February 19, 2025
As the lawyers reading this know, media giant Thomson Reuters has a proprietary online research database called Westlaw. In addition to hosting cases and statutes, Westlaw also includes original material written by Westlaw editors. A recent decision involving that original content and its use by Ross Intelligence, a potential Thomson Reuters competitor, to create an AI-powered product may provide a bit of a roadmap on fair use and other issues facing the courts considering cases against OpenAI, Perplexity and other generative AI platforms.
First, some background: while the bulk of Westlaw’s content — statutes, rules, ordinances, cases, administrative codes, etc.— are not subject to copyright protection, Westlaw editors concisely restate the important points of a case with short summaries. Each is called a Headnote. Westlaw organizes Headnotes into something called the West Key Number System, which makes it much easier to find what you’re looking for.
This case began when Ross asked to license Westlaw’s Headnotes to create its own, AI-powered legal research search engine. Not surprisingly, Thomson Reuters didn’t want to help create a competitor and said no.
As a workaround, Ross hired a company called LegalEase, which in turn hired a bunch of lawyers to create training data for Ross’ AI. This training data took the form of a list of questions, each with correct and incorrect answers. While the lawyers answering these questions were told not to simply cut and paste Headnotes, the answers were formulated using Westlaw’s Headnotes and the West Key Number System. LegalEase called these “Bulk Memos.”
Thomson Reuters was none too happy about this and sued Ross for, among other things, copyright infringement, claiming that “Ross built its competing product from Bulk Memos, which in turn were built from Westlaw [H]eadnotes.” In its defense, Ross claimed that Westlaw’s Headnotes were not subject to copyright protection, and that to the extent it infringed on Thomson Reuters’ copyrights, its use constituted fair use.
In 2023 the Court largely denied Thomson Reuters’ motion for summary judgment, ruling that, among other things, the question of whether Headnotes qualify for copyright protection would have to be decided by a jury. The Court, however, subsequently had a change of heart and asked Thomson Reuters and Ross to renew their motions for summary judgment. Earlier this month, the Court ruled on these renewed motions.
Of note, the Court found that at least some Headnotes qualified for copyright protection, as did the West Key Number System. On the Headnotes, the Court found that the effort of “distilling, synthesizing, or explaining” a judicial opinion was sufficiently original to qualify for copyright protection. The Court also found the West Key Number System to be sufficiently original to clear the “minimal threshold for originality” required for copyright protection. The Court further found that the Bulk Memos infringed on some of the Headnotes.
The Court also rejected Ross’ assertion of fair use. Its decision was based largely on the fact that Ross was using Thomson Reuters’ Headnotes to create a competing product. Here, the Court looked at not only Thomson Reuters’ current market, but also potential markets it might develop, finding that since Thomson Reuters might create its own AI products the Ross product could negatively impact the market for Thomson Reuters, which weighed against fair use.
The Court was not impressed with Ross’ reliance on a line of cases finding copying of computer code at an intermediate step to be fair use. Here, the Court noted that Ross was not copying computer code. Moreover, in those cases, the copying was necessary to access purely functional elements of a computer program and achieve new, transformative purposes. In contrast, Ross used Headnotes to make it easier to develop a competitive product.
Ultimately, these conclusions are most interesting because of what other courts hearing AI infringement cases may take from them. Sure, there are differences (notably, Ross doesn’t seem to be using generative AI), but this case highlights some of the legal and factual issues we’re going to see as other cases move forward. In particular, I think the fact that the Court here found that the process of summarizing or distilling longer cases into Headnotes renders the Headnotes subject to copyright protection may be problematic for companies such as OpenAI, which has tried to claim that it is only ingesting underlying facts from news articles. If creating Headnotes is sufficiently original to qualify for copyright protection, then it seems likely that a reporter selecting the facts to include in a news article is also sufficiently original.
Stay tuned. There is much, much more to come.
February 11, 2025
And this week, it’s DeepSeek. Every few days it seems there’s something new dominating tech headlines, and since right now it’s the low-cost, low-energy Chinese AI roiling world governments and markets, I thought I’d use this week’s post to take a look at some portions of DeepSeek’s Terms of Use (ToU). Of course, keep in mind nothing I write here is legal advice and, as I’ve covered at greater length previously, there’s a whole lot of uncertainty about the rules governing the creation of large language and diffusion models, as well as their outputs. But that doesn’t mean there’s not a lot to chew on already.
With that disclaimer out of the way, I’m going to start with something that’s rather mundane, but where litigators’ minds tend to go right off the bat: forum selection. For the non-attorneys out there, that’s where a lawsuit against DeepSeek would have to be brought. What do DeepSeek’s ToU say? “In the event of a dispute arising from the signing, performance, or interpretation of these Terms, the Parties shall make efforts to resolve it amicably through negotiation. If negotiation fails, either Party has the right to file a lawsuit with a court having jurisdiction over the location of the registered office of Hangzhou DeepSeek Artificial Intelligence Co., Ltd.”
In other words, if you want to sue DeepSeek, you have to do so in China. This is not atypical — technology companies generally include favorable forum selection clauses in their ToU — but from an American perspective, this will make it hard or impossible for most US-based DeepSeek users to sue the company in the event of a dispute.
More disturbing is section 4.2 of DeepSeek’s ToU: “Subject to applicable law and our Terms, you have the following rights regarding the Inputs and Outputs of the Services: (1) You retain any rights, title, and interests—if any—in the Inputs you submit; (2) We assign any rights, title, and interests—if any—in the Outputs of the Services to you.” Sounds benign, right?
Nope. What it really means is if DeepSeek decides a user has violated its ToU (or Chinese law), it could unilaterally decide that the user has given up rights to its materials and/or the rights to use output from DeepSeek. This means DeepSeek could use this provision to claim ownership over the material users put into DeepSeek, or could sue a user who includes output generated by DeepSeek in any of their own commercial activities. People and organizations will have to make their own calls about whether this is an acceptable risk but, on top of the fact that any user who thinks their rights have been improperly rescinded would have to seek legal recourse in a Chinese court, this seems, um, bad.
I should also mention that the privacy and national security concerns involved in using DeepSeek are well above my pay grade — but I’d love to hear your thoughts on them. I’m particularly curious what privacy attorneys think about the provisions around the platform’s use by minors (“DeepSeek fully understands the importance of protecting minors and will take corresponding protective measures in accordance with legal requirements and industry mainstream practices”); and reports that a DeepSeek database containing sensitive information was publicly accessible. Neither the vague language on the protection of minors nor DeepSeek’s failure to protect its information inspires confidence. But I’m not a privacy lawyer so maybe I’m missing something.
Lastly, one especially amusing thing has come from the DeepSeek splash: OpenAI (creators of ChatGPT) has publicly accused DeepSeek of using its output to train DeepSeek’s AI, complaining that it is a violation of OpenAI’s terms of service. Ha! OpenAI, of course, is currently embroiled in several copyright infringement lawsuits (which I’ve covered here) with the New York Times and others over OpenAI’s use of their content to train its algorithms (and presumably compete with them). Oh, the irony.
January 21, 2025
As you know, I’m interested in business development and am always looking to learn more. In search of new ideas and inspiration, I Googled “lawyer blog on business development.” Yikes!
On the bright side, one of the first things that came up was this worthy blog, which I routinely read. But after that it was pretty much a wasteland of cliched blather: Develop a network; have a personal brand (can we please retire this phrase?); maintain good relationships with clients; and, inevitably, be a thought leader! (another phrase I am so over).
Pretty empty stuff, right? If anything, I think the fact that so many people serve up the same trite advice proves that none of them actually possess a personal brand or provide thought leadership (is there an emoji for irony?). More importantly, none of these bloggers ever tell you much about how to do these things they suggest. Obviously, these people are trying to sell their services and don’t want to give away valuable advice. But why would I be confident they actually have any?
What’s more, such vague banalities make the reality of business development seem more mysterious and daunting than it actually is. So let’s see if we can simplify things with some real lessons from my own experience that I feel define the building blocks of business development.
I’ve learned that the origin point is to give serious thought to a few questions: Who are you? What exactly do you want to do? How do you want to communicate that? Who do you want to work and network with? That foundational work needs to happen before you hire a marketing, PR or social media person — or to at least take place from the get-go with any hires. I say this as someone who spent good money on a marketing consultant with bad results, partly because we hadn’t answered these questions at the start.
Perhaps the most important of those questions is, what exactly do you want to do? When I started my firm I worked on a very broad range of cases and matters, basically taking whatever came my way. Guess what? I ended up working on things I had absolutely no interest in. (I am 100% fine if I never, ever handle another ERISA matter). So why did I do it? Well duh, the idea of turning down a client for my brand-new practice was terrifying. But when I eventually started saying no, my work (and my life) became much more satisfying. I avoided cases that didn’t interest me and didn’t waste energy dealing with people I didn’t want to work with. That freed me to take on interesting cases and work with people I was happy to represent. Plus, it left me time to further refine my skills and deepen my knowledge of the substantive legal areas that I wanted my practice to focus on.
Another problem with taking on work you don’t want: Such cases lead to meeting people, like co-counsel and opposing counsel, who work in those areas. They get to like you (that’s nice!). They think of you when something comes up they could refer to you (also nice!). But then you end up with more cases you don’t want (not nice). So it becomes something of a vicious career circle.
Once you know what type of work you want to take on, the next step is determining what clients you’re open to working with. Me, I have a strict “no assholes” policy. Litigation can be a very difficult, frustrating and draining experience, and if I get even a hint that a potential client is going to vent their anger with the process on me or my team, they will need to find another firm. Likewise, if a potential client comes to me after having been fired by another attorney, I’m not taking them on — no matter how much they’re willing to pay. It’s just not worth the possible stress. Ultimately, picking who I work with and what I work on makes it easier for me to do good work, which means the clients are happier, I’m happier, and the chances that more of the work I want will come my way increases exponentially.
I have a similar attitude when it comes to my network of peers and contacts in the legal community. I associate with people I like, who I respect, and who share my general ethos. That way, when I refer potential clients to someone I trust, I know that client will be treated well. And when I get referrals from peers I know well, I have some assurance the potential client and I are right for each other.
Speaking of networks, one thing I’ve learned over the years is that having a network is a lot more than a pile of business cards from people I met at some conference and then never spoke to again. How, exactly, is that a network? To me, a network is an array of professional contacts I enjoy regularly staying in touch with (and I’m not talking about through Instagram or TikTok). Having real relationships with people helps you all grow your businesses, your knowledge and, most importantly, your joy in what you do.
And in the end, enjoying what you do is the single most important litmus test for business development, because if you’re happy in your work, you’re developing your business right.
January 7, 2025
I talk a lot about trademarks here, but do you know exactly what one is? Well, according to the United States Trademark Office, a trademark is something that “Identifies the source of your goods or services.” Put another way, it’s anything — a logo, a word, a swoosh — that tells buyers who made the merchandise on which it appears.
So, who made this stuff?
Penn State, right? No! These items were sold by a company called Vintage Brand, which insists it has every right to do so despite not being affiliated in any way with the university in State College, Pennsylvania.
Next (and obvious) question: WTF?!
Vintage Brand claimed its use of these designs and others, which were taken from (appropriately) vintage Penn State materials featuring the school’s Nittany Lion trademark, didn’t infringe on Penn State’s trademarks for a couple of reasons. First, it claimed that these Penn State designs were just there for decoration; they weren’t intended to inform consumers that the apparel and accessories were made and sold by Penn State. Vintage Brand further asserted these designs were merely functional, because they allowed people to express support for or affiliation with Penn State, and thus were not a trademark use. Finally, Vintage Brand said there was no way consumers would be confused (the central inquiry in trademark infringement) as to who made the merch because Vintage Brand’s website included disclaimers saying that it was not affiliated with Penn State (sure, everybody reads the fine print).
Unsurprisingly, Penn State did not see things this way and, in 2021 it sued Vintage Brand for trademark infringement, accusing the company of being a “serial infringer,” and seller of “counterfeit” goods. Penn State lawyers argued that consumers would mistake the fakes for official Penn State merchandise, diluting their trademarks and reducing their value and exclusivity, while also taking revenue that should have otherwise gone to the university. Other schools, including Purdue and Stanford, also sued on similar grounds, but Penn State’s case was the first to go to trial.
As the case progressed, Vintage Brand continued to insist its use of Penn State’s marks was permissible because the designs were solely ornamental and functional. While they did not dispute that their merchandise included properly registered trademarks that belong to Penn State, Vintage Brand said its designs were independently recreated from vintage artwork to celebrate nostalgia and history and that any resemblance between its designs and Penn State’s trademarks was coincidental and not likely to cause confusion among consumers.
In response, Penn State pointed out that if consumers couldn’t tell what products originated with Penn State and what products originated with Vintage Brand (or someone else) that was, pretty clearly, trademark infringement.
The judge allowed Vintage Brand’s defenses to stand and the case was tried in front of a jury in November, 2024. The jury found in favor of Penn State and, while they only awarded the school a little more than $25,000 in damages, the victory was far more valuable in the continued trademark protection it extended to Penn State and other universities that sell branded merchandise.
Seems weird there was even enough here for a judge to send the case to a jury, right? Well, there’s actually some precedent for companies successfully defending similar trademark infringement claims. This dates back to the 1970s when the National Hockey League sued a company called Dallas Cap & Emblem for selling knockoff patches of NHL team logos to sporting goods stores. Dallas Cap claimed that the emblems, when attached to clothing by consumers, were functional and served no trademark purpose. The District Court in that case agreed. Even though the District Court’s decision was overturned, the idea that logos can be functional and not identify the source of goods has continued to crop up. But, maybe Penn State’s victory here will put an end to this defense.
filed under: trademark
December 17, 2024
Of the many lawsuits media giants have filed against AI companies for copyright infringement, the one filed by Dow Jones & Co. (publisher of the Wall Street Journal) and NYP Holdings Inc. (publisher of the New York Post) against Perplexity AI adds a new wrinkle.
Perplexity is a natural-language search engine that generates answers to user questions by scraping information from sources across the web, synthesizing the data and presenting it in an easily-digestible chatbot interface. Its makers call it an “answer engine” because it’s meant to function like a mix of Wikipedia and ChatGPT. The plaintiffs, however, call it a thief that is violating Internet norms to take their content without compensation.
To me, this represents a particularly stark example of the problems with how AI platforms are operating vis-a-vis copyrighted materials, and one well worth analyzing.
According to its website, Perplexity pulls information “from the Internet the moment you ask a question, so information is always up-to-date.” Its AI seems to work by combining a large language model (LLM) with retrieval-augmented generation (RAG — oh, the acronyms!). As this is a blog about the law, not computer science, I won’t get too deep into this but Perplexity uses AI to improve a user’s question and then searches the web for up-to-date info, which it synthesizes into a seemingly clear, concise and authoritative answer. Perplexity’s business model appears to be that people will gather information through Perplexity (paying for upgraded “Pro” access) instead of doing a traditional web search that returns links the user then follows to the primary sources of the information (which is one way those media sources generate subscriptions and ad views).
Part of this requires Perplexity to scrape the websites of news outlets and other sources. Web scraping is an automated method to quickly extract large amounts of data from websites, using bots to find requested information by analyzing the HTML content of web pages, locating and extracting the desired data and then aggregating it into a structured format (like a spreadsheet or database) specified by the user. The data acquired this way can then be repurposed as the party doing the gathering sees fit. Is this copyright infringement? Probably, because copyright infringement is when you copy copyrighted material without permission.
To make matters worse, at least according to Dow Jones and NYP Holdings, Perplexity seems to have ignored the Robots Exclusion Protocol. This is a tool that, among other things, instructs scraping bots not to copy copyrighted materials. However, despite the fact that these media outlets deploy this protocol, Perplexity spits out verbatim copies of some of the Plaintiff’s articles and other materials.
Of course, Perplexity has a defense, of sorts. Its CEO accuses the Plaintiffs and other media companies of being incredibly short sighted, and wishing for a world in which AI didn’t exist. Perplexity says that media companies should work with, not against, AI companies to develop shared platforms. It’s not entirely clear what financial incentives Perplexity has or will offer to these and other content creators.
Moreover, it seems like Perplexity is the one that is incredibly shortsighted. The whole premise of copyright law is that if people are economically rewarded they will create new, useful and insightful (or at least, entertaining) materials. If Perplexity had its way, these creators would not be paid at all or accept whatever it is that Perplexity deigns to offer. Presumably, this would not end well for the content creators and there would be no more reliable, up-to-date information to scrape. Moreover, Perplexity’s self-righteous claim that media companies just want to go back to the Stone Age (i.e., the 20th century) seems premised on a desire for a world in which the law allows anyone who wants copyrighted material to just take it without paying for it. And that’s not how the world works — at least for now.
