Copyright Office Seeks Comments on Compulsory Copyright License for Generative AI

Last year, the United States Copyright Office announced a wide-ranging initiative to examine the copyright law and policy issues raised by artificial intelligence technologies.¹ While much has been written recently about such issues, the Copyright Office has raised at least one question that has so far received relatively little attention. Specifically, should Congress consider establishing a “compulsory licensing regime”² for artificial intelligence technologies that use copyrighted works as training materials?

For more than a century, Congress has used compulsory licensing as a tool to resolve legal disputes arising from the intersection of copyright law and new technologies. Such licenses, however, remain a relatively esoteric subject even among intellectual property lawyers. In this article, we provide a brief history of compulsory licensing in the United States and highlight the key themes raised by commenters addressing the Copyright Office’s questions on this subject.

An Introduction To Compulsory Licenses

The Copyright Act vests copyright owners with several exclusive rights, including the exclusive rights to copy, display, and publicly perform their works. Those exclusive rights are tempered by the fair use doctrine, which permits a variety of uses of copyrighted works that otherwise would require a license. Generally, where the fair use doctrine does not apply and a license is necessary, the question of whether or not to grant such a license is left up to the copyright owner’s discretion. However, since the early 1900s, Congress has occasionally enacted statutory “compulsory” licenses that, unlike ordinary copyright licenses, are not within the control of individual copyright owners and are instead available to any entity who complies with their terms.

Such compulsory licensing regimes have historically reflected a rough, imperfect compromise between the owners of new technologies, who argue that their uses of copyrighted works are non-infringing under current laws, and copyright owners, who argue that new technologies are unfairly profiting from their works without providing compensation. For copyright owners, the benefit of a compulsory licensing regime is the recognition that the new technology affects their exclusive rights in their works and requires compensation. For the owners of new technologies, a compulsory licensing regime ensures continued access to the copyrighted works that their products rely upon, without the need to negotiate with individual copyright owners, so long as they comply with the terms of the new license.

For example, in 1909, Congress created the United States’ first compulsory licensing regime in order to resolve a legal battle over what was then a relatively new technology: player pianos that were capable of reproducing a musical work nearly automatically. Early player pianos relied on perforated paper rolls onto which musical works had been translated into cutouts; those cutouts permitted air pressure to pass through and operate pneumatic devices that played musical notes.

This raised a legal issue: by translating a musical work into cutouts on a perforated roll, did player piano companies infringe the copyright owner’s right to create a “copy” of their work?

In 1908, the Supreme Court said no:

These perforated rolls are parts of a machine which, when duly applied and properly operated … produce musical tones in harmonious combination. But we cannot think that they are copies within the meaning of the copyright act. It may be true that the use of these perforated rolls, in the absence of statutory protection, enables the manufacturers thereof to enjoy the use of musical compositions for which they pay no value. But such considerations properly address themselves to the legislative, and not the judicial, branch of the government.³

Congress responded to this suggestion. In the following year, it enacted legislation that codified a copyright owner’s exclusive right “to make any arrangement or setting of [a musical composition] … in any system of notation in any form of record … from which it may be read or reproduced,” e.g., a perforated roll.⁴ Simultaneously, it tempered that right by providing for the first form of compulsory licensing in the United States:

[A]s a condition of extending the copyright control to such mechanical reproductions … whenever the owner of a musical work has used or permitted … the use of the copyright work upon the parts of instruments serving to reproduce mechanically the musical work, any other person may make similar use of the copyrighted work upon the payment to the copyright proprietor of a royalty of two cents on each such part manufactured.…⁵

This license is typically referred to as the “mechanical license.” Although Congress has modified it over time to embrace new technologies, and to change its terms, it still exists today, currently codified in 17 U.S.C. § 115.

More than a half century after creating the mechanical license, Congress again considered difficult copyright questions presented by the emergence of a new technology: cable television. The main purpose of early cable television systems was to retransmit over-the-air broadcast signals to geographic locations that could not easily receive the signals via an antenna. A debate quickly emerged: when a cable system retransmitted an over-the-air broadcast channel, did it infringe the right of the owners of the programming on that channel to publicly perform their works?

In 1968 and 1974, a pair of Supreme Court decisions held that the retransmission of broadcast signals by cable systems did not infringe copyright owners’ public performance rights, whether the broadcast signals were transmitted from within the cable system’s local television market⁶ or from a distant one.⁷ As it had at the start of the century, however, the Supreme Court called again on Congress to resolve the many competing interests at stake:

We have been invited by the Solicitor General in an amicus curiae brief to render a compromise decision in this case that would, it is said, accommodate various competing considerations of copyright, communications, and antitrust policy. We decline the invitation. That job is for Congress.⁸

After years of debate, Congress codified a new compulsory license for cable television in the 1976 Copyright Act. As with the mechanical license before it, the new regime simultaneously accomplished two things. First, it expanded the scope of a copyright protection to render retransmission of programming by cable television systems potentially infringing in the absence of a license.⁹ Second, it tempered that right by providing a compulsory license for such retransmissions, provided that the cable systems complied with relevant FCC regulations and paid a semi-annual royalty fee to the Copyright Office.¹⁰ Like the mechanical license, the cable compulsory license still exists today, currently codified at 17 U.S.C. § 111.

These examples are not exhaustive, and Congress has continued to enact compulsory licensing regimes since the 1970s. For example, in the early 1990s, Congress created a companion to the cable compulsory license for satellite television carriers.¹¹ And in the Digital Millennium Copyright Act, enacted in 1998, Congress created a compulsory licensing regime that permits certain “noninteractive” Internet streaming services to make digital performances of sound recordings.¹²

What Are Commenters Saying About a Compulsory License for Generative AI?

Many commenters, representing both copyright owners and artificial intelligence companies, have weighed in on the Copyright Office’s compulsory license question. Several key themes emerge from these comments.

First, recalling the early debates around the mechanical license and the cable license, some commenters assert that a compulsory license is not necessary because generative AI’s use of copyrighted works to train models is non-infringing under current copyright laws. As the Computer & Communications Industry Association argues, for example:

The existing statutory framework and related case law concerning the fair use right, 17 U.S.C. § 107, clearly permit the ingestion of large amounts of copyrightable material for the purpose of an AI algorithm or process learning its function. Numerous appellate courts have correctly found the mass copying of raw material to build databases, including commercial databases, for automated computational analysis to be fair use under 17 U.S.C. § 107…. Training AI is a form of this computational analysis.¹³

These commenters also note the existence of several active lawsuits presenting the same or similar questions and suggest that courts should have the chance to decide the issue before a compulsory license is considered.

Second, many commenters oppose compulsory licensing in favor of a marketplace-based solution. According to some of these comments, the free market has already begun to provide options for licensing works in the AI context. The Copyright Clearance Center, for example, argues that it “already offers market-based, global non-exclusive voluntary licenses to support AI in the commercial research, schools, and education technology sectors” and that those licenses “were built with rightsholders and users based on agreed understandings of needs and market conditions.”¹⁴ These commenters also point to the many criticisms leveled against existing compulsory licenses, including the high costs of administering the licenses, as well as litigation costs associated with setting rates and determining how to allocate royalties among many different copyright owners.

Third, numerous comments raised concerns that a compulsory licensing regime would be likely to under-compensate copyright owners. For example, the National Music Publishers’ Association argues “[c]ompulsory licensing is an extreme remedy that deprives copyright owners of their right to contract freely in the market, and takes away their ability to choose whom they do business with, how their works are used, and how much they are paid.”¹⁵ Under-compensation may also occur because of the difficulties associated with tracking uses for royalty-reporting purposes. As the Music Workers Alliance argues, “[o]nce the sounds and styles music workers have spent our lives perfecting have been ingested in a generative AI data bank, it will likely be very difficult to detect the myriad uses to which they will be put. This will create significant obstacles to our ability to quantify, and to fairly monetize, the use of our works.”¹⁶

Finally, at least some commenters expressed openness to further consideration of a potential compulsory licensing solution. For example, BigBear.ai argued that a compulsory license is “worthy of consideration,” noting that the license “would certainly facilitate AI innovation.”¹⁷ Likewise, while the American Intellectual Property Law Association does not “believe that the implementation of a compulsory licensing system is appropriate at this time,” it is “open to, and interested in, considering any proposed legislation or rulemaking pertaining to such a system.”

Conclusion

The Copyright Office’s AI-initiative is still in its early stages, and the Copyright Office has not yet addressed the comments it has received concerning compulsory licenses. Any further consideration of the issue will likely raise many additional questions that these initial comments largely left unaddressed, including which specific activities would be covered by a compulsory license and the appropriate level of compensation to copyright owners. If history is any guide, it may be years before such questions are answered.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.