In partnership with
This week the copyright and AI debate moved into a new phase. The House of Lords Communications and Digital Committee published a substantial report rejecting the government's original opt-out proposals and calling for a licensing-first approach to AI training on copyrighted works. With the government's own statutory copyright reports due by 18 March, this is the most consequential moment yet for UK lawyers advising on the intersection of intellectual property and artificial intelligence.
AI in Practice
Lords call for licensing-first approach to AI and copyright
On 6 March 2026, the House of Lords Communications and Digital Committee published a 180-page report entitled "AI, copyright and the creative industries." The recommendation is clear that the government should rule out a commercial text and data mining exception with rightsholder opt-out; and should instead adopt a licensing first framework that requires AI developers to obtain permission before training on copyrighted content.
The committee found that generative AI systems depend on vast quantities of human-created content for training, often used without explicit consent or payment. Its inquiry received evidence from across the creative industries, AI developers, and legal experts. The report notes that 95% of industry respondents to the government's earlier consultation rejected the original opt-out proposals. The government has since abandoned those proposals but has not confirmed what replaces them.
The report's key recommendations go further than licensing alone. It calls for sufficiently granular transparency obligations around AI training data, going beyond the high-level summaries required under the EU AI Act. It recommends new protections for identity and style imitation, and robust labelling requirements for AI-generated content. The committee also endorsed the idea of a Creative Content Exchange, a government-backed platform to allow AI developers access to digitised cultural content in return for fair remuneration, with a pilot expected by summer 2026.
For UK lawyers, this report matters on several levels. Firms advising clients in publishing, music, broadcasting, journalism, or the wider creative industries now have a detailed parliamentary position to work with. The committee's rejection of opt-out is significant because it aligns with the overwhelming weight of consultation responses and makes it politically harder for the government to revive that model. Firms advising AI developers, meanwhile, need to factor in a likely licensing-first landscape when structuring training data arrangements.
The timing is also deliberate. Under Section 137 of the Data (Use and Access) Act 2025, the Secretary of State must publish two documents by 18 March 2026: (1) an economic impact assessment of the consultation options, and (2) a report on the use of copyright works in AI development. The Lords report is plainly intended to influence those publications. The government's response will set the direction for UK AI copyright policy through 2026 and, in all likelihood, into any future AI legislation.
Takeaways
Act: If you advise clients in the creative industries or in AI development, read the report's executive summary as it will be a useful basis of things to potentially come.
Watch: The government's statutory reports due 18 March 2026. These will indicate whether ministers accept the licensing-first direction or attempt a different path. Also watch for any indication on timing for the delayed AI Bill.
Risk: AI developers training on UK copyrighted content without licences face increasing legal and reputational exposure. The report explicitly notes that the current copyright framework is not outdated but the problem is enforcement. Clients need to understand that the legal risk is already real, even before any new legislation.
On your radar
Government copyright and AI reports due 18 March: The statutory deadline under the Data (Use and Access) Act 2025 is now less than a week away. The Secretary of State must publish an economic impact assessment and a substantive report on the use of copyright works in AI development. The earlier consultation drew over 11,500 responses, with 88% favouring mandatory licensing. The government's preferred opt-out option was supported by just 3% of respondents. Why it matters for UK lawyers: whatever the reports say will set the terms of the debate for the rest of 2026. Firms advising on IP, media, or technology should be ready to brief clients quickly once the publications land. (GOV.UK)
Cross-border legal AI: when outputs sound right but fail: Artificial Lawyer published a piece this week warning that legal AI has reached a stage where outputs have surface credibility but accuracy degrades sharply in cross-border contexts. The danger is not obvious errors but answers that are almost, but not quite, right, particularly where legal systems diverge in ways that a language model trained primarily on common law materials may not reliably capture. Why it matters for UK lawyers: any firm using AI for multi-jurisdictional work, whether in corporate transactions, disputes, or regulatory advice, should treat cross-border AI output with particular caution. Verification against local law remains essential! (Artificial Lawyer)
Spellbook raises $40m debt for legal AI acquisitions: Canadian legal AI company Spellbook secured $40 million in debt financing from RBCx, the technology arm of Royal Bank of Canada, to fund acquisitions in a consolidating market. This follows a $50 million Series B two months ago that valued the company at $350 million. CEO Scott Stevenson says the company hears from smaller legal AI firms looking for an exit every few weeks. Why it matters for UK lawyers: market consolidation means the vendor landscape is shifting. Firms evaluating legal AI tools should factor in the risk that smaller providers may be acquired or shut down. For those already using niche tools, continuity planning is key. (Artificial Lawyer)
SRA research: a third of the public now uses GenAI for legal issues: SRA-commissioned research, due for publication in April 2026, indicates that roughly a third of the public has used generative AI to help identify legal issues. Many clients are taking a hybrid approach, consulting both a solicitor and an AI tool, something this writer is encountering more frequently. Clients will give their case as an AI summary and often already seem to know what advice and process they want. Why it matters for UK lawyers: clients are increasingly arriving with AI-generated expectations about their legal position. This creates both an opportunity (as clients engage earlier), and a risk (as incorrect AI output may have already shaped their understanding of the case). The SRA has flagged hallucination risks and the concern that inaccurate AI-generated material is finding its way into court bundles. (Society of Asian Lawyers / SRA) SRA - Innovation: Navigating technology and AI - challenges and opportunities
Ivo opens London office as contract intelligence platform expands: Ivo, the San Francisco-based contract intelligence platform for in-house teams, is opening offices in London and New York, reporting six-fold growth. Why it matters for UK lawyers: another US legal AI vendor entering the UK market, this time focused on in-house contract management. Worth noting for in-house teams evaluating their options. (Artificial Lawyer)
Ad Break
In order to help cover the running costs of this newsletter, please check out the advert below. In line with my promises from the start, adverts will always be declared and actual products that I have tried, with some brief thoughts from me.
Beehiiv remains a great platform for this newsletter and I support their partner scheme. Check out the advert below and if you want to give it a go, use my partner link here: https://www.beehiiv.com?via=Serhan-Handani
What do these names have in common?
Arnold Schwarzenegger
Codie Sanchez
Scott Galloway
Colin & Samir
Shaan Puri
Jay Shetty
They all run their businesses on beehiiv. Newsletters, websites, digital products, and more. beehiiv is the only platform you need to take your content business to the next level.
🚨Limited time offer: Get 30% off your first 3 months on beehiiv. Just use code JOIN30 at checkout.
For Review
AI, copyright and the creative industries. Full Report (House of Lords Communications and Digital Committee)
The full 180-page report. Covers the evidence base, licensing models, transparency obligations, identity and style protection, labelling, and the proposed Creative Content Exchange. Essential reading for any lawyer advising on intellectual property, media, or technology, or for firms whose clients create or use copyrighted content at scale.
Read: House of Lords
AI and copyright: House of Lords Committee sets out licensing-first approach (Mishcon de Reya)
Mishcon's analysis of the Lords report, summarising the key recommendations and their practical implications for rightsholders and AI developers. A useful secondary source if you want the main points without reading the full report.
Read: Mishcon de Reya
Practice Prompt
This week's prompt helps you assess whether your organisation's use of AI tools creates copyright exposure in light of the Lords report. Ensure you fill in context and other aspects marked with {}. Remember to adhere to the Golden Rules and do not upload confidential or privileged information to public tools.
I am a {solicitor / barrister / in-house counsel} working in {practice area} at {type of firm or organisation}.
My organisation currently uses the following AI tools:
{List each tool, e.g.:
- Microsoft 365 Copilot (enterprise licence)
- Harvey (firm-wide deployment)
- ChatGPT (individual subscriptions)
- An internal document review tool built on [model/vendor]}
The House of Lords Communications and Digital Committee has recommended a licensing-first approach to AI and copyright, rejecting a text-and-data-mining exception with opt-out. It has also called for granular transparency obligations on AI training data and new protections against identity and style imitation.
For each AI tool listed above, produce a table with the following columns:
1. Tool name and vendor
2. Whether the vendor has publicly disclosed its training data sources (yes / no / unclear)
3. Whether the vendor holds or claims to hold licences for copyrighted training data used in the UK (yes / no / unclear)
4. Potential copyright exposure for my organisation if the licensing-first approach is adopted (high / medium / low) — with a brief explanation
5. Whether the vendor offers an indemnity for copyright infringement claims arising from use of its outputs (yes / no / partial / unclear)
6. Recommended next step (e.g., "review vendor terms for IP indemnity", "request training data disclosure from vendor", "no action needed", "seek specialist IP advice")
Then:
- Identify any gaps where my organisation may be exposed to copyright risk under a licensing-first regime.
- Suggest three practical steps I could take now to reduce that exposure, before any legislation is introduced.
- Flag where you are uncertain and recommend I seek further guidance from an IP specialist.
Do not invent specific details about the vendors' licensing arrangements. If the position is unclear, say so.
How did we do?
Hit reply and tell me what you would like covered in future issues or any feedback. We read every email!
Thanks for reading,
Serhan, UK Legal AI Brief
Disclaimer
Guidance and news only. Not legal advice. Always use AI tools safely.
Recommended Newsletters
Below are a few newsletters that I recommend, for various reasons. Check them out!
