In what may turn out to be an influential decision, Judge Stephanos Bibas ruled as a matter of law in Thompson Reuters v. Ross Intelligence that creating short summaries of law to train Ross Intelligence’s artificial intelligence legal research application not only infringes Thompson Reuters’ copyrights as a matter of law but that the copying is not fair use. Judge Bibas had previously ruled that infringement and fair use were issues for the jury but changed his mind: “A smart man knows when he is right; a wise man knows when he is wrong.”

At issue in the case was whether Ross Intelligence directly infringed Thompson Reuters’ copyrights in its case law headnotes that are organized by Westlaw’s proprietary Key Number system. Thompson Reuters contended that Ross Intelligence’s contractor copied those headnotes to create “Bulk Memos.” Ross Intelligence used the Bulk Memos to train its competitive AI-powered legal research tool. Judge Bibas ruled that (i) the West headnotes were sufficiently original and creative to be copyrightable, and (ii) some of the Bulk Memos used by Ross were so similar that they infringed as a matter of law.

The court rejected Ross Intelligence merger and scènes à faire arguments. Though the headnotes were drawn directly from uncopyrightable judicial opinions, the court analogized them to the choices made by a sculptor in selecting what to remove from a slab of marble. Thus, even though the words or phrases used in the headnotes might be found in the underlying opinions, Thompson Reuters’ selection of which words and phrases to use was entitled to copyright protection. Interestingly, the court stated that “even a headnote taken verbatim from an opinion is a carefully chosen fraction of the whole,” which “expresses the editor’s idea about what the important point of law from the opinion is.” According to the court, that is enough of a “creative spark” to be copyrightable. In other words, even if a work is selected entirely from the public domain, the simple act of selection is enough to give rise to copyright protection.

Relying on testimony from Thompson Reuters’ expert, the court compared “one by one” how similar 2,830 Bulk Memos were to the West headnotes at issue. The found that 2,243 of the 2,830 Bulk Memos were infringing as a matter of law. Whether Ross Intelligence’s contractor had access to the headnotes was an open question, the court reasoned that a Bulk Memo that “looks more like a headnote that it does the underlying judicial opinion is strong circumstantial evidence of copying.” Questions of infringement are, of course, normally left for the fact finder, but the court found a reasonable juror could not conclude that the Bulk Memos were not copied from the West headnotes.

The court then went on to rule as a matter of law that Ross Intelligence’s fair use defense failed – even though only two of the four fair use factors favored Thompson Reuters. The court specifically found that Ross Intelligence’s use was commercial in nature and non-transformative because the use did not have a “further purpose or character” apart from Thompson Reuters’ use. The court also found dispositive that Ross’ intended purpose was to compete with Thompson Reuters, and thus would impact the market for Thompson Reuters’ service. The court, on the other hand, found that the relative lack of creativity in the headnotes, and the fact that users of Ross’ systems would never see them, also favored Ross.

The court distinguished cases holding that intermediate copying of computer source code was fair use, reasoning that those courts held that the intermediate copying was necessary to “reverse engineer access to the unprotected functional elements within a program.” Here, copying Thompson Reuters’ protected expression was not needed to gain access to underlying ideas. How this reasoning will play out in other pending artificial intelligence cases where fair use will be hotly contested is anyone’s guess – in most of those cases, the defendants would argue that they are not competing with the rights owners and that, in fact, the underlying ideas (not the expression) are precisely what the copying is trying access.

The court left many issues for trial (including whether Ross infringed the West Key Number system and thousands of other headnotes). Nonetheless, the opinion seems to be striking victory for content owners in their fight against the AI onslaught. Although Judge Bibas has only been on the Third Circuit bench since 2017, he has gained a reputation for his thoughtful and scholarly approach to the law. Whether his ruling sitting by designation as a trial judge in the District of Delaware can make it past his colleagues on the Third Circuit will be worth watching.

The case is Thomson Reuters Enterprise Centre GmbH et al v. ROSS Intelligence Inc., Docket No. 1:20-cv-00613 (D. Del. May 06, 2020).