French Lawmakers Propose Law To Tax AI-Generated Works Based On Copyrighted Material

The French National Assembly, on September 12, proposed a law to establish a taxation regime for works generated by artificial intelligence (AI) using works, whose origin remains uncertain. Through the proposed law, the government aims to tackle Copyright concerns associated with AI and encourage AI systems to respect “Copyright and creation”.

Acknowledging that AI is disrupting traditional categories of literary and artistic creations developed by a human mind that define Copyright laws in many countries, the National Assembly observed that restricting exploitation of AI generated works would enable fair distribution of remuneration among the original creators.

“…strictly controlling the exploitation of works generated by AI would make it easier to collect the remuneration received from these works and to guarantee fair and equitable remuneration for their exploitation, thus contributing to the encouragement of innovation and promoting artistic diversity. All made possible by traceability by making identifiable the authors and artists who should have benefited from an authorization request before their creations and interpretations are swallowed by an algorithm which uses or draws inspiration from them alongside thousands others,” the lawmakers stated.

Why it matters:

The non-licensed use of data available on the internet for building AI systems by companies is a critical point of contention between AI developers and artists, publishers, who have raised concerns about infringement of their Copyrighted works by AI. To what extent can existing works be used for machine learning purposes without copyright infringement, is also a critical question that remains unaddressed.

As countries aim to address Copyright concerns associated with AI in their respective frameworks for AI regulation, the focus has primarily been on disclosure and transparency norms, rather than licensing or authorisation. For example, the European Union had proposed in April that companies launching generative AI tools, such as ChatGPT, will have to disclose any copyrighted material used for training their AI systems. Whereas, China included stringent provisions for use of data from legitimate sources, and non-violation of intellectual property rights, in its rules for generative AI. In the US, a district court decided that AI-generated works cannot be protected under the US Copyright law.

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France has taken a step ahead in proposing for a taxation system for ensuring appropriate credit and remuneration to compensate for the human labour that the AI system is built upon. However, there arise questions as to how will the tax rules apply for derivate works produced from samples of output generated by AI systems that already obtain permissions for people contributing to the software? Similarly, sectoral issues can raise further complications that can hinder effective implementation of the law.

What does the proposed law by French lawmakers say?

• The proposed rules are amendments to the Intellectual Property Code of France and are applicable to existing Copyright-protected works that are integrated into an AI system and also require authorization from the authors or rights holders.
• It observes that, “When the work is created by artificial intelligence without direct human intervention, the only rights holders are the authors or rights holders of the works who made it possible to design said artificial work.”
• Article 2 of the draft amendment states that the “collective management of rights” to AI-generated works can be administered by the authors’ societies or other collective management organizations. These are entities that are authorised to represent the rights holders and to collect remuneration for the exploitation of the copy of the works, that is in accordance by their company rules.
• Further, for AI-generated works, it is imperative to state “work generated by AI” as well as to insert the name of the authors of the works that served as underlying data for generating the said AI work.
• Article 4 of the proposed law states that in cases where origin of the works used to create AI-generated work cannot be determined, the body responsible for collective management of works defined under the first point of this section will benefit from the taxation. The tax will be imposed on the company which operates the said AI system.