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Regardless of whether Congress takes up the issue of patent eligibility in 2024, the courts will likely see a dramatic increase in artificial intelligence-related patent litigation in the coming year, says Crowell & Moring partner Gang Chen. A surge in AI patent litigation is the logical outcome of the explosion in the number of AI patent applications filed over the past two decades. In 2020, the USPTO reported it received 80,000 utility patent applications involving AI—over 150 percent higher than in 2002. In the fall of 2023, the USPTO said that AI appeared in more than 18 percent of all utility patent applications it received. In addition, many of those AI inventions patented in the past two decades have been brought to the commercial market over the past couple of years, making infringement claims increasingly likely. They also are getting more valuable, with the size of the global AI market forecasted to increase seven-fold, from nearly $60 billion in 2021 to more than $420 billion in 2030. “So much has been invested and so much progress made, it’s inevitable that disputes will arise,” says Chen.

Dozens of cases are already on the docket to be heard by courts across the country that could have long-lasting effects on how IP is regulated, from artificial intelligence to social media to pharmaceuticals. Here are some of the cases we’re keeping a close eye on that we’ll let you know about throughout the year: Generative AI vs. human authors OpenAI and Microsoft, among other large language model (LLM) platforms, have been on the defendant side for multiple class action lawsuits in the hot issue of whether the leading artificial intelligence content generators, such as ChatGTP, and their owners have infringed human content creators’ copyright when it ingested the human creator’s content for LLM training. There are eight of these types of cases already on the docket in California (four cases), New York (three cases) and Tennessee (one case). It will be interesting to see if any of the cases could survive the motion to dismiss and proceed further. Chevron deference Chevron deference will be tested in the U.S. Supreme Court – again. The precedent-setting case in 1984 established a legal test for when U.S. federal courts must defer to a government agency’s interpretation of a specific law. This latest challenge comes from commercial fishing entities that want to overturn the precedent the original ruling established. The Supreme Court heard an oral argument in the case last week, and it already seems like Chevron deference could be on its way out. While not specific to intellectual property, the decision could have profound consequences for virtually every area of federal law. Social media content moderation The Supreme Court will hear two cases in 2024 on the issue of social media companies’ content moderation authority and the state law intended to restrict this authority. We should watch how broadly the Court would interpret the First Amendment right when applied to social media platforms. IP at the Supreme Court Generic drugs, skinny labels, and induced patent infringement: The generic drug manufacturer Teva Pharmaceuticals has petitioned the Court to reverse a federal circuit decision and agree with Teva that the FDA-approved “skinny label” is sufficient to excuse its liability for inducing users to infringe a name brand drug’s patented uses. Inter partes review (IPR) collateral estoppel scope and the trigger time The Court is asked to clarify whether the scope of IPR estoppel applies even if the petition to institute an IPR was unsuccessful, but the claims “reasonably could have been raised during that (unsuccessful) IPR. IPR estoppel prevents a petitioner from asserting in district court litigation any ground for invalidating a patent that it raised or reasonably could have raised during the IPR. The solicitor general is invited to file a brief in this case expressing the views of the United States. The Court’s appetite and position on the case could potentially impact patent litigation strategies. Patent eligibility: A petition has been pending on the Supreme Court’s docket waiting for the Court to address the uncertainty surrounding patent eligibility since 2022. The case presented to the Court the Alice two-step framework and asked for clarification on how each step should be applied to physical, manual and computer processing and the appropriate enablement consideration in each step. In light of the new wave of innovation fueled by artificial intelligence, 2024 could be a critical time for the Court to visit the patent eligibility issue. Even with this already-crowded docket that we’ll be watching, there are bound to be additional cases that courts around the country likely will hear that could have massive effects on intellectual property law. To keep up-to-date with the most important IP cases and verdicts, you can sign up for our e-alerts by clicking here or if you have any questions on IP law, please contact me.

Still reeling from the COVID-19 pandemic, court systems in many states are working to clear their case backlogs. Some court systems have moved cases faster using virtual court proceedings, court data dashboards and online jury selection. In other states, lawmakers are stepping in. The pandemic worsened problems that already had caused state and local court delays, legal experts say. The hurdles include insufficient funding, judicial vacancies, lawyer shortages and delays processing digital and physical evidence. Some state legislators are particularly focused on shortages of prosecutors and judges. In Georgia, New York and Vermont, for example, lawmakers have filed or plan to offer bills that would increase prosecutor pay, boost the number of judges or streamline procedures to reduce the number of cases. “Managing cases today is much more complex on the part of our courts than it used to be, and the pandemic is just one more complexity,” said Brittany Kauffman, the CEO of the Institute for the Advancement of the American Legal System, an independent research center at the University of Denver. The bulk of the backlog in most states and counties are criminal trials. Unlike civil or family law cases, they typically cannot be conducted online because criminal defendants have a constitutional right to face their accusers. The backlog poses significant challenges for defendants, whose right to a speedy trial can be jeopardized by extended pretrial detention. Those held in jail during pretrial detention may lose jobs and experience housing instability. And for crime victims, extended court proceedings can make navigating the already complex justice system even more difficult, said Renée Williams, the executive director of the National Center for Victims of Crime. “[Victims] are very much facing the justice system alone and kind of left to navigate the best they can, so when we start to see court backlogs, that becomes especially an issue because there might be a lack of communication to them about what’s going on,” Williams said in an interview. As proceedings drag on, there’s also a higher chance that victims may face intimidation or retaliation for coming forward — discouraging them from participating altogether, Williams said.

“AI cannot replace a judge. ... However, it has immense potential as an aid in judicial processes,” said Mr. Chitkara.

“The knowledge revolution has started, and these AI platforms have in certain situations demonstrated their capabilities to instantaneously transform queries into outstanding results.”

These heavy workloads can take a toll on judges; in four districts, interviewees explicitly raised the concern of burn-out due to the burdens of compensating for long-term vacancies (E.D. Cal., S.D. Fla., D. Nev., E.D. Tex.).59 Chief Judge Davis in the Eastern District of Texas, for example, described the “long-term tolling effect on the judges” from his district’s two vacancies, citing an impact on “morale.”60 He added, “I sense a weariness and a tiredness on behalf of our district judges, especially ones that have to travel long distances [because of vacancies].”61 Judge Davis speculated that this long-term toll was encouraging judges in his district to retire, noting that the number of senior judges in his district has declined as more judges chose to leave the bench altogether when they reached retirement age.62 Chief Judge Federico Moreno in the Southern District of Florida likewise highlighted the toll that vacancies in his district placed on judges, despite observing that he did not think the vacancies were impacting the administration of justice.63 “It’s like an emergency room in a hospital,” he observed. “The judges are used to it and people come in and out and get good treatment. But the question is, can you sustain it? Eventually you burn out.”64

In two districts, interviewees also highlighted the burdens on senior judges who had retired from active service while continuing to carry full or close-to-full caseloads,65 arguing that it “wears [them] down.”66 The Clerk of Court in the Western District of Wisconsin commended the district’s senior judge as “working as hard or harder than before she retired.”67

While most economic scholarship analyzing the importance of the courts has focused on disputes over real property, the relationship between the court system and investment is no less strong for intellectual property. And to a large extent, the relationship between the courts and the patent system depends on the quality of “judicial human capital.”

In the United States, as in many countries, the courts are a crucial part of the patent system to the extent that the patent system is can be termed a two-stage process. In the first stage, the U.S. Patent and Trademark Office grants property rights to inventors. In the second stage, inventors can protect those rights through patent infringement suits in the courts and alleged infringers have the right to challenge improvidently granted patents and have them declared invalid. As a consequence, some authors have referred to patent rights as being “probabilistic,” depending not only on whether the innovation embodied in the patent has commercial value, but also on the refinement of that patent property right after litigation.15

Climate changes are already affecting US water resources, and the consequences for communities, health, and the environment will worsen

The science is unambiguous, as shown in the long series of US National Climate Assessments, reports from the US National Academies of Science, and other national and international scientific reviews (US Global Change Research Program 2020). Rising temperatures affect both water supply and demand. Rapidly melting snow and ice mean floods in spring, droughts in summer, and new threats to hydropower production. Rising sea levels threaten coastal communities, groundwater, and wetlands.

Indeed, the Supreme Court does need to be limited to its proper role. But when it comes to our engagement with the world, that role involves taking a stand, not stepping aside. The reason for this is straightforward: the court is in charge of interpreting the Constitution, and the Constitution plays a major role in shaping our engagement with the rest of the world. The court therefore has no choice about whether to involve itself in the question of which direction the Constitution will face; it is now unavoidably involved. Even choosing to defer to the other branches of government amounts to a substantive stand on the question.

That said, when the court exercises its own independent political judgment, it still does so in a distinctively legal way. For one thing, the court can act only through deciding the cases that happen to come before it, and the court is limited to using the facts and circumstances of those cases to shape a broader constitutional vision. The court also speaks in the idiom of law -- which is to say, of regular rules that apply to everyone across the board. It cannot declare, for instance, that only this or that detainee has rights. It must hold that the same rights extend to every detainee who is similarly situated. This, too, is an effective constraint on the way the court exercises its policy judgment. Indeed, it is this very regularity that gives its decisions legitimacy as the product of judicial logic and reasoning.

No matter the issue—whether it’s marriage equality, voting rights, health care, or immigration—the U.S. federal courts play a vital role in the lives of all Americans. There are two types of courts: state and federal. The federal courts are those established to decide disagreements that concern the Constitution, congressional legislation, and certain state-based disputes. Although most Americans are familiar with the lifetime appointment of justices on the U.S. Supreme Court, many are surprised to learn that more than 900 judges have lifetime appointments to serve on lower federal courts, where they hear many more cases than their counterparts on the Supreme Court. Each year, the Supreme Court reviews around 100 of the most significant cases out of the nearly 30 million cases resolved by state and federal courts. These courts hear the majority of cases and, most of the time, they have the final say. That is why, along with the Supreme Court’s justices, the judges who sit on the nation’s federal district and circuit courts are so important. At any given time, there are vacancies on U.S. federal courts that need to be filled. If they are not filled, federal caseloads get backlogged, and as a result, Americans’ access to justice is limited. As of March 9, 2015, there were 50 current vacancies on U.S. federal courts. These seats have been vacant for a total of 22,222 days, resulting in a backlog of 29,892 cases. The Administrative Office of the United States Courts has designated 23 of these pending vacancies as judicial emergencies, meaning that filling them is a critical task. As the Center for American Progress has noted, “in practical terms,” these are the judicial districts “where judges are overworked and where justice is being significantly delayed for the American public.” The Constitution dictates that the president appoints federal judges while the Senate advises and consents on these appointments. The result is a delicate balance between the desires of the White House, deference to home-state senators, and the power of the party that controls the Senate. Recently, politics has played a big role in the pace at which judicial nominees are confirmed. In an attempt to slow President Barack Obama’s effect on the federal courts, Senate Republicans have obstructed the president’s judicial nominees at unprecedented levels by attempting to prevent or delay a vote through filibustering a record number of nominees and making them await confirmation for long periods of time. The reason many Senate Republicans have played politics with President Obama’s judicial nominees is because they know the dramatic impact the judiciary can have on policies, including marriage equality and reproductive choice. The fewer judges that President Obama appoints to fill federal judicial vacancies, the greater leverage the next president will have in deciding the make-up of these courts. Yet in the face of unprecedented obstruction, President Obama has made great strides to fill vacancies and to ensure that federal judges meaningfully reflect the dynamic diversity of the nation. A diverse federal bench improves the quality of justice and instills confidence that judges understand the real-world implications of their decisions. Americans have different backgrounds, as well as an assorted set of professional, educational, and life experiences. It is important that the federal courts reflect the diversity of the public they serve. As Supreme Court Justice Sonia Sotomayor once wrote, “The dynamism of any diverse community depends not only on the diversity itself but on promoting a sense of belonging among those who formerly would have been considered and felt themselves outsiders.” Furthermore, scholars have found that judges often change their minds during the deliberative process. In one study, researchers concluded that having a woman on the panel affected “elements of both deliberation and bargaining—alternative perspectives, persuasive argument, and horse trading.” Not only do the federal courts play a vital role in preserving democracy, but who sits on the courts has an effect too.

President Joe Biden says he wants to renew America’s democratic alliances. He has outlined a new foreign policy agenda, which aims to reinvigorate democratic values and provide stronger competition to rising authoritarian powers. His administration writes about fighting kleptocracy and climate change, conquering inequality, and standing up for human rights. There’s talk about a “Summit for Democracy” to promote the new agenda. None of it can succeed, though, without an information environment that allows arguments to be won with evidence and allows citizens to deliberate about significant issues in a full, free, and fair conversation. Such an environment does not exist today in the United States or most other democracies. Donald Trump’s defining technological legacy was to demonstrate the vulnerability of citizens of democracies to digital exploitation. As President, he displayed a shrewd ability to manipulate our fractured information environment to his personal advantage, promoting a mix of extreme voices that inflamed polarization and nearly propelled him to a second term. Our authoritarian adversaries, meanwhile, are busy pursuing their own information strategies. China and Russia have defined their “cyber sovereignty” agendas, based on the idea that countries are entitled to make their own rules for governing the internet even if those rules violate universal principles like human rights. U.S. efforts to oppose them have so far been contradictory and confused. Trump may have ramped up rhetorical confrontation with China. In private, however, he undercut his public posture, telling Xi Jinping that the Chinese ruler should “go ahead” with the building of concentration camps for Uighurs. Unsurprisingly, Trump’s messaging failed to unite democratic allies around a common agenda. When Trump did push back against the Chinese tech industry, he adopted some of the same practices for which he had criticized Xi, like impulsively banning China’s WeChat and TikTok apps from the U.S. market and pressing TikTok to offer itself for sale to a Trump political supporter. Trump tried to portray our tech competition with China as a matter of “their side” or “our side;” but since the sides were not defined by common values or even interests, it just looked like bullying, with no power to win over allies. Instead, many in the EU started to view China and America as equally bad options. After Biden’s presidential victory, the EU leaked a memorandum arguing that national tech policies should be unified by “shared values.” Incoming Secretary of State Antony Blinken has said something similar, describing “techno-democracies” that must work together to defend their values against the world’s “techno-autocracies.” But what are these values? Do we know what a democratic information environment looks like anymore? It used to be pretty easy to define the difference between a democratic information environment and a dictatorial one. They had censorship and state-controlled media; we had freedom of speech, pluralism, and the “marketplace of ideas.” Today, in contrast, dictators don’t just censor by constraining the amount of media content: They exploit freedom of expression to flood the environment with so much disinformation that the truth is swamped, a sort of censorship through noise. Some of the most egregious cases occur in democracies like Brazil or the Philippines. Even in Russia and China, leaders don’t just restrict communication but overload or flood information channels. Pluralism, meanwhile, displays a polarization so extreme that it destroys the possibility of a shared reality, let alone a “marketplace of ideas.” Delineating Rights America, of course, is in no position to lecture anyone on the subject of disinformation or tech regulation. Instead, there is a risk that democracies will fracture even further, into “splinternets,” unable to coordinate norms and standards. If so, it will become still easier for authoritarians to set their own rules. Or, if the EU continues with projects like its proposed digital regulations to govern data privacy, platform accountability, and the economic power of “gatekeeping” internet companies, the process could shift Europe away from the U.S. tech sphere. In fact, if growing numbers of countries see little cost to devising their own rules, the world could see a cyber race to the bottom. The best current ideas in this field come from smaller frontline states, like Estonia and Taiwan, for which finding a way to design an open yet secure information environment is often existential. But without the United States, it will be hard to make real progress.

This law-centric orientation is strikingly different from that of most Americans, despite popular claims about their litigiousness. Most individuals never even identify the civil legal problems they experience as "legal." Only a tiny minority will ever seek legal advice in response to a problem, and most are more likely to do nothing than to file a lawsuit. Decades of empirical scholarship have confirmed that despite the prevalence of civil legal problems in everyday life, there is remarkably little recourse to formal law. [FOOTNOTE BEGINS] DAVID M. ENGEL, THE MYTH OF THE LITIGIOUS SOCIETY: WHY WE DON'T SUE 3 (2016) (noting that "specious claims of a litigation explosion have been made so often that they have rooted themselves in the national psyche"). [FOOTNOTE ENDS]

While many courts returned to their usual pre-pandemic operations in 2022 as the Covid-19 crisis receded, most received fewer case filings than the year prior, according to released Tuesday by the U.S. judicial system. The latest Judicial Business report from the Administrative Office of the U.S. Courts provides statistical data about federal caseloads by circuit, district and offense for the fiscal year ending Sept. 30, 2022, compared with data for prior years. Total case filings in U.S. district courts fell 18% last year to 343,253. Civil case filings declined 20% to 274,771, and criminal filings dropped by 8% to 68,482.

March 21 (Reuters) - A bipartisan $1.2 trillion spending package unveiled by U.S. congressional leaders on Thursday would provide a modest increase in spending on the federal judiciary, but falls short of what the court system had sought. Set for a vote in the Republican-controlled House of Representatives on Friday, the spending package would increase discretionary spending, opens new tab on the judiciary for the 2024 fiscal year to $8.63 billion, up 2% from 2023. That's below the $8.95 billion the judiciary had asked for in December when it reduced an earlier request for an 8% spending increase to just a 5.8% boost as a result of scaled-back hiring and investments that it said could offset its 2024 needs. Funding for court security would remain flat at $750 million even as the U.S. Marshals Service is reporting that serious threats against federal judges had increased to 457 in fiscal year 2023, from 224 in fiscal year 2021. The judiciary had asked for $783.2 million to bolster security, a 4.4% increase from what the 2023 budget provided. The judiciary in 2023 received an additional $112.5 million in supplemental funding to improve courthouse security. "I understand members of Congress want to rein in certain categories of spending, but keeping judiciary security funding flat at a time of rising threats against judges seems unwise," said Gabe Roth, who heads the court reform group Fix the Court. A summary of the spending bills by Republicans on the House Appropriations Committee said the legislation "provides adequate resources to ensure an impartial, strong, and secure judiciary." The U.S. Supreme Court would receive $129.3 million in discretionary funding for salaries and expenses, an 18% increase from 2023, while spending for the care of its building and grounds would drop nearly 30% to $20.7 million. The legislation increases spending on federal public defenders from prior versions of the bill, after the judiciary and Democratic Senate Judiciary Committee members warned of steep job cuts if funding was not boosted. The $1.451 billion provided for federal public defenders is an increase of $68 million above fiscal year 2023, though it still falls short of the $1.5 billion funding that the judiciary argued was needed. Based on the new proposed spending levels, the Administrative Office of the U.S. Courts said a hiring freeze for federal defenders' offices nationally that began in July 2023 was being lifted immediately. Melody Brannon, the federal public defender in Kansas who helped respond to congressional requests for information on spending, in an email said she was grateful Congress recognized the shortfall public defenders faced in earlier budget drafts. "We remain underfunded and it is vitally important that we get the resources we need for FY 2025," she said. "But we are breathing easier today."

Courts nationwide are implementing modernization principles, leveraging digital technology and data-driven strategies to improve efficiency and accessibility. With the rise of legal tech, courts are prioritizing streamlined case processing and sentencing reforms, aiming to reduce delays and enhance overall system effectiveness. Additionally, global shifts towards during crises reveal a commitment to embracing modernization for improved efficacy. These efforts underscore a concerted push by court leaders to better serve litigants while addressing budget constraints, increasing caseloads, and workforce limitations. Efforts in modernizing civil courts reflect a forward-thinking approach that seeks to balance limited resources with the imperative of delivering fair and accessible justice. Through strategic use of legal technology and data analysis, courts aim to streamline processes while maintaining the integrity of the judicial system. Notably, these advancements align with broader trends in utilizing digital solutions for societal progress—ultimately shaping a more efficient and equitable future for civil courts.

The first graph in the report clearly dispels the notion that patent litigation is excessive. It shows the trends over time in the number of patent grants and the number of patent infringement complaints filed in U.S. district courts. As seen in the graph, there is a sharp increase in the number of complaints filed after 2011 due to the anti-joinder provisions of the America Invents Act (AIA). As astute observers of the U.S. patent system understand, this increase in complaints does not represent new disputes but merely a separation of defendants into individual lawsuits thereby mechanically increasing the number of complaints. Therefore, the decline in complaints observed after 2013 is more impressive than it appears as the decline would have been even greater were it not for the anti-joinder provision. Even still, complaints are only about a third higher than they were in the period leading up to the AIA. Furthermore, patent infringement complaints as a share of granted patents is low and is also declining. Marcum reports this share averaged 1.7% from 2013 to 2017 and is less than 1% today.

Michael Furey, who handles commercial litigation and employment matters at Day Pitney, likewise sees improvements in the functioning of the District of New Jersey since the arrival of the six new judges. But he still believes the District of New Jersey doesn’t move cases as swiftly as courts in other jurisdictions. “I think the federal courts are getting back to business, and they have been for some time. Trials are being held, motions are being argued. Some judges are better than others at getting their decisions out,” Furey said. “I’m not sure if the problem now is COVID-related. I think it’s more just the practices of certain judges as to how conscientious they are in getting their decisions done.” Furey said he believes the state’s federal courts are mainly trying criminal cases and some more civil trials but not complex civil trials.

The Lanham Act does not create a duty for trademark to police their marks.79 Indeed, as the USPTO website states, the government will not police the use of trademarks.80 Instead, “the owner of a registration is responsible for bringing any legal action to stop a party from using an infringing mark.”81 Despite the lack of duty to police, the U.S. trademark system incentivizes trademark policing. Lawyers often advise trademark owners to diligently protect their marks.82 As such, trademark owners engage in trademark policing to monitor for unauthorized use of their marks or confusing similar marks and to prevent misuse that could lead to genericide.83 This Part discusses the incentives that drive trademark owners to police and enforce their marks and gives a brief overview of common methods of enforcement.

Efficient and pro-competitive interpretations of trademark law will, on the other hand, face repeated challenges. Almost by definition, successfully challenging an efficient interpretation of trademark law will lead to less competition. It may do so directly, by prohibiting a would-be competitor from entering a market altogether. Or it may do so indirectly, by increasing a competitor’s costs or the degree of product differentiation in the market. Where increased competition reduces economic rents, decreased competition increases them. For a trademark plaintiff, the prospect of capturing those increased rents provides a powerful incentive to challenge an efficient interpretation of trademark law if they believe they have a chance to persuade a court to reinterpret trademark law in a way that reduces competition. As a result, even if a court gets it right in a given case and adopts an efficient, pro-competitive interpretation of trademark law, we should expect self-interested trademark plaintiffs to repeatedly challenge the resulting legal rule. Given heterogeneity in the a priori beliefs of judges as to the merits of various legal rules, such repeated challenges will, sooner or later, find a sympathetic judicial ear. When they do, the original pro-competitive interpretation of trademark law will become less so, as later decisions limit and distinguish it. The inevitable result of this process is, again, exactly what we have observed: good decisions don’t last.

We worry a bit about self- represented litigants who may use AI to abusively flood the courts with meritless lawsuits, clogging the system and overwhelming court personnel and judges. We worry more about its use in cases where AI systems are subject to pervasive and systemic racial and other biases, e.g., predictive policing, facial recognition, and criminal risk/recidivism assessment. We lose the most sleep over a court relying on AI applications or evidence as the primary or sole evidence supporting a consequential outcome (such as the imposition of a criminal sentence) without sufficient assurances that the AI system has been trained on data and/or programmed so its validity and reliability can be demonstrated empirically (i.e., it accurately does what it was designed to do and it consistently produces accurate results when applied to substantially similar facts, respectively); and that it is equitable, unbiased, and/or fair (assuming that we can reach consensus on what it means for an algorithm to be “equitable,” “unbiased,” and/or “fair”). When one or more of those conditions cannot be met, we believe that AI evidence should be excluded.

Courts Dealing with the Onslaught of Intellectual Property Issues Over Artificial Intelligence Add to Packet Join our mailing list to receive the latest updates and alerts Subscribe Artificial Intelligence (AI) has been used to create significant advancements in technology and efficiencies for businesses and legal teams over the last decade. One of the most significant ways AI has already impacted intellectual property litigation is through enhancing document review and analysis through technology assisted review. News headlines about chatbots such as ChatGPT show the significant growth in this area. As this technology continues to evolve at a rapid pace, generative AI (gen AI), which is a subset of AI, has arrived and will also change the landscape of intellectual property issues and litigation. The basic difference between AI (pattern recognition) and gen AI (pattern creation) is that traditional AI is generally used to analyze data and make predictions, whereas gen AI helps by creating new data based on its training data from large language models. This article highlights some of the key issues courts are facing with AI in intellectual property litigation. Copyright Litigation: Is large-scale scraping of third-party content to train gen AI tools fair use and under what circumstances do AI-generated works infringe on existing copyrights? Andersen v. Stability AI Ltd., 2023 WL 7132064 (N.D. Cal. Oct. 30, 2023): The plaintiffs Sarah Andersen, Kelly McKernan and Karla Ortiz, on behalf of a putative class of artists, allege that Stability AI Ltd. scraped billions of copyrighted images from online sources, without permission, to use as training data to create Stable Diffusion, an AI image product, without consent from the creators of the images or the websites that hosted them. The plaintiffs allege that Stable Diffusion is a “software library” providing “image-generating services” to products produced and maintained by the defendants including DreamStudio, DreamUp and the Midjourney Product. According to the plaintiffs, consumers use these products by entering text prompts into the programs to create images “in the style” of artists. The plaintiffs claim that the new images are based entirely on the training images and are “derivative” of the training images. However, the plaintiffs conceded that none of the image outputs “is likely to be a close match for any specific image in training data.” The plaintiffs filed a class action lawsuit against the defendants Stability AI Ltd., Stability AI, Inc., Midjourney, Inc., and DeviantArt, Inc. for: Direct and vicarious copyright infringement under 17 U.S.C. § 501; Violation of the Digital Millenium Copyright Act (DMCA), 17 U.S.C. §§ 1201-1205; Violation of the plaintiff’s statutory and common law rights of publicity, Cal. Civ. Code Section 3344; and Violation of unfair competition law, Cal. Bus. & Prof. Code §§ 17200, et seq. In their motion to dismiss, the defendants argued that the models do not copy or store any images, copyrighted or otherwise, but rather, just analyze the properties of online images to generate parameters that were later used to assist the gen AI model in creating new images from text prompts, as opposed to copying any portion of the underlying images used for training. On October 30, 2023, the court largely granted the motion to dismiss with leave to amend. However, the court allowed Andersen’s copyright infringement claim to proceed for registered works against Stability, acknowledging the plausibility that they were included in the training datasets. The court found that the allegations that Stability “downloaded or otherwise acquired copies of billions of copyrighted images without permission to create Stable Diffusion” and used those images to train Stable Diffusion were sufficient to state a direct infringement claim. Resolution of this question will certainly involve consideration of the doctrine of fair use, which protects certain unauthorized uses of copyrighted works – i.e., use that transforms an original work into something sufficiently different – against copyright infringement claims. Key Takeaways: Copyright owners should seek legal advice to make sure their copyrights are protected and identify potential claims for misuse of their work in gen AI models. Companies using gen AI should carefully assess risks of using an AI model and whether it generates transformative outputs. Companies should also assess whether its use of gen AI complies with copyright laws and seek legal advice on the possibility of obtaining the appropriate permissions or licenses for the use of copyrighted material. Patents: Are inventions created by AI or in conjunction with AI assistance eligible for patent protection? Can AI be an “inventor” under U.S. patent law? Thaler v. Vidal , 43 F.4th 1207, 1213 (Fed. Cir. 2022), cert. denied, 143 S. Ct. 1783 (2023): Stephen Thaler filed two patent applications with the United States Patent and Trademark Office (USPTO) naming an AI software system called DABUS (Device for the Autonomous Bootstrapping of Unified Sentience) as the sole inventor for both applications. The USPTO rejected the applications, finding them incomplete for lack of a valid inventor. Thaler sought judicial review and the district court agreed with the USPTO’s conclusion and denied inventorship status to DABUS. The district court found that Congress intended to limit the definition of “inventor” to natural persons or human being. Thaler appealed to the Federal Circuit and argued that AI inventorship would increase innovation, encourage AI development, and encourage commercialization and disclosure of information for inventions created by humans and AI. The Federal Circuit affirmed the district court’s decision, holding that the Patent Act clearly and unambiguously requires that the inventor of a patent be a natural person or “human being.” The Federal Circuit explained that the Patent Act defines an inventor, whether singular or joint, as an “individual” (35 U.S.C. §§ 100(f), (g)) and highlighted that Supreme Court precedent shows that an “individual” ordinarily means human being. However, the Federal Circuit left open the question of “whether inventions made by humans beings with the assistance of AI are eligible for patent protection.” Key Takeaways: As the law currently stands, an AI system cannot be the inventor of record on a patent because the Patent Act requires that an inventor of record be a human being. After the Thaler decision, there is still uncertainty around AI inventorship. The Federal Circuit implied that inventions made by human beings with the assistance of AI are eligible for patent protection. But how much assistance by AI is too much for patentability? A company’s ability to get a patent is a very important method for protecting its intellectual property and obtaining a competitive advantage in the marketplace and this will only increase with companies that develop and use AI technology. Companies should seek legal advice regarding patent protection involving AI, but also consider other ways to protect its inventions generated by AI such as trade secrets.

AI copyright claims could overwhelm court capacity