/ An inside look at the business of digital content
Copyright and AI: a win win
The enforcement of U.S. intellectual property law and the Copyright Act is essential for America's AI Action Plan and the broader success of American businesses
March 20, 2025 | By Chris Pedigo, SVP Government Affairs – DCN@Pedigo_ChrisConnect on
In terms of public policy debates, Artificial Intelligence continues to be the belle of the ball with nearly every major government courting the industry to locate their investments and jobs within their jurisdictions. Europe, China, Korea, and the U.S. (among others) have laid out competing tax and government spending plans to entice and encourage AI companies. Against this backdrop of AI frenzy, President Donald Trump, via the Office of Science Technology and Policy, has solicited input on the formation of an “AI Action Plan” in order to “define the priority policy actions needed to sustain and enhance America’s AI dominance.”
Unsurprisingly and unabashedly, tech companies advocate that the U.S. government allow their content-generating AI models to train on copyrighted material without consent or compensation. However, as DCN noted in our comments regarding the action plan, a key component to achieving the stated goal of enhancing America’s AI dominance – and the broader success of American businesses – is the robust protection and enforcement of U.S. intellectual property law including the Copyright Act.
Copyright protection makes legal, and financial, sense
The longstanding legal rights for copyright holders are derived from the U.S. Constitution (Article I, section 8, clause 8), which affords them the opportunity to monetize the results of their hard work and investment in a variety of ways and incentivizes them to reinvest in the creation of additional content and new innovative delivery mechanisms to potential consumers. As a result of these longstanding rights, American content creators, including news organizations and other publishers, are able to contribute significantly to U.S. economic growth, including through employment, exports and important trade surplus, and digital services and goods.
According to a recent study, copyright-based industries accounted for 12.31% of the U.S. economy and 63.13% of the U.S. digital economy. From 2020 to 2023, these industries outpaced U.S. economic growth almost threefold. In the digital sector alone, copyright-based industries employ 56.6% of all employees in the digital sector. The annual compensation paid to core copyright workers is approximately 50% higher than the average U.S. annual wage. As for the global impact, the sales of select U.S. copyrighted products in overseas markets amounted to $272.6 billion, which exceeded the sales of other IP industries including pharmaceuticals, agriculture, and aerospace.
Copyright, competition and a fair market
Unfortunately, the manner in which many AI developers have exploited original content without consent or compensation – to build and operationalize their commercial products – has unjustifiably violated the rights of copyright holders. It has upended the existing balance which has historically sustained and promoted innovation.
AI developers use copyright protected content not only to “teach” their models to predict and mimic language skills, but also as a means to create compelling outputs which have the compounding harm of substituting for the original works on which the models were trained. This activity unfairly competes with those who invested in the creation of the original material and undermines their ability to seek a fair economic return. In fact, U.S. Senior District Judge Beryl Howell noted earlier this week in a copyright case attempting to argue fair use that the publisher’s content is “so valuable they put a copyright on it.” Exactly.
By “reaping that which they do not sow” AI companies cause harm to creators, publishers and the ecosystem as a whole. It is important that this form of destructive misappropriation be deterred, whether by copyright law or other appropriate means. In the U.S, there are 39 related lawsuits and counting. The outcome of these suits will provide much-needed clarity regarding the application of existing copyright law, including the fact-specific defense of fair use, to the infringement of the rights of copyright holders to develop generative AI technology.
However, one U.S. District Court recently confirmed that licensing is required for the use of copyrighted content to train an AI system. In Thomson Reuters Enter. Ctr. GmBH v. Ross Intel. Inc., the court, applying clear and recent precedent from the U.S. Supreme Court, held that the defendant’s unauthorized use of the plaintiff’s works to train the defendant’s AI system was direct infringement and did not constitute fair use. The Court reaffirmed that the impact of the use on existing and potential markets is the single most important element of a fair use analysis, and that there was clearly a potential market to use the materials at issue in the case to train AI.
Innovation flourishes within the copyright framework
Lest the VC crowd be dismayed, a licensing framework is emerging as many deals have been struck by publishers, record labels, motion picture industries, and others. OpenAI, Google, and Perplexity have all made efforts to pay for the right to use protected content to power their models and tools. This is a clear acknowledgment that this model is not only necessary, but eminently feasible.
While publishers’ rights are coming into clearer focus in the U.S., AI companies are beginning to feel a shared pain as evidenced recently by DeepSeek’s R1 model. OpenAI accused the company of IP theft, claiming that DeepSeek may have used OpenAI’s IP and violated its terms of service to develop its AI model.
“We know PRC (China) based companies – and others – are constantly trying to distill the models of leading US AI companies,” OpenAI said in a statement to Bloomberg. “As the leading builder of AI, we engage in countermeasures to protect our IP, including a careful process for which frontier capabilities to include in released models, and believe as we go forward that it is critically important that we are working closely with the US government to best protect the most capable models from efforts by adversaries and competitors to take US technology.”
A rising tide can lift all boats. Only maintaining existing copyright protections will lead to a robust, free market where creators are incentivized to make high quality works and AI companies are incentivized to license them. Importantly, in this robust market, AI companies would continue to have access to quality content which is critical for training and outputs. The American values of IP protection have been a cornerstone in our country’s innovative spirit and competitive edge over foreign adversaries. Protecting IP is a matter of preserving the core principles that distinguish American businesses in the global market. For the history of the U.S., copyright and innovation have gone hand in hand and there is no reason to deviate from that successful combination as we build the next chapter.