means such as a media fund. The most logical outcome of the Times’ lawsuit is almost certainly going to be a licensing agreement. Given the seemingly unstoppable wave of AI development, meaningful licensing agreements would seem to be the best way to ensure fairness and balance of interests going forward.  

A Goliath like the New York Times is in a much better position to make this happen than a disparate group of writers and artists. Indeed, there are logistical challenges in being able to license the works of tens of thousands of content creators. In an earlier blog post, I postulated that perhaps copyright collectives might find a role for themselves in this area in future. In my view, ultimately the only logical solution to the conundrum of respecting rights-holders while facilitating the development of AI is to find common ground through fair and balanced licensing solutions. The wrestling giants of the NYT and Microsoft may help show the way.

© Hugh Stephens 2024. All Rights Reserved.

As Creator’s Rights Face New Challenges, Canada Needs to Keep Pace with International Developments

Image by Greg Altmann/Pixabay

This blog post appeared first in Open Canada, the journal of the Canadian International Council, on November 20, 2023.

In the past few weeks there has been a flurry of activity with respect to international regulation of Artificial Intelligence (AI) such as the Bletchley Declaration spearheaded by UK Prime Minister Rishi Sunak, the Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence signed by US President Biden, as well as the G7 AI Code of Conduct. Canada has been involved in some of these initiatives but will be affected whether or not it participates, including aspects of the AI issue dealing with protection of intellectual property, specifically creator’s rights protected through copyright laws. Indeed, there is a huge emerging issue related to whether the indiscriminate scraping of copyrighted content by AI developers to train their algorithms is legal under existing copyright laws, plus whether the output of content generated by AI can be legally protected under accepted copyright norms. 

When it comes to copyright challenges today, Canada has just launched a public consultation on this issue (”Copyright in the Age of Generative Artificial Intelligence”) as part of the process of updating Canada’s copyright framework in the digital age. The implications of the extent to which AI and copyright are compatible illustrate the interdependent nature of national copyright protection regimes, notwithstanding the fact that each nation interprets and applies copyright law in slightly different ways. The key point here is that countries that are too lax in protecting their creative sectors could see their copyright-protected cultural industries suffer negative economic impact; countries that are overly protective could see investment in AI innovation flow to countries with lower copyright standards. Whatever international consensus emerges and whatever framework to regulate AI is developed, whether it be OECD guidelines or a more formal arrangement, Canada will need to be a party. Such is the nature of international issues these days, with respect to digital issues, copyright and intellectual property generally. 

Canada is already bound by a number of international commitments with respect to its application of copyright, and these will undoubtedly have an impact on future and long overdue revisions to Canada’s Copyright Act. For example, the current international framework for protection of copyrighted works (books, films, music, performances, television and streaming content, broadcasts and other forms of copyright protected works such as software, paintings, drawings, photographs, etc.) is embedded in the TRIPS Agreement (WTO Agreement on Trade-Related Aspects of Intellectual Property Rights) that was a part of the establishment of the World Trade Organization in 1995. Canada, was of course, a party to TRIPS. With respect to copyright, TRIPS incorporates the terms of the Berne Convention, with the added benefit of a dispute-settlement mechanism to resolve disputes, something lacking in Berne. However, the WTO’s dispute settlement process is currently suspended owing to the inability to appoint new members to the WTO’s Appellate Body because of US opposition. The Berne Convention of 1886 (along with its periodic updates over the years) remains the bedrock of international copyright cooperation. 

When it comes to copyright legislation, it is generally accepted that the first modern copyright law is the Statute of Anne, passed by the British Parliament in 1710. The stated purpose of legislation was for “the encouragement of learning”. For the first time it gave authors (or those to whom they assigned their rights) rather than printers the exclusive right to print or reprint their books. The period of protection lasted for an initial period of fourteen years. This provision was included in the US Constitution “to promote the progress of science and useful arts…”, again with an initial period of protection of fourteen years. 

During the 18th and most of the 19th century, copyright laws were applied to nationals only of the country concerned or to works first published in a that country. Thus, British copyright applied in Britain (and the British Empire) to British authors but works by nationals of other countries could be freely reprinted in Britain unless first published there. The same applied in the US and other countries. Attempts were made to negotiate bilateral treaties under which reciprocal protection would be afforded the nationals the two countries concerned, but this resulted in a confusing patchwork quilt of protection. Eventually, under the leadership of the French novelist Victor Hugo, in 1886 the first international copyright treaty, the Berne Convention, was signed. Only eight countries ratified it initially, (Belgium, France, Germany, Great Britain, Italy, Spain, Switzerland and Tunisia). Notably absent was the United States which did not join Berne until 1989. Today, over 180 countries are members and some economies (like Taiwan, Hong Kong and Macao) that are not accessory states to Berne but are members of the WTO) also apply its terms.  

When Britain joined Berne in 1886, the Convention’s provisions applied to all parts of the British Empire, including Canada, as Canada was not at that time a fully sovereign state. Nonetheless, copyright was a power conferred on the new dominion established in 1867 and in 1868 Canada enacted its first Copyright Act. This ambiguity led to conflicts with the imperial government, and on several occasions Canada tried to exit Berne, before acceding in its own right in 1928. Canada also tried to pass legislation favouring Canadian works over those from Britain, only to have the legislation vetoed by the Governor-General. 

One of the issues was Canada’s desire to promote the Canadian printing industry. British works were protected by copyright in Canada but Canadian printers could normally not get printing rights from British publishers, despite the high cost of the imported British books. However, in the US, British works were freely printed without permission (“pirated”) because US copyright law did not protect British works. Canadian booksellers, instead of importing the expensive British editions of Charles Dickens and other British writers, would import the much cheaper pirated US editions. This was technically illegal, but the border was long and leaky. British publishers tried to pressure the British government to lean on Canada to block importation of their works printed in the US, but with limited success. 

Just as British works were not protected in the US, nor were US works protected in Britain or other countries such as Canada. Thus, Canadian printers freely reprinted Canadian editions of US works by writers such as Samuel Clemens (Mark Twain), without permission or payment of royalties. That was legal at the time but what was not legal was the resale of these Canadian editions back into the US, a frequent occurrence. Thus, Clemens famously complained about “Canadian pirates” and tried to publish some of his works first in Montreal so he could claim British and Canadian copyright. Finally in 1891, the US agreed to respect the copyrights of other nationalities but only on condition that their works be typeset in the US. 

For many years before it finally joined Berne in 1989, US publishers sought to obtain the benefits of Berne’s widespread international protection (applicable only to acceding parties) by simultaneously publishing works in the US and in Canada, through their Canadian publishing subsidiaries. This became known as “the back door to Berne”. Berne establishes a number of basic principles and commitment to minimum levels of protection by acceding states. For example, under Berne no formal registration is required to establish copyright provided that the fundamental requirements of originality, nationality and fixation are met, although registration can be provided as an option as is the case in both Canada and the United States. In the US registration is required if a legal action is taken to enforce a copyright. Berne also requires a minimum term of protection of the life of the “author” (meaning the creator of the work, even a visual work) plus 50 years after the author’s demise, although countries are free to establish a longer period of protection. The US, EU, and a number of other states, now including Canada, have extended the duration of copyright protection to “life plus seventy”, with a twenty-year extension allowing an author’s estate, or those who have acquired the rights, to have a longer period during which to exploit the work. 

A key principle under Berne is “national treatment”. That is, each country is required to apply the provisions of the Convention within its area of jurisdiction to both nationals and non-nationals on an equitable basis consistent with Berne’s minimum standards. Today Canada and the US are both parties not only to Berne but also to many of the myriad of specialized copyright treaties, such as the “Marrakesh Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled”, which establishes exceptions to copyright for visually disabled people. 

It is not only international treaties that impose certain commitments on Canada, but also bilateral agreements such as the updated NAFTA, the CUSMA (called the USMCA in the US). One of the commitments that Canada made in CUSMA was to extend its term of copyright protection to align with that in the US. The implementing legislation for this commitment has now been enacted and the longer term of copyright protection came into effect in Canada on December 30  2022. However, the longer term applies only to works still under copyright protection. Any works that entered the public domain prior to that date do not benefit.  

Given recent Canadian government initiatives, such as Bill C-11 (the Online Streaming Act) and C-18 (Online News Act), both of which will require US companies ranging from Netflix and Disney to Facebook and Google to contribute financially to production of Canadian content, in the case of streaming, or in the case of C-18 and news content, to Canadian journalism, one could well ask whether the US will try to intervene on behalf of these large US content and tech companies. After all, one of the basic principles of CUSMA is national treatment for US companies in Canada, and vice versa, with specified exceptions. 

One of these exceptions is the so-called cultural exception, Article 32.6 of CUSMA, which relates to what could be called “copyright industries”. This article allows Canada to take actions to protect culture in ways that would be inconsistent with the Agreement but for the exception. Film and television production, as well as the publication of magazines, periodicals and newspapers, and radio, TV and cable broadcasting, are all included in the definition of a cultural industry. However, Article 32.6 has a sting in its tail. It allows the other parties (the US or Mexico) to take equivalent measures of retaliation in any sector of the economy if the cultural exception is invoked. In effect this means that if Canada uses the cultural exception to justify measures against US (or Mexican) companies, other sectors of the Canadian economy could suffer the consequences. As such, it is a poison pill, which explains why it is very improbable it will ever be used. Instead, if there is a US trade challenge to these pieces of legislation – which is unlikely given the range of US interests involved, (some of which support the legislation) – the Canadian government will not invoke the cultural exception but will argue the measures it is implementing are not aimed at US companies per se, but rather at specific commercial entities that have an excessive degree of competitive market power. Thus, there is no violation of the national treatment principle. At the present time, the only companies that fit the definition happen to be American, but in future the definition could extend to European companies or Chinese entities like TikTok or, potentially, Canadian companies.

All this just goes to show that no nation is an island, whether it concerns specialized areas like copyright or broader issues like AI harms. Copyright has adapted over the years to technological change, with AI being but the most recent example. Likewise, Canada has adjusted to the international framework regulating copyright, to its advantage and to the benefit of its creative industries, and it will need to continue to do so in future.

(c) Hugh Stephens, 2023. All Rights Reserved

AI’s Copyright Challenges: Searching for an International Consensus

Image: Shutterstock

This has been a busy couple of weeks for national and international declarations on Artificial Intelligence (AI). First the G7 issued its International Code of Conduct for Advanced AI Systems on October 30.  The same day US President Biden signed the Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence, followed by the Bletchley Declaration at the conclusion of the “AI Summit” hosted by UK Prime Minister Rishi Sunak in Bletchley Park, Buckinghamshire, a couple of days later. Meanwhile, the EU’s AI Act is being touted by its sponsor as a potential model for AI legislation in other parts of the world (although its enactment is currently bogged down in the trilogue process between the Commission, EU Council and European Parliament). Notable was the fact that the US Executive Order, a wide-ranging framework document covering many aspects of the AI issue, effectively “scooped” the Brits by a day or so, allowing Vice President Kamala Harris to highlight steps the US had just announced when speaking to the press at Bletchley.

The declarations all addressed many of the concerns surrounding AI, ranging from safety and security, fraud and cybersecurity to privacy, equity and civil rights to protecting consumers, supporting workers and promoting innovation. A key issue only lightly touched on in these declarations, however, was that of AI’s intersection with copyright. This was a missed opportunity to come to grips with a major concern regarding how AI will be able to co-exist with copyright law. (The EU’s draft AI Act includes a transparency requirement to  “document and make publicly available a sufficiently detailed summary of the use of training data protected under copyright law“, Article 28(b) 4(c).)

AI faces two significant challenges when it comes to copyright protection. First, with respect to the inputs that AI developers use to populate their models to produce generative AI, there is the unresolved question as to whether the free use of copyrighted content violates copyright law by making unauthorized reproductions. There are currently a number of lawsuits underway in the US examining this fundamental question. Many creator groups, such as the News Media Alliance in the United States argue that “the pervasive copying of expressive works to train and fuel generative artificial intelligence systems is copyright infringement and not a fair use”.

Second, with respect to outputs, the work generated by AI has two challenges in terms of obtaining the benefits of copyright protection. If its inputs are infringing, that clearly casts doubt on the legality of the derivative outputs. In addition, there is the problem posed by the current position of the US Copyright Office (and most other copyright authorities) that to be copyright-protected a work must be an original human creation. After the infamous Monkey Selfie case, the USCO issued an interpretive bulletin reiterating the need for human authorship and, to date, it has hewed to this line when examining applications for copyright registration from authors claiming works produced by AI.

The G7 Declaration was broad, covering a wide range of issues related to AI. It included a reference to the copyright issue under Point 11, “Implement appropriate data input measures and protections for personal data and intellectual property”, specifically stating that, “Organizations are encouraged to implement appropriate safeguards, to respect rights related to privacy and intellectual property, including copyright-protected content.” This is hardly prescriptive language, but it is a beginning. I understand that the creative community had to fight hard to get this wording included, but it is at least recognition of the issue.

With respect to the US Administration’s Executive Order, the issue of copyright was also acknowledged, but in a somewhat backhanded way. Section 5.2 (Promoting Innovation), addresses copyright as part of clarifying issues “related to AI and inventorship of patentable subject matter”. Paragraph (c)(iii) declares that the Under Secretary of Commerce for Intellectual Property and Director of the US Patent and Trademark Office shall;

“within 270 days of the date of this order or 180 days after the United States Copyright Office of the Library of Congress publishes its forthcoming AI study that will address copyright issues raised by AI, whichever comes later, consult with the Director of the United States Copyright Office and issue recommendations to the President on potential executive actions relating to copyright and AI. The recommendations shall address any copyright and related issues discussed in the United States Copyright Office’s study, including the scope of protection for works produced using AI and the treatment of copyrighted works in AI training.”  

This is not exactly a ringing endorsement of the need for respecting the copyright of those who, willingly or not, provide the raw material for the voracious AI machines that are busy scooping up creator’s content, but it is nonetheless an acknowledgment that there’s an issue that needs addressing.

The US Copyright Office (USCO) launched its study on Artificial Intelligence and Copyright on August 30 of this year “to help assess whether legislative or regulatory steps in this area are warranted”. By the end of October, the USCO had already received more than 10,000 submissions. The comments range from statements by AI developers as to why they shouldn’t be required to pay for copyrighted content used as inputs in developing their models (while of course claiming they should enjoy the benefits of copyright protection for their AI generated outputs), to submissions by creator organizations that argue, among other things, that the ingestion of copyrighted material by AI systems is not categorically fair use and that AI companies should license works they ingest. Licensing their content to AI companies as an additional revenue stream is precisely what major media companies are currently engaged in.

If the US, currently and for the foreseeable future the leading country in development of AI, is thrashing around trying to address this question, one can imagine the process taking place elsewhere. Will the need to set standards inevitably lead to some form of international consensus for the regulation of AI, including the role of copyrighted content? I think it will be essential. Countries that are too lax in protecting their creative sectors will see their copyright-protected cultural industries suffer negative economic consequences; countries that are overly protective of content are worried that investment in AI innovation will flow to countries with lower copyright standards, becoming a race to the bottom for creators.

The UK government has already felt the pinch of this dilemma. In a misguided attempt to gain a head start in the AI development race, about a year and a half ago the British government unveiled a proposal sponsored by the UK Intellectual Property Office (of all entities!) to create an unlimited text and data mining (TDM) exception to copyright, at the same time stripping rights-holders of their ability to license their contact for TDM purposes, or to contract or opt out. In the words of the discussion paper accompanying the draft legislation, in order to reduce the time needed to obtain permission from rightsholders and to eliminate the need to pay license fees;

“The Government has decided to introduce a new copyright and database right exception which allows TDM for any purpose …Rights holders will no longer be able to charge for UK licences for TDM and will not be able to contract or opt-out of the exception.”

This outrageous attempted expropriation of intellectual property rights aroused a storm of protest from the UK’s vibrant cultural sector, a backlash that found resonance in Parliament. As a result, the British government backed off, and withdrew the proposed legislation. However, one wonders if the stake has truly been driven through the heart of this hi-tech gambit or whether, like Dracula, this misguided policy will rise again. “UK Parliamentary Committee Shoots Down Copyright Exemption for AI Developers–But is it Really Dead”? Certainly, British publishers are not convinced the content grab is over. According to the Guardian, they have just issued a statement urging the UK government, “to help end the unfettered, opaque development of artificial intelligence tools that use copyright-protected works with impunity.”

Canada has just launched a public consultation on AI and Copyright, (”Copyright in the Age of Generative Artificial Intelligence”), and others will be doing the same. In Australia, Google, responding to a review of copyright enforcement, urged the government to relax copyright laws to allow artificial intelligence to mine websites for information across the internet (even though this wasn’t the topic of the enquiry). Meanwhile, the Attorney-General’s Department has been conducting several roundtables to explore the issue, the most recent being at the end of August. In that roundtable, representatives of the Australian creative community called for greater transparency around how copyright material is being used by AI developers during the input training and output process.

And so, the search for the right formula goes on. It will not be easy to find the elusive international consensus, especially since at the moment (with the exception of China) this is an issue on the agenda only of the so-called Global North.

How the heavy-hitters will deal with the issue of AI, including its intellectual property dimensions, remains to be seen. There could be something as relatively powerless as OECD Guidelines that emerge or regulation could go a lot further, including the establishment of some kind of international agency with the “authority” to regulate in the area of AI, as suggested by Elon Musk and others. However, as we have seen with every international organization created to date, whether it be the UN, World Trade Organization, International Atomic Energy Agency, or any of the myriad other supra-national structures created in recent years, the authority granted them is only as good as the commitment of its signatory states. It makes sense to harmonize and set broad international standards for the way in which AI is created and used, but it will be a long road to get there.

The challenge of how copyright can intersect with AI–to the mutual benefit of both–has still be worked out. The courts are playing a role, as is technology, evolving business models, and legislation. Society needs to find the sweet spot where both human creation and technological advancement in the form of AI can co-exist for the benefit of society at large. Despite recent pronouncements, the search continues.

© Hugh Stephens, 2023. All Rights Reserved.

This post has been updated to include reference to the ongoing roundtable process underway in Australia under the aegis of the Attorney-General’s Department to explore, inter alia, questions of AI and copyright.