China has issued the world's first legally binding verdict concerning copyright infringement of AI-generated images, according to news released on Monday.

The Guangzhou Internet Court ruled on Feb 8 that an AI company was guilty of infringing on copyright and adaptation rights related to the iconic Ultraman series in the process of providing generative AI services.

The dispute centered around the exclusive copyright ownership of the "Ultraman" series images, which had been granted to the plaintiff by the copyright owner. The defendant, an AI company, operated a website offering AI conversation and AI-generated painting services.

The plaintiff, upon investigation, discovered that the images generated by the defendant's website bore striking similarities to its Ultraman images. Additionally, the website's AI drawing feature was only accessible to paying members.

The plaintiff argued that the defendant unauthorizedly used its rights to train the defendant’s model and generate substantially similar images, which causes serious harm to the plaintiff.

The Guangzhou Internet Court ruled that the defendant’s unauthorized replication of the original artistic work constitute a violation of the plaintiff's reproduction rights. Furthermore, the court noted that some of the generated images displayed new features based on the original expression, which violated the plaintiff's adaptation rights. The defendant was ordered to compensate the plaintiff for economic losses totaling 10,000 yuan ($1,389).

The ruling sets a significant precedent for the treatment of AI-generated content and underscores China's commitment to protecting IP rights in the digital age. It follows a similar decision by China’s Beijing Internet Court in November 2023, where an AI-generated image was recognized as copyrighted artwork in an IP dispute.