Cyprus and the EU's AI Copyright Crossroads: What the Latest Study Means for Our Digital Future

As the European Union grapples with unprecedented challenges at the intersection of artificial intelligence and copyright law, a groundbreaking new study commissioned by the European Parliament's Committee on Legal Affairs reveals critical gaps that could significantly impact Cyprus's growing digital economy and creative sectors.

 

The Current Legal Landscape

The comprehensive study, "Generative AI and Copyright: Training, Creation, Regulation," authored by Professor Nicola Lucchi of the University Pompeu Fabra, exposes a fundamental mismatch between current EU copyright frameworks and the realities of AI development. As Cyprus continues to position itself as a regional technology and innovation hub, these findings carry particular significance for local stakeholders.

The study reveals that the EU's current text and data mining (TDM) exceptions, implemented through the 2019 Copyright in the Digital Single Market (CDSM) Directive, were never designed to accommodate the massive scale and synthetic nature of generative AI training. This creates a legal grey area that affects all EU member states, including Cyprus.

Industry-Specific Implications

For Creative Industries

Cyprus has a vibrant creative sector, from traditional crafts and cultural heritage to modern digital arts and software development. The study's findings suggest that creators may currently have limited protection against unauthorized use of their works in AI training datasets. As noted in the study, "the current framework allows generative AI developers to benefit from mass-scale ingestion of creative works without returning any value to the original contributors."

For Tech Companies and Startups

Cyprus's growing technology sector, particularly companies developing or utilizing AI technologies, must navigate increasingly complex legal terrain. The study warns that current practices of using the Article 4 TDM exception for AI training may not have solid legal foundations, potentially exposing companies to litigation risks.

 

For Legal and Regulatory Framework

As an EU member state, Cyprus must implement any future reforms to copyright law. The study's recommendation for a shift from "opt-out" to "opt-in" systems could require significant changes to how digital platforms and AI companies operating in Cyprus manage copyrighted content.

The Three-Pillar Accountability Test

The study proposes an innovative evaluation framework that could guide Cyprus's approach to AI governance:

1. Epistemic Accountability (Transparency): Can creators see how their work is used?

2. Normative Accountability (Fairness): Are rights and revenues shared appropriately?

3. Systemic Accountability (Enforcement): Is there effective oversight and enforcement?

This framework aligns well with Cyprus's commitment to transparent governance and rule of law, principles that have helped establish the island as a trusted jurisdiction for international business.

Proposed Solutions and Their Cyprus Context

Institutional Reforms

The study recommends establishing an AI & Copyright Unit within the EU AI Office, working closely with the European Union Intellectual Property Office (EUIPO). For Cyprus, this could mean enhanced technical assistance and clearer guidelines for local implementation.

Collective Licensing Models

The proposal for statutory remuneration schemes could benefit Cypriot creators by ensuring they receive compensation when their works are used in AI training, even when individual licensing is impractical.

 

Transparency Requirements

Enhanced disclosure obligations for AI developers could help Cypriot rightsholders understand how their content is being used and assert their rights more effectively.

Economic Considerations

 The study highlights that "the proliferation of AI-generated content risks diluting the value of human authorship" and could create "market displacement risks" for professional creators. For Cyprus's economy, which increasingly values creative and knowledge-based industries, this presents both challenges and opportunities.

The island's strategic position could allow it to become a testing ground for balanced AI governance approaches that protect creators while fostering innovation—potentially attracting AI companies seeking compliant operational bases within the EU.

Looking Ahead: The CJEU Case

 The study notes the upcoming Court of Justice of the European Union ruling in Case C-250/25 (Like Company v. Google Ireland), which could significantly clarify the legal landscape. This ruling will be binding across all EU member states, including Cyprus, and could influence how AI systems operate throughout the union.

Recommendations for Cyprus Stakeholders

For Policymakers:

• Monitor EU-level developments and prepare for implementation of new copyright frameworks

• Consider Cyprus-specific guidance for AI companies and creators

• Explore opportunities to pilot innovative licensing models

For Businesses:

• Review current AI development and deployment practices for copyright compliance

• Consider proactive licensing arrangements for training data

• Prepare for enhanced transparency and reporting requirements

For Creators:

• Stay informed about evolving rights and protection mechanisms

• Consider collective action through professional associations

• Explore new licensing and monetization opportunities

Conclusion

As the EU moves toward comprehensive AI copyright reform, Cyprus stands at a crucial juncture. The island's combination of EU membership, English-speaking business environment, and growing tech sector positions it well to benefit from clearer, fairer AI governance frameworks.

The study's call for "targeted, proportionate reforms that reinforce existing legal architecture" while ensuring "innovation can flourish without hollowing out authors' rights" resonates with Cyprus's balanced approach to economic development and regulatory compliance.

By staying ahead of these developments and preparing for implementation of new frameworks, Cyprus can continue to attract innovative companies while protecting its creative communities—maintaining its competitive edge in a rapidly evolving digital landscape.

References:

• Lucchi, N. (2025). "Generative AI and Copyright: Training, Creation, Regulation." European Parliament Policy Department for Justice, Civil Liberties and Institutional Affairs, PE 774.095.

• Court of Justice of the European Union, Case C-250/25, Like Company v. Google Ireland (pending).

• Directive (EU) 2019/790 on Copyright in the Digital Single Market (CDSM Directive).