August 6, 2025
By Emily Poler
Remember NFTs? Back in the last presidential administration, which seems a lifetime ago, a company called Yuga Labs launched Bored Ape Yacht Club (“BAYC”), a collection of 10,000 NFTs of apes decked out in yachting gear and appearing rather blasé about existence. At one point, Yuga and its bored apes were the most successful launch in NFT history, with total sales of more than $1 billion.
As I wrote about previously, a conceptual artist named Ryder Ripps and a partner decided to critique the BAYC imagery and/or capitalize on its success by selling a collection of Ryder Ripps Bored Ape Yacht NFTs (“RR/BAYC”) NFTs. Defendants lost in District Court, but the ape fight didn’t end there. Ripps and his co-creator appealed and the case dragged its knuckles onward to the Ninth Circuit Court of Appeals, which recently issued a ruling with some interesting twists.
Going back to the beginning of the matter, Ripps’ criticism was based on his belief that the BAYC logo and elements of Yuga’s ape images promoted racist stereotypes and incorporated Nazi and neo-Nazi imagery and ideas. For example: similarities between the BAYC and the Waffen SS logos; the ape skull on the Yuga Labs logo has 18 teeth, and 18 is code for Adolf Hitler; and the expression “surf the Kali Yuga” is used by white supremacists.
The RR/BAYC NFTs linked to the original BAYC images, but also came with a link to Ripp’s artist’s statement and a website where he criticized the BAYC images.
As will surprise no one reading this blog, in June 2022, Yuga sued Ripps and his co-creator, alleging that the RR/BAYC NFTs violated the Lanham Act which, generally speaking, prevents unfair competition and prohibits parties from trading on the name and goodwill of another. (Yuga sued on other grounds too, but there’s not enough space here to get into all that.) In their defense, Ripps et. al. asserted that Yuga did not have any enforceable trademark rights, and that their use of the BAYC trademarks were protected under the nominative fair use doctrine and the First Amendment. The District Court was not impressed with these defenses and eventually found that “‘Defendants’ use of Yuga’s BAYC [m]arks was likely to cause confusion’ and that Defendants intentionally infringed Yuga’s BAYC [m]arks.”
Defendants appealed and the Ninth Circuit Court of Appeals recently issued its ruling. But before turning to that, I’ve got to highlight this line in its decision: “[g]rappling with this nascent technology, we hold that Yuga’s FTs are not merely monkey business…” I mean, it’s a good pun (for a court); also, it’s funny/sad that it views something that already feels like it’s from the distant past as a “new” technology.
Okay, back to the ruling: On the plus side for Yuga, the Ninth Circuit affirmed the District Court’s rejection of some of Defendants’ defenses and arguments. For example, the Ninth Circuit rejected Defendants’ claim that NFTs are not “goods” and, therefore, not subject to the protections of the Lanham Act. The Court’s conclusion here is not terribly surprising, as the Lanham Act covers “any goods and services,” and, therefore, is extremely broad. It also rejected Defendants’ claims that their use of the BAYC marks was protected under either the nominative fair use doctrine or as expressive expression under the First Amendment. On the first issue — which allows someone to use another’s trademark to refer to the other party’s goods (as in comparative advertising) — the Court found the Defendants didn’t use the BAYC marks merely to describe or reference Yuga’s products, but to capitalize on Yuga’s success, which is not permitted.
On the other hand, the Appeals Court found the lower Court wrongly concluded that Defendants’ use of the BAYC marks were likely to cause consumer confusion, and found it erred in granting Yuga’s motion for summary judgment. There are a couple of things I find interesting about this. For starters, the Appeals Court found that the addition of “RR” to “BAYC” to create the moniker “RR/BAYC” could be enough for a jury to conclude that RR/BAYC was not the same as BAYC. It also held that the District Court oversimplified things when it concluded that both parties used identical marketing channels — NFT marketplaces and Twitter — to sell their NFTs. Here, the Appeals Court admonished the District Court for overlooking that most of the RR/BAYC NFTs were sold on rrbayc.com, which is different from Yuga’s bayc.com.
What to make of all of this? Well, it’s amazing that in 2025 people are still fighting over NFTs. While it probably makes sense for Defendants to try to get out from having to pay Yuga any money, it seems like Yuga should have just settled this years ago as this appeal had to have been costly, and I wonder how much cash it will actually ever recover from Defendants.
There’s something else in this decision that I found interesting. In general, trademark infringement and unfair competition claims hinge, at least partly, on whether consumers — i.e. people buying stuff — are confused as to the source of the products. Here, in a couple of places, the Ninth Circuit noted that bots were confused by the similarity of BAYC and RR/BAYC. While the Court didn’t really address this issue other than to note it, given the omnipresence of our algorithmic overlords, I wonder whether at some point how bots respond to particular online cues will come into play when analyzing consumer confusion. I bet we’ll find out!
July 29, 2025
By Laura Trachtman
About six months ago, after months of planning and discussing, Emily and I combined our practices. We wrote a combined blog post about the hardest and best aspects of combining our practices. Today’s post is a little update on that, and what we’ve learned and accomplished in the process.
The hardest part of combining practices, six months later, has gotten easier – while I struggled at first with the proactive versus reactive approach, now it seems not only perfectly reasonable to me, but the obvious choice (brief reminder – the reactive approach is simply taking all the work that comes to your door, while the proactive approach is cultivating the kind of work that you want to do). This has the added benefit of ensuring that I’m only taking the work that not only is the work that I want to do, but is the work that is the most efficient use of my time. Before, I would take basically anything that came down the pike, but now, I have a partner to discuss cases that are referred to me, and she offers her opinion as to whether a case is the best use of my time. As a result, I’ve begun to turn down work, which feels almost like a luxury. Just as I suspected, switching from a reactive approach to a proactive one has, indeed, made me happier.
The best part of combining practices remains having a supportive partner who will always tell me the truth and with whom I have an amazing working relationship. Being able to check in on this topic or that case just to do a reality check is, frankly, clutch.
Because the relationship is so positive, there have been unexpected changes along the way to the plan that Emily and I initially crafted. I had planned to maintain my home office; instead, we found an office space in DUMBO that we both love. We planned to just share expenses, but now, we’re cooperating on optimizing all aspects of our practice. We have already hired our first employee (!!!), and he is doing terrific work. What originally could have been described as a partnership of convenience is now a real partnership, where we work on the same cases, wander into and out of one another’s offices to share news and thoughts, and plan together for the future. This is still very much a work in progress (who gets first dibs on a matter that we both can work on, for example, or who gets priority when we both need time-sensitive assistance from our Litigation Support Assistant), but due to our open and easy lines of communication and trust, I remain excited about what we’ve accomplished so far and what I expect we can accomplish in the future.
July 22, 2025
By Emily Poler
As I noted in my previous post, there have been two recent decisions involving fair use and AI. Last time around, I wrote about the case brought by a group of authors against Anthropic. This time, we turn to the other case where there was a recent decision — Kadrey v. Meta Platforms, Inc. — which was also brought by a number of writers.
To cut to the chase, in Kadrey (a/k/a the Meta case), the judge granted Meta’s motion for summary judgment on the issue of fair use, finding that Meta’s use of Plaintiff’s copyrighted works to train its large language model (LLM) — Llama — was highly transformative and, therefore, Meta’s processing of Plaintiff’s work was fair use.
As in the Anthropic case, Meta ingested millions of digitized books to train Llama. It obtained these books from online “shadow libraries” (i.e., pirated copies). Unlike the judge in the Anthropic case who found fair use only where Anthropic paid for the initial copy and actually used the works in developing its LLM, the judge in the Meta case was unfazed by Meta’s use of pirated works. According to the judge in the Meta case, the fact that Meta started with pirated works was irrelevant so long as the ultimate use was transformative.
In other words, the ends justify the means, which seems like a pretty novel way of deciding fair use issues.
Also of interest: the judge in the Meta case didn’t spend any time discussing the exact nature of Meta’s use. Instead, he assumed that the use was Llama itself. This stands in pretty sharp contrast to the judge in Anthropic who spent quite a bit of time looking at the various ways Anthropic used and stored the downloaded books. This seems not great because the intermediate steps (downloading, storing, cataloging, and making pirated works available to internal users) represent copyright infringement on their own. The court here, however, largely glossed over these issues because all of the “downloads the plaintiffs identify had the ultimate purpose of LLM training.”
With that said, the judge in the Meta case did invite other authors to bring a second case against Meta and provided those putative plaintiffs with a roadmap of the evidence that would support a ruling that Meta’s use of their works was not fair use. Here, the judge suggested a novel way of looking at the fourth fair use factor, which focuses on market impact, proposing that indirect substitution could weigh against a finding of fair use. That is, the judge said a court could consider whether someone, for example, buying a romance novel generated by Llama substitutes for a similar novel written by a human, here writing that other plaintiffs could pursue “the potentially winning argument — that Meta has copied their works to create a product that will likely flood the market with similar works, causing market dilution.”
While this certainly has some appeal, it also seems a little unwieldy. Does everyone who writes a romance novel get to point to content generated by LLMs and say that’s substituting for their work? What happens if a book spans genres? How much of a market impact is required?
Overall, the cases against Anthropic and Meta represent some pretty big wins for AI platforms at least as far as copyright infringement goes. However, there are still plenty of areas of uncertainty that should keep things very interesting as these cases march on.
July 15, 2025
By Laura Trachtman
One of the longest and most expensive parts of the litigation process is discovery. For the uninitiated, discovery is the process by which parties “discover” evidence from the other side. This can take a variety of forms: written, verbal, audiovisual recordings, and inspection of locations. My aim today, however, is to focus on written discovery, and what you can and can’t ask for.
The limits of written discovery were helpfully set forth in a recent Second Department case. There, the Court held:
CPLR 3101 (a) requires “full disclosure of all matter material and necessary in the prosecution or defense of an action, regardless of the burden of proof” (see Hamed v Alas Realty Corp., 209 AD3d 628, 629 [2022]). “ ’The words, material and necessary, are . . . to be interpreted liberally to require disclosure, upon request, of any facts bearing on the controversy which will assist preparation for trial’ ” (McAlwee v Westchester Health Assoc., PLLC, 163 AD3d 547, 548 [2018] [internal quotation marks omitted], quoting Allen v Crowell-Collier Publ. Co., 21 NY2d 403, 406 [1968]). “ ’However, the principle of full disclosure does not give a party the right to uncontrolled and unfettered disclosure, and the trial courts have broad power to regulate discovery to prevent abuse’ ” (McAlwee v Westchester Health Assoc., PLLC, 163 AD3d at 548 [internal quotation marks omitted], quoting Gilman & Ciocia, Inc. v Walsh, 45 AD3d 531, 531 [2007]).
Harrington v. New York City Transit Authority, 223 AD3d 787 (2d Dept.2024).
OK great, but what does that mean? In short, it means that both sides have to produce anything that is material and necessary in order to either defend or prosecute the case.
What does material and necessary mean? Material and necessary means anything concerning the case that will assist in preparation for trial for either side. To break it down further: what needs to be established at trial is the injury that is the subject of the lawsuit, the damages stemming from the injury, and the liability for the damages. However, as with all aspects of the law, this is not unlimited.
What are the limits? There is no right to uncontrolled and unfettered disclosure. An excellent example of this is addressed in the Harrington case, above. The plaintiff was directed to evacuate a city bus when the fare box began smoking. While evacuating, she slipped in a substance inside the bus and fell, sustaining injuries.
During discovery, her attorneys requested information concerning the fare box and its upkeep, which then became the subject of a motion to compel, which was denied by the trial court. On appeal, the Appellate Division affirmed the lower court’s finding, noting that “[h]ere, contrary to the plaintiff’s contention, the condition of the fare box at the front of the bus was not a proximate cause of the plaintiff’s accident, but, rather, merely furnished the occasion for the plaintiff’s exit from the bus and her alleged slip and fall due to a wet substance on the floor of the bus (see Sheehan v City of New York, 40 NY2d 496, 502-503 [1976]; Landsman v Tolo, 194 AD3d 1034, 1035 [2021]). Accordingly, the requested discovery regarding the fare box was not material and necessary to the prosecution of the action, and the Supreme Court providently exercised its discretion in denying the plaintiff’s motion to compel such discovery (see State Farm Mut. Auto. Ins. Co. v RLC Med., P.C., 150 AD3d 1034, 1035 [2017]).” In other words, the fare box, which wasn’t why the plaintiff slipped and fell, had no bearing on the controversy.
What does this mean in practical terms? It means that while, at trial, the smoking fare box as the reason for the evacuation of the bus is pertinent, it is irrelevant to how the plaintiff was hurt. , the damages incurred as a result of the injury, or whether the MTA is liable for having a wet substance on the floor of the bus.
This is important because it is a clear example of what is and is not material and necessary for the prosecution and defense of the case: As it is neither the cause of the injury, the damages incurred as a result of the injury, or the establishment of liability for the injury, it is not discoverable.
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.
