The House of Lords Communications and Digital Select Committee has released its highly anticipated "AI, Copyright and the Creative Industries" Report, examining the UK's existing copyright framework and its applicability to generative AI systems. The Report also examines potential approaches to improve the transparency of the use of training data by AI developers, how rights-holders could express preferences about how their content is used (or not) by AI systems, and examines the emerging market for licensing content for generative AI use. 

The report includes recommendations for the UK government on the policy it should adopt on the use of copyright protected content by AI developers. It was released to pre-empt next week's statutory reporting deadline under the Data (Use and Access) Act, which requires the UK government to publish an economic impact of the policy options it had set out under its Copyright and AI consultation paper alongside a report on the use of copyright works in the development of AI systems. 

The House of Lords report

The House of Lords Report frames the UK as facing a stark choice between two potential futures concerning AI and the UK creative sector. Under the first scenario, the House of Lords envisages a future in which the UK becomes an international lead on licensing-based AI development, with domestic AI development efforts directed towards developing licensed sovereign AI models. This approach, underpinned by a "gold-standard" copyright framework, is expected to strengthen the UK creative sector, an "economic powerhouse" industry whose £124 billion contribution to the UK economy in 2023 is expected to continue to grow.

The second scenario, in which the UK continues to "drift towards tacit acceptance of large-scale, unlicensed use of creative content and long-term dependence on opaque models trained overseas" is presented as a "poor bet", which would sacrifice the UK's creative capacity for speculative AI gains which they expect will largely accrue to a few US-based AI developers. 

The report makes the case that current copyright law is not outdated or in need of reform, but that enforcement by rights-holders is challenging due to widespread unlicensed use of copyright protected works and limited transparency from AI developers about how their AI models have been trained. The Committee therefore asks the Government to strengthen the existing framework in relation to AI, and to crystallise its approach to AI and copyright within the next 12 months. 

Key proposals

The report asks the Government to:

• Rule out the introduction of a new TDM exception with an opt-out reservation of rights mechanism, following the example set recently by the Australian government.
• Develop protections for creators against digital replicas, such as "in the style of" generated content. UK law does not currently have an explicit personality or 'style' right, leaving creators unable to license or protect against breach of their digital personality.
• Introduce statutory provisions requiring AI developers to be transparent about their training data, and enable commercial AI developers to make confidential disclosures to an appropriate regulator.
• Develop a sovereign UK ecosystem of domestically governed AI models, with a focus on developing models which deliver enhanced transparency and respect for copyright. The Report mentions Switzerland's Apertus LLM and the Allen Institute's OLMo project as relevant examples of competitive AI systems whose training data are open to external scrutiny.
• Champion the creation and adoption of a regime of international standards for licensing content for AI use, and labelling of AI-generated content such as deepfakes. The report suggests the Government should consider legislating on this topic, and should outline how it intends to work with Ofcom and platforms. Here, the Report proposes that solutions should be strategic rather than technically prescriptive, to avoid the risk of becoming outdated.
• Reconsider the Creative Content Exchange (CCE) as a complete solution, and make sure that any approach to the question of AI and copyright creates optimal legal, as well infrastructure, conditions for success.

What comes next?

Both AI developers and the creative industries are eagerly awaiting next week's Government report on the use of copyright works in the development of AI systems and the economic impact assessment on its copyright reform proposals. However, the Financial Times suggested that the Government is going to further delay decisions on how to resolve the current tension between AI developers and copyright owners, and that any new legislative intervention will be postponed to next year. The further period of delay is likely to anger the UK creative industries, who have expressed concern that the Government's prevarication on this issue is chilling the market for licensing UK content for AI development.