Tag: meta

Hold the Champagne: The Two AI Training/Copyright Decisions Released in the US Last Week Were a Mixed Bag for AI Developers

Illustration of a champagne bottle being popped, enclosed in a red circle with a slash indicating 'no champagne'.

Image: Shutterstock.com

Last week I wrote about the questionable ethics of META’s use of pirated content to train its AI model, Llama, pointing out the ethical issues involved with META’s admitted use of pirated online libraries, such as LibGen (Library Genesis), to feed content to Llama for training purposes. This is quite apart from whatever legal issues that may arise from the widespread practice of ingesting copyrighted content for AI training by making an unauthorized copy from any source (such as a legitimate library, through purchase of a single copy of a work, or from publicly available internet sources, for example) not to mention the additional element of taking that content from pirate sources. The day after that blog was posted the first of what will be a series of legal decisions in the US regarding cases brought by authors and copyright holders against AI companies was issued, followed by another a day later. Both cases were heard in the Northern District of California, in the same San Franciso court house, but handled by different judges.

I updated last week’s blog to make reference to the Bartz v Anthropic case (hereafter “Anthropic”), but given the importance of that decision, combined with a decision released in another California court room a day later (Kadrey et al v META), these cases merit further exploration–especially since they were widely trumpeted by AI advocates as opening the door to unauthorized use of copyrighted content for AI training on the basis of “fair use”.

Fair use is the complex legal doctrine used in the US to determine exceptions to copyright protection. US readers are well aware of the intricacies and idiosyncrasies of fair use but for those not overly familiar with how it works, here is a short summation I drew from a blog post on fair use vs fair dealing that I wrote a few years ago.

In the US context, fair use is an affirmative defence against copyright infringement and is determined by the courts on a case by case basis, judged against several fairness factors (purpose and character of the use, the nature of the work copied, the amount and substantiality of the amount of the work used, and the effect of the use on the value of the original work)… Fair use is not defined by law. Some examples are given in US law of areas where the use is likely to be fair (criticism, comment, news reporting, teaching, scholarship, research) but these are illustrative and not exhaustive. In short, it is the courts that decide. This in turn can lead to extensive litigation as to what is and is not fair use, and it is worth noting that different judicial circuits in the US have at times come up with conflicting interpretations.

Or, for that matter, two different judges in the same circuit delivering decisions just days apart on similar issues but with some significantly different outcomes, as we saw last week (although in these cases both found fair use by AI developers with regard to the copyrighted works at issue).

On the Anthropic case, US District Judge William Alsup ruled, on summary judgement, that the use of copyrighted works for AI training, even though done without authorization, is highly transformative and does not substitute for the original work (“The technology at issue was among the most transformative many of us will see in our lifetimes”). It thus qualifies, according to Alsup, as fair use because the transformative nature of the use overrides or swallows the three other fair use factors, including the important fourth factor (effect of the use on the value of the work). He notes there was no allegation that the output of Anthropic’s model, known as “Claude”, produced content infringing the works of the plaintiffs. However, Judge Alsup then went on to consider the legality of Anthropic’s actions to download more than 7 million works from pirate libraries (such as Books3, Library Genesis and the Pirate Library Mirror) to constitute its reference library, which it initially planned to use for AI training. He concluded this was a prima facie case of copyright infringement, whether Anthropic intended to use some or all of the pirated works to train Claude or not. (“Anthropic seems to believe that because some of the works it copied were sometimes used in training LLMs (Large Language Models), Anthropic was entitled to take for free all the works in the world and keep them forever with no further accounting “.) Damages, to be decided at trial, could be substantial. Alsop did not, however, rule explicitly on whether or not the use of pirated works for AI training purposes could be a fair use.

Because of the controversial nature of Alsup’s findings on transformation and fair use, there is no question that this case will be appealed. While there have been many criticisms of the fair use elements of Alsup’s ruling, a particularly clear and trenchant analysis was put forth by Kevin Madigan of the Copyright Alliance (Fair Use Decision Fumbles Training Analysis but Sends Clear Piracy Message).

The second case last week to reach the decision stage was Kadrey et al v META. In this case District Judge Vince Chhabria found that META’s use of the works of the plaintiffs, thirteen noted fiction writers, to train its AI model (“Llama”) was also fair use. Chhabria, like Alsup, found that META’s use was transformative on the first fairness factor dealing with the purpose and character of the use (“There is no serious question that Meta’s use of the plaintiffs’ books had a “further purpose” and “different character” than the books—that it was highly transformative.”) but unlike Alsup, Chhabria put much greater emphasis on market harm, (the fourth fairness factor dealing with the effect of use on the value of the work) suggesting that it could be determinative. Unfortunately for the plaintiffs, however, Chhabria considered their arguments with respect to market harm to be unconvincing. There was no evidence that Llama’s output reproduced their works in any substantial way or substituted for the specific works at play nor was there evidence, according to the judge, that the unauthorized copying deprived the authors of licensing opportunities.

Chhabria suggested that a far more cogent argument would have been that use (unauthorized reproduction) of copyrighted books to train a Large Language Model might harm the market for those works by enabling the rapid generation of countless similar works that compete with the originals, even if the works themselves are not infringing. In other words, causing indirect substitution for the works rather than direct substitution. This is the theory of “market dilution”, which was also put forward speculatively by the US Copyright Office in its recent Pre-Publication Report on AI and copyright. Since this wasn’t presented as an argument, Chhabria could not rule on it but in effect he is inviting future litigants to pursue this line of argument, noting that his decision on fair use relates only to the works of the thirteen authors who brought the case.

The clearest way to illustrate his line of reasoning is to quote directly,

“In cases involving uses like Meta’s, it seems like the plaintiffs will often win, at least where those cases have better-developed records on the market effects of the defendant’s use. No matter how transformative LLM training may be, it’s hard to imagine that it can be fair use to use copyrighted books to develop a tool to make billions or trillions of dollars while enabling the creation of a potentially endless stream of competing works that could significantly harm the market for those books”.

This editorializing, known in legal circles as obiter dicta, is not binding nor precedential, yet will undoubtedly have some influence given Chhabria’s stature. It is likely that one of these days Judge Chhabria will have the opportunity to put these theories into practice when ruling on a similar case, but one where the plaintiffs have made a better case for market harm. He has provided them a roadmap.

While these two cases have fired the first shots in what is going to be a lengthy war, they do not seem to be dispositive. There are enough caveats and nuances to be able to conclude that the AI developers are far from being out of the woods. Both “victories” have a sting in their tail, especially Judge Alsup’s finding on piracy. Neither copyright advocates nor AI developers should be breaking out the champagne just yet. But whichever way it turns out, there will be some sure winners; the lawyers for each side.

© Hugh Stephens, 2025.

Is it Ethical to Use Pirated Content for Commercial Purposes? META Thinks So

Two signs hanging on a string, one labeled 'ETHICAL' in green and the other labeled 'LEGAL' in red, against a purple background.

Image: Shutterstock.com

There is the question of what is ethical, and then there is the question of what is legal. Sometimes they are the same, often not. The legality of using copyrighted content without authorization for commercial purposes, such as in training AI models—as META and a number of other companies have done—is being decided in court. In META’s case, however, there is the further complaint (not denied by META) that many of the unauthorized copies it made were taken from pirated content. While this revelation may not change the fundamentals of the copyright infringement case against it, there is still the ethical question for META to answer. On this, it comes up short. Very short.

META, the parent company of Facebook, Instagram and WhatsApp, used vast amounts of copyrighted content, without permission or licensing, to train its AI model. It is not alone in doing so. This practice may or may not be legal. A number of cases are working their way through the courts, most of them in the US, with copyright owners from Getty Images to Disney and Universal, from the New York Times to the Authors Guild and on to music labels, all claiming that their content was unfairly and illegally copied to provide training fodder for training AI models, such as META’s model, Llama. META and other AI developers claim that their use was a “fair use” under US law. We’ll see. However, as part of its giant vacuuming of publicly available (but in many cases protected) content, META also ingested content from various pirate sites and databases, notably the notorious “shadow library”, LibGen (Library Genesis). LibGen originated in Russia and contains up to 80 million scientific and academic articles, as well as millions of novels and nonfiction books, most unauthorized, unlicensed copies. It has a been sued by major academic and textbook publishers. In 2017 Elsevier won a $15 million judgement against LibGen, and another pirate website, SciHub. Last year Elsevier was awarded a $30 million default judgement. However, both LibGen and SciHub remain available online.

The extent of the copyrighted content held by LibGen was revealed in an investigative report published recently by The Atlantic. You can search through the LibGen database as published by The Atlantic to find out what works are included, and whether your work has been pirated. Authors from Newfoundland to New York and lots of places in-between and elsewhere found their works included in the database when they did the search. The Authors Guild advises writers to fight back by sending a formal notice to META and other AI companies asserting their rights, as well as adding a “No AI Training” notice on the copyright page of works. This is in addition, as would be expected, to joining the Authors Guild to help them fight what is happening.

Consuming pirated content can result in costly penalties, as some unfortunate downloaders have found out to their regret. Using it for commercial purposes is even more egregious. It’s like running a pirate streaming service based on stolen content. META didn’t use pirated content in this way, but they used it commercially just the same, in their case for AI training. Were they aware of what they were doing. You bet they were.

The discovery process in the US suit of Kadrey et. al. v META revealed a series of email exchanges in which some META employees expressed concerns over the ethics of using pirated content. The concerns went up the chain and back, with “MZ” (guess who? No, not Moses Znaimer) giving approval to proceed. Following on these revelations in Kadrey v META in the US, two class action lawsuits have been filed in Canada, one in Quebec on behalf of a number of French language authors and one in British Columbia. The Quebec suit specifically flags the piracy issue. Among the listed complaints is the following:

“Rather than acting within the law and respecting the rights of class members, it (META) deliberately chose to train its LLMs (Large Language Models) from datasets containing illicit copies of works from all over the world, including those of class members.”

Damages sought are $20,000 per work.

It is clear that META wilfully torrented content from LibGen, knowing that many or most of the works on LibGen were infringing, pirated copies. They just didn’t care.

If it turns out that somehow, inexplicably, META’s unauthorized use of copyrighted content for AI training is ruled by the US courts to be fair use, would the fact that the source of some of the content was from a pirate source be relevant? I am not sure, but a judgement that has just been delivered in California in the “Anthropic” case suggests that even if unauthorized copying can be justified as fair use because it is considered “transformative”, that does not excuse piracy–which is still an infringement. In this case, Anthropic copied both purchased and pirated works to train its AI model, and kept the copies in its central library. It was sued by some authors and journalists in a class action suit alleging copyright infringement. The judge, in one of the first such cases to reach a decision point, concluded on summary judgement that Anthropic’s unauthorized reproduction of copyrighted works for AI training was fair use under the transformation doctrine but added, with respect to those works drawn from pirate sources such as LibGen and others,

“piracy of otherwise available copies is inherently, irredeemably infringing even if the pirated copies are immediately used for the transformative use and
immediately discarded”.

A trial will be held to determine the damages from the piracy.

Being one of the first AI training cases out of the gate, Anthropic will certainly be appealed, so this is not the last word. However, this ruling when added to the US Copyright Office’s views expressed in its Pre-Publication Report on Generative AI issued last month on May 9, a day before Register Shira Perlmutter was dismissed, that “the copying of expressive works from pirate sources in order to generate unrestricted content that competes in the marketplace, when licensing is reasonably available, is unlikely to qualify as fair use”, suggests that META could be in both ethical and legal trouble.

In other jurisdictions, such as Singapore, content used in AI training under a Text and Data Mining exception has to be legally accessed, although this is very thin legal protection because technology companies can legally purchase just one copy of a work to comply. In Canada you cannot break the law (i.e. circumvent a technological protection measure) to exercise a fair dealing right. But whether or not using a pirated source puts META offside the law in the US with respect to fair use, (and the Anthropic case suggests that it could at least with respect to the pirated works), think of the ethics and the image this presents to the public.

A company like META, capitalized at something like $2 trillion, cannot be bothered to even access content legitimately, let alone use it legitimately. Why? Because MZ said it was ok to proceed. Sadly, even though they are not the only ones to use pirated content to train their AI models, that tells me all I need to know about the values and ethics of this particular company.

© Hugh Stephens, 2025. All Rights Reserved.

This post has been updated to include reference to the decision in the Anthropic case, released after the initial publication of this blog post.

Digital Platforms and News Content: Australia Takes Off the Gloves

Image: Shutterstock

Canada infamously tried to take a leaf from Australia’s book in dealing with large internet platforms, like Google and Meta, that benefit from news media content without paying for it. In 2023, Canada introduced the Online News Act (Bill C-18), a Canadian version of Australia’s News Media Bargaining Code. The Australian approach, first introduced through legislation in late 2021, was initially very successful. Rod Sims, the author of the Code from his then position as Commissioner of the Australian Competition and Consumer Commission (ACCC), testified before the Canadian House of Commons Committee studying C-18, pointing to the success of the initiative in generating some AUD200 million in financial support for Australian media annually. Although there had been pushback by both Google and Meta in Australia, both eventually came onside, especially after the spectacular flop of Meta’s news blackout campaign. The threat of being designated under the Australian code was enough to get the two platforms to negotiate agreements with most Australian media in the form of funding to support journalistic output. As a result of the agreements reached, neither platform was designated under the Code and thus was not subject to “final offer” arbitration imposed by the ACCC.

Canada thought it would “improve” on the Australian precedent by making the process somewhat more transparent in terms of funding offers, and by requiring the platforms to self-designate. Whether it was the tweaked Canadian legislation or, more likely, a reappraisal of the value and cost of the agreements (particularly when it became apparent that the Australian precedent was likely to be followed elsewhere, with Canada being the first out of the gate), both platforms dug in. Meta in particular refused to engage with the Canadian process and declared that it would “comply” with the legislation by removing all links to Canadian media. That is not what the Government of Canada or Canadian media had in mind when Bill C-18 was introduced. Meta has held that line, although the extent to which it is fully complying is under review by the regulator, the CRTC. Various workarounds to allow news content to appear on Facebook have been employed by both Facebook users and some news providers, and META seems willling to turn a blind eye. Why that doesn’t trigger the Online News Act requirement to reach funding agreements with news content providers is a question that cries out for a response. (CRTC take note: We are waiting).

Google was slightly more amenable to striking a deal with the Government of Canada, agreeing that in return for exemption from the legislation, it would contribute $100 million (CAD) annually for five years (adjusted to inflation) to a fund that would provide support to qualified Canadian media enterprises. The $100 million subsumes existing contributions Google was already making to some Canadian journalism programs, so the net result is not $100 million in new money. Google has now begun to disburse this funding through the Canadian Journalism Collective (CJC), an entity established by what could legitimately be called “non mainstream media”, i.e. many small digital startups. The CJC was selected by Google as the executing agency for its funding, thus snubbing the organization representing the major media enterprises, News Media Canada. There are likely to be disputes over whether some of the “little guys” actually qualify as bona fide journalists. The more mouths there are to feed, the less there is for each supplicant and the big players are not happy to see the Google revenue stream diluted.

Meanwhile, back in Oz, Meta has announced that once they expire it will not renew the media agreements it reached back in 2022. Many will end this year. It appears Meta has decided it will adopt a consistent global position by insisting that news media content provides it with no value. Zero. None. And therefore it will not pay a cent. In part, this is to head off similar moves in the US where news media providers would like to bring in an arrangement similar to that instituted in Australia, or Canada. A separate initiative in California ended up with an outcome close to the one in Canada, with Google reluctantly agreeing to contribute funding to local journalism while Meta walked away. The Australian government has seen where this is heading, and it is not happy. It is taking the gloves off.

The Albanese government has announced it will be taking measures to require that any internet company that refuses to negotiate with publishers or removes news from its platform will be forced to pay, regardless. This is the big stick to counter META. What happens next is a consultation process, beginning now, to determine how what is being called a “news bargaining incentive” will actually be applied, retroactive to January 1. All digital platforms with annual revenues of AUD250 million annually will likely be subject to it. This will expand the net to include ByteDance (Tik Tok) and Microsoft (Bing, LinkedIn) as well as META and Google. Google has already said it will carry on and will renew the deals it signed with Australian media, allowing it to be exempted under the Code. META is not backing down.

The so-called “incentive” will take the form of a discounted penalty or fine. The initial proposal is that companies that sign deals amounting to 90% or more of the total of the fine that would otherwise be levied will be exempt. In other words, find ways to strike deals that in the end will save you money. Simply refusing to carry news content, as META has done in Canada, will not let a designated platform off the hook, a significant variation from the Canadian legislation, which many have criticized as being flawed. Rod Sims, now back in academia, fully supports the new incentive initiative. It appears the only way META can avoid payment is by closing its business in Australia. Given META’s track record, this might even be a card it is prepared to play. One can expect it to pull out all the stops to oppose the “incentive”, from legal challenges to threatening a pullout to seeking to invoke the support of the Trump Administration.

What position will the Trump Administration adopt? Donald Trump certainly has no love for the news media, as evidenced by his current and threatened lawsuits against US media outlets for providing coverage he doesn’t like. On the other hand, NewsCorp, which has strong holdings in Australia, has in recent years built its reputation and business model on catering to Trump’s vanity and desires. Trump also is not fan of Facebook, but Mark Zuckerberg has smelled the coffee and has donated a $1 million to Trump’s inauguration, after having kissed the ring by dining with the President-elect at Mar-a-Lago. So in the end, who knows where the US government will be on this question? All I can say to the Australian government’s expressed intention to deal head-on with META’s scorched-earth tactics is “good on ya, mate”. I wish Canada had the gumption to do the same.

© Hugh Stephens, 2025. All Rights Reserved.

Looking Back at 2024: It’s All About AI and Copyright (And a Few Other Things)

Image: Shutterstock

A retrospective on the year now coming to a close is what one expects this time of year, so I will try not to disappoint. However, when I look back at the copyright developments I wrote about in 2024, the dominant issues that jump out are AI, AI and AI. You can’t read or think about copyright without Artificial Intelligence, or to be more correct, Generative Artificial Intelligence (GAI), occupying most of the space despite many other issues on the copyright agenda. The mantra of “AI, AI and AI”, as in “Location, Location and Location” is apt because there are at least three important copyright dimensions related to AI; training of AI models; copyright protection for outputs generated by AI; and infringement of copyright by works created with or by AI. Of the three, the use of copyrighted content for AI training is the most salient.

Last year in my year-ender, I also discussed AI and the numerous lawsuits that were emerging as rightsholders pushed back on having their content vacuumed up by AI developers to train their algorithms. Those lawsuits have only multiplied. At last count, there are more that 30 cases in the US, ranging from big media vs big AI (New York Times v OpenAI/Microsoft) to class action suits brought by artists and authors, as well as litigation in the UK, EU, and now in Canada (see here and here). That is just on the input side.

In terms of output, i.e. whether works produced by an AI can be copyrighted, there are a couple of interesting cases in the US where applications for copyright registration have been refused by the US Copyright Office (USCO) because of a lack of human creativity. A couple of months ago, I discussed two such high profile cases, one brought by Stephen Thaler, and the other by Jason Allen. To date the USCO is not budging, although it is undertaking an extensive study of the issue. Part 1 of its study, on digital replicas, was published in July of this year. The next section on copyrightability is expected to be published in January with the issues of ingestion for training and licensing in Q1 2025.

While the USCO has to date denied applications for copyright registration of AI-generated works, the Canadian copyright office (CIPO-Canadian Intellectual Property Office) has been caught up in a problem of its own making. This is because Canadian copyright registration is granted automatically, so long as tombstone data and the prescribed fee is provided. The work for which registration is sought is not examined. As a result, copyright certificates have been issued to works created by AI, notwithstanding the general presumption that copyright protection is only accorded to human created work (although this is not explicitly stated in the Act). In July a legal challenge was launched against copyright registrant Ankit Sahni, who successfully registered a work with CIPO claiming an AI as co-author. The case was brought by the Canadian Internet Policy and Public Interest Clinic (CIPPIC) at the University of Ottawa, as I wrote about here. (Canadian Copyright Registration and AI-Created Works: It’s Time to Close the Loophole).

While the courts in the US, UK, Canada and elsewhere are grappling with various issues related to AI and copyright, governments are studying the issue.

In Australia, the Select Committee on Adopting Artificial Intelligence issued its final report in November. While the report was wide-ranging, three of its recommendations related to copyright;

• engagement with the creative Industry to address unauthorized use of their works by AI developers and tech companies,

• transparency in Training Data by requiring AI developers to disclose the use of copyrighted works in training datasets and ensure proper licensing and payment for these works, and

• remuneration for AI Outputs, with an appropriate mechanism to be determined through further consultation

These are important principles, but how they will be implemented in practice remains to be determined.

In Canada, a consultation on AI and copyright was launched late in 2023 with submissions to be received by January 15, 2024. The Canadian cultural community put forth three key demands;

• 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).

Submissions to the consultation were published in mid-year but since then there has been no apparent action. Given the current political crisis facing the Trudeau government, none is expected in the near term although the issue will inevitably have to be addressed after the general election in 2025.

While the EU has already established some parameters dealing with use of copyrighted materials for AI training, the new UK Labour government is taking another run at the issue after various proposals in Britain to find a modus vivendi between the AI and content industries under the Tories went nowhere. The current UK discussion paper on Copyright and Artificial Intelligence, which seems excessively tilted in favour of the AI industry, has aroused plenty of controversy. While it says some of the right things, such as proclaiming that one of the objectives of the consultation is to “support…right holders’ control of their content and ability to be remunerated for its use” the thrust of the paper is to find ways to encourage the AI industry to undertake more research in the UK by establishing a more permissive regime with respect to use of copyrighted content. It is based on three self-declared principles; (notice how these things always seem to come in threes?);

• Control: Right holders should have control over, and be able to license and seek remuneration for, the use of their content by AI models

• Access: AI developers should be able to access and use large volumes of online content to train their models easily, lawfully and without infringing copyright, and

• Transparency: The copyright framework should be clear and make sense to its users, with greater transparency about works used to train AI models, and their outputs.

These three objectives then lead to what is clearly the preferred solution;

“A data mining exception which allows right holders to reserve their rights, underpinned by supporting measures on transparency”

Fine in principle, but the devil is always in the detail and the details in this case revolve around transparency (how detailed, what form, what about content already taken?) and, in particular, reservation of rights, aka “opting out”. This is easy to proclaim in principle but difficult to do in practice. British creators are up in arms, led by artists such as Paul McCartney, and supported by the creative industries in the US. The British composer Ed Newton-Rex has penned a brilliant satire explaining how AI development in the UK will work if current proposal is enacted. The problem with an opt-out solution is essentially twofold; it doesn’t deal with content already absorbed by AI developers and it would be cumbersome if not impossible for many rightsholders to use.

Other governments have addressed the issue in different ways. Singapore has taken a very loose approach toward copyright protection, putting its thumb firmly on the scale in favour of AI developers. It is currently considering additional proposals that would strip even more protection from rights-holders, who are pushing back strongly. Japan had been widely and incorrectly reported to have been on the same path, resulting in a welcome clarification this year from the Agency for Cultural Affairs regarding the limits of Japan’s text and data mining (TDM) exception.

While AI dominated the copyright agenda in 2024, there were other issues relating to copyright and copyright industries that I wrote about. The ongoing question of payment for news content by large digital platforms continued to play out in different ways. In Canada, the struggle between the government and US tech giants Google and META was finally “resolved” (after a fashion) at the end of last year. Google agreed to “voluntarily” pay $100 million annually into a fund for Canadian journalism in return for being exempted from the Online News Act (ONA) while META called the government’s bluff by blocking Canadian news providers from its platform thus, in theory, avoiding being subject to the ONA. However, META has a very subjective interpretation as to what is Canadian news content, allowing some news providers to post to it, while many users have found workarounds, as documented by McGill’s Media Ecosystem Observatory. While the CRTC investigated, the issue is still unresolved.

Meanwhile in Australia, it seems that META intends to go down the same road of blocking news, announcing it will not renew the content deals it initially signed with Australian media in response to Australia’s News Media Bargaining Code, the model upon which Canada’s legislation was based. Unlike in Canada, the Australian government is planning a robust response. (More on this in a future blog post). Finally, on the same topic, California (which was threatening to introduce its own version of legislation to require digital platforms to compensate news content providers) emerged with an outcome very similar to that reached in Canada, with Google offering up some funding (although proportionally less than in Canada) while META appears to have walked away.

Controlled Digital Lending (CDL) was another copyright issue finally settled in 2024 (in the US). The Internet Archive, after losing a lawsuit brought against it by a consortium of publishers who argued that the digital copying of their works constituted copyright infringement, notwithstanding the Archive’s theory that they were simply lending a digital version of a legally obtained physical work held by them (or someone else associated with them), lost its appeal. In December, the deadline for further appeals expired, thus effectively ending this saga. Whether Canadian university libraries, some of whom are avid devotees of CDL, will take note remains to be seen.

The issue of circumventing a TPM (“Technological Protection Measure”), commonly referred to as a “digital lock” and often represented by a password allowing access to content behind a paywall, was also front and centre this year in Canada. In the case of Blacklock’s Reporter v Attorney General for Canada, the Federal Court found that an employee of Parks Canada, who shared a single subscription to Blacklock’s with a number of other employees by providing them with the password did not infringe Blacklock’s copyright since the employee did not circumvent (in the meaning of the law) the TPM and the purpose of the sharing was for “research“, which is a specified fair dealing purpose. Blacklock’s is a digital research service that sells access to its content and protects its content with a paywall, as is common for many online content providers, like magazines and newspapers.

Despite the hoo-ha of anti-copyright commentators asserting the Court had found that “digital lock rules do not trump fair dealing“, it was equally clear the Court had ruled that fair dealing does not trump digital locks (TPMs). The Court did not undermine the protection afforded to businesses to protect their content through use of TPMs. Rather, it determined that sharing a licitly obtained password did not constitute circumvention as outlined in the Act, as I explained here. (Fair Dealing, Passwords and Technological Protection Measures (TPMs) in Canada: Federal Court Confirms Fair Dealing Does Not Trump TPMs (Digital Lock Rules). Although the Court did not legitimize circumvention of a TPM for fair dealing purposes, contrary to claims stating the opposite, its acceptance of password sharing is an outcome that legal experts have disagreed with, (as do I for what it is worth). The law is very clear that fair dealing cannot be used as a pretext or a defence against violation of the anti-circumvention provisions of the Copyright Act. The decision now under appeal by Blacklock’s.

Finally, the last copyright point of note for 2024 is that this year marked the bicentenary of the introduction of the first copyright legislation in Canada, in the Assembly of Lower Canada, in 1824. It also marked the centenary of the entry in force of the first truly Canadian Copyright Act on January 1, 1924. This two hundred years of domestic copyright history is worth celebrating. The first legislation was introduced “for the Encouragement of Learning” so that more local school texts would be written and printed. Given the current standoff between the secondary and post-secondary educational establishment and Canadian authors and their copyright collective over license payments for use of copyrighted works in teaching, one wonders whether we have really learned anything about the role copyright plays in our society. (Copyright and Education in Canada: Have We Learned Nothing in the Past Two Centuries? (From the “Encouragement of Learning” to the “Great Education Free Ride”).

Leaving that question with you to ponder, gentle Reader, is probably a good way to end this look back over the past 12 months. Stay tuned for more commentary on copyright developments in 2025.

© Hugh Stephens, 2024. All Rights Reserved.

Tech Platforms and News Media: California Cuts a Deal with Google, While Meta Walks Free

Image: Shutterstock (AI assisted)

The ongoing financial tug-of-war between large tech/social media platforms and news media outlets, with governments trying to play a mediator/arbitrator role, has taken another turn with the announcement that California has cut a deal with Google, similar in principle to the one reached in Canada at the end of last year. When Google was fighting being subjected to regulation in Canada under the Online News Act, Bill C-18, it was glancing over its shoulder at impending developments on its own home turf, California. The California Journalism Preservation Act would have instituted a regime similar to that originally proposed in both Australia and Canada by requiring Google to negotiate agreements with news content providers, compensating them for Google’s use of news content links.

The California bill is similar to draft US federal legislation introduced, but not adopted, in the 2022 session of the US Congress. That legislation would have given news media enterprises an exemption from anti-trust laws allowing them to negotiate jointly with the tech platforms while specifying requirements regarding the negotiations, including arbitration in certain circumstances. (That draft US federal legislation made it difficult for Google to enlist the support of the US Government in opposing similar legislation in Canada, as I wrote about here). Google didn’t like the draft legislation in the US one bit and employed various measures to try to stop it. In California it threatened to drop news from Search, (as it did in Canada) and, similar to its tactics in Canada, it trialed blocking links to news sites for some users.

As most readers will know, and as I have written about on several occasions, Google played hardball in Australia and Canada, but in the end came to an accommodation of sorts. In Australia it reached unspecified content deals with the majority of Australian media players. In Canada, in return for avoiding designation under the Online News Act, Google agreed to contribute CAD $100 million (about US$75 million) annually to a journalism fund to support news media outlets, both print and broadcast. While the result was not what the government or the news media had originally expected, it was certainly better than nothing. It was not all “new money”, however, as Google had previously signed some voluntary content deals in a vain attempt to head off the legislation. This pre-existing funding will now be rolled into the $100 million fund. The voluntary deals will be wound up, thus putting an effective cap on Google’s contribution. Its tactics in Canada demonstrate that Google will do just about anything to avoid being made to share revenues for linking to the content of others, seeing this as an existential threat to its business and operating model. The same applies in California.

In return for withdrawal of California’s original legislation—which would have subjected links to compensation—Google has agreed to ante up approximately US$55 million over 5 years to be put into a fund to be managed by the Graduate School of Journalism at the University of California, contingent on the California legislature also contributing $70 million to the fund over the same period of time. That outcome is by no means guaranteed as the funding must be approved by the state legislature each year. In addition, according to the New York Times, Google has undertaken to provide approximately $60 million over 5 years to an AI Innovation Accelerator Fund, plus maintaining its existing $10 million annual support payments for journalism. That is pretty small change for Google. California’s population, at roughly 39 million, is almost exactly the same as that of Canada although California’s GDP is roughly twice as large. Taking that into consideration, maybe Canada did not fare so badly in getting Google to contribute $100 million (CAD) annually.

While Google and the California legislators who brokered the deal were touting its benefits, it received a mixed reaction from some publishers and outright condemnation from unions representing journalists and staff working at news outlets, who called it a “shakedown”. Meanwhile, Meta (Facebook) appears to have walked away scot-free. Meta was one of the targets of the original California legislation, as it was in Australia and Canada. Meta has claimed it gets no value from news links and in Canada “complied” with the Online News Act by blocking news links, thus eliminating any obligation to pay for news content. The result has been perverse, with non-news outlets, like a garbage disposal company in Saskatchewan being allowed to post news to Facebook because technically it is not a news provider, while legitimate professional journalism outlets are blocked. While Meta initially reached some content deals in Australia after its blockage of news content blew up in its face, it is now busy terminating them as renewals come up. The Australian government will have to decide whether to bite its tongue and do nothing or call Meta’s bluff. If they do, there is every likelihood that Meta will block news for Australian users as it has done in Canada.

There are still voices in California calling for ways to “encourage” Meta to make a financial contribution to news media, and the Google offer is not a completely “done deal” although it has support from the Governor of the state. With the California domino having fallen, government attempts to bring Google to heel seem to have sputtered out, at least for now. The Journalism Competition and Preservation Act in the US Congress appears unlikely to go anywhere. The UK is still trying to figure out its approach, as MediaPolicy.ca reported last week. Google and Meta appear to have successfully stared down sovereign governments at the national and state level. While Meta appears to have completely closed its wallet, Google has negotiated payments it can live with as part of the cost of doing business. And given the scale of its business, the amounts it is throwing on the table are exactly that, a business cost that is a small price to pay for its dominant quasi-monopolistic grip on the online advertising market which, at its most basic level, is a vehicle to provide access to content generated by others.

© Hugh Stephens, 2024. All Rights Reserved.

As Journalism Withers, “Garbage” News Takes Over: An Unexpected Result of the Facebook/Instagram News Blackout in Canada

Image: Shutterstock (with AI assist: Note AI misspelling)

The sad, slow decline of professional journalism continues. The most recent manifestation of this in Canada is the announcement that the Saltwire Group, publishers of The Chronicle Herald of Halifax and a number of other daily and weekly papers in Atlantic Canada, is on the ropes with $90 million in debt. The Chronicle Herald has been around for 150 years! Post Media has made a buyout offer of $1 million (less than the cost of the average home in Vancouver). This will keep some of the papers publishing, no doubt with significant staff cutbacks and, reportedly, ending of union contracts and termination of company pension plans. But there seems to be little choice; accept the nasty medicine or expire. Post Media will most likely keep a minimal local newsroom and fill the papers with repurposed content from its flagship daily National Post. Local news will suffer. This is a story that is being replicated all over North America.

Meanwhile small, local online news outlets have been hit by Facebook’s blackout of news for Canadian readers as a result of the passage of the Online News Act, Bill C-18. In the case of New Brunswick’s River Valley Sun, according to the CBC, the free-to-readers, ad-supported, all-digital Sun depended on Facebook to reach its audience as well as to obtain local news that could be added to the online journal. The owner is quoted as saying, “…we started basically from scratch, and because Facebook was free it was wonderful”.

That is the flip side of the narrative accusing Facebook of using uncompensated news content, developed at great expense by professional journalists working for media companies, to attract and hold users’ interest thus keeping them on Meta’s sites (Facebook, Instagram) longer to be able to expose them to more ads. Not so wonderful. That is what C-18 was supposed to rectify, along the lines of the News Media Bargaining Code instituted earlier in Australia, requiring the big social media platforms (in this case Google and Meta) to make a contribution to news gathering if they used news content. Failure to do so would result in compulsory and binding arbitration. While Google ducked and weaved, it eventually agreed to put $100 million into a pot to be doled out to various news organizations by the Canadian Journalism Collective as long as it was given an exemption from the legislation, whereas Meta went to the wall and took down news links rather than contribute. The River Valley Sun is collateral damage, although it could possibly tap into the Google funding if it employs any fulltime journalists (a minimum of two is required).

The Online News Act did result in bringing some additional funding to news outlets, large and small, somewhat along the lines of Australia’s initiative through its News Media Bargaining Code (which was not actually invoked because the two platforms ended up striking content deals with most Australian media). However, it is clear that Meta has had buyer’s remorse about its Australian deals because they are busy unwinding those commitments in Oz. It remains to be seen how Australia will deal with this. There have been some suggestions that the Australian government may be looking at options to force Meta to carry news, and then subject them to the Code. Will Meta get a pass—in which case Google could rightly ask why it should comply—or will news also end up being blocked on Facebook and Instagram for Australian users as well as Canadian?

If that happens, consumers will have to find other ways to get access to news that is normally shared on the Facebook platform. Going to the actual websites of news organizations is one good way to do this. What a novel idea! However, many younger consumers won’t do this; if news is on a social media feed, they might read it, but they will not proactively search for it. Facebook also remains an important go-to source for breaking local news related to weather and climate-change events such as flooding and fires. Hosts of Facebook pages distributing information on the local impact of natural disasters have had to resort to workarounds such as posting photos of news articles on Meta or copy-pasting articles into their Facebook page. (Ironically, such actions could possibly constitute violations of copyright whereas posting a link is not). But workarounds are not going to help news outlets like the River Valley Sun.

Perhaps the journal should take a leaf out of the book of Just Bins, a waste recycling firm in Regina, SK, a garbage collection company that seems to have picked up news distribution as a sideline, benefiting from the free online exposure. It does not distribute mainstream media; it creates its own news content that it features on its website, even employing its own drone footage. Because it is not a news site, it is not blocked by Facebook. It has edgily reported on traffic accidents, problems at City Hall, homelessness, and even suicides. In fact, it was voted best online news source in a recent poll taken for the annual “Best of Regina” awards. Not that it takes its journalism role all that seriously—and that is part of the problem—since fact-checking, journalistic ethics and balanced reporting seem to have been put out with the recycling bins. Just Bins has taken the old adage of “garbage in-garbage out” to new heights. This is yet another byproduct of the Facebook ban, a further kick in the shins for reputable journalism. If the River Valley Sun could just sell pizza on the side, maybe they could slip through the Facebook net and post online as Just Bins is doing.

Just Bins is not the only quasi-news source that has managed to squeeze through the Meta news blockage. This week Howard Law’s media blog MediaPolicy.ca reports on the Meta news ban (“The leaky Meta news ban is roiling Canadian journalism”) and highlights a study conducted by researchers at McGill University on the impact of the ban a year after it went into effect. The McGill study notes that many Canadians continue to use Meta as a source of “news” despite the ban. Three-quarters of the Canadian public is apparently unaware of the ban, yet Canadian news outlets have lost 85% of their engagement on Facebook and Instagram and almost one third of local news outlets are now inactive on social media. How this apparent contradiction is possible is explained in part by workarounds such as those referred to above, but also because Meta allows sites that declare themselves to be non-news outlets to continue to post content. Mediapolicy.ca discusses the case of Narcity.com, a “chain of local news and lifestyle websites” that has recently been reinstated on Meta. Narcity was denied government tax credits as a “Qualified Canadian Journalism Organization” (QCJO) because of insufficient first-hand reporting. With this rejection in hand, it then applied to Meta to be reinstated on its platform on the basis that if it didn’t qualify for QCJO credits, it must not be a news provider under the Online News Act, C-18. It’s a clever argument, one that possibly the River Valley Sun could take advantage of.

One can argue that Canada’s attempt to require Google and Meta to enter into good faith negotiations with news providers to license content was either a valiant and imaginative attempt to come to grips with the painful decline of journalism, riding to some extent on what at the time appeared to be the successful coattails of Australia’s initiative, or a colossal miscalculation and poor timing as the platforms decided to draw a line in the sand in case media interests in the US decided to follow suit. Google and Meta will do everything possible to avoid going down that road. If sending a signal to US media interests requires them to call the bluff of the Canadian government, they will do so.

In the end, the results are mixed. Legitimate media in Canada, big and small, will get some help from Google’s contribution, although the amount Google is providing through the Canadian Journalism Collective has to be offset against pre-existing voluntary agreements that both Google and Meta had with some journalistic outlets. The Meta subsidies are now gone, and the previous Google contributions have been folded into the $100 million that Google has agreed to put on the table. Meanwhile, in Regina, Just Bins has found the garbage loophole, serving up its version of trashy journalism and news on Meta, going where bona fide journalists cannot. Sad.

© Hugh Stephens, 2024. All Rights Reserved.

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

Image: Shutterstock via AI modification

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