Third Circuit Rules Against ROSS Intelligence’s AI Training

AI developers are facing a slew of copyright infringement lawsuits. These suits allege that the development and use of AI models can infringe on intellectual property in several ways. This alleged infringement primarily occurs in two scenarios:

1. When AI is trained on copyrighted material; and
2. When AI outputs contain copyrighted material.

Many AI companies have considered these cases an existential threat to their business. If training AI models on copyrighted data is indeed infringement, then most AI developers are looking at a long list of potential plaintiffs.  Several district courts have weighed in, but last week marked the first time a federal appeals court took up the question. The Third Circuit Court of Appeals ruled in Thomson Reuters v. ROSS Intelligence Inc. That Ross’s use of Thomson Reuters’ headnotes in AI training constituted copyright infringement. A recent Ballard Spahr memo breaks down the decision, including these main issues weighed by the courts:

“The central legal question was whether ROSS Intelligence’s copying of Westlaw headnotes qualified as fair use. Copyright law directs courts to consider four factors: (1) the purpose and character of the use, including whether it is commercial and transformative; (2) the nature of the copyrighted work; (3) the amount of the copyrighted work used and whether that amount was justified; and (4) the effect of the use on existing or reasonably expected markets for the copyrighted work.”

The memo notes that the court ruled against Ross on points 1 & 4. Additionally, factors 2 & 3 had little bearing on the decision. In this case, Ross is a direct competitor of Thomson Reuters and ingested Reuters’ headnotes into their AI system for a commercial purpose. The decision was narrowly tailored to these facts, as many copyright infringement cases are likely to be. Many AI developers would like to see the courts decide that all AI training is fair use. Plaintiffs, on the other hand, would similarly like to see the inverse, with all training being prohibited. Ultimately, the Third Circuit’s decision in this case shows us that the courts are unlikely to adopt such clear bright-line rules. Each infringement claim will likely be litigated on its own merits in a highly fact-specific manner.