The government has announced it will come up with a new code of practice to replace an earlier approach that faced opposition from the creative sectors.

Latham previously reported on the UK government’s proposal to introduce a new copyright and database exception that allows text and data mining (TDM) for any purpose, provided that the party employing TDM obtains lawful access to the material (June 2022 TDM Proposal). The UK government has now announced that it is abandoning this proposal, and intends to consult with AI firms and rightholders to produce a code of practice to support AI firms to access copyrighted work as an input to their models, whilst ensuring protections on generated output to support rightholders. It has foreshadowed that this code of practice, due by summer 2023, may be followed up with legislation if it is not adopted or agreement is not reached.

UK Government Abandons Proposal

TDM is the use of automated computational techniques to analyse large amounts of information to identify patterns, trends, and other useful information. TDM typically requires copying the material to be analysed, which necessitates acquiring a licence from rightholders or relying on a legislative exception.

UK law currently provides a copyright exception for TDM which is subject to a number of limitations, including that the purpose of the TDM must be non-commercial research, and that the researchers in question must have lawful access to the material. Rightholders cannot opt out of this relatively narrow exception, other than through limiting lawful access to their material.

The June 2022 TDM Proposal was broader than the current TDM exception because it also covered commercial TDM activities, and provided an exception with respect to database rights as well. Rightholders would not be able to opt out of the proposed broadened TDM exception, but could choose the platform where they make their works available, and whether and the basis upon which they charge for access. The UK government had indicated that the June 2022 TDM Proposal would be followed by draft legislation, but such legislation did not ultimately materialise.

George Freeman, Minister of State for Science, Technology, and Innovation, announced on 1 February 2023 that the UK government has abandoned its June 2022 TDM Proposal.

Speaking before the House of Commons, Minister Freeman said:

• the June 2022 TDM Proposal was “perhaps…not correctly, fully or properly drafted”;
• some issues surrounding TDM are still worth pursuing. For instance, both technology firms and researchers have reported difficulties in identifying rightholders to negotiate with, which was holding back research;
• the position surrounding TDM exceptions is more complex than the 2022 TDM Proposal suggested; and
• any proposed TDM exception must be proportionate, appropriate, and strike an appropriate balance between the interests of the UK’s creative, digital, and AI sectors.

Minister Freeman articulated the need for a “middle ground” to enable rightholders to set out the terms on which they are prepared to have their material accessed, to allow those engaged in TDM to negotiate licences, and to allow individuals to opt out of having their material accessed by those engaged in TDM.

AI in the Public Consciousness

The rapid uptake of AI and their entry into the public consciousness is also evident in the UK government’s attempt to invoke potential public concerns about TDM. In justifying the need for a “middle ground”, Minister Freeman specifically noted that “some [people] may want to completely opt out and say, “I just never want to see my image turned into an avatar, ever.”” This statement suggests that the appropriate scope of TDM exceptions is far from just a technical legal debate between technology companies, researchers, and those in the creative sectors, and is likely to attract broader public interest and input going forward.

Proposal for Code of Practice

On 15 March 2023, a policy review by Sir Patrick Vallance titled “Pro‑innovation Regulation of Technologies Review – Digital Technologies”, commissioned by the UK government, was published. In that review, Sir Patrick recommended that the government announce a clear policy position on the relationship between intellectual property (IP) law and generative AI to provide confidence to innovators and investors. He noted that “there remains a lack of regulatory clarity as to the direction of those reforms, particularly for AI firms deploying TDM techniques to generate new content. Creating an environment in which TDM is enabled in the UK would attract investment, support company formation and growth, and show international leadership.”

The UK government in its response to this review indicated its intention to provide clarity in relation to the application of IP law to the AI sector. To this end, it will produce a code of practice by summer 2023 which will “provide guidance to support AI firms to access copyrighted work as an input to their models, whilst ensuring there are protections (e.g., labelling) on generated output to support right holders of copyrighted work”. To inform the code of practice, it will “convene a group of AI firms and rights holders to identify barriers faced by users of data mining techniques when accessing copyright materials. An AI firm which commits to the code of practice can expect to be able to have a reasonable licence offered by a rights holder in return.” This proposal for a code of practice is also consistent with the non‑statutory approach to AI regulation set out in the UK government’s AI policy white paper “A pro‑innovation approach to AI regulation” published on 29 March 2023.

By involving both the AI and creative sectors, the UK government seeks to create a balanced and pragmatic code of practice that will enable both sectors to grow in partnership. However it has foreshadowed that this code of practice may be followed up with legislation if it is not adopted or agreement is not reached.

Next Steps

Stakeholders should await the release of the UK government’s proposed code of practice, as well as the outcome of any further consultations on the scope of TDM exceptions.

It remains to be seen, among other points, whether any revised TDM exception proposal will more closely align with the exception that the EU introduced in 2019 under the Directive on Copyright in the Digital Single Market, which allows rightholders to opt out of the exception, save in respect of scientific research.

The predicted proposal on a “reasonable licence” is also worth noting, given potential parallels with the Fair, Reasonable and Non-Discriminatory (FRAND) licensing of Standard Essential Patents (SEPs), which are patents that are essential for the implementation of a technical standard. In a FRAND context, the implementer of a technical standard typically has the right to obtain a licence to the SEPs underlying that standard from the relevant patent owner(s) on terms which are FRAND, so long as its conduct vis‑à‑vis the patent owner is that of a “willing” licensee. Where the relevant patent owner and implementer cannot agree on FRAND licence terms for the use of a standard (including with respect to the royalties payable to the patent owner), then they may turn to an independent third party to determine the terms of such a licence. The English High Court has recently clarified various principles underlying FRAND licensing in Interdigital Technology Corporation & Ors v Lenovo Group Ltd [2023] EWHC 539 (Pat), including in relation to determining the terms of a FRAND licence, and the behaviours which are indicative of being a “willing” licensor and licensee.

More broadly, whether this change of position on TDM might foreshadow any additional changes to the UK government’s AI agenda remains to be seen, noting its stated aim “to secure the UK’s position amongst the global AI superpowers”.