Fair Use or Free Use? Assessing the Impact of TDM on Australian Copyright Law

As artificial intelligence continues to evolve, policymakers around the world are scrambling to update legal frameworks that were never designed for machines that write novels, compose music, or replicate human expression. In Australia, one proposed reform is generating particularly intense debate: the introduction of a text and data mining (TDM) exemption to copyright law.

In August 2025, the Australian Productivity Commission released its Interim Report titled Harnessing Data and Digital Technology.  This report contained the proposed reform to permit the use of copyrighted material for training Artificial Intelligence (AI) models without the permission of copyright holders.

What is TDM

TDM is a process which involves using and analysing large datasets (including books, songs, journalism, and art) to teach AI systems how to produce their own content. These models rely on this input data to "learn" linguistic structures, artistic styles, musical patterns, or narrative conventions. This enables AI models to generate new content that mimics or builds upon the material they were trained on.

From a legal perspective, TDM poses a fundamental challenge to copyright law because it often requires the copying of entire works, sometimes in substantial volume. As a result, policy makers are attempting to create legal exceptions to effectively allow the use of copyrighted use for this purpose. In practice, this will mean AI companies are able to use copyrighted works to train their AI models without needing permission or paying the original creators. While it is intended to support innovation and economic growth, the exemption could have unintended consequences for Australia’s creative industry.

What This Means for Copyright Law

Under current laws, copying or reproducing substantial portions of protected works without permission can constitute infringement. This applies unless the use is captured under the “fair dealing” exceptions, which allow for limited use for specific purposes like research, study, criticism, or reporting the news.

A TDM exception would either expand the concept of “fair dealing” to include the use of copyrighted materials for training AI systems or introduce a separate legal provision to cover this activity. This change would reduce legal risk for companies and researchers engaged in activities which involve processing copyright-protected content.

In addition, the proposal would also affect Australia’s current licensing system, which enables creators to earn income when others use their work. If AI companies are no longer required to obtain licences or pay fees to use creative content for training purposes, this could significantly reduce the revenue streams relied upon by creators.

A New Exception to Support Innovation?

The proposed TDM exception has sparked strong debate across both legal and creative sectors. Supporters argue that such a reform could unlock billions of dollars in economic value by fostering innovation and helping Australia remain competitive in the global digital economy. By lowering legal and financial barriers to AI development, the exception may particularly benefit smaller companies, research institutions, and emerging tech developers.

But for writers, musicians, and artists, the exemption will mean their works can be used without permission or attribution.  This would significantly reduce creators’ control over how their works are used, including their ability to receive credit or earn royalties. Over time, this could erode the value of creative content in the marketplace and weaken the licensing systems that underpin the creative economy. Without mechanisms to ensure proper compensation and recognition, the proposed exception risks undermining both the livelihoods of individual creators and the broader cultural industries that depend on them.

What Should Creators Do?

If you are a creator of any kind, your work may already be fuelling AI systems, without your permission or knowledge. As AI technologies develop at pace, the legal risks associated with unauthorised use of copyrighted content are becoming increasingly complex.

At BlackBay Lawyers, we work closely with our clients to ensure their intellectual property rights are protected. If you are unsure how these developments might affect your rights, or if you suspect your work has been used without permission, we are here to help you understand your options and assert your value in a shifting digital landscape.

The content in this Article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. It should not be relied upon as such. You should seek legal or other professional advice before acting or relying on any of the content

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ABOUT THE AUTHOR

Katie O'Brien is an enthusiastic and driven member of our team. With a genuine focus on understanding each client’s unique needs, she uses her legal expertise to craft tailored strategies that deliver exceptional results.

Katie focuses on assisting clients in areas of defamation, social media, creative industries, employment law, and commercial litigation. Holding a Bachelor of Laws and a Bachelor of Media (Public Relations and Social Media) from Macquarie University, Katie applies her legal knowledge and strong understand of the digital world to expertly navigate the unique challenges arising in these sectors.