The long-running copyright litigation between legal research giant Thomson Reuters and now-shuttered legal research startup ROSS Intelligence took another interesting turn this week, following the 3rd U.S. Circuit Court of Appeals\u2019 order that the parties file supplemental briefs addressing the impact of its recent ruling in American Society for Testing & Materials v. UpCodes, Inc. [\u2026]<\/p>\n
The long-running copyright litigation between legal research giant Thomson Reuters and now-shuttered legal research startup ROSS Intelligence took another interesting turn this week, following the 3rd U.S. Circuit Court of Appeals\u2019 order that the parties file supplemental briefs addressing the impact of its recent ruling in American Society for Testing & Materials v. UpCodes, Inc.<\/em> \u2014 a case I covered here in April<\/a>.<\/p>\n Both sides filed their supplemental briefs on May 11, and, not surprisingly, each argues that UpCodes<\/em> supports its position. What is notable, though, is how different are their readings of the same opinion \u2014 and how directly the briefs crystallize the central dispute at the heart of this appeal.<\/p>\n Find all of my coverage of this litigation here<\/a>.<\/strong><\/em><\/p>\n The filings came in response to an April 27 text order from the court\u2019s clerk<\/a> directing the parties to file supplemental briefing \u201caddressing what impact, if any\u201d the court\u2019s UpCodes<\/em> decision has on the appeal.<\/p>\n As I wrote in April, the UpCodes<\/em> decision was a significant fair use ruling in which a unanimous 3rd Circuit panel held that UpCodes\u2019 publication of technical building standards incorporated by reference into law likely constitutes fair use.<\/p>\n The court found UpCodes\u2019 use transformative because its purpose \u2014 conveying what the law actually is \u2014 differed fundamentally from ASTM\u2019s purpose in publishing those same standards.<\/p>\n In its supplemental brief<\/a>, ROSS, which is represented by law firms White & Case and Pillsbury Winthrop Shaw Pittman, argues that UpCodes<\/em> is essentially controlling and demands summary reversal of the district court\u2019s ruling against it on fair use.<\/p>\n When ROSS initially petitioned for this interlocutory appeal, the question of whether AI innovators could copy available legal materials to build a new research platform was described as \u201cnovel and difficult,\u201d the brief argues. Then, last month\u2019s unanimous UpCodes<\/em> panel answered that question: Yes, fair use permits it.<\/p>\n ROSS draws parallels between its situation and that of UpCodes. West, like the UpCodes<\/em> plaintiff, is a recognized industry leader whose users purchase subscriptions to access copyrighted materials. ROSS, like the UpCodes<\/em> defendant, is a for-profit startup that built a legal research platform using \u201ccopyrighted\u201d content (the word is in quotes in the brief) without securing a license, and both employed freemium business models offering AI-powered tools.<\/p>\n ROSS goes factor by factor through the fair use analysis, arguing that UpCodes<\/em> requires reversal on the first and fourth factors, where the district court ruled against it, and affirmance on the second and third, where the district court found for ROSS.<\/p>\n On the critical first factor \u2014 the purpose and character of the use \u2014 ROSS argues the district court made two errors that UpCodes<\/em> now exposes. First, the district court analyzed ROSS\u2019s subjective purpose (it found ROSS \u201ctook the headnotes to make it easier to develop a competing legal research tool\u201d), whereas UpCodes<\/em> clarifies that the first factor calls for an objective inquiry.<\/p>\n Second, the district court conflated ROSS\u2019s purpose with the expressive similarity of the output, which UpCodes<\/em> says is the wrong inquiry. ROSS\u2019s objective use \u2014 training an AI model on the relationships among legal words, so that the headnotes would not appear in the final product at all \u2014 is, ROSS contends, at least as transformative as what UpCodes did, and arguably more so, because it \u201cinvolved a change in medium.\u201d<\/p>\n On the fourth factor \u2014 market harm \u2014 ROSS argues the district court made a categorical error by treating \u201clegal research platforms\u201d as the relevant market, rather than examining what West actually derives from the specific works at issue, its headnotes.\u00a0Under UpCodes<\/em>, ROSS says, the court should have looked at the market for headnotes specifically and the percentage of Westlaw revenues attributable to them.<\/p>\n ROSS also argues that West conceded it has no evidence of actual market harm \u2014 no documented lost subscribers, no lost revenue traceable to ROSS \u2014 and that UpCodes<\/em> requires courts to examine the record closely rather than inferring harm from the mere fact of competition.<\/p>\n \u201cIn 2020, West should have responded to ROSS with innovation,\u201d the brief concludes. \u201cInstead, West chose litigation. Copyright rewards the former, not the latter.\u201d<\/p>\nROSS: UpCodes<\/em> Requires Reversal<\/strong><\/h3>\n
Thomson Reuters: UpCodes<\/em> Changes Nothing<\/strong><\/h3>\n