Recent court rulings have started to define the legal boundaries for AI training and the intellectual property rights of the creative industries. The rulings have raised the question of whether a balance can be struck between the needs of the two sectors. Judgments have also focused attention on the obstacles facing the creative industries as they seek to protect revenues for their work.

In November, the UK High Court dismissed copyright claims brought by media company Getty Images against developer Stability AI relating to the training and output of its model, Stable Diffusion. Getty dropped its claims of primary copyright infringement after it was unable to provide evidence of unauthorised copying in the UK. Nick White, Vice-Chair of the IBA Copyright and Entertainment Law Subcommittee, says this highlights the difficulty of reaching a judgment on such claims in the country because ‘all the major AI models […] are not trained here.’

The remaining allegation was of secondary copyright infringement from the download and distribution of Stable Diffusion in the UK. Getty alleged that Stable Diffusion was an ‘infringing copy’, that the creation of the AI model’s internal data – its ‘weights’ – would have constituted copyright infringement if carried out in the UK. The Court ruled however that the ‘weights’ themselves aren’t infringing copies because they don’t store the original images – only patterns and features learned from the training data.

The Court did find Stability AI liable for limited trademark infringement resulting from the watermarks in images that certain versions of Stable Diffusion can generate. Getty hasn’t confirmed an appeal but said it would ‘be taking forward findings of fact from the UK ruling’ in its ongoing case in California.

The judgment ‘is very interesting because it shows how the technicalities of different generative AI technologies can mean that cases go in different ways,’ says Alina Trapova, a lecturer in law at University College London and specialist in AI, IP and the creative industries. She highlights a judgment against OpenAI in November by the Munich Regional Court. In the case, Germany’s music rights society GEMA claimed that ChatGPT had harvested protected lyrics by popular artists to train its language models. ChatGPT’s developer, OpenAI, said its chatbot didn’t store specific training data but only statistical knowledge in its parameters and that any infringements were caused by user prompts.

The judge ruled that AI training constitutes ‘reproduction’ under German copyright law. The Court said that even a ‘fixation’ of copyrighted works – ie, an original idea or expression captured in a tangible, permanent form – in the AI model’s numerical probability values qualifies as a reproduction, as long as the work can later be perceived through technical means.

The Court also found that ChatGPT reproduces complete training data (‘memorisation’), which means it falls outside EU text and data mining exceptions, which permit the use of copyrighted works to train AI models only in certain circumstances, provided rightsholders have the option to opt out. OpenAI is considering an appeal.

In the US, the Bartz v Anthropic class action saw a group of authors and publishers sue the AI company for allegedly infringing copyright by using material from pirated books to train its Claude large language models (LLMs). The Court ruled that Anthropic’s use of books to train its AI system without permission was fair use and didn’t breach copyright law. However, the judge said that copying and storing over seven million pirated books in a central library did infringe copyright. Anthropic has agreed to pay a $1.5bn settlement.

In Kadrey v Meta, a group of authors claimed the tech company had infringed on their copyright by training its Llama LLMs on their work. Judge Vince Chhabria ruled that, in the absence of meaningful evidence of market dilution – ie, an indirect market harm whereby the AI generates ‘new’ but competitive content that substitutes human-created works – from the authors, the copying and training were fair use.

Although Judge Chhabria acknowledged that no other copyright use ‘has anything near the potential to flood the market with competing works the way that LLM training does,’ he said the weakness of the evidence presented by the plaintiffs meant this failed to ‘move the needle.’

‘The content industry’s current weakness relates to evidence,’ says Daniela De Pasquale, an officer of the IBA Technology Law Committee. She explains that none of the major rulings against plaintiffs to date deny the existence of damage to the content industry, or the fact that works were copyrighted. Rather, the rulings were made simply due to a lack of evidence of copyright infringement.

A distinction should be made between AI input and output, adds De Pasquale, who’s a partner at Ughi e Nunziante in Milan. ‘The smoking gun is always the output. If the output is the full lyrics of a song or a passage from a book, then there must have been a corresponding input in which case unauthorised training has taken place and there is evidence of copyright infringement.’ However, often it’s not possible to identify the output as a copy, perhaps because filters have been used to avoid it, ‘making it harder to provide sufficient evidence of copyright infringement,’ she says.

There’s a question as to whether it’s possible to strike a balance between the needs of AI developers and ensuring copyright holders are remunerated for their effort. White, who’s a partner at law firm Level in London, believes ‘there will be some form of meeting in the middle, perhaps a collecting society-type model,’ whereby an organisation licenses copyrighted works on behalf of its members.

The history of tech innovation also indicates that cooperation is possible, says De Pasquale, noting that litigation cases against peer-to-peer platforms in the 2000s led to the formation of a music streaming industry where tech innovators and music labels work together. ‘My personal feeling is that something similar will happen with Generative AI,’ she says.

Stronger transparency rules in relation to AI training could also help prevent costly legal battles in the future. The EU’s AI Act requires GenAI companies to design models to prevent the generation of illegal content and to publish summaries of copyrighted data used for training. Most major EU and US developers have signed up to the former’s code of practice for GenAI, which sets out commitments on transparency, copyright and safety.

Header image: Dee karen/Adobe Stock

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The IBA’s flagship event, the Annual Conference, took place at the Metro Toronto Convention Centre in Canada between 2–7 November, bringing together more than 5,500 delegates from 130 jurisdictions around the world.

At the IBA Section on Public and Professional Interest Awards Breakfast on Thursday 6 November, the annual awards, sponsored by LexisNexis, were announced – honouring an exceptional young lawyer, a contribution to pro bono work and a human rights lawyer. These were given to Oluwafunke Adeoye, Arfat Selvam and Hoda Abdel-Moneim respectively.

You can find abridged transcripts of various showcase sessions, interviews and speeches from the Annual Conference in this edition of Global Insight. On the IBA website, you will find videos of sessions, interviews and speeches, as well as photos, the Daily News paper from the conference in PDF form, press releases and more.

In 2026, the Annual Conference will take place in Copenhagen, Denmark.

See the Toronto website here.

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Global Insight podcast: the Trump administration and the international community

Speaking on the podcast are:

• John Bellinger, Co-Chair, Global Law and Public Policy Group, Arnold & Porter, Washington, DC; former Legal Adviser to the US Department of State and Senior Associate Counsel to President George W Bush;
• Beth Van Schaack, Senior Fellow, Center for Human Rights and International Justice, Stanford; former US Ambassador-at-Large for Global Criminal Justice;
• Mark Ellis, Executive Director, IBA; and
• Alberto Mora, former Senior Fellow, Harvard Carr-Ryan Center for Human Rights; former General Counsel, US Navy

Listen to the podcast here.

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New Arbitration Committee report on emergency arbitration

Read the report here.

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IBA updates its Pro Bono Declaration

The accompanying IBA Guide to the Pro Bono Declaration is designed to help implement pro bono practice. It sets out guidance, for example on how pro bono legal service can be monitored and reported.

The document also contains a section on ‘pro bono in action’, specifically in terms of the climate crisis. It notes that there’s many ways in which pro bono legal services can support access to justice for climate-affected communities, in addition to broader climate change and sustainability initiatives that promote human rights and positive environmental outcomes. It lists several examples, including supporting those negatively affected by climate change to engage in dispute resolution mechanisms and offering legal advice and services to climate or nature-focused non-profit organisations.

View the Declaration and accompanying guide here.

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The IBA participates in COP30 as official observer organisation to UNFCCC

The IBA has continued to champion the role of lawyers and legal institutions in advancing the global climate agenda on the international stage through its involvement in COP30. The event – the UN Framework Convention on Climate Change (UNFCCC) 30th Conference of the Parties, to give its full name – took place in Belém, Brazil, from 10–21 November.

This is a significant COP, marking ten years since the adoption of the Paris Agreement. COP30 also takes place in the wake of landmark advisory opinions delivered by two international courts this year, which clarify the obligations of parties to align with the 1.5 degree temperature goal of the Paris Agreement.

As an official observer organisation to the UNFCCC, the IBA was in Brazil representing the legal profession at the conference and in key events alongside the COP30 discussions.

These activities included convening an expert roundtable exploring the consequences of the recent advisory opinions on climate change for corporations and legal practitioners during Climate Law and Governance Day 2025 and holding an official side event to examine how law firms, legal associations and practitioners can support the implementation of government and corporate climate commitments.

Read the full news release about the IBA’s activities at COP30 here.

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New report released on business services and operations

Read the report here.

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In September, legislation came into force in the UK that aims to hold businesses to account if they profit from fraud committed by their employees. Under the new ‘failure to prevent fraud’ offence, a company will be liable where a specified fraud offence is committed by an employee or ‘associated person’ for the organisation’s benefit and the business lacked ‘reasonable’ procedures to prevent it.

Following various large-scale, high-profile financial scandals that have resulted in numerous job losses, the UK government is keen to promote a corporate culture that’s anti-fraud in nature. ‘Next time there is a financial crisis, and a big institution is perceived to have behaved badly, the offence provides a mechanism by which they can be prosecuted as a result of the actions of their associated persons,’ says Nick Barnard, a partner in Corker Binning’s criminal and regulatory practice in London.

The government says the law will encourage organisations to implement and improve compliance, driving a major shift in corporate culture to help reduce fraud, which accounts for over 40 per cent of crime recorded against individuals in England and Wales. The legislation follows similar ‘failure to prevent’ laws introduced in previous years in relation to bribery and the facilitation of tax evasion.

In order to fall under the scope of the law, companies need to meet two of three criteria: they must have more than 250 employees, a turnover of above £36m and/or over £18m in assets. Fraudulent conduct covered by the legislation includes dishonest sales practices or the hiding of important information from consumers or investors. It also includes dishonest practices in financial markets.

Enforcement will be predominantly handled by the UK’s Serious Fraud Office (SFO) and the Crown Prosecution Service (CPS), with penalties for breaking the law including unlimited fines, criminal convictions and significant reputational damage.

The failure to prevent fraud offence is expected to reshape business thinking about risk – from how a company may become a victim of fraud to how an organisation could benefit from it through the actions of their employees. For compliance professionals who already have experience of meeting the requirements of the other failure to prevent laws, the process of implementing organisation-wide fraud controls should be similar.

‘It’s a big concern if you are a business of that size which is now thinking this is a major new risk because it’s not just about falling victim to fraud, or maybe there will be some civil proceedings because [the organisation has] been sued by an unhappy counterparty, but [the company] might actually get locked into a criminal investigation which is going to last five to ten years,’ says Barnard.

The broad scope of the offence is demonstrated by its extraterritorial reach and its definition of ‘an associated person’, which is wider than that attached to the other failure to prevent offences and includes employees, subsidiaries, contractors and suppliers. ‘Non-UK businesses may want to assess their exposure to the UK more,’ says Alex Swan, an officer of the IBA Business Crime Committee. ‘It’s not merely a question of do we have subsidiaries operating in the UK but to what extent does our business involve the UK and UK persons.’

Lloydette Bai-Marrow, a former investigative counsel at the SFO, says that, despite the law only targeting large companies, there will be a ‘trickle-down effect’ for small to medium sized enterprises (SMEs). It’s therefore best practice for SMEs to establish robust anti-fraud measures. ‘Small businesses by virtue of the legislation may be classed as associated persons,’ says Bai-Marrow, who’s also founding partner at Parametric Global Consulting. ‘SMEs will need to be in a position to have their own processes in place to assure the large companies in scope that they not going to bring them risk’.

Alongside holding companies to account for defrauding the public purse or making false financial statements, the new rules on failure to prevent fraud also make greenwashing a criminal offence. Rebecca Dix is a barrister at 5 Paper Buildings and a former associate general counsel at the SFO. She says that, with increasing pressure to reduce carbon emissions, companies need to be careful to not make misleading or false statements about their environmental credentials. ‘Fraud could potentially emanate from many areas of a business, but ultimately environmental and regulated sectors are at a high risk,’ she says.

The Director of the SFO, Nick Ephgrave, has made investigating and prosecuting fraud a clear enforcement priority of the agency and said in a speech in April that he is ‘very, very keen’ to prosecute businesses who fail to comply with the failure to prevent fraud offence.

Bai-Marrow is clear about what the SFO needs to be able to achieve this. ‘The challenge around enforcement is to make sure that the SFO has the resources that it needs to take up those cases,’ she says. ‘It’s important to recognise that these cases take time and it’s not going to be overnight’.

White-collar practitioners say that while prosecutions are important, the success of the failure to prevent fraud legislation shouldn’t be measured by the number of companies prosecuted for alleged wrongdoing. ‘What should be a measure of success is whether, across the board, compliance standards have improved,’ says Barnard.

‘If we look at the Bribery Act, whilst there hasn’t been a huge amount of prosecutions, it has been incredibly effective in terms of changing culture or at least sensitising people to the risks around bribery,’ says Bai-Marrow. ‘If the failure to prevent fraud offence can do something similar it would count as a success.’

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