The ruling is the first by a federal appeals court, setting a potential landmark precedent in the legal battle over AI and copyright.
The case involved Ross’ copying of headnotes, short annotations highlighting important legal issues in judicial opinions, that appear in Thomson-owned Westlaw’s legal research platform. Ross used the headnotes to train an AI-powered legal search engine that competed with Westlaw’s service.
In a 32-page opinion, the court ruled that Ross’ use of the headnotes caused harm to Thomson Reuters by undercutting Westlaw’s ability to market its service by offering a directly competing service, which weighed against a finding of fair use.
The Copyright Act directs courts to weigh four factors in deciding whether a particular unauthorized use of copyrighted material qualifies as non-infringing fair use, including the purpose and character of the use; the nature of the copyrighted work; the amount and substantiality of the portion used in relation to the work as a whole; and the effect of the use upon the potential market for or value of the copyrighted work.
Of the four, the final factor, market harm, is often the most decisive.
“While there may be no standalone market for headnotes, Thomson Reuters touts the headnotes as a feature to attract users to buy a Westlaw subscription,” the opinion said. “By copying the headnotes and using them to build its own competing legal research platform, Ross appropriated the headnotes’ value for finding and analyzing judicial opinions and diminished their value as a draw for users to Thomson Reuters’ legal research platform.”
While the appeals court ruling represents a setback for those on the fair use side of the AI-copyright debate, the court was careful to distinguish its finding from earlier district court rulings holding that the use of copyrighted works to train AI models was fair use.
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Ross’ now-defunct search engine was not generative. It merely returned passages taken directly from judicial opinions in response to user queries.
“[W]e must ask whether Ross’ use of Thomson Reuters’ headnotes is transformative—that is ‘whether and to what extent’ Ross’ use of the headnotes ‘has a purpose or character different from’ Thomson Reuters’ use,” the opinion said.
“[B]oth Thomson Reuters and Ross use the headnotes to create and optimize a legal research platform that helps users find responsive legal material,” the opinion said. “Thus, Ross’ use of the headnotes shares the same ultimate purpose as Thomson Reuters’ use, making Ross’ use minimally transformative, at best.”
That, too, weighed against a finding of fair use, the opinion said.
The 3rd Circuit also rejected Ross’ effort to frame the case as about something other than copyright.
“Under Ross’ framing, this case appears to concern the future of AI legal technology,” the opinion said. “But appearances can be deceiving. In truth, this is no more than an ordinary copyright case…”
In a statement published by news agency Reuters, which is owned by Thomson Reuters, a spokesperson for Thomson Reuters said the company “firmly believes that respecting copyright is essential for fostering innovation while protecting the intellectual property that fuels fiduciary-grade AI solutions.”
Ross has not commented publicly on the ruling.
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