A Significant Decision Concerning AI Companies Using Copyrighted Works
On February 11, 2025, Judge Bibas of the United States District Court for Delaware issued a revised summary judgment ruling in the Thomson Reuters v. Ross Intelligence case which could have critical ramifications for companies which are using the copyrighted works of others as a means to create generative AI products.
The case centered on how Ross Technologies (“Ross”) created a legal research search engine which uses artificial intelligence. To train its Ai search tool Ross needed a database of legal questions and answers and so it reached out to Thomson Reuters (“Westlaw”) to request a license to use Westlaw’s content. However, because Ross was a competitor Westlaw refused to license its product to Ross.
After being rebuffed from Westlaw, Ross turned to a company called LegalEase to obtain the needed training data in the form of “Bulk Memos” which are compilations of legal questions created by lawyers working for LegalEase which included both good and bad answers. LegalEase provided its lawyers with a guide explaining how to create the questions using Westlaw headnotes with the clarification that the lawyers should not just copy and paste headnotes directly in the questions.
Ultimately, LegalEase provided 25,000 Bulk Memos which were used by Ross to train its AI search tool.
When Westlaw discovered that Ross built its competing product using Bulk Memos, which in turn were built from Westlaw headnotes, it sued Ross over its use of 21,787 headnotes. Of these 21,787 headnotes the Judge found that Ross copied 2,830 headnotes in such an obvious manner that no reasonable jury could find otherwise. Whether Ross copied the remaining headnotes was determined to be a question of fact and would have to be decided by the jury.
Ross asserted several defenses to the charge of copyright infringement including: innocent infringement, copyright misuse, merger, scenes a faire and fair use. The Judge denied the first four defenses without much discussion but he provided a lengthy analysis of the fair use defense. Because fair use is an affirmative defense the burden of proof was on Ross.
The Judge considered four fair use factors (1) the purpose and character of the use, including whether it was for a commercial or nonprofit use; (2) the nature of the copyrighted work; (3) how much of the work was used and how substantial a part it was relative to the whole copyrighted work; and (4) how Ross’s use affected the value or potential market of the copyrighted work.
Factor One
The court found factor one in Westlaw’s favor finding that Ross’s use was commercial and was not transformative. The Court addressed Ross’s argument that because the Westlaw keynotes did not appear as a final product its actions constituted intermediate copying which had been deemed fair use in other cases. The Court said that the cases involving intermediate copying dealt with copying computer code which was necessary for competitors to innovate but Ross took the Westlaw headnotes in order to make it easier to develop a competing legal research tool and as such the use was not transformative.
Factor Two
The court found Westlaw’s product had the minimal spark of originality required for copyright validity, but the work was not that creative which led the Judge to find there was a question of fact whether Ross inducing LegalEase’s copying of Westlaw’s content after Westlaw refused to license its content to Ross constituted bad faith.
Factor Three
The court found this factor favored Ross as Ross’s output to the end user did not include the Westlaw headnote nor did it make the headnote available to the public.
Factor Four
The court viewed this factor as the most important element of fair use and found two markets: legal-research platforms and data to train legal AI systems. The court found that Ross was a competitor in the legal-research platform market, and it did not matter if Westlaw had already begun to use its data to train its own legal research tools because Ross’s effect on the potential market effected the value of Westlaw’s copyrights.
Takeaway
This case should be viewed as a huge win for copyright owners. Technology companies often have the credo to ask for forgiveness not permission when creating new products. However, given the statutory damages which are available to copyright owners, taking another’s work without a license or permission can be a recipe for huge exposure in the form of potentially millions of dollars in damages. Companies should heed Judge Bibas words “Copyrights encourage people to develop things that help society…Their builder earn the right to be paid accordingly.”
Let Us Help
If you have questions concerning intellectual Property law. Please contact one IP groups protection attorneys Colin O’Brien at cobrien@llflegal.com, John Ambrogi at jambrogi@llflegal.com , Avery Buffa abuffa@llflegal.com or Dora Zang dzang@llflegal.com.
