Data mining in the UK: no broader exemption for the AI industry…for the time being.

It is no secret that the UK Government wants to “supercharge” the UK’s position on AI and to make these technologies central to the UK’s development as a global science and innovation superpower.  Following suggestions that UK copyright law may be impeding AI development, we recently reported that the IPO proposed to introduce a data mining exception to UK copyright law.

Using data protected by copyright to train AI will, except in limited non-commercial circumstances, be unlawful without the rightsholders’ permission. Whilst there is nothing to stop AI firms from seeking licenses, in practice this presents a considerable challenge. It is often difficult to identify the rightsholders involved and, from an AI firm’s perspective, it is time-consuming and costly to negotiate licences with each of the rightsholders. In many cases, rightsholders are likely to be individuals, not sophisticated corporations with licensing teams and lawyers to represent them.

AI firms which proceed to use copyright works without permission will be exposed to risk of claims brought by rightsholders and claims management firms. They will also be at risk of claims from users of the AI. Whilst firms such as OpenAI, owner of ChatGPT, exclude their liability to users, enterprise customers are likely to seek warranties from AI providers that licences have been obtained as well as indemnities against intellectual property claims.

The proposed exemption was intended to address these issues, but it has been met with vigorous opposition from the creative industries. They are concerned it would allow AI firms to extract value from works the creators, often individuals, have put considerable effort into developing without compensating the creators. There is likely be a significant power imbalance between rightsholders and AI firms and there is concern that the exemption would significantly undermine licensing opportunities, dramatically weaken copyright and stifle creativity in the UK.

Following these concerns, the government has announced that it will forego the proposed exemption, for the time-being at least. This is welcome news for rightsholders, but the AI industry will see the volte face as a lost opportunity. It also a significant challenge to the government’s desire to position the UK as a global leader in AI, particularly given the opportunities presented to AI firms in countries which do not offer such robust protection to creators.

The government will now enter into a dialogue with representatives of the tech industry, creators, platforms, publishers, broadcasters and digital intermediaries to try to anticipate the challenges of AI and to attempt to put in place a regulatory framework which is fit for the coming AI technological revolution and the opportunities it creates, but which allows for adequate protection of creators.

This will take considerable time to complete, meanwhile AI firms and their users will not put their development plans on hold, AI is a transformational technology moving at a pace we have never experienced before. For the time being, the ball is in the legal profession’s court to help AI firms and rightsholders develop practical licensing solutions.

If you would like further insight into this topic or advice on AI agreements, licensing arrangements or claims relating to intellectual property rights our Technology & Innovation and Commercial & Regulatory Disputes teams are well-placed to advise you.

Anne Todd is a Partner in Michelmores Technology & Innovation team and a member of the Society for Computers & Law, AI Committee. Lorenza Picciano is a Solicitor in the Commercial and Regulatory Disputes Team.