In a meeting with technology investors in San Francisco, California, late last year,
Philippine President Ferdinand Marcos Jr vowed the readiness of the Philippines to
embrace AI, and invited technology companies to become partners as the country
braces for the so-called industrial revolution 4.0. While the country’s National AI
Strategy Roadmap has been in place since 2021, AI adoption has been slow relative to
the rest of the Asia-Pacific.
Nonetheless, recent research conducted by Cisco shows that 98% of surveyed
organisations in the Philippines deem the need to roll out AI-backed tools as urgent –
61% pointed to the need to adopt the technology now or be left behind. The “innovate
or die” stories of Kodak and Nokia come to mind.

While we are yet to see how the unstoppable train that is generative AI will ram or
revolutionise various industries, one particular concern is the effect of generative AI
on copyrighted works. Generative AI, such as ChatGPT, can produce text, images,
music and videos, as well as formulate “decisions”, using data that is often copyright
protected. This poses challenges, such as discerning authorship and attribution.
Complaints and occurrences of infringement are expected to rise.
The fair use antidote is central to copyright law. Experts suggest the further
incorporation of the fair use doctrine upfront, that is, in the AI algorithm
itself – known as “algorithmic fair use”. However, this presents challenges.
Programmers would need to have a deep understanding of the fair use concept so that
they can embed the same in their code. There is also the danger that this would create
considerable biases (Burk, 2019). As generative AI technology is yet in its early or
“unfair” form, it is imperative for end users to ensure fair use is observed over the
whole creative process.
The challenge is that the fair use concept is not as straightforward for many regular
Filipino creatives such as writers, educators, digital artists, content creators, etc., who
now have sudden access to a wealth of AI-generated works. The Intellectual Property

Office of the Philippines (IPOPHL) recently released the Guidelines on Statutory Fair
Use 2024, to provide clarity and guidance in better understanding of fair use and
copyright.
The concept of fair use has its roots in English common law. It evolved within
American jurisprudence, and was codified into the US Copyright Act of 1976. The US
provisions were substantially adopted into the IP Code. Section 185 provides for the
“general fair use” principle, which states that the following factors should be
considered: (1) Purpose and character of use; (2) Nature of the copyrighted work; (3)
Amount and substantiality of the portion used in relation to the copyrighted work; and
(4) Effect of use on the potential market or value of the copyrighted work. The IP
Code identifies uses that are deemed fair use, such as criticism, comment, news
reporting, teaching, scholarship and research. The list is not exhaustive.
In reviewing the purpose and character of the usage of the copyrighted work, the
Philippine Supreme Court, in ABS-CBN v Gozon et al (11 March 2015) held that the
“transformative test” is generally used to determine whether the reproduction of the
work adds “new expression, meaning or message” that ultimately transforms the
copyrighted work into something else. Meanwhile, in the Harper case, the US
Supreme Court held that the fourth factor is the most crucial aspect of fair use, and
that the same is constrained to the use of works by others in a manner that does not
significantly impair the market potential of the copied work.
Hence, works predominantly created by AI without adding transformative elements
will fail under the fair use provisions. And even if the work is transformative, if the
copied work will adversely affect the potential market of the original work, there is
still infringement. In the ABS-CBN case, the court held that lack of intention to
infringe was not a defence against an infringing action.
Quoting IPOPHL director general Rowel Barba: “Fair use … allows artists to produce
versions of music, authors to quote from novels and educators to enhance learning
materials. By striking a balance between protection and access, fair use fosters a
vibrant cultural ecosystem.” Amid the increasing prevalence and acceptance of

generative AI use, the fair use doctrine, being an integral and essential aspect of
copyright law, is anticipated to take a more central role.

This article was written by Federis & Associates Law Office for Asian Business
Law Journal. See the link here