The FTC is Meddling in AI Creativity in Its Comments to the Copyright Office

The Federal Trade Commission (FTC) recently submitted comments to the U.S. Copyright Office arguing that training artificial intelligence (AI) systems on copyrighted materials or using AI to produce creative works “raises significant competition and consumer protection issues” beyond copyright law. Not only is the FTC overreaching into areas beyond its regulatory purview—it has no jurisdiction over copyright issues—but imposing additional restrictions on the use of creative works in AI beyond existing copyright law will undercut competition. Congress should remind the FTC that questions about the copyright implications of emerging technologies, including AI, should be left to the Copyright Office.

The FTC makes several troubling claims in its comments. First, the FTC says “conduct that may violate the copyright laws…may also constitute an unfair method of competition or an unfair or deceptive practice” and gives, as an example, “training an AI tool on protected expression without the creator’s consent.” However, the FTC’s example conflicts with the fair use doctrine. The fair use doctrine permits the unlicensed use of copyright-protected works under certain conditions, such as for criticism, commentary, news reporting, teaching, scholarship, or research. This allowance is crucial as it safeguards free speech and fosters the advancement of science and the arts. Developers of large language models (LLMs) like ChatGPT do not merely duplicate content; they use the content to build a model—a transformative use of copyrighted content that is protected under the fair use doctrine. In a recent copyright case against Meta, a U.S. district judge acknowledged this point writing, “When I make a query of Llama, I’m not asking for a copy of Sarah Silverman’s book—I’m not even asking for an excerpt.”

Second, the FTC expresses concern about someone “mimicking the creator’s writing style, vocal or instrumental performance.” However, here again, the conduct is likely permissible under copyright law. The essence of creativity often involves studying and drawing inspiration from existing works. For centuries, humans have emulated the works of authors like Shakespeare to learn and evolve artistically. When an LLM produces sonnets, it engages in a similar creative process. Copyright law establishes reasonable standards for fair use, and the FTC should not attempt to overwrite this standard by claiming these copyright issues are now consumer protection or competition issues. Moreover, this is not a competition issue.

Finally, the FTC presents the risk that LLMs could potentially “diminish the value of [a creator’s] existing or future works.” In some cases, this may be true. For example, some LLMs probably produce more interesting and engaging writings than many unpopular, self-published authors. The ability to produce creative works more efficiently with AI may reduce what some people are willing to pay for these works (something the FTC should welcome). But AI may also enhance value for many creators, such as by allowing them to produce commercial works more efficiently. This argument also overlooks the potential of AI to bring renewed attention to lesser-known works. Much like book reviews, which are safeguarded under the fair use doctrine due to their contribution to cultural dialogue, AI can play a role in highlighting and reinvigorating interest in past works.

Paradoxically, the FTC also critiques companies that pay to license copyright protected content. The FTC’s comments state, “Many large technology firms possess vast financial resources that enable them to indemnify the users of their generative AI tools or obtain exclusive licenses to copyrighted (or otherwise proprietary) training data, potentially further entrenching the market power of these dominant firms.” The FTC is proposing a no-win scenario by arguing that companies are acting unfairly by not paying for content available under fair use, but also saying it would likely be unfair if firms had to pay because only large firms would be able to do so.

The FTC also argues that “conduct that may be consistent with the copyright laws nevertheless may violate Section 5,” which address unfair commercial practices. While following copyright laws do not give firms a pass to violate other laws, the FTC’s critique here is focused on legitimate uses of copyrighted works. The critical point here is that if a firm’s actions are in line with copyright laws but potentially violate the FTC Act, it would be more appropriate for the FTC to address these issues directly rather than including them in their general commentary to the Copyright Office.

The FTC’s comments to the Copyright Office extend beyond its original mandate and reflect its deep and ongoing animus towards large U.S. technology companies. By challenging the existing copyright framework, the agency risks stepping outside its regulatory bounds and inadvertently hindering the innovation and competition it is meant to protect. The adaptability of copyright laws has remained its strength throughout technological advancements, and that should not be ignored. The public will fare better if courts decide copyright issues. The FTC should consider the broader impact of their actions on the technology ecosystem, ensuring that their approaches foster, rather than hinder, the advancement of technology and the competitive spirit that drives it. And if the FTC keeps overstepping its mandate, Congress should intervene.