The Copyright Office has been engaged in a multi-year study of how copyright law intersects with artificial intelligence. That process culminated in a series of three separate reports: Part 1 – Unauthorized Digital Replicas, Part 2 – Copyrightability, and now, the much-anticipated Part 3—Generative AI Training.
Many in the copyright community anticipated that the arrival of Part 3 would be the most important and controversial. It addresses a central legal question in the flood of recent litigation against AI companies: whether using copyrighted works as training data for generative AI qualifies as fair use. While the views of the Copyright Office are not binding on courts, they often carry persuasive weight with federal judges and legislators.
The Report Arrives, Along With Political Controversy
The Copyright Office finally issued its report – Copyright and Artificial Intelligence – Part 3 Generative AI Training (link on Copyright Office website; back-up link here) on Friday, May 9, 2025. But this was no routine publication. The document came with an unusual designation: “Pre-Publication Version.”
Then came the shock. The following day, Shira Perlmutter, the Register of Copyrights and nominal author of the report, was fired. Perlmutter had served in the role since October 2020, appointed by Librarian of Congress Carla Hayden—herself fired two days earlier, on May 8, 2025.
These abrupt, unexplained dismissals have rocked the copyright community. The timing has fueled speculation of political interference linked to concerns from the tech sector. Much of the conjecture has centered on Elon Musk and xAI, his artificial intelligence company, which may face copyright claims over the training of its Grok LLM model.
Adding to the mystery is the “pre-publication” label itself—something the Copyright Office has not used before. The appearance of this label, followed by Perlmutter’s termination, has prompted widespread belief that the report’s contents were viewed as too unfriendly to the AI industry’s legal position, and that her removal was a prelude to a potential retraction or revision.
What’s In That Report, Anyway?
Why might this report have rattled so many cages?
In short, it delivers a sharp rebuke to the AI industry’s prevailing fair use narrative. While the Office does not conclude that AI training is categorically infringing, its analytical framework casts deep doubt on the broad legality of using copyrighted works without permission to train generative models.
Here are key takeaways:
Transformative use? At the heart of the report is a skeptical view of whether using copyrighted works to train an AI model is “transformative” under Supreme Court precedent. The Office states that such use typically does not “comment on, criticize, or otherwise engage with” the copyrighted works in a way that transforms their meaning or message. Instead, it describes training as a “non-expressive” use that merely “extracts information about linguistic or aesthetic patterns” from copyrighted works—a use that courts may find insufficiently transformative.
Commercial use? The report flatly rejects the argument that AI training should be considered “non-commercial” simply because the outputs are new or the process is computational. Training large models is a commercial enterprise by for-profit companies seeking to monetize the results, and that, the Office emphasizes, weighs against fair use under the first factor.
Amount and substantiality? Many AI models are trained on entire books, images, or articles. The Office notes that this factor weighs against fair use when the entirety of a work is copied—even if only to extract patterns—particularly when that use is not clearly transformative.
Market harm? Here, the Office sounds the loudest alarm. It directly links unauthorized AI training to lost licensing opportunities, emerging collective licensing schemes, and potential market harm. The Office also notes that AI companies have begun entering into licensing deals with rightsholders—ironically undercutting their own arguments that licensing is impractical. As the Office puts it, the emergence of such markets suggests that fair use should not apply, because a functioning market for licenses is precisely what the fourth factor is meant to protect.
But Google Books? The report goes out of its way to distinguish training on entire works from cases like Authors Guild v. Google, where digitized snippets were used for a non-expressive, publicly beneficial purpose—search. AI training, by contrast, is described as for-profit, opaque, and producing outputs that may compete with the original works themselves.
Collectively, these conclusions paint a picture of AI training as a weak candidate for fair use protection. The report doesn’t resolve the issue, but it offers courts a comprehensive framework for rejecting broad fair use claims. And it sends a strong signal to Congress that licensing—statutory or voluntary—may be the appropriate policy response.
Conclusion
It didn’t take long for litigants to seize on the report. The plaintiffs in Kadrey v. Meta (which I recently wrote about here) filed a Statement of Supplemental Authority on May 12, 2025, the very next business day, citing Ninth Circuit authority that Copyright Office reports may be persuasive in arriving at judicial decisions (but failing to note that the report in question here is “pre-publication”). The report was submitted to judges in other active AI copyright cases as well.
The coming weeks may determine whether this report is a high-water mark in the Copyright Office’s independence or the opening move in its politicization. The “pre-publication” status may lead to a walk-back under new leadership. If, on the other hand, the report is published as final without substantive change, it may become a touchstone in the pending cases and influence future legislation.
If it survives, the legal debate over generative AI may have moved into a new phase—one where assertions of fair use must confront a detailed, skeptical, and institutionally backed counterargument.
As for the firing of Shira Perlmutter and Carla Hayden? No official explanation has been offered. But when the nation’s top copyright official is fired within 24 hours of issuing what could prove to be the most consequential copyright report in a generation, the message—intentional or not—is that politics may be catching up to policy.
Copyright and Artificial Intelligence, Part 3: Generative AI Training (pre-publication)