Hello and welcome back to the Pinsent Masons Podcast, where we keep you up to date with the most important developments in global business law every second Tuesday. My name is Matthew Magee. I'm a journalist here at Pinsent Masons and this week we track the latest twist in a much-watched dispute about copyright and the training of AI systems. And we hear about a new standard being enforced in some public Australian contracts to improve the culture in construction.

But first, here is some business law news from around the world:
Cost awards, currency question answered by UK Supreme Court.
Indian Supreme Court ruling raises contracts challenge risk and
Mali licence change sparks more uncertainty for African mining industry.

A new ruling by the UK Supreme Court should prompt businesses to factor exchange rate exposure into litigation cost budgets and recovery, an expert has said. Madelaine Power of Pinsent Masons was commenting after the court confirmed that when awarding costs in litigation in the UK, courts should generally make such awards in the currency that the successful party actually incurred its expenditure in, not its home currency or based on a hypothetical conversion. In an arbitration process and Industrial Development secured arbitral awards totalling $6.6 billion plus interest after Nigeria allegedly breached a gas processing contract. In 2023, however, the Commercial Court overturned the award. The court ordered PNID to pay Nigeria's legal costs totalling about £44.1 million, but the dispute arose about the currency it should pay those costs in. Both the Commercial Court and the Court of Appeal considered that the cost should be awarded in pounds sterling, not Nigeria's naira. Now, the Supreme Court has ruled in agreement.

A ruling by India's Supreme Court over how breaches of contracts should be enforced will have significant impact on contractual relationships there, an expert has said. In 2010, a purchaser bought property paying 90% of the price but missing the deadline for paying the remainder. The buyer made further payments to the seller, which accepted them before terminating the agreement to sell the property, claiming the full sum hadn't been paid in time. The court ruled, the parties which accept late payments after the initial deadline for the sale has passed, effectively treating the contract as ongoing, can be found to have waived their right to terminate the deal, and that post-contractual breach conduct should play an important part in deciding whether or not to enforce the contract. Legal expert Mohammed Talib said that the ruling would mean organisations and customers need to take greater care in how they exit agreements in future. This case has significant implications for the termination of contracts in India, he said.

A decision by Mali's government to revoke more than 90 mining licences will create further uncertainty for international firms looking to invest in the region, experts have warned. The West African state confirmed late last week that it was revoking permits for international companies operating in the country. The permits, which had been issued between 2015 and 2022, were for exploration of gold, bauxite, uranium and other minerals. Corporate crime expert Edward James said the move is part of a recent trend across the African continent, which has seen various countries amending their laws and regulations in an effort to increase the benefits to local stakeholders. Mining sector investors should be aware of these changes and be ready to handle any subsequent risks that may arise, he said.

All eyes have been on the High Court in London in recent months as a blockbuster trial took place over one of the great tensions of our age: whether it’s right that AI developers train their systems on copyrighted material without paying the creators of that material. Photo agency Getty Images had sued developer Stability AI because it believed it had trained its Stability Diffusion AI image generator on Getty’s pictures. The court case was during the summer and the ruling is just in and while the ruling is important the outcome is a bit: meh. It doesn’t give the industry-defining clarity that content owners and AI developers craved, but it does tip the balance in the UK a little towards AI companies. London based intellectual property expert Gill Dennis told me first what the case was about.

Gill Dennis: The real heart of these proceedings is the question of the extent to which copyright works can be used to develop AI. So what happened in this case was that Getty Images, we all know them, the media company, they issued proceedings against Stability AI. Stability AI was alleged to have used, without Getty's consent, lots and lots of Getty's images scraped from its website to train its AI tool called Stability Diffusion.
The claim was that Stability's initial use of the copyright works to train the data was primary copyright infringement because that required some copying of the works into the memory of the AI tool, if that makes sense. And there were also claims of secondary infringement as well, in effect, importing that software into the UK and making it available to businesses and consumers over here.

Matthew Magee: Not all copyright infringement is the same. In UK law you can have primary and secondary infringement. Primary is just what you would think, it's making available copies of work without a licence or payment. Secondary infringement is where you deal with or use what you know is an infringing copy of work without permission, rather than that you're the person who's making the copies.

Gill: At the very end of the trial, which took place in June this year, Getty had dropped its primary copyright infringement claims. Now that was the question we really wanted an answer to: can you copy copyright works to train AI, primary infringement? Getty dropped those claims at the end of the trial, so that issue remains unanswered and very live still. The secondary copyright claims though remained. And on the secondary infringement claims, the High Court said there was no secondary infringement by Stability AI. So Stability could lawfully import Stability Diffusion into the UK and make it available here.

Matthew: The ruling was clear on one element which will be useful to content creators, that UK law does cover electronic copyrighted works and not just physical ones. So when the law refers to an article, that can be a digital thing, but it also has to be an infringing copy. And the court said that in this case, the AI system did not break this part of the law because it didn't retain a copy of the original image.

Gill: Our legislation, copyright legislation, comes from 1988, so it was very much developed before AI was contemplated, and the secondary infringement provisions in that legislation refer to importing an article that is an infringing copy. Now, Getty's argument was that the article can be something intangible like software. Of course, Stability said no, no, no, the legislation was designed to prevent tangible things coming into the country. A book printed abroad and then imported in here and sold, for example. So the court really importantly decided that an article can be an electronic copy. So potentially that would enable claims to be made against AI developers in respect of unlawful use of copyright works. So that's helpful for content creators.
However, on the flip side of that is that the secondary infringement, the article tangible or intangible, has to be an infringing copy. Now this is where Getty fell down, because what the court decided was that an infringing copy must have the copyright works that it was used to train on stored within it and reproduce those in its outputs. And on the evidence before the High Court in these proceedings, there was no indication that Stability Diffusion did indeed store or reproduce these copyright works at all. That's technically not how it worked. And that was the reason why there was no secondary copyright infringement. So Stability Diffusion was an article intangible, but it wasn't an infringing copy, so no secondary infringement by importation.

Matthew: It's important to know why Getty earlier this year dropped its primary infringement claims. In order to break UK laws on primary copyright infringement, the copying activity has to take place in the UK. Stability AI said this activity took place outside the UK, so Getty had to drop that part of the claim. Now, the UK court has said that the use of the imagery to train the AI system was not secondary infringement. This means that you can copy something and use it to train your AI and avoid primary copyright infringement by doing that copying abroad. And you can avoid secondary infringement by making sure your system uses but doesn't store the copyrighted material. At that point, according to this ruling, you're clear to sell the system you've trained in the UK.

Gill: I think a lot of people have looked at this decision and said that really the reason there was no secondary infringement was this technicality of whether or not the AI stored the works or reproduced them. And you know really I think that's right. I think what the judge perhaps should have looked at arguably is more the exploitation of the value of those copyright works that Stability was utilising in its tool, and the judge didn't think about that at all. That wasn't really the focus of the arguments, I must say. So the judge wasn't obliged to consider those arguments. But yes, very much this was a technicality around how AI is trained and works, rather than looking at a broader policy decision around whether or not AI developers should be able to use the value of copyright works without paying for that.

Matthew: So all those investors, developers, creators and even policy makers looking to this ruling hoping it would settle the big AI training copyright question will be disappointed because the ruling didn't settle the big question on primary infringement, but on secondary infringement, it has strengthened the hand of developers, Gill said.
Gill: I think it is a blow to content creators, absolutely, because there is so much uncertainty around whether there is a primary infringement claim able to be made out if copyright works are copied in the UK to train at all. We just don't know that at the moment. So really content creators had to fall back on the secondary infringement claim, and I think this ruling does make it significantly more difficult for them to make that out. It will of course depend on how a particular AI tool in question works. As I understand it, quite a lot of AI tools, some do copy works and store them, some don't. So it could be very fact-specific as to whether or not a content creator can actually make out a claim of secondary infringement. It certainly hasn't made their life easier, let's put it that way.

Construction sites can be dangerous places, and companies have long taken physical health and safety very seriously. But new guidelines in Australia are designed to make changes that will improve well-being and gender diversity, equating mental health and safety with the more traditional physical kind. One of Australia's regions, the ACT, now requires construction companies working on public projects to comply with a new culture standard. This standard requires measures to be taken to look after workers' mental health better, to make sure they have time for life and to increase the diversity of the workforce. Melbourne-based Rebecca Dickson is a construction expert and told me what the problems are that the new measure is trying to solve.

Rebecca Dickson: It's a massive problem with worker mental health. So in 2018 a report was commissioned by Roads Australia and it was undertaken by an academic at the Royal Melbourne Institute of Technology at University in Victoria, and it identified rates of stress, anxiety and depression among white-collar workers in construction that were diabolically bad. The research indicated that workers were twice as likely to burn out. Most workers worked over 50 hours a week in their role and the rates of stress, anxiety and depression I think were two and a half times higher than the rates for other sectors. There are other organisations in the Australian construction industry that measure the mental health of blue-collar workers and a report now which is quite old that was published by Mates in Construction reported that 195 workers each year kill themselves, commit suicide, in construction. The rates of female participation in construction are still really, really low and women in construction tend to hold administrative roles. So they're the people that sort of run the site office or are the admin assistants and they're the HR role. So there's an absence of diversity among the construction workforce. There is a lot of data about the absence of diversity, the absence of inclusive work practices, poor mental health among white-collar and blue-collar professionals and I think faced with that data and research, the Australian Constructors Association, the Victorian and the NSW governments came together and thought something has got to change and that's what sparked the conversation around the culture standard.

Matthew: Sydney-based employment expert Emma Lutwyche said that there are three parts to the standard to address those three problems of mental health, time for life and workforce diversity.

Emma Lutwyche: There's three pillars to it to address the three problems. The first one is well-being and that is looking after psychosocial safety and employee mental work and mental health on site. Some of the things that are specifically required under that pillar are having mental health first aiders trained on all sites and available at all times, having peer-to-peer trained support workers available to assist with mental health issues on site and triage those issues, and also having employee assistance programs, psychological support available for workers 24/7, confidentially and free. The second pillar is Time for Life and that really recognises that there's a lot of overwork in the industry and that that has a very detrimental impact on well-being. The standard encourages only five days a week of work, no more than 50 hours per week and ideally Monday to Friday with two consecutive days off. The third pillar is diversity and inclusion with a focus on gender diversity. It encourages all contractors to look at their gender diversity data, look at where they've got a gender diversity problem. There's a concentration of women in the administrative and support roles, but not on site and so actually understanding where you've got a gender diversity problem, looking at things like policies that apply to and impact women more and other blockers to retaining, recruiting and keeping women safe in these environments, that's what the standard requires.

Matthew: The standard was created by the Australian Constructors Association and the governments of Victoria and NSW, two regional governments that Rebecca said are heavy spenders on construction. She said that the standard has begun to be referenced in some procurement there, but that hopefully regions around the country would follow the lead of the ACT and make it mandatory. Rebecca said that if it were more widely adopted, the industry would see commercial as well as health benefits.

Rebecca: The Australian construction industry is one of the least productive construction industries in the world. We're slow and we're expensive and I think the Australian Constructors Association and the Australian Government's, likely the NSW government, the Victorian government in particular, they're not blind to this and the research is showing, I think some of the research relied upon to create the culture standard, has recognised that poor well-being practices and absence of inclusion and diversity practices and an absence of time for life, so constantly needing to be at work, do not a productive worker make. So all of the things that we're now safeguarding or have and have already been safeguarding in laws, they actually have a productivity impact too. So looking after the individual will benefit the group because you'll have a set of healthy, well-rested construction workers who the data suggests or the research suggests will be infinitely more productive at work.

Matthew: In fact, most of what's in the culture standard is already in laws governing psychosocial safety, the right to disconnect, a duty to proactively prevent sexual harassment and gender diversity, says Emma. It's just the construction industry perhaps needs extra support in making the changes in these three areas.

Emma: There was a codification and a clarification for employers about five years ago to make it really abundantly clear that psychological safety is required to be treated in the same way as physical safety. But actually it was always the case under the model work health safety laws in Australia and so it shouldn't strictly be a huge change. Most enterprise agreements should have breaks in them, they should have rest time, they should have maximum hours, they should have all of those things in them already. But I think it shouldn't be a big change legally. But I think on the frontline it will be a big culture change and I think that small things like it actually specifically calls out things like there should be no pornography or explicit images visible on the work site. Now in any other industry in Australia that will and has for decades gone without saying. But the construction industry is still at a point where that needs to be specifically called out as something they need to address. And so I think that demonstrates where that gap is. But I don't think that removing the pornography from work sites should have a productivity or project delivery impact.

Well, thank you once again for tuning in and listening to the Pinsent Masons Podcast. It's greatly appreciated. We know you have lots of demands on your time. Do share it with anybody else you think might be interested and if you want to find out up-to-the-minute legal news and analysis from all over the world from our specialist team of reporters, you can read anytime at pinsentmasons.com. Or you can get a weekly digest tailored to just the things that you're interested in by going to pinsentmasons.com/newsletter. That's it for this week. Thanks for listening and goodbye.

The Pinsent Masons Podcast was produced by Matthew Magee for international professional services firm Pinsent Masons.