Insights + Resources

September 6, 2022

METAVERSE+ | DALL-E 2: Who owns AI Art Under Australian Law?

Launched in July 2022 by US artificial intelligence research lab OpenAI, DALL-E 2 is a revolutionary text-to-image art generator which harnesses the power of machine learning. Dubbed the internet’s “meme machine”, DALLE-2 represents an exciting intersection of AI, art and technology. In this instalment of our METAVERSE+ series, below we take a look under the hood of the DALL-E 2 platform and consider some copyright ownership questions it touches upon under Australian law.

What is DALL-E 2?

DALL-E 2 is a software program or platform that uses machine learning to respond to human user inputs to generate creative works.  Whilst primarily a text-to-image AI art generator, DALL-E 2 also allows users to upload their own images to the program. Its name is a portmanteau of ‘Dali’ (as in Salvador) and Pixar’s ‘Wall-E’.

As a generative software tool, DALL-E 2 produces outputs by accessing 650 million or more images from the internet. Its text-to-image function receives the user’s text descriptions to form context and understand relationships between images and the words that describe them.

The use of DALL-E 2 is currently limited to a narrow pool of people, and prospective users need to join a waiting list before they are allowed access to the technology. Once waitlisted users gain access, they can generate new images, edit existing images and save images to a personal database on the DALL-E 2 platform. During the trial phase, DALL-E 2 users receive an initial allotment of 50 free credits to use on the platform, and 15 new credits each month. Users can then exchange one credit for one prompt. There is also the option to purchase more credits through the DALL-E 2 platform.

Although DALL-E 2 is perhaps the most sophisticated program of its kind, other text-to-image generative models have mushroomed recently in the AI space[4]. These can be seen as part of the general emergence of Web 3.0. Some programs are open source and accessible to public users, while others are available on an invite-only basis.

How are DALL-E 2 works created?

A user of the DALL-E 2 text-to-image AI art generator submits written prompts, which the program uses to scour the internet for content before producing works. Examples of written prompts shown below are:

“mouse in VR”

“construction workers removing the moon from the sky”

“Napoleon crossing the alps on a Harley Davidson”

Who owns the DALL-E 2 program?

The program was created by the artificial intelligence company OpenAI, which was founded by Elon Musk and Sam Altman.  Elon Musk has since exited, and today the company describes itself on its website as:

“…an AI research and deployment company dedicated to ensuring that general-purpose artificial intelligence benefits all of humanity.

As part of this, the owners incorporated the US company OpenAI LP as a hybrid of a “for-profit” and “not for profit” (NFP) – which they call a “capped-profit” company. Investors can make a commercial return but there is a ceiling on it, with excess profits channelled back to the OpenAI NFP entity.

Are the DALL-E 2 works protected by copyright?

Under Australian law, works that attract copyright protection are classified as literary, dramatic, musical or artistic. Such works must be “original”, which does not necessarily require artistic skill or innovation, but requires an element of skill, labour or judgment.

Copyright is generally owned upon creation by the author of the work. In considering the works generated by DALL-E, the question arises as to who should be regarded as the author (and original copyright owner) of these works? Is the author:

  • the program itself – DALL-E 2?
  • the human user who prompts DALL-E 2?
  • the corporate owner of DALL-E 2 – the Open AI companies?

If no author can be found, then it follows that there is no copyright protection.  We consider this below.

DALL-E 2 as author

Whether a machine can create art, and be credited as an author, is a fascinating social and legal question for our age.  In Isaac Asimov’s Bicentennial Man, the android played by Robin Williams lobbied successfully to have their human nature legally recognised.  However, this Hollywood construct is not one that is met with sympathy under current Australian law.

Under section 32 of the Copyright Act, copyright is held by a “qualified person”, which is defined as an Australian citizen or a person resident in Australia.[1] Based on current Australian judicial authority,[2] the qualified person who contributes the necessary element of skill, labour or judgment, must be capable of independent human intellectual effort. This idea was clarified judicially in Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149 (the “Telstra Directories case). In a unanimous judgement of the Full Federal Court of Australia, it was stated that “the creation of the work must be the product of a human intellectual process”.[3]

The Telstra Directories case is still good law in Australia. Under these principles, an “intelligent” technology platform like DALL-E 2, which is not human, cannot be recognised as the author or owner of works it generates.

Human user as author

The human user prompting DALL-E 2 is unlikely to qualify as the author of the works under current Australian law. In the Telstra Directories case, Telstra argued that the directories were compiled by employees who exerted independent intellectual effort in the creation of the directories. However, the Federal Court rejected this argument and held that substantial parts of the compilation procedure were computerised processes which are automated to the extent that human involvement is minor.

If the DALL-E 2 program is deployed as a mere tool in the creation of the work, provided that it meets the requisite test of originality, the human user would be the copyright author under Australian law. However, we do not believe this to be the factual case. It seems instead that DALL-E 2 is not a mere tool in the user’s hands, but rather that the human user outsources the aspect of skill, labour or judgment to the program.  As discussed above, under current Australian legal doctrine, DALL-E 2 cannot be the author for the same reason it cannot be issued a passport.

The OpenAI corporation as author

Under its Terms of Use, OpenAI claims to own all images created by DALL-E 2. Users are granted full usage rights to the images they create, including rights to reprint, sell and merchandise. For example, users could put the works on merchandise and sell them. OpenAI expressly suggests that users could utilise the DALL-E-generated images in video games, art for publishing, and book illustrations.

As the owner of the program, OpenAI can be sued for copyright infringement where the program breaches third party copyright. However it is doubtful that Open AI can be the owner of the copyright in these works.  The Telstra Directories case discussed above made it clear that phone directories are not works protected as copyright because they have no human author that contributes the necessary element of originality. If this is also true of DALL-E 2 works, then OpenAI cannot own the copyright in the DALL-E 2 works.

Although OpenAI cannot own the copyright under Australian law, it can protect the ownership of the original work that is generated through its Terms of Use.  However this is only valid as against a user of the DALL-E 2 platform that has agreed to the Terms of Use.  To the world at large, no contract is formed, and no contractual restriction can be legally imposed.

An alternative legal shield for OpenAI to protect the works potentially arises through laws of confidentiality. Whilst the works are secretly held within a closed network (as is the present case), they can be protected from third party use. However, as soon as a DALL-2 work makes it way into the public domain, as will be the case where a user exercises their usage rights, this confidentiality is lost. It is then unclear how either OpenAI or the user could prevent a third person (acting in good faith) from copying the work.

Concluding Remarks

The Telstra Directories case is more than 10 years old, and it is beyond sensible debate that Australian copyright law has fallen well and truly behind the increasingly sophisticated landscape of AI-generated works. Other jurisdictions such as the UK and New Zealand have amended their copyright statutes to provide that the author of computer-generated works is the person ‘by whom the arrangement necessary for the creation of the work are undertaken’.

As AI programs play an increasingly mainstream and important role in society, the implications for Australian copyright law will be immense. The current rules lag behind other jurisdictions. Given this delay, it is not inconceivable that Australian law leapfrogs forward, and applies an innovative solution to the question of who owns the copyright in an AI-generated work.  Will we arrive at a world such as Isaac Asimov’s Bicentennial Man, where the AI program has its consciousness officially recognised? Only time will tell.

For advice on emerging laws surrounding AI, Web 3.0 and the digital landscape generally, please contact us below.

For other articles in our METAVERSE+ series, including similar questions with respect to AI patents click here.


[1] Copyright Act 1968 (Cth) s 84.

[2]  IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458; Copyright Act 1968 (Cth) s 32.

[3] Telstra Corporation Ltd v Phone Directories Company Pty Ltd [2010] FCAFC 149 [137] (Yates J).

[4] These include Midjourney, Hugging Face’s Craiyon, Meta’s Make-A-Scene and Google’s Imagen.

Close Btn Created with Sketch.


Straight to your inbox on legal and business developments set to disrupt and transform.