Australia's position on AI and copyright - text and data mining exemption rejected

The Australian Federal Government has announced that it will not introduce a text and data mining (TDM) exemption into Australian copyright law, reinforcing a restrictive stance on copyright during the global AI boom.

TDM exemption is a mechanism used in some countries which could potentially allow artificial intelligence companies scope to use copyrighted content to train AI models within Australia without infringing copyright laws.

While the rejection of TDM exemption is a positive outcome for Australian creatives, it is yet to be seen whether any other steps will be taken to adapt copyright protection in relation to AI.

Harnessing Data and Digital Technology report

The TDM exemption was floated by the Productivity Commission in its interim report published on 5 August 2025 as part of its ongoing inquiry into Harnessing Data and Digital Technology. In the report, the Productivity Commission discusses the challenges of fitting AI within Australia's current intellectual property framework, particularly issues around the training of AI models.

Datasets used to train AI models usually contain digital copies of media, including literary and artistic works, films and musical works, which are often the subject of copyright protection. Under current copyright laws, AI models require authorisation from copyright holders to use their works as input for training processes within Australia. According to the report, there is evidence to suggest that large AI models are already using copyrighted materials for training purposes without consent or compensation to copyright holders.¹

In light of this issue, the Productivity Commission raised the option of introducing a text and data mining exemption. Such exemptions have been introduced in other countries to allow greater potential for AI training without copyright infringement. Unsurprisingly, many Australian creatives strongly opposed the exemption.

Such an exemption was originally recommended by the Australian Law Reform Commission it its report on Copyright and the Digital Economy published in 2013 in which it explained that TDM should not constitute infringement because it is 'non-expressive', leaning on the fundamental principle that copyright law protects expression and not information,² but was not taken up by the Government at that time. According to the Productivity Commission, the TDM exemption could cover not only AI model training, but any form of analysis similar to language learning models, involving the identification of patterns, trends and other useful information.³

'Fair dealing' v 'Fair use'

A TDM exemption would expand the existing 'fair dealing' regime in Australia's Copyright Act 1968 (Cth) (the Act), which allows for the use of copyrighted material without permission – but only where the use is for one of the specified purposes in the Act and is considered fair. The specific purposes in the Act include:

• research or study⁴ – this includes a quantitative test deeming a fair amount of copyrighted material used, for example the number of pages or percentage of words⁵
• criticism or review⁶
• parody or satire⁷
• reporting news⁸
• providing legal advice⁹

This regime can be contrasted with other jurisdictions such as the United States which apply the 'fair use' approach. Under the 'fair use' doctrine, any non-consented use of copyright material is allowed provided the use is considered 'fair'; it need not fall within a specific purpose. In comparison to fair dealing, fair use provides a broader exemption to copyright infringements.

In the recent example of Bartz, et al. v. Anthropic PBC, the US Federal Court ruled in favour of genAI firm Anthropic, finding that its use of copyrighted books to train its AI tool 'Claude' amounted to fair use. The judge found that the Claude LLM training process, which involved analysing statistical relationships between text fragments to enable the generation of new original text, was "quintessentially transformative" ¹⁰ and analogous to an aspiring writer reading a classic; they do not seek to replicate or supplant the original work, but to learn and create something different.¹¹ Furthermore, the judge found that authors could not rightly exclude anyone from using their work for training and learning purposes, and whilst a person would purchase a book initially, they would not be required to pay for every occasion they read, recall or draw upon the book.¹²

The landmark decision in the Anthropic case demonstrates the broad application of the fair use doctrine and its enablement of AI companies to have access to copyrighted works. It also illustrates the major implications of different approaches to copyright laws. If the case were decided in Australia, it is unlikely that Anthropic would be exempt from copyright infringement, given the use of copyrighted books to train AI models to generate new text does not appear to fall within any of the specified purposes under fair dealing.

What's next

Despite AI companies (such as OpenAI) and investors advocating for Australia to adopt a 'fair use' approach, the recent comments from the Federal Government indicate that the current fair dealing regime is not likely to change in the foreseeable future. However, the Productivity Commission's inquiry is ongoing. The Productivity Commission also referred to a range of possible new enforcement measures, including alternative dispute resolution, take-down notices and setting up simple options to resolve 'small value' copyright infringements.¹³

The final report is due in December this year which may provide insight on other potential next steps in modernising copyright protection in Australia.

How we can help

Our legal team specialises in intellectual property and ensuring the best outcomes for clients. To find out more about our services, head to our IP Law page. If you would like assistance to navigate and implement your IP legal rights, reach out to the authors or one of our experts in Australia.

Footnotes

¹ Productivity Commission. (2025). Harnessing data and digital technology: Interim Report, page 25
² Australian Law Reform Commission Report 2013, page 261
³ Productivity Commission Interim Report 5 August 2025, page 25
⁴ Copyright Act 1986 (Cth) ss 40(1), 103C(1)
⁵ Ibid s 40(3)–(8)
⁶ Ibid ss 41, 103A.
⁷ Ibid ss 41A, 103AA.
⁸ Ibid ss 42, 103B
⁹ Ibid s 43(2)
¹⁰ Bartz v. Anthropic PBC, No. C 24-05417 WHA (N.D. Cal. June 23, 2025) (Alsup, J.), p. 13.
¹¹ Ibid, pp. 12-14.
¹² Ibid, p. 12.
¹³ Productivity Commission, 2025, pp. 25-26.

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