Facts of the Case
On February 11, Third Circuit Judge Stephanos Bibas (sitting by designation for the U.S. District Court of Delaware) issued a new summary judgment ruling in Thomson Reuters v. ROSS Intelligence. He overruled his previous decision from 2023 which held that a jury must decide the fair use question. The decision was one of the first to address fair use in the context of AI, though the facts of this case differ significantly from the many other pending AI copyright suits.
This ruling focuses on copyright infringement claims brought by Thomson Reuters (TR), the owner of Westlaw, a major legal research platform, against ROSS Intelligence. TR alleged that ROSS improperly used Westlaw’s headnotes and the Key Number System to train its AI system to better match legal questions with relevant case law.
Westlaw’s headnotes summarize legal principles extracted from judicial opinions. (Note: Judicial opinions are not copyrightable in the US.) The Key Number System is a numerical taxonomy categorizing legal topics and cases. Clicking on a headnote takes users to the corresponding passage in the judicial text. Clicking on the key number associated with a headnote takes users to a list of cases that make the same legal point.
Importantly, ROSS did not directly ingest the headnotes and the Key Number System to train its model. Instead, ROSS hired LegalEase, a company that provides legal research and writing services, to create training data based on the headnotes and the Key Number System. LegalEase created Bulk Memos—a collection of legal questions paired with four to six possible answers. LegalEase instructed lawyers to use Westlaw headnotes as a reference to formulate the questions in Bulk Memos. LegalEase instructed the lawyers not to copy the headnotes directly.
ROSS attempted to license the necessary content directly from TR, but TR refused to grant a license because it thought the AI tool contemplated by ROSS would compete with Westlaw.
The financial burden of defending this lawsuit has caused ROSS to shut down its operations. ROSS has countered TR’s copyright infringement claims with antitrust claims but the claims were dismissed by the same Judge.
The New Ruling
The court found that ROSS copied 2,243 headnotes from Westlaw. The court ruled that these headnotes and the Key Number System met the low legal threshold for originality and were copyrightable. The court rejected the merger and scenes à faire defense by ROSS, because, according to the court, the headnotes and the Key Number System were not dictated by necessity. The court also rejected ROSS’s fair use defense on the grounds that the 1st and 4th factors weighed in favor of TR. At this point, the only remaining issue for trial is whether some headnotes’ copyrights had expired or were untimely registered.
The new ruling has drawn mixed reactions—some saying it undermines potential fair use defenses in other AI cases, while others dismiss its significance since its facts are unique. In our view, the opinion is poorly reasoned and disregards well-established case law. Future AI cases must demonstrate why the ROSS Court’s approach is unpersuasive. Here are three key flaws we see in the ruling.
Problems with the Opinion
- Near-Verbatim Summaries are “Original”?
“A block of raw marble, like a judicial opinion, is not copyrightable. Yet a sculptor creates a sculpture by choosing what to cut away and what to leave in place. … A headnote is a short, key point of law chiseled out of a lengthy judicial opinion.”
— the ROSS court
(↑example of a headnote and the uncopyrightable judicial text the headnote was based on↑)
The court claims that the Westlaw headnotes are original both individually and as a compilation, and the Key Number System is original and protected as a compilation.
“Original” has a special meaning in US copyright law: It means that a work has a modicum of human creativity that our society would want to protect and encourage. Based on the evidence that survived redaction, it is near impossible to find creativity in any individual headnotes. The headnotes consist of verbatim copying of uncopyrightable judicial texts, along with some basic paraphrasing of facts.
As we know, facts are not copyrightable, but expressions of facts often are. One important safeguard for protecting our freedom to reference facts is the merger doctrine. US law has long recognized that when there are only limited ways to express a fact or an idea, those expressions are not considered “original.” The expressions “merge” with the underlying unprotectable fact, and become unprotectable themselves.
Judge Bibas gets merger wrong—he claims merger does not apply here because “there are many ways to express points of law from judicial opinions.” This view misunderstands the merger doctrine. It is the nature of human language to be capable of conveying the same thing in many different ways, as long as you are willing to do some verbal acrobatics. But when there are only a limited number of reasonable, natural ways to express a fact or idea—especially when textual precision and terms of art are used to convey complex ideas—merger applies.
There are many good reasons for this to be the law. For one, this is how we avoid giving copyright protection to concise expression of ideas. Fundamentally, we do not need to use copyright to incentivize the simple restatement of facts. As the Constitution intended, copyright law is designed to encourage creativity, not to grant exclusive rights to basic expressions of facts. We want people to state facts accurately and concisely. If we allowed the first person to describe a judicial text in a natural, succinct way to claim exclusive rights over that expression, it would hinder, rather than facilitate, meaningful discussion of said text, and stifle blog posts like this one.
As to the selection and arrangement of the Key Number System, the court claims that originality exists here, too, because “there are many possible, logical ways to organize legal topics by level of granularity,” and TR exercised some judgment in choosing the particular “level” with its Key Number System. However, the cases are tagged with Key Number System by an automated computer system, and the topics closely mirror what law schools teach their first-year students.
The court does not say much about why the compilation of the headnotes should receive separate copyright protection, other than that it qualifies as original “factual compilations.” This claim is dubious because the compilation is of uncopyrightable materials, as discussed, and the selection is driven by the necessity to represent facts and law, not by creativity. Even if the compilation of headnotes is indeed copyrightable, using portions of it that are uncopyrightable is decidedly not an infringement, because the US does not protect sui generis database rights.
- Can’t Claim Fair Use When Nobody Saw a Copy?
“[The intermediate-copying cases] are all about copying computer code. This case is not.”
— the ROSS court conveniently ignoring Bellsouth Advertising & Publishing Corp. v. Donnelley Information Publishing, Inc., 933 F.2d 952 (11th Cir. 1991) and Sundeman v. Seajay Society, Inc., 142 F. 3d 194 (4th Cir. 1998).
In deciding whether ROSS’s use of Westlaw’s headnotes and the Key Number System is transformative under the 1st factor, the court took a moment to consider whether the available intermediate copying case law is in favor of ROSS, and quickly decided against it.
Even though no consumer ever saw the headnotes or the Key Number System in the AI products offered by ROSS, the court claims that the copying of these constitutes copyright infringement because there existed an intermediate copy that contained copyright-restricted materials authored by Westlaw. And, according to the court, intermediate copying can only weigh in favor of fair use for computer codes.
Before turning to the actual case law the court is overlooking here, we wonder if Judge Bibas is in fact unpersuaded by his own argument: under the 3rd fair use factor, he admits that only the content made accessible to the public should be taken into consideration when deciding what amount is taken from a copyrighted work compared to the copyrighted work as a whole, which is contrary to what he argues under the 1st factor—that we must examine non-public intermediate copies.
Intermediate copying is the process of producing a preliminary, non-public work as an interim step in the creation of a new public-facing work. It is well established under US jurisprudence that any type of copying, whether private or public, satisfies a prima facie copyright infringement claim, but, the fact that a work was never shared publicly—nor intended to be shared publicly—strongly favors fair use. For example, in Bellsouth Advertising & Publishing Corp. v. Donnelley Information Publishing, Inc., the 11th Circuit Court decided that directly copying a competitor’s yellow pages business directory in order to produce a competing yellow pages was fair use when the resulting publicly accessible yellow pages the defendant created did not directly incorporate the plaintiff’s work. Similarly, in Sundeman v. Seajay Society, Inc., the Fourth Circuit concluded that it was fair use when the Seajay Society made an intermediary, entire copy of plaintiffs’ unpublished manuscript for a scholar to study and write about it. The scholar wrote several articles about it mostly summarizing important facts and ideas (while also using short quotations).
There are many good reasons for allowing intermediate copying. Clearly, we do not want ALL unlicensed copies to be subject to copyright infringement lawsuits, particularly when intermediate copies are made in order to extract unprotectable facts or ideas. More generally, intermediate copying is important to protect because it helps authors and artists create new copyrighted works (e.g., sketching a famous painting to learn a new style, translating a passage to practice your language skills, copying the photo of a politician to create a parody print t-shirt).
- Suddenly, We Have an AI Training Market?
“[I]t does not matter whether Thomson Reuters has used [the headnotes and the Key Number System] to train its own legal search tools; the effect on a potential market for AI training data is enough.”
— the ROSS court
The 4th fair use factor is very much susceptible to circular reasoning: if a user is making a derivative use of my work, surely that proves a market already exists or will likely develop for that derivative use, and, if a market exists for such a derivative use, then, as the copyright holder, I should have absolute control over such a market.
The ROSS court runs full tilt into this circular trap. In the eyes of the court, ROSS, by virtue of using Westlaw’s data in the context of AI training, has created a legitimate AI training data market that should be rightfully controlled by TR.
Only that our case law suggests the 4th factor “market substitution” considers only markets which are traditional, reasonable or likely to be developed. As we have already pointed out in a previous blog post, copyright holders must offer concrete evidence to prove the existence, or likelihood of developing, licensing market, before they can argue a secondary use serves as “market substitute.” If we allowed a copyright holder’s protected market to include everything that he’s willing to receive licensing fees for, it will all but wipe out fair use in the service of stifling competition.
Conclusion
The impact of this case is currently limited, both because it is a district court ruling and because it concerns non-generative AI. However, it is important to remain vigilant, as the reasoning put forth by the ROSS court could influence other judges, policymakers, and even the broader public, if left unchallenged.
This ruling combines several problematic arguments that, if accepted more widely, could have significant consequences. First, it blurs the line between fact and expression, suggesting that factual information can become copyrightable simply by being written down by someone in a minimally creative way. Second, it expands copyright enforcement to intermediate copies, meaning that even temporary, non-public use of copyrighted material could be subject to infringement claims. Third, it conjures up a new market for AI training data, regardless of whether such a licensing market is legitimate or even likely to exist.
If these arguments gain traction, they could further entrench the dominance of a few large AI companies. Only major players like Microsoft and Meta will be able to afford AI training licenses, consolidating control over the industry. The AI training licensing terms will be determined solely between big AI companies and big content aggregators, without representation of individual authors or public interest. The large content aggregators will get to dictate the terms under which creators must surrender rights to their works for AI training, and the AI companies will dictate how their AI models can be used by the general public.
Without meaningful pushback and policy intervention, smaller organizations and individual creators cannot participate fairly. Let’s not rewrite our copyright laws to entrench this power imbalance even further.