July 8, 2025
By Emily Poler
Two recent court decisions are starting to provide some clarity about when AI companies can incorporate copyrighted works into their large language models (LLMs) without licenses from the copyright holders. One is in a suit against Meta; we’ll get to that in a future post.
Today, let’s focus on the suit brought by a group of authors against Anthropic PBC, the company behind Claude, a ChatGPT and CoPilot competitor. (For what it’s worth, I’ve found Claude to be the best AI of the three). Bottom line: “The training use was a fair use,” wrote Judge William Alsup. “The use of the books at issue to train Claude and its precursors was exceedingly transformative.” This ruling is a landmark as it’s one of the first substantive decisions on how fair use applies to AI — and it’s a big win for AI, right? Well, there’s a catch.
But first, some background. To create Claude (I love how AI companies give their LLMs these friendly, teddy bear names that mask that they’re machines and cause real harm), Anthropic collected a library of approximately seven million books. In some cases, Anthropic purchased hard copies and scanned them. But, mostly it just grabbed “free” (aka, pirated) digital copies from the Internet. At least three authors whose books were used — Andrea Bartz, Charles Graeber and Kirk Wallace Johnson — were not amused, and in 2024 they filed a class action suit against Anthropic, alleging copyright infringement for training Claude on their works and for obtaining the materials without paying for them.
As far as Anthropic’s training of its LLM on copyrighted materials, the Court found this to be fair use since it dramatically differs from the works’ original purpose. As the judge wrote, “the technology at issue was among the most transformative many of us will see in our lifetimes.” This is a big deal.
But what’s also a big deal — and the catch for Anthropic — is that if you’re going to train an AI on copyrighted materials, you have to pay for them. In most cases, Anthropic didn’t. And thus, Judge Alsup is allowing the case to proceed to trial, writing that Anthropic “downloaded for free millions of copyrighted books in digital form from pirate sites on the internet.”
For me, there are a couple of notable takeaways here, some purely legal and some the kind of common sense that I suspect that most kindergartners could point out. Let’s talk about the purely legal point first. The Court went to great lengths to distinguish the different ways that Anthropic used the works, which was critical in its fair use analysis.
As part of Anthropic’s process, when it scanned a purchased book it discarded the original copy. The Court found this constituted fair use as long as the hard copy was destroyed and the digitized version not distributed outside the company. However, Anthropic kept all the books, including the millions of pirated copies, in a general library even after deciding, in some cases, that some books in this library would not be used for training now, or maybe ever. The judge specifically noted this implied the company’s primary purpose was to amass a vast library without paying for it, regardless of whether it might someday be used for a transformative purpose, and that such a practice directly displaced legitimate demand for the authors’ works.
The opinion is especially interesting to me because of how the Court distinguished the facts of this case from other fair use cases. For example, the Court pointed out that in most (if not all) of other fair use cases, the defendant purchased or obtained the initial copy legally by either purchasing it or using a library copy.
This brings us to the other big takeaway, which is a mix of legal reasoning combined with morals and common sense: A defendant doesn’t get a free pass on stealing copyrighted materials just because it does something neat with those materials. In his opinion, the judge consistently ruled that it’s not ok to pirate books. This should have been obvious to Anthropic (and its lawyers) as I think that most children could tell you doing something cool or interesting with the proceeds of a bank robbery doesn’t make the bank robbery legal. This is particularly true given that Anthropic’s whole marketing schtick is that it’s less evil than other technology companies. In fact, Anthropic’s lawyers seemed to acknowledge as much at oral argument, saying “You can’t just bless yourself by saying I have a research purpose and, therefore, go and take any textbook you want. That would destroy the academic publishing market if that were the case.”
It will be fascinating to see what happens in the trial, slated to start in December. If judgement for copyright goes against Anthropic, U.S. copyright law allows for statutory damages of up to $150,000 per infringed work. With more than seven million pirated books in Anthropic’s library, the damages could be huge.
Also huge, of course, is the precedent set here that training AI on copyrighted works is fair use. It’s a significant decision that many have been waiting for that will have enormous repercussions on, well, just about everything going forward.
Stay tuned. More to come soon on the suit against LLAMA, Meta’s LLM.
July 1, 2025
By Laura Trachtman
New York State Senator Sean Ryan has introduced another bill banning non-compete agreements in New York. The bill, S4641, has passed the State Senate and is currently before the Assembly. This is the third bill addressing non-competes since 2021. Hopefully, the third time’s the charm.
What are non-compete agreements? Non-compete agreements are agreements between an employee and employer where the employee agrees that, after their employment ends, they may not engage in whatever they’ve been doing for a period of time and in a specific geographic area.
Why are we talking about this? Non-compete agreements are a vital issue in employment law. If you sign an employment contract that has a non-compete provision, you could find yourself bagging groceries at the local supermarket for the next year instead of engaging in whatever work you have specialized in for the past years/decades. (More on that later.)
Why did my employer make me sign this? Your employer has, in theory at least, invested time, energy and money in making you the standout employee you are today, and your employer does not want you to take what you learned at their expense and port it to a competitor.
Is that legal? That’s the question I’m addressing today. Right now, yes, it’s completely legal in certain situations, although they are not nearly as enforceable as people think. The bill above, S4641, wants to change that.
How will the bill change that? S4641 purports to limit non-competes to “highly compensated individuals” – those who are making greater than $500,000 per year. S4641 also states that health related professionals (physician, PA, chiropractor, dentist, etc.) are not subject to non-competes. Lawyers are not excluded. Womp womp.
What happens if the bill is not passed? If the bill isn’t passed or Governor Hochul refuses to sign it, and she has refused to sign previous iterations of a non-compete ban, employees still have the protections of the Courts.
The Courts have already addressed the merits of a non-compete, so I’ll run through this quickly. New York has a strict policy against restraint of trade. “In general, we have strictly applied the rule to limit enforcement of broad restraints on competition.” BDO Seidman v. Hirschberg, 93 NY2d 382, 389 (1999). This makes sense, as there’s a general policy against restraining trade, as trade makes money and the State likes money. However, non-competes restrain trade by preventing qualified individuals from getting new jobs – so how does that work?
It means that Courts will only enforce a non-compete if it is “(1) necessary to protect the employer’s legitimate interests; (2) reasonable in time and area; (3) not unreasonably burdensome to the employee; and (4) nor harmful to the general public” Id., at 388-89. In other words, the employer has to have a really good reason to enforce the non-compete. It also has to be reasonable in time and distance – if you’re working in New York, and you get a job offer in Abu Dhabi, well, enforcing the non-compete is going to be hard for the employer, as Abu Dhabi is rilly rilly far from New York, and the employer will have an uphill battle justifying how a job in Abu Dhabi will endanger the employer’s legitimate interests. The non-compete must also not be unreasonably burdensome to the employee. That means that the employee has to be able to get a job in another area – an employer can’t just expect a person to be unemployed for a year, or bagging groceries, as I referenced above. Finally, the non-compete has to not harm the general public.
My final point today about the Courts and enforcement of non-competes is that the Courts have held that “…the only justification for imposing an employee agreement not to compete is to forestall unfair competition.” Id., at 391. That means that if the employee is going to engage in fair competition, there’s no reason to enforce the non-compete.
Does this mean that the employee always gets out of a non-compete if they can demonstrate that they will only engage in fair competition? No, because there are so many other variables, especially the employee’s risk tolerance; not everyone is interested in damning the torpedoes and going full speed ahead, especially when there’s a better than average chance of landing in court. This is a frustrating situation, especially as one who believes in the Court system, as it can dissuade a qualified and worthy employee from moving forward with their professional endeavors.
And that’s the real reason why New York needs a non-compete ban enacted by the legislature – while employers tend to have the advantage over employees in the Court systems (generally – with access to greater resources, etc.), the situation is different if there’s an actual law against non-competes. And while the $500,000 cap is frustrating for me, as an attorney who represents individuals who earn that much, one hopes that an employee will negotiate either a waiver or a garden leave.
June 24, 2025
By Emily Poler
Last year I wrote about the dispute between two social media influencers that came to be known as the “Sad Beige” lawsuit, because it involves a dispute in which influencer Sydney Nicole Gifford sued rival Alyssa Sheil, alleging Sheil was replicating her “neutral, beige, and cream aesthetic” to promote the same aggressively minimalist products on TikTok, Instagram and their Amazon storefronts. (As an aside, I was blissfully unaware of Amazon Storefronts until this lawsuit. One of the things I love about writing this blog is that I learn about all sorts of stuff, whether useful to me or, in this case, not.) Due to the unprecedented and ultra-modern nature of the suit — can one copyright a “vibe”? — and its potential impact on the countless influencers who earn their livings based on their own aesthetics, the case got a lot of press and an amusing, snarky moniker. And, recently, a resolution.
To sum up, both Sheil and Gifford have amassed hundreds of thousands of social media followers by posting photos of themselves promoting home, fashion and beauty products in neutral colors that are sold on Amazon. The two met a few times in 2023 to discuss a potential collaboration, after which Sheil ghosted Gifford and blocked her from viewing her socials. At that point, according to Gifford, Sheil began copying her posts, shilling the same or similar Amazon products and replicating Gifford’s poses, hairstyles, camera angles and fonts — all of which, Gifford alleged, equaled her minimalist, “beige” aesthetic. In 2024, Gifford sued Sheil for trade dress infringement, tortious interference, vicarious copyright infringement, misappropriation of likeness, and violation of the Digital Millennium Copyright Act.
Sheil moved to dismiss these claims on numerous grounds. The District Court, for the most part, rejected Sheil’s arguments, dismissing the claim for tortious interference while allowing the rest of Gifford’s complaint to proceed. In late May, though, Gifford voluntarily dismissed all claims against Sheil with prejudice, with Sheil’s consent. (For the non-litigators and non-lawyers out there, generally, once a defendant answers a complaint, both parties’ consent is required for dismissal.) Following this anti-climactic (dare I say, “neutral”) conclusion, both sides posted on TikTok to explain the situation to their followers. For her part, Gifford claimed that she had agreed to dismissal because litigation is “prohibitively expensive” and she wanted to focus her time on her “business and growing family.” Sheil, meanwhile, proclaimed total victory. As her attorneys put it, “Ms. Gifford took nothing on her claims, proving — as Ms. Sheil has always alleged — that they were completely frivolous.”
What are the takeaways here? For me, there are two different types — some that apply to litigation generally and some relevant to this specific litigation, highlighting the complex interplay between social media influencers and existing intellectual property laws.
On litigation generally:
- Litigation is expensive. Sometimes the expense is necessary to vindicate or defend a right but, as Gifford found out, it can be a lot more than you can afford (or can hope to receive in victory).
- Litigation takes a long time and can be a real slog. Again, sometimes it is necessary, but it can be emotionally draining and suck up time that most people would prefer to devote to something else.
- Not everything that feels wrong can be made right by litigation. No doubt, Gifford was upset by the fact that Sheil appeared to be copying her posts and overall look; she probably felt violated and frustrated every time she saw one of Sheil’s posts. However, litigation isn’t necessarily going to make her less upset even if, ultimately, she won and Sheil was forced to change her aesthetic. Of course, if Gifford lost, she would have spent a lot of money and likely been angrier than ever.
On the relationship between social media content and existing IP law:
- At a high level, copyright law encourages creators to invest time in creating new works because those works benefit society. Speaking for myself, it’s really hard to see how the material created by these influencers positively benefits society. I realize I’m being judgmental, but social media is overflowing with so much content like Gifford’s and Sheil’s, and so much of it is so similar, that I don’t see how rewarding its creation through the grant of a copyright encourages or benefits society.
- Similarly, trademark law encourages people to invest time and money in ensuring that consumers link products with a particular source so as to prevent consumer confusion over the source of a particular good or service. Here, one way to look at what Gifford and Sheil do is that they provide a service that assists customers to identify things they might want to buy. However, as it appears that a lot of the products they each promote are really just items that Amazon wanted them to promote, I have questions about whether what they do actually furthers the purpose of trademark law.
Putting aside the legal aspects of this much publicized (and ridiculed) case, it does strike me as ironic that both women promote a minimalist aesthetic through encouraging people to buy a cheap stuff on Amazon. I see a real contradiction there, like preaching the way to achieve a Zen-like state of grace is by endlessly shouting at strangers. But hey, maybe that’s just me (although I don’t think so).
June 17, 2025
By Laura Trachtman
The Supreme Court recently denied a petition for certiorari in Nicholson v. W.L. York, Inc. d/b/a Cover Girls, et al, and refused to hear the claims of the petitioner, Chanel Nicholson. In so doing, the Supreme Court has again flouted clear precedent and failed to allow Nicholson access to the courts to remedy a discriminatory action.
In an appeal from the Fifth Circuit, which covers Texas, Louisiana and Mississippi, Nicholson asked the Supreme Court to overrule the Circuit Court’s determination that her claims were time barred. When the Supreme Court voted to refuse to hear her appeal, Justice Jackson, with Justice Sotomayor joining, wrote a pointed dissent.
First, the facts. Nicholson, a Black woman, worked as an exotic dancer in several clubs in the Houston area, starting in 2014. Race discrimination pervaded the clubs where she worked, and on multiple occasions she was refused entry to the clubs to work, with management stating that there were too many Black women already working. This was in contravention of her employment contract, which stated that she could make her own hours, and 42 USC § 1981, which is the federal cause of action for claims of intentional race discrimination in contracting. Clearly, the basis for which she was refused access to work – that there were too many Black women already working – was applied only to women of color, and not to white women, hence the basis for a discrimination lawsuit.
Next, the precedent. The statute of limitations for § 1981 actions is four years, and the claim accrues on the date that the act occurred. For every new discriminatory act, the statute of limitations restarts, but sometimes, actions occur that are not, in and of themselves, discriminatory, but rather reflect the “continued effects” of earlier discriminatory actions. Those actions do not restart the clock. And that’s where the trouble starts.
The Fifth Circuit determined that each time Petitioner Nicholson was refused work at the clubs, it did not constitute a new discriminatory act but was merely a continued effect of earlier discriminatory actions, and did not restart the clock. Mind you, Nicholson was refused work solely due to her race, as white women were allowed into the club to work at times when she was turned away. Accordingly, the Fifth Circuit determined that Nicholson’s claims were time barred, and dismissed her case. When Nicholson applied for a writ of certiorari to the Supreme Court, it was denied. While the Supreme Court isn’t required to grant cert to every Petitioner who requests that the Supreme Court review their case, the Supreme Court could have reviewed this case and corrected the Fifth Circuit’s obviously erroneous decision, but chose not to. That’s where the problem lies.
Why? Because when a new act of discrimination occurs, it restarts the clock. Not only that, but if the act is one in a continuing course of action, then not only does the most recent act start the clock, it can drag the previous acts within the statute of limitations for certain causes of action. This is the exact opposite of what the Fifth Circuit held.
In other words, the Fifth Circuit should have held that the most recent acts of discrimination restarted the clock – take the most recent act and count backwards. What the Fifth Circuit actually did was take the act that was furthest away in time and go forward. This is contrary to the established law of the land, and should be wildly disturbing to anyone who’s paying attention. The Supreme Court should have granted cert and overruled the Fifth Circuit’s decision, but they did not.
The reason I personally am so upset about this is for a couple of reasons. One, for better or for worse, I trust in our legal system to do what’s right for the American people. Our legal system is built on precedent, and both of the instances I discuss above – the Fifth Circuit’s incorrect analysis and the Supreme Court’s failure to correct the same – constitute a wildly alarming detour from precedent, which serves to undermine the entire basis for our legal system. Furthermore, this isn’t even a hard issue to decide – it’s not Delaware Chancery law or anything, it’s fairly basic, which means one of three things: 1) that the Fifth Circuit and the Supreme Court just didn’t care whether they were issuing a correct decision, or 2) they didn’t understand the legal issues, or 3) the worst option, that they know exactly what they’re doing and are doing it on purpose to disenfranchise our vulnerable citizens.
Finally, this is not the first time that the Supreme Court has deviated from settled precedent. Yes, I’m talking about Roe v. Wade. If our Supreme Court fails to respect precedent, in violation of our legal system and their oath to “do equal right to the poor and to the rich”, it’s a slippery slope to chaos and the end of our society as we know it.
June 10, 2025
By Emily Poler
True confession: I was feeling a little stuck about what to write about in this week’s post. At first, I considered the summary judgment motions on fair use in cases against Anthropic and Meta over AI, but I’m kind of over writing about AI at the moment. I also thought about getting into the trademark issues associated with dupes and/or whether the card mahjong players use is copyrightable, but I just wasn’t feeling it. I’ll likely come back to these topics in coming weeks (especially the one about the mahjong card), but none of these were really inspiring me.
I mean, things feel like a lot right now. Even putting aside the stress of a world burning down around us, work has been super busy. Plus, there are a number of changes afoot here at Trachtman & Poler (all good, and more on that to come). Getting some space in which to free my mind from the parade of daily tasks is a key step in my process of thinking about things, reaching conclusions, and then writing them down for this blog. That space has been missing lately.
And then, it happened. I went to a BigLaw event this week, and seeing all those shiny, soon-to-be 3L students working at large firms for the summer got me thinking about the tradeoffs people make for a career in BigLaw. It also made me ponder some of the myths of what it’s like working at a legal behemoth, as well as the misconceptions people have regarding starting your own law firm. So here we go!
For those who don’t know, BigLaw (yes, that’s how people spell it) firms hire people who have just completed their second year of law school for internships. These jobs pay well, and usually come with a lot of wining and dining meant to lure the “lucky” students into signing their lives over to these firms after graduation. This is exactly what I did.
Why? When you’re starting out as an adult (and plenty of other times too), I think some people want stability and predictability, while others are ok with or hungry for open options and unexpected opportunities. Some of this may be innate, but I also think people’s backgrounds and experiences have a lot to do with how they enter the working world. As you might have guessed, I was one of those eager for stability and predictability.
Without getting too deep into my childhood, let’s just say I grew up in a somewhat chaotic family environment. Looking back, I see how that motivated me to choose a well-mapped career path with a well defined beginning, middle and end, where through sheer hard work and grit I could outlast just about everyone else and make it to the top.
Also, money. Somewhere along the line, probably around 10 or 12 years old, it became pretty clear to me that I couldn’t — or shouldn’t — rely on anyone to support me; I definitely didn’t ever want to have to ask someone else for money. So yeah, it’s kind of obvious why I ended up going to a top law school and working in BigLaw, because if you’re any good at it, it’s a straight climb to making a lot of money pretty quickly.
But, things changed. For starters, my young adult life turned out not to be as financially unpredictable as I had imagined. I managed to graduate college and law school with pretty minimal debt, and by my second year as an attorney I was able to buy an apartment in a neighborhood that, at the time, was considered less than desirable. That meant I knew I’d be able to pay my mortgage even if I took a significant pay cut.
So once the miseries of working for BigLaw began to take their toll on me, losing 20 pounds I would rather have kept and sending me into therapy, I started realizing maybe I didn’t have to stick to the painful BigLaw career path. I became less willing to prioritize financial stability over having control of when I got to and left the office, the clients and cases I handled while I was there, who I worked for, and how I interacted with the people I worked with. So eventually, I left and went to a smaller firm. After that, I started my own firm and, recently, joined forces with the wonderful Laura Trachtman.
This background means that I now really love meeting others who also left BigLaw to forge their own paths. What we all have in common is having made a calculus about the need to balance predictability with exerting a degree of control over how and when we work. That calculation is a key element that I think often gets overlooked by people when they’re mired in the day-to-day of their careers: How much predictability (and income) do you want, how much do you actually need, and how much are you willing to exchange in the short term for more control over your daily work and life and, eventually, long-term satisfaction and earning potential?
Thinking about all this the past few days, I’ve also come to understand how people tend to look at those of us who took the risk, left high paying jobs and started our own businesses, as being somewhat brave. And sure, it definitely takes a measure of courage to do so. But it’s not necessarily harder than working for BigLaw, it’s just different. Each has its own set of sacrifices, but while the travails of working for a large firm are pretty well known (as are the $$ rewards), the tradeoffs, worries and stresses of going it alone are less well documented. This is something I’ve tried to address periodically on this blog, while also sharing the ways I’ve overcome the obstacles and made it work for me. It’s been very gratifying to hear from people that my thoughts and insights into starting and growing one’s own business have been appreciated. And hopefully, it’s helped a few people make that leap for themselves. Because one thing is certain: The sacrifices and hardships of going it alone are, ultimately, more than compensated by the freedoms and satisfactions of choosing your own road to success.
