LONDON & HONG KONG - The impending rollout of the European Union’s Artificial Intelligence (AI) Act represents the bloc’s latest attempt to cement its status as a regulatory powerhouse. This ambitious legislation - which aims to impose stringent regulations on advanced tech like AI - underscores the EU’s commitment to proactive governance.

Meanwhile, the United States has taken a very different path. Despite the sweeping executive order issued by US President Joe Biden in October 2023, the country still lacks a cohesive AI regulatory framework. Instead, a surge of litigation has overwhelmed US courts, with leading AI firms being sued for copyright infringement, data-privacy breaches, defamation, and discrimination.

Given that litigation is expensive and often drags on for years, the EU’s strategy may appear more forward-looking. Even this approach has flaws, however - the common-law system may prove to be an even more effective mechanism for tackling the myriad challenges posed by generative AI (GenAI). This is particularly evident in copyright law, where a growing number of artists, publishers, and authors are embroiled in legal battles against AI giants like Microsoft, OpenAI, and Meta over the use of copyrighted material. 

At the core of these disputes is the question of whether the training of large language models (LLMs) should qualify as fair use - a classification that would exempt tech firms from compensating content creators. For its part, the EU’s AI Act includes a provision mandating the disclosure of copyrighted materials, enabling copyright holders to opt out of AI training databases. The hope