Shira Perlmutter, the highly respected US Register of Copyright, recently made public a pre-publication of the Copyright and Artificial Intelligence Report Part 3: Generative AI Training, see link here.

Remarkably, following this report, President Donald Trump sacked her. But she is fighting back with support from many and is suing Donald Trump stating that he did not have the authority to sack her. The 108-page report provides a balanced review of copyright and Fair Use, but the President disagreed.

In her introduction to her report, Shira Perlmutter, the ousted Copyright Register in the USA, said, “The stakes are high, and the consequences are often described in existential terms. Some warn that requiring AI companies to license copyrighted works would throttle a transformative technology, because it is not possible to obtain licenses for the volume and diversity of content necessary to power cutting-edge systems. Others fear that unlicensed training will corrode the creative ecosystem, with artists’ entire bodies of works used against their will to produce content that competes with them in the marketplace. The public interest requires striking an effective balance, allowing technological innovation to flourish while maintaining a thriving creative community”.

According to Graham Lovelace in his excellent AI & Copyright blog, “KEY TAKEAWAY: “Brava Shira Perlmutter. Her highly detailed 108-page report with 588 footnotes was released as a “pre-publication” version — a clue that she rushed it out before tech-friendly new management quashed it. The report made five key points that would have incensed the copyright-denying AI companies: AI models don’t necessarily need “further increases in data” to improve performance; the process of training an AI model starts with making unauthorised copies; “some uses of copyrighted works for generative AI training will qualify as fair use, and some will not”; opt-outs for creators are “inconsistent with the basic principle that consent is required for uses within the scope of their statutory rights”; and licensing should be encouraged “to ensure that innovation continues” without undermining IP rights”.

Shire Perlmutter’s conclusion includes the following:

• Copyright law has long adapted to new technologies, balancing innovation with creators’ rights. While generative AI’s use of copyrighted material is unprecedented in scale, existing frameworks—especially fair use—can address these challenges.
• The key issue is whether AI training that uses copyright content qualifies as fair use, which depends on factors like the purpose, source, and market impact of such use. Some uses, particularly for research and analysis, may be transformative and unlikely to harm markets.
• However, commercial exploitation of copyrighted works that compete with original markets may exceed fair use limits, especially if obtained illegally. Practical solutions like licensing are emerging but remain uneven.
• The Copyright Office suggests encouraging voluntary licensing over statutory changes, while also exploring extended collective licensing to address gaps. Supporting innovation alongside creator rights is essential for continued U.S. leadership in AI and creative industries. The Office will keep monitoring developments and advising Congress as needed.

According to Reuters and the Indian Express, “As part of the ‘One Big Beautiful Bill Act’ (OBBBA), a comprehensive legislative package passed by the House of Representatives, there is a provision for a 10-year federal moratorium on state-level AI regulations. This measure aims to prevent states from enacting or enforcing their own AI-related laws, with the intent of fostering a unified national approach to AI governance and promoting innovation. Proponents argue that a consistent federal framework is essential to maintain U.S. competitiveness in AI development.

However, this proposal has faced bipartisan opposition. Critics, including 40 state attorneys general and several lawmakers, contend that the moratorium would strip states of their ability to protect consumers from potential AI-related harms, such as deepfakes, scams, and privacy violations. They argue that in the absence of comprehensive federal regulations, state-level oversight is crucial to address emerging risks associated with AI technologies”. Reuters