AI and Copyright ‘Hallucinations’: Does the Text and Data Mining Exception Really Supporting Generative AI Training?

This paper critically challenges the widespread—and, we argue, conceptually flawed—assumption that Articles 3 and 4 of the CDSM Directive provide a lawful basis for training generative AI systems on copyright-protected content. We describe this misinterpretation as a form of legal “hallucination,” underscoring its disconnect from the Directive’s textual, technical, and normative foundations. Designed to enable automated analytical extraction for scientific or informational purposes, the TDM exceptions do not encompass the large-scale reproduction, internalisation, and expressive re-use of works characteristic of GenAI training. Article 3 is limited to non-commercial research; Article 4’s opt-out mechanism, based on non-standardised signals, exacerbates uncertainty without ensuring transparency or fair compensation. This misclassification not only undermines core copyright incentives but also distorts the scope of EU exceptions, placing the framework in tension with the three-step test and international norms. We argue that applying TDM rules to GenAI training introduces structural imbalances—both doctrinal and distributive—that risk entrenching platform asymmetries, weakening authorial agency, and threatening cultural diversity. Rather than relying on strained legal interpretations, a forward-looking response requires bespoke legal reforms that preserve normative coherence while addressing the specific challenges posed by synthetic content creation.