Category: Scoop.it

Posts scooped from the Cokato Copyright Attorney law blog of Thomas James

Generative-AI as Unfair Trade Practice

While Congress and the courts grapple with generative-AI copyright issues, the FTC weighs in on the risks of unfair competition, monopolization, and consumer deception.

Federal Trade Commission headline as illustration for Thomas James article
FTC Press Release exceprt

While Congress and the courts are grappling with the copyright issues that AI has generated, the federal government’s primary consumer watchdog has made a rare entry into the the realm of copyright law. The Federal Trade Commission (FTC) has filed a Comment with the U.S. Copyright Office suggesting that generative-AI could be (or be used as) an unfair or deceptive trade practice. The Comment was filed in response to the Copyright Office’s request for comments as it prepares to begin rule-making on the subject of artificial intelligence (AI), particularly, generative-AI.

Monopolization

The FTC is responsible for enforcing the FTC Act, which broadly prohibits “unfair or deceptive” practices. The Act protects consumers from deceptive and unscrupulous business practices. It is also intended to promote fair and healthy competition in U.S. markets. The Supreme Court has held that all violations of the Sherman Act also violate the FTC Act.

So how does generative-AI raise monopolization concerns? The Comment suggests that incumbents in the generative-AI industry could engage in anti-competitive behavior to ensure continuing and exclusive control over the use of the technology. (More on that here.)

The agency cited the usual suspects: bundling, tying, exclusive or discriminatory dealing, mergers, acquisitions. Those kinds of concerns, of course, are common in any business sector. They are not unique to generative-AI. The FTC also described some things that are matters of special concern in the AI space, though.

Network effects

Because positive feedback loops improve the performance of generative-AI, it gets better as more people use it. This results in concentrated market power in incumbent generative-AI companies with diminishing possibilities for new entrants to the market. According to the FTC, “network effects can supercharge a company’s ability and incentive to engage in unfair methods of competition.”

Platform effects

As AI users come to be dependent on a particular incumbent generative-AI platform, the company that owns the platform could take steps to lock their customers into using their platform exclusively.

Copyrights and AI competition

The FTC Comment indicates that the agency is not only weighing the possibility that AI unfairly harms creators’ ability to compete. (The use of pirated or the misuse of copyrighted materials can be an unfair method of competition under Section 5 of the FTC Act.) It is also considering that generative-AI may deceive, or be used to deceive, consumers. Specifically, the FTC expressed a concern that “consumers may be deceived when authorship does not align with consumer expectations, such as when a consumer thinks a work has been created by a particular musician or other artist, but it has been generated by someone else using an AI tool.” (Comment, page 5.)

In one of my favorite passages in the Comment, the FTC suggests that training AI on protected expression without consent, or selling output generated “in the style of” a particular writer or artist, may be an unfair method of competition, “especially when the copyright violation deceives consumers, exploits a creator’s reputation or diminishes the value of her existing or future works….” (Comment, pages 5 – 6).

Fair Use

The significance of the FTC’s injection of itself into the generative-AI copyright fray cannot be overstated. It is extremely likely that during their legislative and rule-making deliberations, both Congress and the Copyright Office are going to be focusing the lion’s share of their attention on the fair use doctrine. They are most likely going to try to allow generative-AI outfits to continue to infringe copyrights (It is already a multi-billion-dollar industry, after all, and with obvious potential political value), while at the same time imposing at least some kinds of limitations to preserve a few shards of the copyright system. Maybe they will devise a system of statutory licensing like they did when online streaming — and the widespread copyright infringement it facilitated– became a thing.

Whatever happens, the overarching question for Congress is going to be, “What kinds of copyright infringement should be considered “fair” use.

Copyright fair use normally is assessed using a four-prong test set out in the Copyright Act. Considerations about unfair competition arguably are subsumed within the fourth factor in that analysis – the effect the infringing use has on the market for the original work.

The other objective of the FTC Act – protecting consumers from deception — does not neatly fit into one of the four statutory factors for copyright fair use. I believe a good argument can be made that it should come within the coverage of the first prong of the four-factor test: the purpose and character of the use. The task for Congress and the Copyright Office, then, should be to determine which particular purposes and kinds of uses of generative-AI should be thought of as fair. There is no reason the Copyright Office should avoid considering Congress’s objectives, expressed in the FTC Act and other laws, when making that determination.

AI Legislative Update

Congressional legislation to regulate artificial intelligence (“AI”) and AI companies is in the early formative stages. Just about the only thing that is certain at this point is that federal regulation in the United States is coming.

Congressional legislation to regulate artificial intelligence (“AI”) and AI companies is in the early formative stages. Just about the only thing that is certain at this point is that federal regulation in the United States is coming.

In August, 2023, Senators Richard Blumenthal (D-CT) and Josh Hawley (R-MO) introduced a Bipartisan Framework for U.S. AI Act. The Framework sets out five bullet points identifying Congressional legislative objectives:

  • Establish a federal regulatory regime implemented through licensing AI companies, to include requirements that AI companies provide information about their AI models and maintain “risk management, pre-deployment testing, data governance, and adverse incident reporting programs.”
  • Ensure accountability for harms through both administrative enforcement and private rights of action, where “harms” include private or civil right violations. The Framework proposes making Section 230 of the Communications Decency Act inapplicable to these kinds of actions. (Second 230 is the provision that generally grants immunity to Facebook, Google and other online service providers for user-provided content.) The Framework identifies the harms about which it is most concerned as “explicit deepfake imagery of real people, production of child sexual abuse material from generative A.I. and election interference.” Noticeably absent is any mention of harms caused by copyright infringement.
  • Restrict the sharing of AI technology with Russia, China or other “adversary nations.”
  • Promote transparency: The Framework would require AI companies to disclose information about the limitations, accuracy and safety of their AI models to users; would give consumers a right to notice when they are interacting with an AI system; would require providers to watermark or otherwise disclose AI-generated deepfakes; and would establish a public database of AI-related “adverse incidents” and harm-causing failures.
  • Protect consumers and kids. “Consumer should have control over how their personal data is used in A.I. systems and strict limits should be imposed on generative A.I. involving kids.”

The Framework does not address copyright infringement, whether of the input or the output variety.

The Senate Judiciary Committee Subcommittee on Privacy, Technology, and the Law held a hearing on September 12, 2023. Witnesses called to testify generally approved of the Framework as a starting point.

The Senate Commerce, Science, and Transportation Subcommittee on Consumer Protection, Product Safety and Data Security also held a hearing on September 12, called The Need for Transparency in Artificial Intelligence. One of the witnesses, Dr. Ramayya Krishnan, Carnegie Mellon University, did raise a concern about the use of copyrighted material by AI systems and the economic harm it causes for creators.

On September 13, 2023, Sen. Chuck Schumer (D-NY) held an “AI Roundtable.” Invited attendees present at the closed-door session included Bill Gates (Microsoft), Elon Musk (xAI, Neuralink, etc.) Sundar Pichai (Google), Charlie Rivkin (MPA), and Mark Zuckerberg (Meta). Gates, whose Microsoft company, like those headed by some of the other invitees, has been investing heavily in generative-AI development, touted the claim that AI could target world hunger.

Meanwhile, Dana Rao, Adobe’s Chief Trust Officer, penned a proposal that Congress establish a federal anti-impersonation right to address the economic harms generative-AI causes when it impersonates the style or likeness of an author or artist. The proposed law would be called the Federal Anti-Impersonation Right Act, or “FAIR Act,” for short. The proposal would provide for the recovery of statutory damages by artists who are unable to prove actual economic damages.

Generative AI: Perfect Tool for the Age of Deception

For many reasons, the new millennium might well be described as the Age of Deception. Cokato Copyright Attorney Tom James explains why generative-AI is a perfect fit for it.

Illustrating generative AI
Image by Gerd Altmann on Pixabay.

What is generative AI?

“AI,” of course, stands for artificial intelligence. Generative AI is a variety of it that can produce content such as text and images, seemingly of its own creation. I say “seemingly” because in reality these kinds of AI tools are not really independently creating these images and lines of text. Rather, they are “trained” to emulate existing works created by humans. Essentially, they are derivative work generation machines that enable the creation of derivative works based on potentially millions of human-created works.

AI has been around for decades. It wasn’t until 2014, however, that the technology began to be refined to the point that it could generate text, images, video and audio so similar to real people and their creations that it is difficult, if not impossible, for the average person to tell the difference.

Rapid advances in the technology in the past few years have yielded generative-AI tools that can write entire stories and articles, seemingly paint artistic images, and even generate what appear to be photographic images of people.

AI “hallucinations” (aka lies)

In the AI field, a “hallucination” occurs when an AI tool (such as ChatGPT) generates a confident response that is not justified by the data on which it has been trained.

For example, I queried ChatGPT about whether a company owned equally by a husband and wife could qualify for the preferences the federal government sets aside for women-owned businesses. The chatbot responded with something along the lines of “Certainly” or “Absolutely,” explaining that the U.S. government is required to provide equal opportunities to all people without discriminating on the basis of sex, or something along those lines. When I cited the provision of federal law that contradicts what the chatbot had just asserted, it replied with an apology and something to the effect of “My bad.”

I also asked ChatGPT if any U.S. law imposes unequal obligations on male citizens. The chatbot cheerily reported back to me that no, no such laws exist. I then cited the provision of the United States Code that imposes an obligation to register for Selective Service only upon male citizens. The bot responded that while that is true, it is unimportant and irrelevant because there has not been a draft in a long time and there is not likely to be one anytime soon. I explained to the bot that this response was irrelevant. Young men can be, and are, denied the right to government employment and other civic rights and benefits if they fail to register, regardless of whether a draft is in place or not, and regardless of whether they are prosecuted criminally or not. At this point, ChatGPT announced that it would not be able to continue this conversation with me. In addition, it made up some excuse. I don’t remember what it was, but it was something like too many users were currently logged on.

These are all examples of AI hallucinations. If a human being were to say them, we would call them “lies.”

Generating lie after lie

AI tools regularly concoct lies. For example, when asked to generate a financial statement for a company, a popular AI tool falsely stated that the company’s revenue was some number it apparently had simply made up. According to Slate, in their article, “The Alarming Deceptions at the Heart of an Astounding New Chatbot,” users of large language models like ChatGPT have been complaining that these tools randomly insert falsehoods into the text they generate. Experts now consider frequent “hallucination” (aka lying) to be a major problem in chatbots.

ChatGPT has also generated fake case precedents, replete with plausible-sounding citations. This phenomenon made the news when Stephen Schwartz submitted six fake ChatGPT-generated case precedents in his brief to the federal district court for the Southern District of New York in Mata v. Avianca. Schwartz reported that ChatGPT continued to insist the fake cases were authentic even after their nonexistence was discovered. The judge proceeded to ban the submission of AI-generated filings that have not been reviewed by a human, saying that generative-AI tools

are prone to hallucinations and bias…. [T]hey make stuff up – even quotes and citations. Another issue is reliability or bias. While attorneys swear an oath to set aside their personal prejudices,… generative artificial intelligence is the product of programming devised by humans who did not have to swear such an oath. As such, these systems hold no allegiance to…the truth.

Judge Brantley Starr, Mandatory Certification Regarding Generative Artificial Intelligence.

Facilitating defamation

Section 230 of the Communications Decency Act generally shields Facebook, Google and other online services from liability for providing a platform for users to publish false and defamatory information about other people. That has been a real boon for people who like to destroy other people’s reputations by means of spreading lies and misinformation about them online. It can be difficult and expensive to sue an individual for defamation, particularly when the individual has taken steps to conceal and/or lie about his or her identity. Generative AI tools make the job of defaming people even simpler and easier.

More concerning than the malicious defamatory liars, however, are the many people who earnestly rely on AI as a research tool. In July, 2023, Mark Walters filed a lawsuit against OpenAI, claiming its ChatGPT tool provided false and defamatory misinformation about him to journalist Fred Riehl. I wrote about this lawsuit in a previous blog post. Shortly after this lawsuit was filed, a defamation lawsuit was filed against Microsoft, alleging that its AI tool, too, had generated defamatory lies about an individual. Generative-AI tools can generate false and defamation statements about individuals even if no one has any intention of defaming anyone or ruining another person’s reputation.

Facilitating false light invasion of privacy

Generative AI is also highly effective in portraying people in a false light. In one recently filed lawsuit, Jack Flora and others allege, among other things, that Prisma Labs’ Lensa app generates sexualized images from images of fully-clothed people, and that the company failed to notify users about the biometric data it collects and how it will be stored and/or destroyed. Flora et al. v. Prisma Labs, Inc., No. 23-cv-00680 (N.D. Calif. February 15, 2023).

Pot, meet kettle; kettle, pot

“False news is harmful to our community, it makes the world less informed, and it erodes trust. . . . At Meta, we’re working to fight the spread of false news.” Meta (nee Facebook) published that statement back in 2017.  Since then, it has engaged in what is arguably the most ambitious campaign in history to monitor and regulate the content of conversations among humans. Yet, it has also joined other mega-organizations Google and Microsoft in investing multiple billions of dollars in what is the greatest boon to fake news in recorded history: generative-AI.

Toward a braver new world

It would be difficult to imagine a more efficient method of facilitating widespread lying and deception (not to mention false and hateful rhetoric) – and therefore propaganda – than generative-AI. Yet, these mega-organizations continue to sink more and more money into further development and deployment of these lie-generators.

I dread what the future holds in store for our children and theirs.

Another AI lawsuit against Microsoft and OpenAI

Last June, Microsoft, OpenAI and others were hit with a class action lawsuit involving their AI data-scraping technologies. On Tuesday (September 5, 2023) another class action lawsuit was filed against them. The gravamen of both of these complaints is that these companies allegedly trained their AI technologies using personal information from millions of users, in violation of federal and state privacy statutes and other laws.

Among the laws alleged to have been violated are the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Invasion of Privacy Act, California’s unfair competition law, Illinois’s Biometric Information Privacy Act, and the Illinois Consumer Fraud and Deceptive Business Practices Act. The lawsuits also allege a variety of common law claims, including negligence, invasion of privacy, conversion, unjust enrichment, breach of the duty to warn, and such.

This is just the most recent lawsuit in a growing body of claims against big AI. Many involve allegations of copyright infringement, but privacy is a growing concern. This particular suit is asking for an award of monetary damages and an order that would require the companies to implement safeguards for the protection of private data.

Microsoft reportedly has invested billions of dollars in OpenAI and its app, ChatGPT.

The case is A.T. v. OpenAI LP, U.S. District Court for the Northern District of California, No. 3:23-cv-04557 (September 5, 2023).

Is Microsoft “too big to fail” in court? We shall see.

A Recent Exit from Paradise

Over a year ago, Steven Thaler filed an application with the United States Copyright Office to register a copyright in an AI-generated image called “A Recent Entrance to Paradise.” In the application, he listed a machine as the “author” and himself as the copyright owner. The Copyright Office refused registration  on the grounds that the work lacked human authorship. Thaler then filed a lawsuit in federal court seeking to overturn that determination. On August 18, 2023 the court upheld the Copyright Office’s refusal of registration. The case is Thaler v. Perlmutter, No. CV 22-1564 (BAH), 2023 WL 5333236 (D.D.C. Aug. 18, 2023).

Read more about the history of this case in my previous blog post, “A Recent Entrance to Complexity.”

The Big Bright Green Creativity Machine

In his application for registration, Thaler had listed his computer, referred to as “Creativity Machine,” as the “author” of the work, and himself as a claimant. The Copyright Office denied registration on the basis that copyright only protects human authorship.

Taking the Copyright Office to court

Unsuccessful in securing a reversal through administrative appeals, Thaler filed a lawsuit in federal court claiming the Office’s denial of registration was “arbitrary, capricious, an abuse of discretion and not in accordance with the law….”

The court ultimately sided with the Copyright Office. In its decision, it provided a cogent explanation of the rationale for the human authorship requirement:

The act of human creation—and how to best encourage human individuals to engage in that creation, and thereby promote science and the useful arts—was thus central to American copyright from its very inception. Non-human actors need no incentivization with the promise of exclusive rights under United States law, and copyright was therefore not designed to reach them.

Id.

A Complex Issue

As I discussed in a previous blog post, the issue is not as simple as it might seem. There are different levels of human involvement in the use of an AI content generating mechanism. At one extreme, there are programs like “Paint,” in which users provide a great deal of input. These kinds of programs may be analogized to paintbrushes, pens and other tools that artists traditionally have used to express their ideas on paper or canvas. Word processing programs are also in this category. It is easy to conclude that the users of these kinds of programs are the authors of works that may be sufficiently creative and original to receive copyright protection.

At the other end of the spectrum are AI services like DALL-E and ChatGPT. These tools are capable of generating content with very little user input. If the only human input is a user’s directive to “Draw a picture,” then it would be difficult to claim that the author contributed any creative expression. That is to say, it would be difficult to claim that the user authored anything.

The difficult question – and one that is almost certain to be the subject of ongoing litigation and probably new Copyright Office regulations – is exactly how much, and what kind of, human input is necessary before a human can claim authorship.  Equally as perplexing is how much, if at all, the Copyright Office should involve itself in ascertaining and evaluating the details of the process by which a work was created. And, of course, what consequences should flow from an applicant’s failure to disclose complete details about the nature and extent of machine involvement in the creative process.

Conclusion

The court in this case did not dive into these issues. The only thing we can safely take away from this decision is the broad proposition that a work is not protected by copyright to the extent it is generated by a machine.

Generative-AI: The Top 12 Lawsuits

Artificial intelligence (“AI”) is generating more than content; it is generating lawsuits. Here is a brief chronology of what I believe are the most significant lawsuits that have been filed so far.

Artificial intelligence (“AI”) is generating more than content; it is generating lawsuits. Here is a brief chronology of what I believe are the most significant lawsuits that have been filed so far.

Most of these allege copyright infringement, but some make additional or other kinds of claims, such as trademark, privacy or publicity right violations, defamation, unfair competition, and breach of contract, among others. So far, the suits primarily target the developers and purveyors of generative AI chatbots and similar technology. They focus more on what I call “input” than on “output” copyright infringement. That is to say, they allege that copyright infringement is involved in the way particular AI tools are trained.

Thomson Reuters Enterprise Centre GmbH et al. v. ROSS Intelligence (May, 2020)

Thomson Reuters Enterprise Centre GmbH et al. v. ROSS Intelligence Inc., No. 20-cv-613 (D. Del. 2020)

Thomson Reuters alleges that ROSS Intelligence copied its Westlaw database without permission and used it to train a competing AI-driven legal research platform. In defense, ROSS has asserted that it only copied ideas and facts from the Westlaw database of legal research materials. (Facts and ideas are not protected by copyright.) ROSS also argues that its use of content in the Westlaw database is fair use.

One difference between this case and subsequent generative-AI copyright infringement cases is that the defendant in this case is alleged to have induced a third party with a Westlaw license to obtain allegedly proprietary content for the defendant after the defendant had been denied a license of its own. Other cases involve generative AI technologies that operate by scraping publicly available content.

The parties filed cross-motions for summary judgment. While those motions were pending, the U.S. Supreme Court issued its decision in Andy Warhol Found. for the Visual Arts, Inc. v. Goldsmith, 598 U.S. ___, 143 S. Ct. 1258 (2023). The parties have now filed supplemental briefs asserting competing arguments about whether and how the Court’s treatment of transformative use in that case should be interpreted and applied in this case. A decision on the motions is expected soon.

Doe 1 et al. v. GitHub et al. (November, 2022)

Doe 1 et al. v. GitHub, Inc. et al., No. 22-cv-06823 (N.D. Calif. November 3, 2022)

This is a class action lawsuit against GitHub, Microsoft, and OpenAI that was filed in November, 2022. It involves GitHub’s CoPilot, an AI-powered tool that suggests lines of programming code based on what a programmer has written. The complaint alleges that Copilot copies code from publicly available software repositories without complying with the terms of applicable open-source licenses. The complaint also alleges removal of copyright management information in violation of 17 U.S.C. § 1202, unfair competition, and other tort claims.

Andersen et al. v. Stability AI et al. (January 13, 2023)

Andersen et al. v. Stability AI et al., No. 23-cv-00201 (N.D. Calif. Jan. 13, 2023)

Artists Sarah Andersen, Kelly McKernan, and Karla Ortiz filed this class action lawsuit against generative-AI companies Stability AI, Midjourney, and DeviantArt on January 13, 2023. The lawsuit alleges that the defendants infringed their copyrights by using their artwork without permission to train AI-powered image generators to create allegedly infringing derivative works.  The lawsuit also alleges violations of 17 U.S.C. § 1202 and publicity rights, breach of contract, and unfair competition.

Getty Images v. Stability AI (February 3, 2023)

Getty Images v. Stability AI, No. 23-cv-00135-UNA (D. Del. February 23, 2023)

Getty Images has filed two lawsuits against Stability AI, one in the United Kingdom and one in the United States, each alleging both input and output copyright infringement. Getty Images owns the rights to millions of images. It is in the business of licensing rights to use copies of the images to others. The lawsuit also accuses Stability AI of falsifying, removing or altering copyright management information, trademark infringement, trademark dilution, unfair competition, and deceptive trade practices.

Stability AI has moved to dismiss the complaint filed in the U.S. for lack of jurisdiction.

Flora et al. v. Prisma Labs (February 15, 2023)

Flora et al. v. Prisma Labs, Inc., No. 23-cv-00680 (N.D. Calif. February 15, 2023)

Jack Flora and others filed a class action lawsuit against Prisma Labs for invasion of privacy. The complaint alleges, among other things, that the defendant’s Lensa app generates sexualized images from images of fully-clothed people, and that the company failed to notify users about the biometric data it collects and how it will be stored and/or destroyed, in violation of Illinois’s data privacy laws.

Young v. NeoCortext (April 3, 2023)

Young v. NeoCortext, Inc., 2023-cv-02496 (C.D. Calif. April 3, 2023)

This is a publicity rights case. NeoCortext’s Reface app allows users to paste images of their own faces over those of celebrities in photographs and videos. Kyland Young, a former cast member of the Big Brother reality television show, has sued NeoCortext for allegedly violating his publicity rights. The complaint alleges that NeoCortext has “commercially exploit[ed] his and thousands of other actors, musicians, athletes, celebrities, and other well-known individuals’ names, voices, photographs, or likenesses to sell paid subscriptions to its smartphone application, Reface, without their permission.”

NeoCortext has asserted a First Amendment defense, among others.

Walters v. Open AI (June 5, 2023)

Walters v. OpenAI, LLC, No. 2023-cv-03122 (N.D. Ga. July 14, 2023) (Complaint originally filed in Gwinnett County, Georgia Superior Court on June 5, 2023; subsequently removed to federal court)

This is a defamation action against OpenAI, the company responsible for ChatGPT. The lawsuit was brought by Mark Walters. He alleges that ChatGPT provided false and defamatory misinformation about him to journalist Fred Riehl in connection with a federal civil rights lawsuit against Washington Attorney General Bob Ferguson and members of his staff. ChatGPT allegedly stated that the lawsuit was one for fraud and embezzlement on the part of Mr. Walters. The complaint alleges that Mr. Walters was “neither a plaintiff nor a defendant in the lawsuit,” and “every statement of fact” pertaining to him in the summary of the federal lawsuit that ChatGPT prepared is false. A New York court recently addressed the questions of sanctions for attorneys who submit briefs containing citations to non-existent “precedents” that were entirely made up by ChatGPT. This is the first case to address tort liability for ChatGPT’s notorious creation of “hallucinatory facts.”

In July, 2023, Jeffrey Battle filed a complaint against Microsoft in Maryland alleging that he, too, has been defamed as a result of AI-generated “hallucinatory facts.”

P.M. et al. v. OpenAI et al. (June 28, 2023)

P.M. et al. v. OpenAI LP et al., No. 2023-cv-03199 (N.D. Calif. June 28, 2023)

This lawsuit has been brought by underage individuals against OpenAI and Microsoft. The complaint alleges the defendants’ generative-AI products ChatGPT, Dall-E and Vall-E collect private and personally identifiable information from children without their knowledge or informed consent. The complaint sets out claims for alleged violations of the Electronic Communications Privacy Act; the Computer Fraud and Abuse Act; California’s Invasion of Privacy Act and unfair competition law; Illinois’s Biometric Information Privacy Act, Consumer Fraud and Deceptive Business Practices Act, and Consumer Fraud and Deceptive Business Practices Act; New York General Business Law § 349 (deceptive trade practices); and negligence, invasion of privacy, conversion, unjust enrichment, and breach of duty to warn.

Tremblay v. OpenAI (June 28, 2023)

Tremblay v. OpenAI, Inc., No. 23-cv-03223 (N.D. Calif. June 28, 2023)

Another copyright infringement lawsuit against OpenAI relating to its ChatGPT tool. In this one, authors allege that ChatGPT is trained on the text of books they and other proposed class members authored, and facilitates output copyright infringement. The complaint sets forth claims of copyright infringement, DMCA violations, and unfair competition.

Silverman et al. v. OpenAI (July 7, 2023)

Silverman et al. v. OpenAI, No. 23-cv-03416 (N.D. Calif. July 7, 2023)

Sarah Silverman (comedian/actress/writer) and others allege that OpenAI, by using copyright-protected works without permission to train ChatGPT, committed direct and vicarious copyright infringement, violated section 17 U.S.C. 1202(b), and their rights under unfair competition, negligence, and unjust enrichment law.

Kadrey et al. v. Meta Platforms (July 7, 2023)

Kadrey et al. v. Meta Platforms, No. 2023-cv-03417 (N.D. Calif. July 7, 2023)

The same kinds of allegations as are made in Silverman v. OpenAI, but this time against Meta Platforms, Inc.

J.L. et al. v. Alphabet (July 11, 2023)

J.L. et al. v. Alphabet, Inc. et al. (N.D. Calif. July 11, 2023)

This is a lawsuit against Google and its owner Alphabet, Inc. for allegedly scraping and harvesting private and personal user information, copyright-protected works, and emails, without notice or consent. The complaint alleges claims for invasion of privacy, unfair competition, negligence, copyright infringement, and other causes of action.

On the Regulatory Front

The U.S. Copyright Office is examining the problems associated with registering copyrights in works that rely, in whole or in part, on artificial intelligence. The U.S. Federal Trade Commission (FTC) has suggested that generative-AI implicates “competition concerns.”. Lawmakers in the United States and the European Union are considering legislation to regulate AI in various ways.

Is Jazz Confusingly Similar to Music?

Is jazz confusingly similar to music? No, that wasn’t the issue in this case. It was a contest between APPLE JAZZ and APPLE MUSIC involving tacking.

Bertini v. Apple Inc., No. 21-2301 (Fed. Cir. 2023). Apple, Inc. attempted to register the trademark APPLE MUSIC for both sound recordings and live musical performances (among other things). Bertini, a professional musician, filed an opposition, claiming to have used the mark APPLE JAZZ in connection with live performances since 1985, and to have started using it in connection with sound recordings in the 1990s. Bertini argued that APPLE MUSIC would likely cause confusion with APPLE JAZZ.

The first question that popped into my head, of course, was whether a consumer would really be likely to confuse jazz with music. I mean, come on.

Sadly, however, that was not the legal issue in this case. The legal issue was whether, and in what circumstances, priority of use can be established by “tacking” a new trademark registration onto an earlier one for a mark in a different category of goods or services.

The Opposition Proceeding

Apple applied to register APPLE MUSIC as a trademark in several categories of services in IC 41, including the production and distribution of sound recordings, and organizing and presenting live musical performances. Bertini, a professional jazz musician, filed a notice of opposition to Apple’s application, on the basis that he has used the mark APPLE JAZZ in connection with live performances since 1985. In the mid-1990s, Bertini began using APPLE JAZZ to issue and distribute sound recordings. Bertini opposed Apple’s registration of APPLE MUSIC on the ground that it would likely cause confusion with Bertini’s common law trademark APPLE JAZZ.

The Trademark Trials and Appeals Board (TTAB) dismissed the opposition. Bertini appealed to the Federal Circuit Court of Appeals.

The Appeal

On appeal, the parties did not dispute that there was a likelihood consumers would confuse Bertini’s use of APPLE JAZZ and Apple’s use of APPLE MUSIC. The only dispute on appeal was priority of use.

Apple, Inc. began using APPLE MUSIC in 2015, when it launched its music streaming service, nearly thirty years after Bertini had begun using APPLE JAZZ. Apple, however, argued that it was entitled to an earlier priority dating back to a 1968 registration of the mark APPLE for “Gramophone records featuring music” and “audio compact discs featuring music.” (The company had purchased the registration from Apple Corps, the Beatles’ record company.)

The TTAB agreed with Apple’s argument, holding that Apple was entitled to tack its 2015 use of APPLE MUSIC onto Apple Corp’s 1968 use of APPLE and therefore had priority over Bertini’s APPLE JAZZ.

The appellate court reversed, holding that Apple cannot tack its use of APPLE MUSIC for live musical performances onto Apple Corps’ use of APPLE for gramophone records, and that its application to register APPLE MUSIC must therefore be denied.

The Court of Appeals construed the tacking doctrine narrowly. Framing the question as “[W]hether a trademark applicant can establish priority for every good or service in its application merely because it has priority through tacking in a single good or service listed in its application,” the Court answered no. While Apple might have been able to use tacking to claim priority in connection with the production and distribution of sound recordings, it could not use that priority to establish priority with respect to other categories of services, such as organizing and presenting live performances.

Contact attorney Thomas James for help with trademark registration.

Copyright Registration and Management Services

There is now an inexpensive, intelligent alternative to “copyright mills” that is creator-friendly as well as a time-saver for attorneys.

In the United States, as in most countries, it is possible to own a copyright without registering it. Copyright registration is not a prerequisite to copyright protection. Rather, a copyright comes into being when a human being fixes original, creative expression in a tangible medium (or when it is fixed in a tangible medium at a human being’s direction.) Nevertheless, there are important reasons why you should register a copyright in a work you’ve created, particularly if you live in the United States.

Reasons for registering copyrights

If you live in the United States, the most important reason for registering a copyright is that you will not be able to enforce it unless you do. As a condition of filing an infringement claim in court, the United States Copyright Act requires a copyright owner to have applied for registration and received either a certificate of registration or a denial of registration from the U.S. Copyright Office. Registration is not a prerequisite to serving a cease-and-desist letter or a DMCA take-down notice. If you want to enforce your copyright in court, though, then you will need to register it.

This is true, as well, of infringement claims filed in the new Copyright Claims Board (sometimes called the “copyright small claims court” or “CCB”). It is not necessary to have received either a registration certificate or denial letter from the Copyright Office before filing a claim with the CCB. It is necessary, however, to have at least applied for registration before filing a claim.

Prompt registration is also important. You may not be able to recover statutory damages and attorney fees in an action for copyright infringement unless you registered the copyright either within three months after first publication or before the infringement began.

Registration gives you the benefit of a legal presumption that the copyright is valid. It also gives rise to a presumption of ownership, and that all of the other facts stated in the certificate (date of creation, etc.) are true.

Registration is not only critical to enforcement; it is also an important defensive strategy. If someone else registers the work and you do not, then they get all of the benefits described above and you do not. As the original creator of a work, you do not want to find yourself in the position of being sued for “infringing” your own work.

Registration workarounds that aren’t

The “poor man’s copyright”

One dangerous myth that has been circulating for years is that simply mailing yourself a copy of your work will be enough to establish your rights in it. This is not true. Anybody can make a copy of someone else’s work and mail it to himself or herself. Even if doing that could establish a person’s rights in a work, it is still going to be necessary to register the copyright in the work in order to enforce it in the U.S. legal system. And you won’t get any of the other benefits of registration, either, unless you do.

Posting to YouTube or another Internet website

Posting a copy of a work to YouTube or another Internet website is a modern-day version of the “poor man’s copyright” myth. The best this will do, however, is provide a date and time of posting. That proves nothing about authorship, and it does not provide any of the benefits of registration.

Notary

Notarization only verifies the validity of a signature; it does not prove anything about authorship.

Having an agent, distributor or licensing agency

Having an agent or a distributor, or listing with ASCAP, for example, does not prove authorship, nor does it provide any of the benefits of registration.

Registries and databases

Some websites offer to list your work in a “registry” or other database, supposedly as a means of protecting your copyright in the work. Some of these websites border on fraud. “Registering” your work with a private company or service will not prove authorship and will not give you any of the other benefits of registration. In the United States, the benefits of registration flow only to those who register the copyrights in their works with the United States Copyright Office.

True copyright registration services

Not all online copyright registration services are scams. Some of them will actually get a customer’s copyright registered with the United States Copyright Office. It is still necessary to proceed with caution when using them, however. Here are some things to watch out for.

Per-work vs. per-application

Pay careful attention to whether service fees are charged “per work,” on one hand, or “per application,” on the other.

If you have more than one work to register, it may sometimes be possible to register them with the Copyright Office as a group rather than individually. For example, a group of up to ten unpublished works by the same author may be registered with the Office using one application and paying one filing fee. Similarly, up to 750 photographs can sometimes be registered together as a group using only one application and paying only one filing fee.

An online service that offers to register copyrights at the rate of $100 “per work” might not inform users about the Copyright Office’s group registration options. Imagine paying $75,000 plus $33,750 filing fees to register copyrights in 750 photographs when you might have done it yourself, using one application, for a $55 filing fee.

Single, standard or group application

Once you’ve selected a service whose rates are “per application” rather than “per work,” you will want to ensure that the service includes group registration options. If a service indicates that it will prepare a “single” or “standard” application, then this may mean that it will not prepare applications for group registrations. Find that out before proceeding.

GRAM and GRUW applications

If you are a musician or composer, you may be able to qualify for a significant discount on Copyright Office filing fees by filing a GRAM or GRUW application. These are special application forms that allow the registration of up to 10 unpublished songs, or up to 20 published songs on an album, using one application and paying one filing fee. They are relatively new additions to the Copyright Office’s application forms repertoire. Some registration services will not, or do not yet, work with them.

Fees

First, understand the difference between a service fee and the Copyright Office filing fee. The Copyright Office filing fee is usually going to be between $45 and $85, depending on the kind of application. When a website quotes a fee for the service it provides, the fee it quotes normally does not include the Copyright Office filing fee — unless, of course, the website expressly says so.

Online registration service companies charge different rates for their services. One attorney website I saw quoted a $500 flat fee “per work.” Apparently, he would intend to charge $5,000 to register a group of 10 works.

Other services quote a much lower fee, typically somewhere between $100 and $250, either per work or per application.

These services typically are limited to filing a registration application, and nothing more. Some of them stand behind their work. Others charge additional fees if an application is rejected and they need to do additional work to fix the problem.

RightsClick™

A new online copyright service entered the scene last year. Called RightsClick™ it boasts processing fees that are 85% lower than most other registration services. Rather than charging $100 to $500 plus the Copyright Office filing fee, RightsClick charges $15 plus the Copyright Office filing fee.

It is also one of the few services that processes applications for group registration, and is up-front and clear about the cost. A group of up to 10 unpublished works, for example, can be registered for $15, that is to say, the same low processing fee that is charged for a single application.

There are monthly subscription charges, but even adding these into the mix does not bring the cost up to anything near to what many online services are charging.

The services provided include more than copyright registration, and additional features are planned for the future.

Learn more

Because I believe this innovative new service can be a great time and money saver for attorneys who work with authors and other copyright owners, I am hosting a continuing legal education (CLE) course through EchionCLE. It will be presented by Steven Tepp and David Newhoff, the developers of RightsClick. It will include an update on registration law and a demonstration of what RightsClick can do and how it works.

This program is FREE and is open to both attorneys and non-attorneys.

EchionCLE has applied to the Minnesota Board of Continuing Legal Education for 1.0 Standard CLE credit.

The live webinar will be held on May 17, 2023.

There will be a video replay on June 1, 2023.

For more detailed information, or to register, click here.

Disclosure statement

I do not own or have any interest in RightsClick. I have not been paid and have not received anything of value in connection with this post. This post is not an endorsement or advertisement for RightsClick or the services it offers. It is simply an announcement of what appears to me to be a service that could be of considerable benefit to authors, creators, publishers and attorneys.

Copyright owners prevail in Internet Archive lawsuit

A federal district court has ruled in favor of book publishers in their copyright infringement lawsuit against Internet Archives

In June, 2020 four book publishers filed a copyright infringement lawsuit against Internet Archive. The publishers asserted that the practice of scanning books and lending digital copies of them to online users infringed their copyrights in the books. On Friday, March 24, 2023, a federal district court judge agreed, granting the publishers’ motion for summary judgment.

The Internet Archive operation

Internet Archive is a nonprofit organization that has undertaken several archiving projects. For example, it created the “Wayback Machine,” an online archive of public webpages. This lawsuit involves another of its projects, namely, the creation of a digital archive of books. Some of these are in the public domain. Also included in this archive, however, are over 3 million books that are protected by copyright. The judge determined that 33,000 of them belong to the plaintiffs in the lawsuit.

According to the Order granting summary judgment, after scanning the books, Internet Archive made them publicly available online for free, without the permission of the copyright owners.

“Fair Use”

According to the Order, Internet Archive did not dispute that it violated copyright owners’ exclusive rights to reproduce the works, to make derivative works based on them, to distribute their works, to publicly perform them (Internet Archive offered a “read aloud” function on it website), and to display them (in this case, on a user’s browser.) In short, the Order determined that the operation violated all five of the exclusive rights of copyright owners protected by the United States Copyright Act (17 U.S.C. sec. 106).

Internet Archive asserted a “fair use” defense.

In previous cases involving massive operations to scan and digitize millions of books, Authors Guild v. Google., Inc. and Authors Guild v. HathiTrust, judicial analyses resulted in “fair use” determinations unfavorable to copyright owners. Internet Archive, of course, invited the judge to do the same thing here. The judge declined the invitation.

The judge distinguished this case from its predecessors by ruling that unlike the uses made of copyrighted works in those cases, the use in this case was not transformative. For example, Google had digitized the entire text of books in order to create a searchable index of books. “There is nothing transformative,” however, about copying and distributing the entire texts of books to the public, the judge declared.

The judge observed that Google reproduces and displays to the public only enough context surrounding the searched term to help a reader evaluate whether the book falls within the range of the reader’s interest. The Court of Appeals in Google had warned that “[i]f Plaintiff’s claim were based on Google’s converting their books into a digitized form and making that digitized version accessible to the public,” then the “claim [of copyright infringement] would be strong.”

The judge also determined that the alleged benefit to the public of having access to the entire text of books without having to pay for them “cannot outweigh the market harm to the publishers.”

Ultimately, the judge concluded that all four “fair use” factors (character and purpose of the use, nature of the work, amount and substantiality of the portion copied, and the effect on the market for the work) weighed against a finding of fair use.

What’s next?

Internet Archive apparently intends to appeal the decision. In the meantime, it appears that it will continue other kinds of digitized book services, such as interlibrary loans, citation linking, access for the print-disabled , text and data mining, purchasing e-books, and receiving and preserving books.

The CCB’s First 2 Determinations

The Copyright Claims Board (CCB) has issued its first two determinations. Here is what they were about and what the CCB did with them.

The United States Copyright Claims Board (CCB), an administrative tribunal that has been established for the purposes of resolving small copyright claims, began accepting case filings on June 16, 2022. Eight months later, it has issued its first two determinations. Here is a summary of them.

Flores v. Mitrakos, 22-CCB-0035

This was a DMCA case.

Michael Flores filed the claim against Michael Mitrakos. He alleged that Mitrakos filed a knowingly false takedown notice. The parties negotiated a settlement. On February 3, 2023 they submitted a joint request for a final determination dismissing the proceeding. It included a request to include findings that the respondent submitted false information in a takedown notice, resulting in the wrongful removal of the claimant’s material. The parties also agreed the respondent would inform Google that he was rescinding the takedown notice. The CCB incorporated the parties’ agreement into its final determination.

No damages were sought and the CCB did not award any.

Issued on February 15, 2023, this was the CCB’s first Final Determination. You can read it here.

Oppenheimer v. Prutton, 22-CCB-0045

While Flores v. Mitrakos was the first Final Determination the CCB issued, Oppenheimer v. Prutton was its first Final Determination on the merits. It is also the first copyright infringement case the Board has resolved.

The case involved alleged infringement of a copyright in a photograph. The facts, as reported in the CCB’s Final Determination, are as follows:

David G. Oppenheimer owns the copyright in a photograph he took of a federal building in Oakland, California. He registered the copyright in the photograph on July 29, 2017. On June 4, 2018, he discovered it was being displayed on the business website of attorney Douglas A. Prutton. Prutton admitted reproducing and displaying it without permission. He stated that his adult daughter found it on the Internet and put it on his website, in an effort to help improve his website, and that he removed it in 2019 upon receiving a letter from Oppenheimer objecting to the use. Oppenheimer sought an award of statutory damages for the unauthorized use of the photograph.

Prutton asserted two defenses: fair use and unclean hands.

The asserted defenses

Fair use

A person asserting fair use as a defense must address and discuss four factors: (1) purpose and character of the use; (2) nature of the work; (3) amount and substantiality of the portion copied; and (4) effect on the market for the work. Prutton only addressed the fourth factor. The failure to address the first three factors, the CCB ruled, was fatal to this defense.

Unclean hands

Prutton alleged that Oppenheimer was a copyright troll, earning revenue mostly from copyright litigation rather than from sales or licensing of his works. The CCB ruled that this is not a sufficient basis for a finding of unclean hands.

Damages

The CCB refused to reduce damages to $200 on the basis of “innocent infringement.” The CCB ruled that Prutton should have known the photograph was protected by copyright, emphasizing the fact that he was an attorney.

Oppenheimer requested statutory damages of $30,000. The CCB is limited by statute to awarding no more than $15,000 per work. The Board therefore construed it instead as a request for the maximum amount the Board can award. The CCB declined to award maximum damages.

While the amount of statutory damages does not have to be tied to the amount of actual damage, an award of statutory damages “must bear a plausible relationship to . . . actual damages.” Stockfood Am., Inc. v. Sequoia Wholesale Florist, Inc., 2021 WL 4597080, at *6 (N.D. Cal. June 22, 2021). Oppenheimer did not submit evidence of actual loss.

In the absence of any evidence of actual damage or harm, statutory damages will normally be set at $750 per work infringed. One member of the Board voted to do just that in this case. The other two members, however, believed a small increase from the minimum was justified for various reasons, such as that it was a commercial use and it had lasted for more than a year. The Board ultimately awarded Oppenheimer $1,000 statutory damages.

You can read the CCB’s Final Determination here.

Contact Thomas B. James, attorney

Need help with a CCB claim or defense? Contact Thomas B. James, Minnesota attorney.

%d bloggers like this: