Generative AI and copyright: exception, compensation or both?

The emergence of generative artificial intelligence (“AI”) has increased existing concerns and raised new issues both for AI developers and right holders. These include possible copyright infringement when copyright subject matter is used in AI training (including generative AI) modules, absence of viable licensing models, and a lack of transparency around the use of works in AI training. This article proposes a four-step approach that might help mitigate these challenges by taking into account the interests of both AI developers and Australian right holders. It suggests differentiating between the so-called “non-creative AI” and “creative AI” modules. While the former “non-creative AI” modules could be subjected to a new copyright exception, the use of works to train “creative AI” modules should require compensation that could be best collected via a statutory licensing scheme. In addition, the article calls for transparency around the use of works in AI training, which is indispensable for the efficient exercise and enforcement of rights.