The Prime Minister is correct to aim to make the UK an ‘AI superpower’ and the ‘best place to start and scale an AI business’. To carry through this ambition, the Government will need to make difficult decisions: we will need to invest in energy infrastructure, provide datasets to developers and attract top global talent. We will also need to actually legalise building AI models in the UK – something that is currently obstructed by outdated copyright laws.
It is no accident that virtually no AI companies train their models in the UK. Under current laws, companies cannot train on publicly available data, discouraging investment and forcing firms to relocate to jurisdictions with more favourable copyright regimes. For example, Stability AI, one of the UK’s few companies training a foundation model, has established offices in the US and Japan in part due to these regulatory constraints.
Restrictive regimes like the status quo or an opt-out model (as proposed in current plans for copyright reform) are a lose-lose policy: they hurt economic growth without protecting the creative industry. Even if your content is protected under UK laws, companies operating from other jurisdictions (like the US or China) are not bound by our copyright rules. Thus, restrictive laws do nothing for rights holders – who would still see their data being used abroad – but they do harm our AI sector and businesses looking to adopt new technologies.
The impact of such a restrictive approach is severe. AI is a general-purpose technology with economy-wide implications. A restrictive copyright regime chills investment, slows tech diffusion and harms consumers. The best talent and startups will relocate. The best products – faster cancer treatments, cheaper logistics, smarter energy grids – won’t launch in the UK. The UK risks forfeiting at least £29.9 billion in economic growth over the next five years if it implements a restrictive regime like the opt-out model.
But the Government has at its disposal a cost-free intervention that would strengthen the UK’s AI capabilities: liberalising the text and data mining copyright regime. Japan is a great example of a country that has been able to balance exceptions to copyright law with an IP regime that protects its large creative sector.
Since 2009, Japan has introduced clear exceptions to copyright law for data analysis and machine learning (Article 30-4 of the Japanese Copyright Act). This does not mean Japan is the wild west of IP. It is highly respectful of intellectual property, and values both its research-intensive sectors of the economy and its large creative sector. In fact, the Japanese government sees IP as strategically important for the country’s economy: it has established an Intellectual Property Strategy Headquarters, chaired by the Prime Minister and comprising all Cabinet members.
Rather than restricting AI development and training, Japanese law focuses on copyright infringement at the point of content generation and utilisation. It applies the same standards to AI-generated outputs as to human-created works: AI models may learn from copyrighted materials, but they infringe if they replicate protected content. This approach aligns with longstanding copyright principles: an artist or journalist may be influenced by and learn from past works, but they are infringing if they reproduce protected material in their own work.
Japan’s framework also prevents AI developers from fine-tuning models in ways that closely mimic original works or using copyrighted materials for retrieval-augmented generation systems designed to replicate the expression of a specific creator.
The UK should adopt a similar model that better aligns with the legal principles of copyright law while ensuring that the AI sector is not unduly disadvantaged. Such a model would also continue to provide rights holders a clear path to address genuine instances of copyright infringement.
Protecting the creative industries does not require restrictive copyright laws. The UK’s creative sector has always adapted to technological change, from vinyl to streaming and from cinema to digital distribution. AI is another evolution – one that presents new opportunities. There are better ways to support the creative industries through this change than imposing restrictive copyright policies. Reversing recent cuts to arts funding – financed by economic growth spurred by AI – would be a more sustainable solution. Partnerships between AI labs and creative industries could also create new revenue streams and opportunities for artists and content creators.
In fact, AI could actually end up benefiting the sector. A recent study found that the creative industries are second only to IT in AI adoption rates, with a growing number of artists actively using AI in their work. Among independent musicians, 60% already use AI in their creative processes.
The Government must decide whether it wants the UK to be a leader in AI or a bystander. Adopting a Japan-style text and data mining exception will allow the economy to flourish while ensuring that rights holders remain protected. The alternative – a restrictive copyright regime – would leave the UK isolated, unable to compete with more forward-thinking jurisdictions. The choice is clear: reform copyright law and lead in AI, or maintain outdated rules and fall behind.
Read UKDayOne’s report: ‘Copyright & AI: The Case for a Pro-Growth Approach’
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