AI training on copyrighted works may violate derivative rights, US court told

AI Training Use Treated as Licensing Market

An amicus curiae brief has been submitted in the consolidated copyright infringement case against OpenAI and Microsoft in a United States federal court. The brief argues that feeding books, news articles and other copyrighted material into artificial intelligence systems should be viewed as a distinct licensing market. It further contends that this kind of use may amount to the creation of derivative works under copyright law.

What the Court Has Been Told

The submission is not from the parties themselves but from an amicus, a third party offering its perspective to assist the court. Its central claim is that AI training input is not merely incidental copying. Instead, the brief asks the court to treat the ingestion of protected works for training purposes as a separate commercial activity that ought to be licensed. If accepted, that framing could place training datasets within the scope of derivative rights rather than treating them as a distinct, unregulated use.

Why It Matters for Businesses

For Indian legal, tax and compliance teams, the outcome of this litigation could shape how cross-border licensing arrangements are structured. Companies building or deploying AI models may face questions about whether training data requires clearances separate from the rights already obtained for reading, archiving or internal reference. This has knock-on effects for vendor contracts, indemnities and representations in technology agreements. It also touches transfer pricing and withholding tax analysis, since a new licensing market implies new categories of payments for the use of copyrighted content. Organisations relying on scraped or licensed datasets should review whether their permissions extend to training, fine-tuning and model improvement.

What to Watch Next

The court's response to the amicus argument will indicate whether derivative rights are read broadly in the AI context. Parallel proceedings and any legislative or…