Hello and welcome once again to the Pinsent Masons Podcast, where we collect our thoughts every two weeks to bring you the latest news and analysis from the world of global business law. I'm Matthew Magee, a journalist here at Pinsent Masons. This week, we're going to hear why the US Copyright Office is right to say that most AI output shouldn't attract copyright protection. We will also investigate the new rights UK trade unions will have to access workplaces.
But first, here's some business law news from around the world:
A new consumer protection regime will shortly come into force
Dutch courts have ruled that payment providers can be compelled to supply data
UK ride-hailing companies could qualify for special VAT status under the Tour Operators Margin scheme
Businesses should make sure they understand and comply with new consumer protection laws that come into force in the UK this week, an expert has said. Important consumer protection provisions of the UK's Digital Markets, Competition, and Consumers Act of 2024 will come into force on the 6th of April. The provisions include new direct enforcement powers afforded to the Competition and Markets Authority, stronger court-based enforcement powers, and substantive provisions on unfair commercial practices which replace and update previous UK consumer protection law on unfair trading practices. Competition law expert Tadeusz Gielas said that the Act substantially increases the non-compliance risks for businesses, both consumer-facing traders and manufacturers that market their products to consumers even if they don't sell directly to users. Consumer protection is expected to be a key area of CMA enforcement focus.
A recent decision by a Dutch court has confirmed that payment and intermediary service providers can be compelled to surrender customer data, according to one expert. Payment provider Stripe had denied a data access request from a disgruntled customer who made a purchase from a Shopify-based webshop. The court denied the customer's data access claim under the General Data Protection Regulation, which gives people the right to request a copy of any of their personal data, but did award the customer's claim to get access to the operator's details that Stripe had on file on another legal basis. The court dismissed arguments that the operator's details were exclusively retained for anti-money laundering compliance because Stripe also had a contract in place with the operator, resulting in the court ordering Stripe to produce the requested data for the customer. Technology law expert Wouter Seinen “On its legal merits this judgment is not novel, but the case does confirm that even intermediary service providers, including payment service providers (PSPs), can be compelled to surrender customer data to private claimants.”
Providers of ride-hailing services in the UK may now use a niche value-added tax or VAT treatment known as a tour operator's margin scheme, as a recent Upper Tribunal ruling has confirmed that these businesses could fall within the scope of the scheme. The scheme, TOMS, is a special VAT scheme designed to simplify tax processes for businesses in the travel industry. It originated within the EU as a measure to avoid the complexity of registering for VAT in multiple EU countries when tour operators buy in and resell travel, accommodation, and certain other services. Following the ruling, companies providing private hire services through smartphone applications and websites are now considered as tour operators under TOMS, allowing them to charge VAT on the profit margin made from supplying the services rather than the full selling price. This could potentially reduce the VAT liability for private hire operators.
There's been lots of debate about the copyright implications of AI inputs. Should creators of material be compensated when that material is used to train AI systems? There's been less debate about whether AI outputs should be protected by copyright. If a system writes a poem, should that be protected? And who would own that copyright anyway? Well, a US government agency has waded in. The US Copyright Office is producing three big reports about AI and intellectual property rights, and the second one deals with whether AI outputs should be protected. Frankfurt-based AI expert Nils Rauer has been taking a look at the report.
Nils Rauer: The very nature of copyright is that it rests on human creativity, on something that an author has done and then we need to understand whether this is eligible for copyright protection, to IP protection, yes or no. Now as we all see, AI tools can do phenomenal things. They can create very bespoke and eloquent text, images, video, everything can be produced by AI. And the question is now if this product can also be eligible for copyright protection, yes or no? Because as it is, AI produces this nice output and we as humans only do the prompting. So we give some steer on what the machine shall do. And so as I said, we start off with copyright being linked to human creativity. And now the question is, can AI also create copyright?
Matthew Magee: So what does the report actually say? Well, it finds that, largely speaking, AI outputs shouldn't be protected. But like anything to do with AI, it's neither clear nor simple.
Nils: Copyright law needs to adapt to technical change. This is not new. This has been the case for a long time. There is room and flexibility in the law. Do we need to adapt the laws now to make purely AI-generated content eligible for copyright? The answer is no. There is a good reason why the centre of all that should be the human being, and the Copyright Office now makes a very clear distinction between situations where AI is assisting the human author in the creative process and where AI stands in for human creativity. In the latter case, there's no room for copyright coming into existence. But if we remain in this assistive stage where the AI tool supports and assists the human being, there we have room for copyright protection.
Matthew: So the US Copyright Office has taken up a well-researched, detailed position. But are they right? Nils thinks they are.
Nils: Those who produce pencils don't have a right in what is written with a pencil, and this principle also applies to those who are coding AI tools. It resonates with what the US Copyright Office takes in terms of a position. It's not the big IT firms that create the tools that are then used by the creatives. It's not intended. It's not what we want from an IP perspective, from a social perspective as well. This is not the aim. And as I see it, even the big IT companies do not claim the need of themselves being the copyright or any type of IP owner to the output. Of course, they own the code, which also can be protected by IP, notably by copyright, but it's not the output that they want to lay their hands around in terms of IP protection. The US Copyright Office is advocating to apply the same rules and the same thinking as we do without AI being part of the game. Why is that? Even today when you talk about copyright-protected work, it is only eligible to the copyright if it mirrors the author's creativity. So yes, we also today look at the work and if it features a visible recognisable element of the author's originality of its creativity, and if you do not have human input, because everything is done by AI, you can look as long as you want. You won't find this nucleus of authorship of human creativity in that.
Matthew: Of course, it's not the US Copyright Office which decides who wins a legal dispute. That's for the courts. But Nils says that the opinion will have a huge influence on US lawmakers, regulators, and courts and its influence will even extend into what's becoming a pretty solid global consensus on the issue.
Nils: I mean, it's an institution that is around since 1870 and therefore it's something that you pay attention to if such a report is published. Outside the US, I would also say that people will read this with interest. It does matter, but it has no impact in terms of no authority over, let's say, the European Court of Justice in the European Union. It will not have to follow that approach. But as we see the decisions that have come through on copyright by the CJU in Piner Info Pack or football DCATO, there are also similarities in how to approach copyright and the use of technical assistance when creating copyright. So they are pretty much aligned I would say, maybe in details you could see differences. But overall I think a judge in Europe will say, yeah, OK, that makes sense. It's not binding upon me, but they do think in reasonable ways.
UK employment law is getting the most dramatic overhaul it's had in a generation under that country's relatively new Labour government and following 14 years of Conservative-led rule. Workers' rights are being strengthened and trade unions, traditionally big supporters of the Labour Party as other labour movements, are getting new rights. One of the most striking of those is a new right to request access to workplaces independently, instead of just via employees who are members of the union. The right even extends to what's been called digital access to workplaces, though it's fair to say nobody really knows what that means yet. But it will be significant, Edinburgh-based employment law expert Lucy Townley explained what's changed.
Lucy Townley: The new framework for union access arrangements provides unions with the right to apply for physical and digital access to workplaces, and the purposes of that are to meet, represent, recruit, or organise workers and to facilitate collective bargaining. So it's interesting because other than during the recognition and derecognition process, unions don't normally have an independent right of access to workplaces. Unions that have recognition will already have access to workers in their bargaining unit, but these new rights are to all employees, whether or not they're members of a trade union. So it's quite interesting from that perspective. The bigger change is this right to digital access. So it's obviously an attempt to modernise the relationships between employers and trade unions. This new digital right will allow them to access, for example, intranet pages, e-mail systems, or other digital platforms, and in that way, unions will be able to share content with members and with other employees.
Matthew: So unions have the right to request access, not an absolute right of access. Lucy says that the details have yet to be fully worked out the right of employers to refuse will be pretty limited.
Lucy: The intended approach is that a trade union will be able to submit an access request to an employer and the employer will then have a period of time to provide a response. We think that period of time might be as short as five days, but we don't know for sure yet what that will look like. If agreement isn't reached, the Central Arbitration Committee (CAC) will decide whether or not access should be given and on what terms, and they will be able to impose financial penalties where they think access has been unreasonably withheld. At the moment, there is flexibility to reject access, but this has to be justified. So if an employer can show that granting the access would cause significant disruption to their operations, or for example, if there are legitimate security concerns, they may be able to say no. But we think that that might be quite difficult in practice.
Matthew: This feels like quite a big shift in the relationships between employers and unions, maybe especially for big companies from places like the US with a less strong trade union tradition. Lucy confirms that yes, it's a very big deal.
Lucy: It's a huge change. So the Employment Rights Bill generally is the most significant change to employment law that we've seen in decades. But this in particular is quite radical in the UK Rights to access workplaces where there's no recognition in place and to access all members is really radical and the digital access aspect is particularly new. As unions don't have unlimited resources, we think they're likely to focus on certain groups of employers. So it's most likely to impact workplaces where trade unions have existing members and where they've had some sort of indication from their members that there's an interest in organising things collectively. It'll probably focus on employers with more than 20 workers, you know, big workforces and workforces where there's a greater distance between the employees and senior management. We know that certain employers are the target of trade unions, for example, in the public sector or the construction and energy industries. So we think it's most likely to impact those sectors to begin with but it has the potential of impacting all employers to varying degrees, I think.
Matthew: So what should companies do now to get ready for these changes? Well, engagement with employees and unions is the best approach, says Lucy.
Lucy: So I think what's crucial and what has always been important for union relations is that employers start engaging with unions and fostering positive relations and engaging directly with employees. I think employers want to be explaining to employees why this has come about and why union access is now being allowed, especially where a union is not currently recognised. So we expect employees won't be aware of this change in the law, so they may then assume that the employer has initiated this intervention or access rights from the unions. And I think we need to focus on employers liaising directly with their employees as well. So we need to be sure that employees feel they can go directly to their employers with problems rather than waiting to go with those issues via a union.
Thanks once more for joining us in the Pinsent Masons Podcast. I hope you find it useful. I hope you're maybe sharing it with other people who find it useful or might do. I hope you've had a chance to rate or review or follow or subscribe. All of these things make it just a little bit easier for us to reach other people for whom this might be useful. We know lots of people are clamouring for your attention. We're always grateful when you spend time with us. And remember, you can do that in the written form. We've got new news and analysis published by our team of journalists every day in the Outlaw sections of the Pinsent Masons website or you can sign up at pinsentmasons.com/newsletter for a weekly digest tailored just for you. Thanks again for listening. Until next time, goodbye. The Pinsent Masons Podcast was produced and presented by Matthew Magee for international professional services firm Pinsent Masons.
