Copyright Liability and Generative AI: What's the Way Forward?

This paper examines the intricate relationship between copyright liability and generative AI, focusing on legal challenges at the output stage of AI content generation. As AI technology advances, questions regarding copyright infringement and attribution of liability have become increasingly pressing and complex, requiring a revision of existing rules and theories. The paper navigates the European copyright framework and offers insights from Swedish copyright law on unharmonized aspects of liability, reviewing key case law from the Court of Justice of the European Union and Swedish courts. Considering the liability of AI users first, the paper emphasizes that while copyright exceptions are relevant in the discussion, national liability rules nuance a liability risk assessment above and beyond the potential applicability of a copyright exception. The analysis centers in particular on the reversed burden of proof introduced by the Swedish Supreme Court in NJA 1994 s 74 (Smultronmålet / Wild strawberries case) and the parameters of permissible transformative or derivative use (adaptations of all sorts), especially the level of similarity allowed between a pre-existing and transformative work, examining in particular NJA 2017 s 75 (Svenska syndabockar / Swedish scapegoats). Moreover, the paper engages in a discussion over the harmonization of transformative use and the exclusive right of adaptation through the right of reproduction in Article 2 InfoSoc Directive. Secondly, the paper examines copyright liability of AI system providers when their technology is used to generate infringing content. While secondary liability remains unharmonized in the EU, thus requiring consideration of national conceptions of such liability and available defences, expansive interpretations of primary liability by the Court of Justice in cases like C-160/15 GS Media, C-527/15 Filmspeler, or C-610/15 Ziggo require a consideration of the question whether AI providers indeed could also be held primarily liable for what users do. In this respect, the analysis considers both the right of communication to the public as well as the right of reproduction. The paper concludes with a forward-looking perspective, arguing in light of available litigation tactics that clarity must emerge through litigation rather than premature legislative reform. It will provide an opportunity for courts to systematize existing rules and liability theories and provide essential guidance for balancing copyright protection with innovation.