Thomson Reuters Scores Major Legal Victory Over Ross Intelligence

Thomson Reuters has achieved a significant legal victory against Ross Intelligence, which marks a pivotal moment in how artificial intelligence (AI) companies gather and utilize data.

Many AI firms have found themselves under scrutiny for their methods, which often involve collecting large amounts of copyrighted material for training their algorithms. Although these companies claim their activities fall under 'fair use,' numerous legal battles have arisen as various organizations pursue claims against them.

The lawsuit brought by Thomson Reuters against Ross Intelligence centered on copyright infringement allegations. Ross Intelligence, a now-defunct startup, faced criticism for allegedly using Thomson Reuters' legal database as a foundation for its AI-generated content. The outcome resulted in Ross shutting down due to the financial strain caused by the lawsuit.

In a surprising turn, U.S. Circuit Judge Stephanos Bibas reversed an earlier ruling that suggested a jury would need to assess the fair use claims made in this case. He admitted to reconsidering his position, stating, "A wise man knows when he is wrong." He revised his summary judgment in light of this understanding.

Judge Bibas granted several motions in favor of Thomson Reuters. These included partial summary judgments on copyright infringement and on the fair use argument. The judge denied Ross's attempts to obtain summary judgment regarding both fair use and Thomson Reuters' copyright claims.

Background of the Case

The case stemmed from Thomson Reuters' assertion that its Westlaw database represents one of the largest legal information repositories in the United States, which it licenses to users. Ross Intelligence approached Thomson Reuters, aiming to license content from Westlaw to develop a competitive database. However, as Ross intended to compete directly with Westlaw, Thomson Reuters rightfully declined.

Despite not having legal access, Ross Intelligence proceeded to acquire training data through a partnership with LegalEase, resulting in the creation of "Bulk Memos" which contained legal questions and corresponding answers. These were based on Westlaw’s headnotes. Thomson Reuters became aware of this practice and subsequently filed the copyright infringement lawsuit.

The Heart of the Matter: Copyrighted Headnotes

The central issue in the lawsuit was whether Ross' actions infringed the copyright associated with Westlaw's headnotes. These headnotes are concise summaries of legal points derived from extensive judicial opinions. While the text of the judicial opinions themselves is not copyrightable, these headnotes can be considered original works due to the creative effort involved in their formulation.

Judge Bibas recognized that Westlaw’s compilation method for the headnotes demonstrated a requisite degree of creativity, thus reinforcing their copyright status. Additionally, he determined that the Key Number System utilized by Westlaw was also an original compilation, further bolstering Thomson Reuters' claims.

Evaluation of Fair Use

A major consideration in the ruling was whether Ross' use of the data could be classified as 'fair use.' Judge Bibas reiterated the four key factors that determine fair use:

1. The purpose and character of the use, including its commercial nature.
2. The nature of the original work being used.
3. The amount and substantiality of the portion used in relation to the copyrighted work.
4. The effect of the use on the market value of the original work.

In this case, the first and fourth factors were significant, favoring Thomson Reuters. Judge Bibas determined that Ross' commercial nature and the lack of transformative use weighed heavily against the possibility of fair use, as Ross’ aim was to create a product that directly competed with Westlaw.

While the second factor leaned towards Ross due to the nature of Westlaw’s original content, the third factor, which analyzes how the work was utilized, also favored Ross, as its outputs did not openly present Westlaw's headnote content to end users.

The Final Ruling

Ultimately, taking all factors into account, Judge Bibas ruled against Ross' fair use defense. Factors one and four strongly supported Thomson Reuters, while factors two and three did not hold as much weight. Therefore, summary judgment on fair use was granted in favor of Thomson Reuters, along with partial judgments on direct copyright infringement regarding the headnotes.

Thomson Reuters expressed satisfaction with the ruling, asserting that Westlaw's editorial content is protected under copyright, and that others cannot use it without permission.

The Wider Impact of the Ruling

This decision could have significant repercussions across the AI industry. Many companies, including Meta, have faced scrutiny for their data collection methods, often risking legal actions similar to the case against Ross. Judge Bibas' ruling challenges the common stance that extensive data collection by AI firms falls under fair use.

If this precedent is followed in other cases, it could lead to considerable liability for AI firms and their leadership, resulting in extensive damages and even potential criminal charges.

The outcome of this case serves as a critical reminder for all AI companies about the importance of respecting copyright laws when building their models and accessing data.

legal, AI, data