for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, and others. Under the fair use doctrine, whether a potentially infringing activity qualifies as fair use depends on four factors:“(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes (i.e., transformative use);(2) the nature of the copyrighted work;(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and(4) the effect of the use upon the potential market for or value of the copyrighted work.” 17 U.S.C. § 107.Under fair use jurisprudence, there is a close linkage between the first factor (transformative use), and the fourth factor, which is described as “undoubtedly the single most important element of fair use.” Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 566 (1985).Examining Other Fair Use Cases for ContextIn Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015) (the “Google case”), copyright owners challenged Google’s scanning and indexing of copyrighted books and its indexing of same online. Google did so to allow users to search for terms within the scanned books, and permitted its users to see snippets of the copyrighted material. The Second Circuit held in favor of Google’s fair use defense, opining that Google’s digitization of copyrighted material and subsequent display via snippets in the Google Books archive was “highly transformative”, factoring in favor of fair use, because the snippet view allowed for users to identify books of interest. Moreover, with respect to the fourth factor, the Second Circuit found that Google’s transformative use did not serve as a “meaningful market substitute” for the original copyrighted works, ultimately leading the court to rule in favor of Google. Id. at 207 (“Google’s making of a digital copy to provide a search function is a transformative use, which augments public knowledge by making available i

In reaching its’s conclusion, the Second Circuit considered four factors set out in 17 U.S.C. §107, which states in relevant part: [I]n determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.Factor 1 – Purpose and Character of the Use The court found that factor one slightly favored fair use. The court noted that the primary inquiry under factor one was whether the secondary use was transformative, and considered its decision in Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015) (the “Google Books” case), which held that Google’s pooling of digital copies of copyrighted books into a text-searchable database served a transformative purpose because it “communicate[d] something new and different from the original.” 804 F.3d at 214.

lade, Inc., 977 F.2d 1510, 1514–1515, 1522–23 (9th Cir. 1992); Google LLC v. Oracle Am., Inc., 593 U.S. 1, 24 (2021).Id. at 18.Id.Id.Id.Although many judges, like Judge Bibas, do not give much importance to this factor, legal scholars and decision-makers have advocated for giving this prong more weight, especially in the context of “fact-like materials,” such as those at issue in the Thomson Reuters case. In contrast to Judge Bibas, scholars have advocated for the importance of considering the copyrighted work’s nature, because the copying of materials that are factual in nature requires “necessary breathing room.” In cases involving scholarly works, judges have put increased weight on the second prong of the analysis. However, it remains commonplace for judges to put little weight on this factor. See Figares, Alex R. et. al, Copyright Infringement and the Fair Use Defense: Navigating the Legal Maze, 27(1) Univ. of Fl. J. of Law & Public Pol. 135 (2016); Authors Guild v. Google, Inc., 804 F.3d 202, 220 (2d Cir. 2015); Cambridge University Press v. Patton, 769 F.3d 1232 (11th Cir. Ga. 2014).Memorandum Opinion, Thomson Reuters, 1:20-cv-00613at 21, Rich Stim, Measuring Fair Use: The Four Factors.Memorandum Opinion, Thomson Reuters, 1:20-cv-00613, at 21.Id.Id.Id.Netanel, Making Sense of Fair Use.Memorandum Opinion, Thomson Reuters, at 22.Memorandum Opinion, Thomson Reuters, 1:20-cv-00613, at 22.Id.Id. at 22, 23.Id. at 19.Bernard Marr, The Difference Between Generative AI And Traditional AI: An Easy Explanation for Anyone, Forbes (July 24, 2023), https://www.forbes.com/sites/bernardmarr/2023/07/24/the-difference-between-generative-ai-and-traditional-ai-an-easy-explanation-for-anyone/.Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, 589 U.S. (2023); Authors Guild v. Google, Inc., 804 F.3d 202, 220 (2d Cir. 2015).Warhol, 589 U.S. at 1276.See Google LLC v. Oracle Am., Inc., 593 U.S. 1, 24 (2021); contra Memorandum Opinion, Thomson Reuters, 1:20-cv-00613, at 18.runi Soni, Judge Rejects Fair-U

ors, suppliers and third parties will have to address the use of exchanged confidential information in generative AI.C. Conclusion The arrival of generative artificial intelligence into realms previously thought to be within the sole purview of humans will disrupt countless industries and cause just as many legal headaches. Like the internet in the 2000’s and crypto currency today, practitioners are in the legal equivalent of the Wild West, where the laws appear to be more of guidelines and all parties attempt to find their way in territory that is, in many respects, uncharted. Courts and practitioners will attempt to fit this new order into existing legal doctrines. There will undoubtedly be growing pains as new applications arise and case law and the law adjusts.We will continue to write on AI-generated intellectual property and related issues going forward as the legal battles unfold.A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001)Authors Guild, Inc. v. Google, Inc 804 F.3d 202 (2d Cir. 2015)Doe v. GitHub, Inc., 3:22-cv-06823 (ND CA). At its core, plaintiffs allege Defendants released Codex and Copilot—two “assistive AI-based systems” that are alleged to generate copied copyrighted material without attribution in some instances. (Complaint at¶¶ 46, 77.) Plaintiffs allege that after Defendants trained Copilot and Codex by exposing it to large quantities of data gathered from publicly accessible open source code repositories on GitHub, they used Copilot and Codex to distribute similar code to users. (Id. ¶¶ 46, 140.) As a result, Plaintiffs assert that Defendants violated open-source licenses and infringed intellectual property rights. (Id. ¶¶ 143-171.)Andersen, et al., v. Stability AI LTD., et al., 3:23-cv-00201(ND CA). In this case, Getty Images filed a lawsuit in the US against Stability AI, creators of open-source AI art generator Stable Diffusion. The stock photography company alleges that Stability AI copied more than 12 million images from its database “without permis

k of the court’s analysis focused on Ross’s fair use defense, which it ultimately rejected.Purpose and Character of the Use: The court applied the Supreme Court’s recent framework in Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508 (2023) to analyze this first fair use factor, by considering whether Ross’s use was commercial and for similar purposes.Ross’s use is admittedly commercial, and the court concluded that the purpose is “to make it easier to develop a competing legal research tool” to Westlaw. Therefore, Ross’s use was not transformative, giving this factor to Thomson Reuters.In its transformativeness analysis, the court distinguished earlier cases involving intermediate copying (i.e., interim non-public reproduction) of computer programs. The court did not, however, address case law discussing transformativeness in the more closely relevant context of intermediate copying for enabling content indexing and searching (e.g., Authors Guild v. Google, Inc., 804 F.3d 202 (2d Cir. 2015)).Nature of the Original Work: The court agreed with Ross that the headnotes had limited creativity, corresponding to limited scope of copyright protection. It emphasized, however, that this factor matters less than the others.Amount and Substantiality of the Portion Used: The court clarified that “portion used” refers to what is “made accessible to a public.” Since Ross did not make the actual headnotes publicly available to it users, this factor favors Ross.Likely Effect of the Copying on the Market for the Original: The court emphasized that this is the most important factor. This factor favored Thomson Reuters because Ross intended to compete with Westlaw as a market substitute. Moreover, the court recognized a potential market for Thomson Reuters in AI training (which Ross undercut) because Ross failed to show that such hypothetical market did notexist. Although acknowledging the public benefit in accessing the law, the court found that it fell short of tipping the scales.Balanced

s of whether use of copyrighted material to train generative AI tools may constitute fair use, but it is by no means dispositive of this query. Something to keep in mind as we continue to track developments in The New York Times v. OpenAI and Microsoft case.Why Isn’t Ross’s AI Training a Fair Use?Courts consider four factors as it analyzes whether use of a copyrighted work is defendable as a fair-use and the alleged infringer bears the burden of proof on this defense. The following factors carry varied weight: (1) the use’s purpose and character, including whether it is commercial or not for profit; (2) the copyrighted work’s nature; (3) how much of the work was used and how substantial a part it was relative to the copyrighted work’s whole; and (4) how the use affected the copyrighted work’s value or potential market. See 17 U.S.C. Section 107(1)-(4). The first and fourth factors weigh most heavily in the analysis. Thomson Reuters v. Ross at 16, quoting Authors Guild v. Google, Inc., 804 F.3d 202, 220 (2d Cir. 2015). While the Court noted that fair use is a mixed question of law and fact, in the instant case the Court held that once copying is determined, the remaining issues for consideration are not related to historical fact, intent or factual prediction, rather it is about how to apply the law to the facts, which is a question for the judge not the jury. Id.First, Judge Bibas considered Ross’s purpose and character of use, which necessarily requires an analysis of whether it was commercial, and whether the use was transformative. Id. citing Andy Warhol Found. For the Visual Arts Inc. v. Goldsmith, 598 U.S. 508, 529-31 (2023). Because Ross and Thomson Reuters used the Westlaw headnotes for “very similar purposes and Ross’s use is commercial, this factor disfavor[ed] fair use.” Id. While Ross’s use is obviously commercial, the Court spent a bit more time explaining why it was not transformative. Whether use is “transformative” is essentially related to the purpose of the use. “If an original wo

nfringement can only limit damages, and does not apply if a work bears a copyright notice, as Westlaw does).[18] Id. at 15 (Ross did not show that “Thomson Reuters misused its copyrights to stifle competition”).[19] Id. (“there are many ways to express points of law from judicial opinions”).[20] Id. (“nothing about a judicial opinion requires it to be slimmed down to Thomson Reuters’s headnotes or categorized by key numbers”).[21] 694 F. Supp. 3d at 482-87.[22] Mem. Op.at 16.[23] 17 U.S.C.§ 107(1).[24] Mem. Op.at 16.[25] Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508, 525 (2023).[26] Mem. Op.at 16-17.[27] Id. at 17 (quoting Warhol, 598 U.S. at 529).[28] Id.[29] Id. at 17.[30] Id. at 17-18.[31] Id. at 18-19 (quoting Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508, 532 (2023)).[32] Id. at 19.[33] Id.[34] 17 U.S.C.§ 107(2).[35] Mem. Op.at 20.[36] 17 U.S.C.§ 107(3).[37] Mem. Op.at 20-21.[38] Id. at 21 (quoting Authors Guild v. Google, Inc., 804 F.3d 202, 222 (2d Cir. 2015); emphasis in original).[39] Id.[40] 17 U.S.C.§ 107(4).[41] Mem. Op.at 21-23.[42] Id. at 21-22.[43] Id. at 22-23.[44] Id. at 23.[View source.]

redacted at this time, the stipulation states that Anthropic will:Maintain current technical measures to prevent AI models, such as Claude, from generating or reproducing content that infringes on copyrighted song lyrics;Apply these safeguards consistently to all future large language models and product offerings developed by Anthropic; andEstablish a protocol for music publishers to notify Anthropic if they believe the guardrails are insufficient. Anthropic is required to investigate and address such concerns promptly, with potential court intervention if needed.These measures appear to strike a balance between advancing AI technology and protecting intellectual property, particularly by addressing the plaintiffs’ concerns of preventing models from generating outputs that could infringe on copyrighted song lyrics. The concept of these guardrails and this stipulation is reminiscent of legal issues raised in earlier technology cases, such as Google Books. Authors Guild v. Google, Inc., 804 F.3d 202, 212 (2d Cir. 2015). Indeed, Anthropic defends its use of copyrighted lyrics for AI training by invoking the fair use doctrine, citing Authors Guild v. Google, where the court ruled that copying for purposes like creating a searchable database can be fair use, as it expands public knowledge. Anthropic argues that, similar to Google Books, its use of copyrighted lyrics is transformative—training its AI to recognize language patterns without directly reproducing the lyrics. Anthropic further states that its position is also supported by past rulings that found intermediate copying for new technological purposes to be fair use. For now, how the Courts will analyze this pivotal question of “fair use” in this context will be for another day.Anthropic emphasizes the guardrails it has implemented to prevent copyright infringement, asserting that it will continue to apply these safeguards across all its current and future AI models. Anthropic also commits to investigating and addressing any concerns raised by th

e responsibility for the potential legal risks involved.So is this where the law on generative AI ends? That will not be the case if an existential battle breaks out similar to the one fought before the Ninth Circuit in A&M Records Inc. v. Napster Inc. in 2001, or the U.S. Supreme Court in MGM Studios Inc. v. Grokster Ltd. in 2005, where other technologies that had outpaced the law had their final reckoning with the law.Instead, the current uncertainty of the law of generative AI ends in a series of well-negotiated licenses with copyright content owners. For the moment, the lawsuits with Silverman and others remain active.But with OpenAI completing a new deal in February that values the company at $80 billion, the future of legal disputes in this space may well be headed in the direction of well-funded settlements and agreements between content providers and the generative AI companies who will replace them.Andy Warhol Foundation v. Goldsmith, (598 U.S., 2023).Authors Guild v. Google, 804 F.3d 202 (2d Cir. 2015).Kelly v. Arriba Soft Corp., 336 F.3d 811 (9th Cir. 2003). Mitigating Legal Risks When Using Generative AI, Forbes, January 29, 2024. OpenAI to use FT content for training AI models in latest media tie-up. Reuters, April 30, 2024.https://blogs.microsoft.com/on-the-issues/2023/09/07/copilot-copyright-commitment-ai-legal-concerns/.A&M Records, Inc. v. Napster Inc., 239 F.3d 1004 (9th Cir. 2001).MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).

n loath to find that copyright infringement is not a sufficient (and sole) remedy. That does not seem to be the case with ChatGPT -- it does not provide information based on Times articles immediately, only after the LLM has been taught on articles. Thus, the Times's misappropriation count seems the most likely one to be dismissed.Like OpenAI, Microsoft is using its motion to dismiss as more than just a vehicle to get rid of certain counts. Instead, it is seeking to create a framework for the case analogous to the Betamax case in addition to arguing for the dismissal of three counts of the complaint. By doing so in a traditional brief format, it may obtain better results than OpenAI. Nonetheless, Microsoft's VCR analogy to LLMs is shaky when placed under scrutiny and seems to be a ploy to leverage Hollywood's overblown and ultimately misplaced reaction to early home recording.[1]Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).[2]Authors Guild v. Google Inc., 804 F.3d 202 (2d Cir. 2015).[3]Google LLC v. Oracle Am., Inc., 141 S.Ct. 1183 (2021).[View source.]