12 Days of ChristmAIs: A TMT insight series
TL;DR
If AI is the ChristmAIs present under the ChristmAIs tree, you need to look carefully behind the wrapping. While AI is transforming creativity and compliance in a bright and shiny way, it is also introducing new legal risks for business. Agentic AI can generate infringing works without a user (such as a staff member) prompting, creating additional risk. Businesses that develop, deploy, or rely on AI and agentic AI systems may face heightened exposure, against the current copyright landscape in Australia which provides an accessible enforcement pathway for rights-holders.
ChristmAIs came early in Australia on 28 October 2025, when the Attorney-General’s Department met with the Copyright and AI Reference Group (CAIRG) to discuss potential reforms to the Copyright Act 1968 (Cth) which would: (1) clarify how copyright applies to AI-generated works; and (2) introduce lower-cost enforcement options (including through a small claims forum).
AI and copyright infringement – under the ChristmAIs wrapping
Under the Copyright Act 1968 (Cth) (Copyright Act), copyright infringement occurs when a person or business uses all or a substantial part of a copyright work in a way that infringes the copyright owner’s exclusive rights, and does so without permission or a relevant defence (such as the fair dealing exceptions).
To claim copyright infringement, the claimant must be the author or owner of the work in question, and copyright must also subsist in that work. The infringement also needs to satisfy the following:
- the infringing act has been done in relation to a substantial part of the work;
- when comparing the works, there is “objective similarity”; and
- there is a casual connection showing the infringement occurred as a result of copying, whether done deliberately or subconsciously.
There are three main types of copyright infringements:
- Direct infringement: using all or a substantial part of a work in a way that conflicts with the copyright owner’s exclusive rights;
- Indirect infringement: dealing with an infringing copy without authorisation (for example, importing infringing material into Australia); and
- Authorisation infringement: allowing, encouraging or directing someone else to infringe. Liability sits with the person who facilitated the infringement.
However, the ChristmAIs presents are yet to be unwrapped by the Australian courts, with a notable lack of AI-related copyright infringement cases. Nonetheless, both sides of the AI ecosystem, from providers to deployers, could be exposed. For example, a provider (who builds or supplies the AI system) may face liability if they fail to take reasonable steps to prevent infringing outputs. A deployer (who uses or integrates the AI system) may face liability if they prompt, generate, store, or rely on infringing outputs. Both may also be liable where copyrighted material is used to train the AI system. Ultimately, liability depends on the conduct of each party and how the system stores, processes, or reproduces copyrighted material. In most circumstances, the current defences to copyright infringement in Australia are unlikely to apply, and the Australian Government, in particular, does not support placing a text and data-mining exception (ChristmAIs present) under the ChristmAIs tree, which is a joyful gift for our creative industries.
Civil and criminal liability – the naughty list
If an AI system (including an agentic AI) causes copyright infringement, a court can still order the usual civil remedies: injunctions, damages or an account of profits. Historically, however, litigation has been minimally pursued due to cost and complexity. The proposed small-claims pathway aims to make it easier for rights holders to enforce their rights and address lower value infringement matters; meaning businesses using or supplying AI are more likely to be pursued in the future.
Serious or commercial-scale infringement can amount to a criminal offence.
This can include making, importing, distributing or possessing infringing AI-generated copies for commercial advantage, or using AI systems to produce or disseminate those copies. Penalties include hefty fines and imprisonment.
Key takeaway tips – Santa’s nice list
If your business is a provider or deployer of AI, you should consider the following (for a very merry ChristmAIs):
- Audit your AI tools (peek behind the wrapping paper): Check what your AI systems actually do. Can they store training data, reproduce copyrighted content, or generate material that looks like someone else’s work? Identify where infringement could realistically arise.
- Check who wears the risk (who gets the best present?): Review your contracts with AI providers. Confirm who is responsible if the system outputs infringing material, and whether you have indemnities or warranties covering training data, outputs, and misuse.
- Use licensed content where needed (make your list and check it twice!): If your AI systems (or agentic AI workflows) rely on third-party content, get permission or licences rather than assuming the AI systems’ use is covered.
- Put guardrails in place (‘tis the season to monitor): Adopt internal rules for how staff should use AI tools. Monitor what training data is fed into your systems and spot-check outputs for potential infringement risk.
- Train your staff (come all ye faithful): Give employees simple guidance (don’t ask AI to “replicate” existing works, don’t upload copyrighted material without permission, and report any suspicious outputs).
- Keep an eye on reform (what’s on the 2026 ChristmAIs list?): With the text and data mining exemption ruled out, the Australian Government has indicated copyright rules in Australia may tighten further. Track updates so your policies and contracts stay up-to-date.
