📝 SummarXiv

Abstract

Traditional fair use can no longer respond to the challenges posed by generative AI. Drawing on a comparative analysis of China's Ultraman and the U.S. cases Bartz v. Anthropic and Kadrey v. Meta, this article proposes "Develop-Fair Use" (DFU). DFU treats AI fair use (AIFU) not as a fixed exception but as a dynamic tool of judicial balancing that shifts analysis from closed scenarios to an evaluative rule for open-ended contexts. The judicial focus moves from formal classification of facts to a substantive balancing of competition in relevant markets. Although China and the U.S. follow different paths, both reveal this logic: Ultraman, by articulating a "four-context analysis," creates institutional space for AI industry development; the debate over the fourth factor, market impact, in the two U.S. cases, especially Kadrey's "market dilution" claim, expands review from substitution in copyright markets to wider industrial competition. The core of DFU is to recognize and balance the tension in relevant markets between an emerging AI industry that invokes fair use to build its markets and a publishing industry that develops markets, including one for "training licenses," to resist fair use. The boundary of fair use is therefore not a product of pure legal deduction but a case-specific factual judgment grounded in evolving market realities. This approach aims both to trim excess copyright scope and to remedy shortfalls in market competition.