Landmark Ruling: Chinese Court Decides Copyright Infringement Case over AI-Generated Outputs

In a groundbreaking verdict, the Guangzhou Internet Court has adjudicated what is being hailed as China’s inaugural copyright infringement case concerning artificial intelligence (AI)-generated outputs. 

This landmark ruling, dated February 8, marks a significant step in the evolving legal landscape surrounding AI technologies. The case involved allegations of copyright infringement against an unnamed operator of an AI-powered text-to-image generator in China, accused of enabling users to produce images resembling those from the renowned Japanese science fiction media franchise Ultraman.

Background: SCLA vs. AI platform operator

Shanghai Character License Administrative Co., Ltd. (SCLA), the licensee of the Ultraman intellectual property (IP) in China, initiated legal action against the AI platform operator in December 2023. 

SCLA alleged that the defendant’s AI-powered platform facilitated the creation of imagery closely resembling that of the Ultraman franchise, thereby infringing upon its exclusive rights to utilize, reproduce, and create derivative works based on Ultraman images.

The Guangzhou Internet Court ruled in favor of SCLA on two pivotal copyright claims. The court found that the defendant’s AI platform violated SCLA’s exclusive right to reproduce Ultraman imagery. It determined that the generated images were “substantially similar” to the copyrighted Ultraman works, affirming SCLA’s infringement claim. 

Secondly, the court sided with SCLA on the issue of derivative works, asserting that certain outputs produced by the defendant incorporated elements of copyrighted Ultraman materials, thereby constituting unlawful derivatives.

Implications of Chinese AI regulations

This landmark ruling delved into China’s AI-specific regulations, particularly the Interim Measures for the Management of Generative Artificial Intelligence Services. These measures, enacted in August 2023, aim to regulate the research, development, and provision of generative AI services in China. 

The court determined that the defendant failed to meet several obligations outlined in the Interim Measures, including implementing a reporting mechanism for copyright infringement complaints and educating users about the risks of engaging in infringing activities.

Court’s decision and remedies

In light of the defendant’s violations of the Interim Measures, the Guangzhou Internet Court ordered the defendant to pay RMB10,000 in damages to SCLA. However, it stopped short of ordering the deletion of Ultraman-specific data from the AI model, citing the involvement of a third-party provider in the model’s training process. 

Instead, the court mandated that the defendant implement measures to ensure compliance with the Interim Measures, thereby preserving the integrity of the AI platform while mitigating potential copyright infringements.