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Lokesh Vyas and Yogesh Badwal This post was originally published on Spicy IP. In the previous part, we examined whether the opt-out mechanism, as claimed in Gen-AI litigations, constitutes a prohibited formality for the “enjoyment and exercise” of authors’ rights under Article 5(2) of the Berne Convention. And we argued no. In this post, we address the second question: Can opting out be permitted as an exception under the three-step test outlined in Article 9(2)? If you haven’t seen the previous post, some context is helpful. (Or, you can skip this part) As we mentioned in the last post, “Many generative AI models are trained on vast datasets (which can also be copyrighted works) scraped from the internet, often without the explicit consent of content creators, raising legal, ethical, and normative questions. To address this, some AI developers have created and claimed “opt-out mechanisms,” allowing copyright holders or creators to ask that their works not be used in training (e.g., OpenAI’s Policy FAQs).  Opt out under the Copyright Exception A  question arises here: What are the other ways opt-out mechanisms can be justified if the states want to make a mechanism like that? One may say that opt-outs can be valid under the Berne Convention if an exception (e.g., an AI training exception with an inbuilt opt-out possibility) passes the three-step test. And this way, opt-outs can be regarded as a legitimate limit on holders’ exclusive rights. For reference, the three-step test was created in the 1967 revision conference, later followed in Article 13 of TRIPS and Article 10 of WCT. The test creates a room for the nations to make certain exceptions and limitations. Article 9(2) authorises the member countries “to permit the reproduction” of copyright works in 1.) “certain special cases, provided that such reproduction 2.) does not conflict with a normal exploitation of the work and 3.) does not unreasonably prejudice the legitimate interests of the author”.  Although we don’t delve into the test, how opting out can be a part of an exception can be understood from an example. For instance, as Ginsburg exemplifies, if a country states that authors lose their translation rights unless they explicitly reserve or opt out of them, it would violate Article 5(2) because such rights under Berne must apply automatically, without formalities. This actually happened with Turkey in 1931, whose application for membership was rejected due to the condition of deposit for translation rights in its domestic law. (See Ricketson and Ginsburg’s commentary, paragraph 17.18.)  But if an exception (like allowing radio retransmissions in bars) already complies with Berne’s provisions and applies equally to all authors, then letting authors opt out of that exception would give them more rights than Berne requires. And this should be permissible.  Notably, introducing an exception, such as for AI training, must first pass the three-step test. Opt out can be built therein. However, remember that every exception presupposes a prima facie infringement. Within that frame, the opt-out offers the author a chance not to lose. Thus, it creates an inadvertent expansion of her rights beyond the convention.  Additionally, opt-out can fare well with the three-step test due to the factor of “equitable remuneration to authors.” As Gompel notes in his piece, “…‘opt out’ eases compliance with the three-step test because it mitigates some of the adverse effects of the proposed copyright exception. That is, it enables authors to retain exclusivity by opting out of the compensation scheme.”  Another question also exists: Did Berne contain particular provisions that directly allowed an opt-out arrangement? Well, the answer is Yes. Does opting out equal the right to reserve under Article 10bis? Not really. Setting aside the debate over formality and the three-step test, the Berne Convention contains an opt-out-style provision, albeit limited, where authors must explicitly reserve their rights to avoid specific uses of their work. Relevant here is Article 10bis of the Convention, which allows member countries to create exceptions for the reproduction of works published in newspapers on, among other topics, current economic, political, or religious issues. However, it also allows the authors to ‘expressly reserve’ their work from reproduction. Indian Copyright Act, 1957 also contains a similar provision in Section 52(1)(m). Interestingly, the right to reserve exploitation has been part of the Berne Convention since its earliest draft. It first appeared in Article 7 alongside the provision on formalities, which was numbered Article 2 in the draft. Article 7 became Article 9(2) in 1908, when formalities were prohibited and the no-formality rule entered the Berne Convention.  This historical pairing raises a strong presumption: opting out of a specific mode of exploitation cannot automatically be deemed a prohibited formality. Ginsburg confirms this, citing the 1908 Berlin Conference, which clarified that the reservation/opt-out clause (then Article 9(2)) was not considered a formality. But can this special setting (created in Article 10bis(1)) be used to open the door for general opt-out AI exception measures by countries? We doubt it. As the negotiation history of the 1967 revision conference suggests, Article 10bis(1) is a lex specialis, i.e., a narrow and specific exception (See page 1134 of Negotiations, Vol. II). This means that it may derogate from the general no-formalities rule, but it cannot serve as a model for broader declaratory measures.  Conclusion The upshot is that opt-outs may be de facto formalities. However, not all formalities are prohibited under the Berne Convention. The convention enables countries to make some formalities on “the extent of protection.” Three key points emerge from this discussion: One, opting out may not be a formality that prevents the enjoyment and exercise of rights, as Gompel and Sentfeln confirm, and Ginsburg argues otherwise. Two, it can be a part of an AI training exception if such an exception can pass the three-step test. When applying this test, opting out would support the factor of equitable remuneration. Three, Article 10(bis) on the right to reserve cannot be read expansively. While it can be used to justify the three-step test as Sentfleben does, it might not be extended generally. Okay. That’s it from our end. À bientôt’ Primary Sources:-

Lokesh Vyas and Yogesh Badwal This post was originally published on Spicy IP. Bonjour, Lately, we’ve been cogitating on this curious concept called the “opt-out”, which has been cropping up with increasing frequency in generative AI litigation, including in India. The EU and the UK are taking the idea seriously and considering giving it statutory teeth. On the surface, it is sold as a middle path, a small price to pay for “balance” in the system. However, at least prima facie, it seems like a legal absurdity that fractures its modern foundational logic, where authors receive default copyright without any conditions. The opt-out model, the argument goes, reintroduces formality through the back door, a de facto formality of sorts. This shifts the burden onto authors and rights holders to actively monitor or manage their works to avoid unintended inclusion in the AI training. There have been questions about whether such an opt-out scheme is compatible with the Berne Convention, which prohibits the same under Article 5(2), e.g., here, here, and here.  Given the complex nature of this issue and the fact that many such discussions happen behind paywalls, making them inaccessible to the public, we thought it would be beneficial to share our ideas on this topic and invite further reflection. This two-part post mainly focuses on the legality of opting out without addressing its implementability and applicability, which raises several questions (e.g., as discussed recently in Martin Sentfleben’s post). In short, we probe whether opt-outs violate the Berne Convention—the first international copyright law treaty binding on all members of the TRIPS and WCT.  We answer it through two questions and discuss each one separately. First, is opt-out a prohibited formality for the “enjoyment and exercise” of authors’ rights under Article 5(2) of the Berne Convention? Two, can it be permitted as an exception under the three-step test under Article 9(2)? We answer the first question in the negative and the second in the positive. Additionally, we also examine whether Berne already has a provision that can allow this without looking at the details.  This post addresses the first question. What Makes Opts Outs So Amusing – The Flip? Many generative AI models are trained on vast datasets, which can also include copyrighted works scraped from the internet without the explicit consent of content creators, raising legal, ethical, and normative concerns. To address this, some AI developers have created and claimed “opt-out mechanisms,” allowing copyright holders or creators to ask that their works not be used in training (e.g., OpenAI’s Policy FAQs).  Herein lies the catch: it requires authors and copyright holders to explicitly say “No” to training by adding a robots.txt tag to their website with specific directives that disallow web crawlers from accessing their content. (E.g., see this OpenFuture’s guide here) Thus, instead of creators being protected by default, they are supposed to opt out to prevent exploitation. One could say that this flips the logic of copyright on its head–from a presumption of protection to a presumption of permission. But that’s not so simple.  Notably, opting out is not a novel argument. In fact, it can be dated back at least to the 1960s in the Nordic countries’ model of “Extended Collective Licensing” (ECL), which mandates collective licensing while preserving the author’s right to opt out. Other notable academic literature on opt-out can be found here, here, here, and here, dating back over two decades. Swaraj also covered this issue a decade ago. In particular, we must acknowledge the scholarship of Jane Ginsburg, Martin Sentfleben, and Stef van Gompel, who have significantly influenced our thinking on the topic. Two Key Questions: Opt out as a Formality and opt out under a permitted Exception Formality Argument first.  Here, the argument goes that the opt-out is a prohibited formality under Article 5(2) and should not be allowed. However, we doubt it. Let’s parse the provision first. Which states: “(2) The enjoyment and the exercise of these rights shall not be subject to any formality; such enjoyment and such exercise shall be independent of the existence of protection in the country of origin of the work. Consequently, apart from the provisions of this Convention, the extent of protection, as well as the means of redress afforded to the author to protect his rights, shall be governed exclusively by the laws of the country where protection is claimed.” (Authors’ emphasis) For context, the provision pertains to “Rights Guaranteed outside the Country of Origin” for both national and foreign authors. And the question of no-formality pertains particularly to foreign authors. In other words, by removing formality requirements in the country where protection is claimed, the provision enabled authors to automatically receive protection without needing to satisfy foreign formalities. This matters because while countries can impose conditions on their own nationals, it’s generally assumed that they will not treat their own authors worse than foreign ones. The post follows this presumption: if a country cannot burden foreign authors, it’s unlikely to impose stricter terms on its own people. Although the removal of formalities had been discussed in the international copyright law context as early as the 1858 Brussels Conference, an important event in the development of international copyright law, it was not implemented until 1908. This change addressed practical difficulties, including identifying the “country of origin” when a work was published in multiple countries, and the challenges courts faced in enforcing rights without formalities. (See International Bureau’s Monthly Magazine, January 1910) Tellingly, while a country can make formalities for its people, it cannot do so for foreign authors. It’s generally assumed that a country would not obligate its authors more than it does to foreign authors. Textual Tensions of Article 5(2) While the phrase “any formality” in the first line of the provision might suggest that all kinds of formalities—including de facto ones like opt-out mechanisms—are prohibited, that is arguably not the case. We say this because the provision is divided into two parts, and the prohibition on formalities applies only to the first part, which is germane to enjoying and exercising rights. The second part of the provision, beginning with “Consequently”, gives leeway to the states wherein they can make formalities regarding the ‘extent of protection’ and

Luca Schirru and Sean Flynn At the beginning of May, the report “Copyright and Artificial Intelligence. Part 3: Generative AI Training” was released, sparking a wide range of debates due to its content and the political issues surrounding its release. In this short contribution, we aim to briefly introduce the report and touch on some of the key content and political issues currently being discussed. SCOPE AND STRUCTURE OF THE REPORT The first thing that stands out about the report appears right on its first page: “pre-publication version”: a label reported as unusual and potentially unprecedented. The 113-page document addresses one of the most controversial issues at the intersection of copyright and Generative AI: the use of protected content to train Generative AI systems.  While most sources focus on fair use, the report also includes sections on “technical background,” “infringement,” and “licensing for AI training”, all of which are a “must read,” especially for those just joining the discussion and feeling overwhelmed by the hundreds of thousands of articles, blogs, books, and other resources available on the topic. The report attempts to summarize some of the main issues in both the legal and technical fields. The approach taken by the USCO is sometimes described as “favorable to copyright owners” or as “a mixed bag”, receiving both praise and criticism on multiple fronts, as we will illustrate below. POLITICAL CONTEXT AND CONTROVERSIES The timing of the report While it may be early to determine the precise reasons behind the (unusual) release of a pre-publication version, several explanations have been speculated, though none have been confirmed. The report states that its early release was made “in response to congressional inquiries and expressions of interest from stakeholders.” However, questions have been raised that may relate to concerns about potential restrictions under Trump Administration, which is arguably aligned with positions favorable to big technology companies, as well as fear that the report could be buried in the event of the dismissal of the Register of Copyright, or the potential influence on ongoing legal cases. Regarding the latter, there have been concerns about the timing of the report and how it could interfere with the outcomes, especially the fair use analysis, of ongoing lawsuits. As noted, “it could put a thumb on the scale for how the courts will resolve these cases,” without giving the parties an opportunity to address any potential gaps in the report, which could have a significant impact on other GenAI cases. Leadership changes and copyright policy While the timing of the notice of dismissal of Shira Perlmutter (Register of Copyrights at the time the report was drafted) and the release of the report could give rise to the inference that the report was the sole reason for her dismissal, other events may have influenced the decision as well. The day before the release of the (pre-publication version of the) report, the Librarian of Congress, Carla Hayden, who had appointed Shira Perlmutter, was dismissed. Therefore, concerns about additional leadership changes may also have played a role in the decision to release the pre-publication version. An extra layer of complexity arises when one considers that Perlmutter’s position was one appointed and overseen by the legislative branch. The argument that the report may have contributed to the dismissal has often been linked to an alleged alignment between the Trump Administration’s position and that of big tech companies. This connection can be inferred from Rep. Joe Morelle’s statement, reported by POLITICO, claiming it is “no coincidence [Trump] acted less than a day after [Perlmutter] refused to rubber-stamp Elon Musk’s efforts to mine troves of copyrighted works to train AI models.” Finally, as reported by Authors Alliance, on April 30, “American Accountability Foundation urges President Trump to fire ‘deep state’ librarians, targeting Carla Hayden and Shira Perlmutter,” based on the claim that Hayden was supporting Biden policies, particularly in the areas of intellectual property and transgender rights. FAIR USE AT THE HEART OF THE DEBATE While the report addresses multiple issues, both legal and technical, the most debated (and anticipated) topics are those related to whether the use of protected content to train Generative AI systems qualifies as fair use. The fair use chapter is the longest in the report, comprising nearly half of its content. It includes a factor-by-factor analysis applied to different scenarios, with the USCO identifying the first and fourth factors as taking on particular prominence in the analysis. In the section titled “weighing the factors,” the Office states the following: “As generative AI involves a spectrum of uses and impacts, it is not possible to prejudge litigation outcomes. The Office expects that some uses of copyrighted works for generative AI training will qualify as fair use, and some will not. On one end of the spectrum, uses for purposes of noncommercial research or analysis that do not enable portions of the works to be reproduced in the outputs are likely to be fair. On the other end, 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. Many uses, however, will fall somewhere in between.” (p.74) While there has been some agreement with certain parts of the report, such as the acknowledgment that litigation outcomes cannot be prejudged, and the view that “research and academic uses should be favored under the fair use analysis”, one of the most criticized aspects is the interpretation of the fourth factor in the fair use analysis, in which the Report concludes that original works created by AI that are not substantially similar to works used in the training may nonetheless result in “market dilution” that should weigh against a fair use analysis. According to USCO’s report: “While we acknowledge this is uncharted territory, in the Office’s view, the fourth factor should not be read so narrowly. The statute on its face encompasses any “effect” upon the potential market.373 The speed and scale at