Legal Stuff

Sarah Silverman Hits Stumbling Block in AI Copyright Infringement Lawsuit Against Meta

by

From The Hollywood Reporter:

A federal judge has dismissed most of Sarah Silverman‘s lawsuit against Meta over the unauthorized use of authors’ copyrighted books to train its generative artificial intelligence model, marking the second ruling from a court siding with AI firms on novel intellectual property questions presented in the legal battle.

U.S. District Judge Vince Chhabria on Monday offered a full-throated denial of one of the authors’ core theories that Meta’s AI system is itself an infringing derivative work made possible only by information extracted from copyrighted material. “This is nonsensical,” he wrote in the order. “There is no way to understand the LLaMA models themselves as a recasting or adaptation of any of the plaintiffs’ books.”

Another of Silverman’s arguments that every result produced by Meta’s AI tools constitutes copyright infringement was dismissed because she didn’t offer evidence that any of the outputs “could be understood as recasting, transforming, or adapting the plaintiffs’ books.” Chhabria gave her lawyers a chance to replead the claim, along with five others that weren’t allowed to advance.

Notably, Meta didn’t move to dismiss the allegation that the copying of books for purposes of training its AI model rises to the level of copyright infringement.

The ruling builds upon findings from another federal judge overseeing a lawsuit from artists suing AI art generators over the use of billions of images downloaded from the Internet as training data. In that case, U.S. District Judge William Orrick similarly delivered a blow to fundamental contentions in the lawsuit by questioning whether artists can substantiate copyright infringement in the absence of identical material created by the AI tools. He called the allegations “defective in numerous respects.”

Some of the issues presented in the litigation could decide whether creators are compensated for the use of their material to train human-mimicking chatbots that have the potential to undercut their labor. AI companies maintain that they don’t have to secure licenses because they’re protected by the fair use defense to copyright infringement.

According to the complaint filed in July, Meta’s AI model “copies each piece of text in the training dataset” and then “progressively adjusts its output to more closely resemble” expression extracted from the training dataset. The lawsuit revolved around the claim that the entire purpose of LLaMA is to imitate copyrighted expression and that the entire model should be considered an infringing derivative work.

But Chhabria called the argument “not viable” in the absence of allegations or evidence suggesting that LLaMA, short for Large Language Model Meta AI, has been “recast, transformed, or adapted” based on a preexisting, copyrighted work.

Another of Silverman’s main theories — along with other creators suing AI firms – was that every output produced by AI models are infringing derivatives, with the companies benefiting from every answer initiated by third-party users allegedly constituting an act of vicarious infringement. The judge concluded that her lawyers, who also represent the artists suing StabilityAI, DeviantArt and Midjourney, are “wrong to say that”  — because their books were duplicated in full as part of the LLaMA training process — evidence of substantially similar outputs isn’t necessary.

Link to the rest at The Hollywood Reporter

ACLU, Parents, and Students Sue Alaska School District Over Book Bans

by

From Publishers Weekly:

On November 17, a group of eight local plaintiffs joined by the American Civil Liberties Union of Alaska and advocacy group the Northern Justice project filed suit against Matanuska-Susitna Borough (Mat-Su) school district north of Anchorage, seeking the return of 56 books said to be improperly banned from school shelves. The suit was filed on behalf of six parents of minor children and two Mat-Su students who are over the age of 18, who claim that the actions of the school board violated their “First and Fourteenth Amendment rights” to free speech and political expression.

“On April 21, 2023, the School Board ordered the Matanuska-Susitna Borough School District to remove 56 books from all of its school libraries because the books contained ideas or concepts that either the Board or some members of the public did not like. The District carried out this removal of books,” the complaint states. While acknowledging that “school districts have broad discretion in the management of school affairs,” the suit argues that “such broad discretion is still bounded by the protections of the U.S. Constitution” and that the districts removal of the books infringes on students First Amendment right “to receive ideas and information as a necessary predicate to their meaningful exercise of the rights of speech, press, and political freedom.”

The books ordered removed by the board include classics such as Toni Morrison’s The Bluest Eye, Kurt Vonnegut’s Slaughterhouse Five, and Khaled Hosseini’s The Kite Runner. The removed books also include books “with protagonists of color or LGBTQ+ protagonists” and “nonfiction reference materials discussing adolescent health and development.”

The plaintiffs seek “an injunction, declaratory relief, and nominal damages against the Board’s unconstitutional removal of books, to protect their right and freedom to explore a wide range of ideas.”

In a statement, ACLU of Alaska legal director Ruth Botstein, said the Mat-Su board put “its personal views” ahead of the rights of students and parents it serves. “Removing classic reads and award-winning literature from bookshelves violates students’ rights to receive ideas and information. This is a foundational component of the rights of young Alaskans to exercise freedom of speech, press, and political expression. Book banning in any public setting is unacceptable.”

The suit in Alaska is the latest in a legal effort to turn back an ongoing, politically-organized nationwide wave of book banning. In addition to the action in Alaska, an ACLU suit is currently pending in Missouri, challenging Senate Bill 775, a school library obscenity law that opponents say forces librarians to censor their collections under the “threat of arbitrary enforcement of imprisonment or fines.”

Link to the rest at Publishers Weekly

FTC calls out consumer protection and competition intersections in Copyright Office AI proceeding

by

From JD Supra:

The U.S. Federal Trade Commission (FTC) staked out its role in policing the potential competition and consumer protection implications of generative AI technologies’ use of copyrighted materials in comments submitted in the U.S. Copyright Office’s proceeding on AI and copyright. The proceeding seeks information on the use of copyrighted works to train AI models, levels of transparency and disclosure needed regarding copyrighted works, and the legal status of AI-generated outputs, among other things. In its comments, the FTC reiterated its expertise addressing competition and consumer protection issues involving AI, identified copyright issues related to generative AI that implicate competition and consumer protection policy, and introduced testimony from an October 2023 FTC roundtable with creative professionals. The FTC also promised vigorous efforts to protect consumers in the rapidly evolving AI marketplace.

The FTC’s AI Enforcement

The FTC’s mandate – under the FTC Act and other statutes – to promote competition and protect consumers gives it the power to address unfair or deceptive acts or practices and unfair methods of competition. The FTC has characterized AI as the latest in a series of new technologies that pose novel and important challenges for consumers, workers, and businesses, which falls within the purview of the FTC’s “economy-wide mission.” According to the FTC, as companies deploy AI-enabled systems across a wide range of industries and people incorporate AI-powered products and services into their daily lives, the potential for harm to consumers increases.

The FTC has experience applying its existing legal authority to address alleged unlawful practices and unfair competition involving AI. Prior actions and guidance have addressed a variety of consumer protection allegations, such as algorithms that rely on consumer’s personal information, algorithm-driven recommendations communicating deceptive claims, and algorithms making biased decisions. The FTC has also called attention to potential advertising concerns relating to AI, and has highlighted the risk of fraud stemming from the use of chatbots, deepfakes, and voice clones.

Consumer Protection, Competition, and Copyright

In its comments to the Copyright Office, the FTC highlights important intersections across consumer protection, competition law and policy, and copyright law and policy.  The Commission’s comments note three areas of interest where the FTC might seek to address unfair or deceptive practices to ensure a competitive marketplace.

First, the FTC notes that decisions about where to draw the line between human creation and AI-generated content may cause harm to both creators and consumers. Creators may be harmed by their work being used to train an AI tool without their consent. Consumers, on the other hand, may be harmed if there is a lack of transparency about AI authorship.

Second, the FTC argues that questions about how to address liability for AI-generated content can implicate consumer protection and competition policy. These questions include what liability principles should apply, assigning and apportioning liability, treatment of pirated content, and the role of disclosures, among other issues. As policymakers seek answers to these questions, there may be overlap and potentially some conflict with consumer protection or competition interests. For example, as the FTC notes, “the use of pirated or misuse of copyrighted materials could be an unfair practice or unfair method of competition under Section 5 of the FTC Act.”

Third, the FTC argues that consumer protection and competition principles may call for policy protections that “go beyond the scope of rights and the extent of liability under the copyright laws.” There may be times when consumer protection or competition policy and copyright policy are aligned, as in the example above where misuse of copyrighted materials would likely violate both the FTC Act and copyright law. The FTC raises the possibility, however, that there may also be circumstances where companies run afoul of Section 5 with their AI-generated content even if that content would not violate copyright law.

Impact of Generative AI on Creative Economy

The FTC also seeks to highlight impacts on content creators. Along with its written remarks, the FTC submitted the transcript of its October 4, 2023, “Creative Economy and Generative AI” roundtable, which featured musicians, authors, actors, artists, software developers, and other creative professionals discussing the impact of generative AI on their work. The FTC transcript noted views shared by participants on topics such as: (1) works being used to train generative AI without participants’ consent; (2) insufficient or ineffective mechanisms for obtaining consent, including reliance on opt-out approaches; (3) lack of transparency and disclosure about training data and authorship of AI-generated content; (4) the ample use cases of AI for creative professionals but the need for better guardrails to protect creators; and (5) the putatively great power imbalance between the creators and the generative AI companies.

Link to the rest at JD Supra

PG is anything but an expert on the FTC’s jurisdiction, but color him skeptical about whether the agency has jurisdiction over Generative AI programs.

PG did some quick and dirty research and found the FTC has about 1000 people on its payroll, about two-thirds of whom are attorneys. As PG has mentioned on multiple occasions, he’s a retired attorney and has high regard for the general intelligence of his fellow attorneys.

However, with the exception of patent attorneys, who must have an undergraduate degree in the science or engineering fields, a large portion of the bar members anywhere PG knows about have non-science or engineering or math degrees as undergraduates. Indeed, law school is one of the few options for a humanities major who would like to be able to support a family in a reasonably comfortable manner.

In short, the people working at the FTC undoubtedly have a lot of opinions about artificial intelligence, but little ability to understand how it works or what dangers are real and what dangers are imaginary. The fact that judges are all attorneys gives PG another reason to worry about involving AI research in the US legal system.

Here’s a statement from the FTC website about the agency’s mission:

The FTC enforces federal consumer protection laws that prevent fraud, deception and unfair business practices. The Commission also enforces federal antitrust laws that prohibit anticompetitive mergers and other business practices that could lead to higher prices, fewer choices, or less innovation.

Whether combating telemarketing fraud, Internet scams or price-fixing schemes, the FTC’s mission is to protect consumers and promote competition.

Perhaps PG missed something, but telemarketing fraud, internet scams or price-fixing schemes don’t sound like the main features of large language models.

First Sale Doctrine in Trademark and Copyright Law

by

From BonaLaw:

Federal law allows owners of copyrights or trademarks to file suit for alleged infringement of their exclusive rights. Through a lawsuit, they can recover damages or ask a court to enjoin further unauthorized use of their protected materials. Certain uses of copyrighted or trademarked materials are allowed by law, even without the owner’s permission.

The first sale doctrine allows the resale of products that constitute or contain someone else’s intellectual property without the owner’s permission, as long as the person lawfully owns the product. The first sale doctrine is codified in U.S. copyright law, and court decisions have applied it to trademarks. It can serve as a defense to a copyright or trademark infringement lawsuit in certain situations.

The First Sale Doctrine in Copyright Law

The first sale doctrine states that a copyright owner cannot prevent someone who has lawfully purchased a copyrighted work, such as a book, from selling, loaning, or giving that item to someone else. This allows the distribution of copyrighted materials beyond the initial sale by the copyright owner. Without the first sale doctrine, no one would be able to sell or otherwise dispose of books, CDs, DVDs, or other tangible works that they have purchased without the copyright owner’s authorization. Bookstores and libraries would need permission every time that they sold or loaned a book.

Federal copyright law has codified the first sale doctrine at 17 U.S.C. § 109. Limits apply to the doctrine when a copyrighted work is in digital rather than physical form. Section 109 also contains exceptions for certain types of media.

Limits on Resale of Digital Copies

The first sale doctrine pre-dates the digital era. It assumes that copyrighted materials exist in physical form. People now buy mp3 files instead of CDs, digital movies instead of DVDs, and ebooks instead of books. Digital media files are not distinct, tangible items that can literally change hands after a sale. The process of copying a digital file is simpler than copying a CD or DVD, and much simpler than copying a book.

The U.S. Copyright Office has concluded that the first sale doctrine does not apply to the unauthorized resale of copyrighted materials in digital form. In a report issued in 2001, it stated that transmitting a digital file from one user to another creates a new copy of the copyrighted work.

Several court decisions have adopted the Copyright Office’s conclusions. For example, in 2018, the Second Circuit Court of Appeals affirmed a New York federal court’s ruling against a company that allowed consumers to sell digital music files that they had purchased through the iTunes store.

Sale vs. Licensing of Work

For the first sale doctrine to apply, the person attempting to sell their copy of a copyrighted work must actually own that copy. A person who buys a book from a bookstore owns the paper on which the book is printed. They can sell that item to someone else. The same can be said for a CD purchased at a music store. That said, not all exchanges of money for copyrighted materials constitute a “sale.”

Many software companies include end-user license agreements (EULAs), stating that the consumer is only purchasing a license to use their software. If the EULA states that the license is not transferable, the consumer cannot legally sell or otherwise convey the software to anyone else.

Link to the rest at BonaLaw

Mark Meadows sued by book publisher over false election claims

by

From The Hill:

The publisher of Mark Meadows’s book is suing the former White House chief of staff, arguing in court filings Friday morning that he violated an agreement with All Seasons Press by including false statements about former President Trump’s claims surrounding the 2020 election.

“Meadows, the former White House Chief of Staff under President Donald J. Trump, promised and represented that ‘all statements contained in the Work are true and based on reasonable research for accuracy’ and that he ‘has not made any misrepresentations to the Publisher about the Work,’” the publishing company writes in its suit, filed in court in Sarasota County, Fla.

“Meadows breached those warranties causing ASP to suffer significant monetary and reputational damage when the media widely reported … that he warned President Trump against claiming that election fraud corrupted the electoral votes cast in the 2020 Presidential Election and that neither he nor former President Trump actually believed such claims.”

The suit comes after ABC News reported that Meadows received immunity to testify before a grand jury convened to hear evidence from special counsel Jack Smith, reportedly contradicting statements he made in his book. 

. . . .

Meadows’s book, “The Chief’s Chief,” was published in 2021 and spends ample time reflecting on the election.

“Meadows’ reported statements to the Special Prosecutor and/or his staff and his reported grand jury testimony squarely contradict the statements in his Book, one central theme of which is that President Trump was the true winner of the 2020 Presidential Election and that election was ‘stolen’ and ‘rigged’ with the help from ‘allies in the liberal media,’ who ignored ‘actual evidence of fraud,’” the company writes in the filing.

According to Meadows’s testimony, as reported by ABC News, Trump was being “dishonest” with voters when he claimed victory on election night. ABC reported that Meadows admitted Trump lost the election when questioned by prosecutors.

Link to the rest at The Hill

The business of mining literary estates is booming

by

From The Economist:

Lord byron intended to publish his memoir, but his literary executor burned it instead. T.S. Eliot is thought never to have wanted songs made about his cats. Terry Pratchett, a British fantasy writer, had imagination: his former assistant honoured Pratchett’s wish to have a steamroller crush a hard drive containing the author’s unfinished stories.

Roald Dahl, author of dark, delightful children’s tales, might have done something equally drastic had he known scriptwriters would conjure up a teenaged Willy Wonka. Dahl, who died in 1990, detested the first film made of his “Charlie and the Chocolate Factory”. It is hard to imagine him cheering its prequel, “Wonka”, which will be released in December. In it, young Willy, played by Timothée Chalamet, faces off against a chocolate cartel.

Authors have long tried to control what happens to their works after they die—and mostly failed. Yet Dahl’s legacy represents a new twist in the tale. Huge sums paid in 2021 for his estate by Netflix, a streaming service, have helped spur a gold rush to mine dead authors’ estates. Once it was intrusion by snoopy biographers that worried writers most. Today it is the temptation among heirs to monetise every shred of creative output.

Voracious hunger for new content from streaming services and film studios is driving this new interest in old books. Shrewd video producers, faced with bidding wars for hot new titles, have turned to more affordable options: novels written decades ago. The rights for these “backlist” works generally belong to an estate for 70 years after an author’s death. After that, the work enters the public domain, and estates can no longer profit from or control it. Consider “Winnie the Pooh: Blood and Honey”, a film released this year, in which Pooh and Piglet, A.A. Milne’s loveable, nearly 100-year-old characters, become bloodthirsty killers.

Copyright-protected works are ripe for technological transformation. They can be milked in various ways, including selling the rights for translations into new languages, permitting “continuation novels” penned by living authors and making streaming series. For example, “The Queen’s Gambit”, which is best known as a show on Netflix, was actually based on a novel published in 1983.

Traditionally, managing the intellectual property of an author’s estate was a low-key affair left to grand-nephews and harried former agents. The modern era of more actively exploiting rights began 15 years ago, when star agents in America and Britain started vying for the estates of Ian Fleming, Evelyn Waugh and Vladimir Nabokov. The heirs of Agatha Christie and Dahl, meanwhile, set up companies to oversee growing empires.

When Dahl’s grandson, who ran the Roald Dahl Story Company, sold the writer’s catalogue to Netflix for an estimated $700m, the sleepy literary world woke up to the business potential of older works. (This was in addition to a separate deal from one already struck with Warner Bros, which gave the studio the right to make “Wonka”.) A reimagining of “The Wonderful Story of Henry Sugar” and three other Dahl tales by Wes Anderson, a film-maker, arrived on Netflix in September; two series on the Oompa-Loompas and other Dahl characters are planned with Taika Waititi, a director from New Zealand.

Even without the blockbuster treatment Dahl’s work has got, estates can prove profitable, as old print titles are packaged into new formats. Audiobooks are booming; in America sales have risen by at least 10% annually in recent years, with a spike of 25% in 2021, according to the Audio Publishers Association, an industry group. Major book publishers recently announced a deal with Spotify, a streaming service, to offer audiobooks as a subscription. New formats could help authors’ estates generate new royalties.

The big money, though, is in screen adaptations. The global market for video streaming is expected to exceed $400bn by 2030. The year 2020 was the first time more books were turned into tv series than into films, according to Publishers Marketplace. Stories about spies, detectives and children’s characters are natural subjects for shows. They are “golden brands”, explains Nicola Solomon, boss of the Society of Authors, which acts as trustee for 58 of its members’ estates. “For better or worse, we live in a brand-driven world, and people buy brands that are familiar,” she adds.

The bonanza has spawned a powerful new player. In 2019 a consortium of lawyers, agents and television promoters called International Literary Properties (ilp) set up shop in New York and London to do this at scale. “There are so many wonderful, unappreciated novels from the past,” says Hilary Strong, the former chief executive of Agatha Christie Limited, who co-founded ilp. “What we are trying to do is open them up and bring them back for new generations to understand.”

Backed by private equity, ilp has acquired part or all of about 50 literary estates. Its portfolio now includes works of classic writers, such as Langston Hughes, Somerset Maugham and Georges Simenon. In 2021 the company sold rights for a drama series featuring Simenon’s Parisian police inspector, Jules Maigret. With 84 Maigret novels to choose from, it does not take a detective to deduce that it could be a long-running show.

Some heirs are flummoxed by the new corporate interest in their intellectual property. In effect, literary estates are a new kind of asset class. Managed well, they can provide steady income. And like tech startups, some hold “the potential for a sudden explosion”, says Ms Solomon.

But many heirs and executors are just glad to find new audiences for their forebears’ work. Take the novels of Octavia Butler, an African-American science-fiction pioneer, who died in 2006 after attracting many awards but little commercial success. Her estate, led by her former agent, authorised new editions, which in turn propelled the late author on to bestseller lists. New graphic novels have been published, and two tv shows are in development, including “Wild Seed”, starring Viola Davis, an American actress.

Grave problems

Yet resuscitating old stories comes with risks and thorny questions. Is it permissible to dress old stories in new packaging to appeal to contemporary tastes? And what should executors do about racist or sexist depictions? Attempts to “update” texts can easily blow up. Just think of the cries of “censorship” when the estate of Dr Seuss decided to withdraw certain titles in 2021 because of the author’s racial stereotyping. Most controversial are decisions to sanitise old books of offensive words, as editors at Penguin Random House did earlier this year with a string of Dahl’s children’s titles, which were reviewed by “sensitivity readers”.

pen, an advocacy group for authors, wrote in a scathing recent report that “part of the usefulness of reading older books is in critically evaluating their attitudes and arguments. Changing the text of classic books after their original publication is, in a sense, revising history.” Michael Katakis, a writer who managed the Ernest Hemingway estate for more than 20 years, agrees. “The words from the past are signposts of where we’ve been and where we’ve travelled from, and it is how we determine if we have improved or if we haven’t moved very far at all.”

Link to the rest at The Economist

Court Offers First Glimpse Into Whether AI Machine Learning Is Copyright Infringement Or Fair Use

by

From Mondaq:

As we previously blogged, multiple generative AI platforms are facing lawsuits alleging that the unauthorized use of copyright-protected material to train artificial intelligence constitutes copyright infringement.  A key defense in those cases is fair use.  Specifically, AI platforms contend that they don’t need a license to use copyright-protected content—whether scraped from the Internet or obtained from a pirate trove of books—for the purpose of developing and improving large language models (LLMs) under the theory that such use is transformative and fair use under the Copyright Act.  Whether fair use prevails in this battle is one of the biggest copyright questions of the day.

While many of the generative AI actions are pending in the U.S. District Court for the Northern District of California, a federal court in Delaware recently had the opportunity to opine on the merits of this important fair use question.  In Thomson Reuters v. Ross Intelligence, 2023 WL 6210901 (D. Del. Sept. 25, 2023), the owner of Westlaw (Thomson Reuters) claims, among other things, that an AI startup (Ross Intelligence) infringed Thomson Reuters’ copyright by using Westlaw’s headnotes to train Ross’s legal AI model.  The parties cross moved for summary judgment on various grounds, including on Ross’s fair use defense.  

Though the decision explores multiple interesting questions of copyright law, including the copyrightability of Westlaw headnotes (maybe) and whether the Copyright Act preempts Thomson Reuters’ claim for tortious interference (yes), its analysis of Ross’s fair use defense—in particular, the court’s assessment of whether Ross’s alleged use of Westlaw’s headnotes (assuming they are protected by copyright) is “transformative—is where the court appears to have broken new ground.

The court begins its fair use analysis by discussing two cases from the Ninth Circuit that deal with so-called “intermediate copying.”  In Sega Enterprises v. Accolade, 977 F.2d 1510 (9th Cir. 1992), the court held that it was fair use for a company to copy Sega’s copyright-protected console code for the purpose of learning the software’s functional components and making new games that were compatible with Sega’s console.  Similarly, in Sony Computer Entertainment v. Connectix, 203 F.3d 596 (9th Cir. 2000), the Ninth Circuit held it was fair use for a company to create a copy of Sony’s software in order to create a new gaming platform that was compatible with Sony’s games.  The Thomson Reuters court noted that the Supreme Court “has cited these intermediate copying cases favorably, particularly in the context of ‘adapting the doctrine of fair use in light of rapid technological change.’”  2023 WL 6210901, at *8 (quoting Google v. Oracle, 141 S. Ct. 1183, 1198 (2021)) (cleaned up).

Thomson Reuters attempted to distinguish the intermediate-copying cases by arguing that, unlike the companies in Sega and Sony that merely sought to “study functionality or create compatibility,” Ross sought to train its AI with Westlaw’s “creative decisions” specifically to “replicate them” in the AI’s output.  Ross, on the other hand, contended that “its AI studied the headnotes and opinion quotes only to analyze language patterns, not to replicate Westlaw’s expression,” and thus was lawful “intermediate copying.”  The court held that whether Ross’s use was transformative would turn on the “precise nature of Ross’s actions.”  

Here’s the key text:

It was transformative intermediate copying if Ross’s AI only studied the language patterns in the headnotes to learn how to produce judicial opinion quotes.  But if Thomson Reuters is right that Ross used the untransformed text of headnotes to get its AI to replicate and reproduce the creative drafting done by Westlaw’s attorney-editors, then Ross’s comparisons to cases like Sega and Sony are not apt.

. . . .

To the extent that LLMs are ingesting copyright-protected material solely to understand language patterns and not to replicate their creative expression (which may very well be the case for many LLMs), this opinion suggests that using such material to train AI is transformative.  But if the material is being used to train AI to output the “creative drafting” discerned from the original, then the use is likely not transformative.  Thus, as the Thomson Reuters court observes, the fair use question in these cases may turn on the exact nature of the AI training process.

Link to the rest at Mondaq

PG apologizes if the rest of this post is boring for anyone who isn’t a law geek, but the following may help clarify PG’s interest.

The OP intrigued PG because he got into a bit of trouble a long time ago when he suggested, in an article he wrote for The Journal of the American Bar Association, that West Publishing didn’t have a legitimate copyright to the books it published that consisted of the opinions of a large number of courts across the country.

West was a venerable professional publisher, founded in 1872 to print law books for the use of attorneys and judges.

West evolved to publish the statutes for the United States government and every state.

West also published the court opinions written by judges in the federal court system and all states.

Because the statutes and case opinions are public documents, anyone who desires to publish them is free to do so.

West contended that the improvements it made in these public documents it published were protected by copyright laws.

West built up a large business based upon the changes it made to improve the quality of the federal and state court opinions. These included:

  1. West employees proofread the opinion and corrected grammatical errors.
  2. West employees checked all of the statutory and case citations included in the opinion and corrected them to reflect generally used conventions of legal citations. (Judges, like any other human beings, sometimes make mistakes when they write their opinions. The conventions used in creating such citations can make correctly creating the citations to statutes and cases an error-prone activity.)
  3. For example, “Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011),” is West’s citation for the court opinion in the case of Stephen Stearns v. Ticketmaster Corp, et al (et al is an abbreviation of the Latin term “et alia,” which means “and others.”) that was published in volume 655 of the Federal Reporter, Third Series (identified by the abbreviation “F.3d”), beginning on page 1013. The citation also shows the decision was issued by the United States Court of Appeals for the Ninth Circuit (abbreviated as 9th Cir.), in 2011.
  4. It was and is considered bad form for an attorney to cite a case other than in the form prescribed by “Blue Book Citations” in legal documents submitted to a court. West citations were the basis for Blue Book Citations. As mentioned earlier, most judges were happy to have West correct their citation errors. That service helped a judge avoid snide remarks from other judges in the judicial cafeteria.

West also categorized cases according to a West-created “Key Number System.” This is a classification system that organizes cases by topic, allowing legal researchers to quickly find cases related to a particular issue. This system was created in the 19th century, starting with seven categories: persons, property, contracts, torts, crime, remedies, and government.

The Key Number System could be quite helpful before the digitization of cases and statutes.

In 1967, the Ohio State Bar Association entered into a $7,000 agreement with Data Corporation of Beavercreek, Ohio, to create a full-text, interactive research service of the Ohio statutes.

In 1973, Mead Data Central, the successor of Data Corporation, introduced LEXIS, an online computer research service that consisted of the full text of Ohio and New York codes and cases, the U.S.
code, and some federal case law. The LEXIS search engine was clunky by today’s standards, but it allowed attorneys to search the statutes and case opinions much faster and at a more granular level than could be done with West’s printed books.

West and LEXIS (Mead Data Central)

IBM, Microsoft and Big Tech Antitrust Folly

by

From The Wall Street Journal:

The continuing trial of Google, along with lawsuits against Amazon and Meta, have brought antitrust back into the public eye. These suits recall the 1969 case against IBM and the 1998 case against Microsoft, the great antitrust battles of the latter half of the 20th century.

Supporters of aggressive antitrust enforcement think that only antitrust suits prevented IBM from commandeering the personal-computer market and Microsoft from taking over the internet. But that’s an urban legend.

Historical evidence rebuts the claim that the antitrust suit forced IBM to stop bundling application software with its machines, jump-starting the modern software industry. As early as 1966, IBM had already made the decision to unbundle independent of the suit because it could no longer provide the variety of software that users demanded.

In the 1960s, IBM led the mainframe computer industry by offering a product that consumers valued for its technical quality and complementary products, coupled with IBM’s customer service. Does that mean IBM would have swallowed the personal-computer industry if the government hadn’t stopped it?

No. IBM was aggressively developing its PC while the trial dragged on. To create it, IBM had given a unit in Boca Raton, Fla., the autonomy of a startup. The company introduced its first PC in August 1981. The machines were selling briskly by the time the Justice Department dropped its antitrust suit in January 1982.

Yet the company’s mainframe computer business proved a liability in the new market. Existing divisions fought for control of the PC, and executives quickly eliminated the autonomy of the PC unit, assigning the new product to legacy divisions. A legion of agile “clone” makers quickly wrested the market away from IBM forever.

IBM had considered the PC a minor complement to mainframe computers, but the PC ended up killing off the traditional mainframe. The once-dominant company lost $8 billion in the second quarter of 1993.

Microsoft’s story is similar. The company also created a unit with considerable autonomy to create its browser, Internet Explorer. The company pressured its operating-system customers to adopt Explorer and engaged in other contracting practices that would be subjected to sanctions in the final antitrust judgment. By 2001, Internet Explorer had vanquished Netscape Navigator in the “browser war.”

Yet far from exploiting the internet, Microsoft managed its browser as a complement to its operating system, the company’s cash cow. Careful historical scholarship suggests that the company did so not because of the antitrust suit but because of many of the same internal forces that hindered IBM’s PC.

Microsoft disbanded its autonomous browser unit and assigned the new technology to its legacy divisions. The effort to dethrone Navigator had always been motivated by the fear that a browser could replace Microsoft’s operating system, and an independent Internet Explorer unit would threaten the operating-system business in the same way Netscape had.

Microsoft had a brighter future than IBM and continued to dominate the browser market for a few years, but Google, a company not burdened with existing assets and capabilities, would exploit the internet more fully.

If there was an antitrust case from the late 20th century that might have had dramatic consequences for technology, it was the long-running suit against AT&T, which resulted in the breakup of the telephone giant in 1982. Unlike today’s targets, however, AT&T was a regulated monopoly. Its breakup was an act of deregulation in the name of antitrust.

Link to the rest at The Wall Street Journal (Sorry if you encounter a paywall)

As the OP mentioned, in 1969, the government launched an antitrust suit against IBM. Despite a huge court tussle, the suit was finally dismissed by the Reagan administration in 1982.

We don’t know what would have happened had the ’69 antitrust suit had not been filed and consumed a huge amount of time of many smart people at IBM, but by 1982, Microsoft was on a roll with PC-DOS and the momentum toward the personal computer was well underway.

Clones of PC-DOS lead by MS-DOS from Microsoft and clones of IBM’s PC personal computers proliferated like rabbits. Compaq, founded in 1982, became the first major producer of PC clones by 1984 and sold larger businesses very effectively.

Radio Shack’s Tandy PC clones proliferated through about 8,000 store locations in urban and small-town locations across the US, UK, Canada and Australia in the 1990’s, aggressively driving the cost of personal computers down so more families and small businesses could afford them.

Do Amazon and Google lock out competition?

by

From The Economist:

Anti-monopoly cases have been known to reshape corporate America. In 1984 AT&T’s telephone network was found to have excluded competing firms. The company was controversially broken up in a move that ultimately led to a boom in innovation among its rivals. Meanwhile, a case against Microsoft in 1998 may have kept the door open for Google’s subsequent rise. Microsoft had bundled together its Internet Explorer browser with its Windows operating system, and made other browsers more difficult to install. Some business historians think the case, by stopping this practice, made life easier for new browsers. It may also have distracted Microsoft from developing its own search engine.

Today, two big cases could redefine the limits of monopolies in the internet age. On September 12th America’s Department of Justice (DOJ) began its court battle against Google over the firm’s deals to obtain default status on phones and browsers. On September 26th the Federal Trade Commission (FTC), chaired by Lina Khan, sued Amazon for allegedly penalising third-party sellers that offered lower prices on other sites, among other harmful practices. In both cases, the government thinks the tech giants are so dominant that their attempts to preserve market power are suspect. This raises a question: what counts as anticompetitive?

Historically, practices that might be ignored for a startup have not been tolerated in a dominant firm. John Rockefeller’s Standard Oil was broken up in 1911, in part for striking deals with railroads that made it impossible for other oil firms to compete. Antitrust historians still debate the extent to which these deals were abusive—after all, Standard Oil benefited from economies of scale and bulk orders commonly receive discounts. But its size and bargaining power led to scrutiny. Before the firm’s break-up, it had cornered 90% of oil refineries. Microsoft’s bundling was found to be problematic because it had over 90% of the market for operating systems on personal computers. In both cases, the courts believed that dominant firms had made life too difficult for newcomers.

Today’s cases have echoes of those past. Start with Google. It pays more than $10bn to Apple and other companies to be the default search engine on their platforms. The DOJ argues this creates a barrier to entry for competitors. Because having lots of data lets a search engine show users more tailored advertisements, a dominant search engine has a larger expected ad revenue from an extra user. The twist is that if a smaller competitor happened to grow, it would be willing to pay more for additional users, thus bidding up how much Google would have to pay—and explaining why Google may be willing to pay large sums to prevent rivals from gaining a foothold. Yet it is easier to use a different search engine on an iPhone than it was to download a new browser on Windows. And Microsoft’s dominance in operating systems seems to have been greater than Google’s is in search. So the case is not airtight.

The case against Amazon is stronger. Luigi Zingales of the University of Chicago thinks that if the alleged facts are found to hold, the FTC should win. Sellers complain that Amazon penalises them for offering cheaper prices on other platforms by downranking products or removing them from the “Buy Box”, which allows instant purchases. Antitrust scholars call practices that force sellers to behave similarly across platforms “most-favoured-nation” (MFN) treatment, and they have come under growing scrutiny. In the past Amazon has had explicit mfn contracts with sellers.

The problem, according to the FTC, is that Amazon has raised the cost of doing business on its platform. It charges sellers a fee for selling, one for using its logistics services and more for advertising. Sellers say that it is next to impossible to qualify for the Buy Box without paying for logistics, and that buying ads has become a must because search results are increasingly cluttered with them. Although the exact figures are redacted, regulators allege that Amazon now collects a larger share of sales on its marketplace as fees than it did a decade ago. In a competitive market, Amazon’s cost hikes and restrictions on pricing more cheaply elsewhere would cause sellers to leave the platform. And in fact, some large retailers, like Nike, have done so. But Amazon’s market share in e-commerce has grown (it currently stands at 40-50% in America), suggesting most sellers feel that the platform is too important to quit.

Amazon denies all this. As with Google, there is a chance that the case becomes a debate about how dominant the firm really is (Amazon argues that it is dwarfed by the multitude of brick-and-mortar stores). American retail is efficient and broadly consumer-friendly—hardly the sign of an industry in need of repair. Amazon also says that if a seller can offer a lower price on another platform, it should do so on its site, too. One can imagine a seller thinking that Amazon Prime customers are rich and price insensitive, and therefore charging more on Amazon than other platforms.

Link to the rest at The Economist

PG says to be prepared for a long and very drawn-out case.

UK: Society of Authors Questions Spotify’s Publisher Deals

by

From Publishing Perspectives:

In a statement provided to Publishing Perspectives for today’s report (October 11), the 12,400-member Society of Authors in London is expressing “deep concern” in learning from press reports last week that ‘all major book publishers’ have agreed new limited streaming deals with Spotify.’”

As our readership knows, Spotify CEO Daniel Ek led an invitational press conference on October 3, announcing the opening in Australia and the United Kingdom of its premium audiobook offer. The move is said by the company to make available at least 150,000 audiobooks as part of Spotify Premium subscriptions, subscribers receiving 15 hours of listening time monthly.

As Anne Steele pointed out in her article for the Wall Street Journal, Spotify says it has made agreements with the Big Five publishing houses and many independent publishers.

“As far as we are aware,” the society’s leadership writes, “no authors or agents have been approached for permission for such licenses, and authors have not been consulted on license or payment terms.”

“Publishing contracts differ but in our view, most licenses given to publishers for licensing of audio do not include streaming. In fact, it is likely that streaming was not a use that had been invented when many such contracts were entered into.”

. . . .

“We know the devastating effect that music streaming has had on artists’ incomes,” the Society’s statement reads, “and the impact of streaming and subscription video on demand platforms on screenwriter incomes and their working conditions. We have long been concerned about streaming models for books.

“The streaming of audiobooks competes directly with sales and is even more damaging than music streaming because books are typically only read once, while music is often streamed many times.”

. . . .

The organization references Sian Bayley’s October 3 announcement story at The Bookseller in making its point.

In that article, as the Society of Authors points out, Bayley wrote, “Book publishers have long expressed reservations about subscription deals for digital content, but Spotify has offered variations of the typical pooled income arrangement, with a more limited offer that publishers believe will assure agents and authors that their income streams will not be undermined.”

The Society of Authors statement goes on even to allude to what might be an appearance of collusion, writing, “Authors and agents have simply not been contacted about such offers, let alone reassured. The fact that all major publishers have entered such arrangements at the same time seems to raise questions that perhaps should be reported to the competition authorities.”

The Society of Authors then concludes with a concise list of what it sees as its requirements in this development. It writes, “We demand that all publishers:

  • “Inform their authors and agents with full transparency about the deals they have negotiated, to seek permission in full respect of their right not to give permission and to remove their books from the Spotify catalogue.
  • “Negotiate an appropriate share of the receipts on a clear and equitable payment model, which should equate to no less than the amount that would be received from a sale of the same audiobook.
  • “Ensure that with all licenses that Spotify applies frictions, as with e-lending, such as time limited loans and guarantees of payment, whatever proportion of the book is read.
  • “Ensure that licenses are time limited and should not allow sublicensing or use on other platforms.
  • “Indemnify authors if the unauthorized use conflicts with existing film or other such deals, or if it leads to claims of copyright infringement by rights holders of quotations or images included in that.
  • “Ensure that licenses include safeguards to prevent pirating of authors’ and narrators’ works and voices including for use in AI systems.”

The controversy here is based in serious considerations about how authors, their literary agents, publishers, and distributors handle the agreements behind the kind of offer Spotify and others may make to consumers for streaming access to copyrighted content.

Link to the rest at Publishing Perspectives

PG doesn’t know more about the details of the streaming agreements signed by publishers or how publishers think they are entitled to grant licenses to Spotify for streaming or how publishers intend to compensate authors and audiobook narrators for the rights they are purporting to grant to Spotify.

PG speculates that publishers have the idea that there is no real difference between the sale of audiobooks under existing publishing agreements with authors and narrators and what they’re planning to do with Spotify.

Will revenues received by the publisher from Spotify be broken down by author and book title? What happens when a Spotify user streams 20% of an audiobook? In a more conventional audiobook sales environment, when a reader acquires an audiobook, the reader pays a lump sum and the author’s royalties are calculated and paid as a percentage of that sum.

A typical publishing contract permits the author to conduct an audit of the publisher’s sales records for the books the publisher has under contract. Typically, the author is entitled to perform the audit in person or designate an individual, individuals or an accounting firm (usually through its auditing department) to perform the audit on behalf of the author.

PG has always believed that the audit rights in a publishing contract include not only the sales records of the publisher with respect to the author’s books but all of the contracts the publishers have made with book wholesalers, bookstores and bookstore chains, etc.

Audiobooks have their own licensing issues that are different from those for printed books and ebooks.

The right to create and sell an audiobook is a derivative right owned by the author of a book and can be licensed by the author separately from the license to “sell” an ebook or a printed book.

An audiobook requires a narrator. Absent a contract stating differently, the narrator has exclusive rights to the audio narration he/she has performed.

Someone needs to create a recording of the narrator. Whoever creates the recording – turning on an audio recorder or overseeing the recording process as it takes place to make certain the recording is audible and meets commercial standards for the audiobook industry. The creator of the recording is the owner of that recording, absent a written contract granting the author or publisher the ownership rights to the recording, including the right to create duplicate recordings that can be sold/licensed to audiobook purchasers.

If music or bits of music are added to the audio, the composer and performers of the music are the owners of their own creation and performance rights, etc. etc.

Why a Little-Known Copyright Case May Shape the Future of AI

by

PG thought he had blogged about this case before but couldn’t find any evidence of doing so when he searched TPV.

From Copywrite Lately:

While a flurry of AI copyright lawsuits from prominent authors and artists grab headlines, another case has quietly taken something more important: a head start.

Even die-hard copyright geeks would be forgiven for overlooking a lawsuit first filed over three years ago by information services company Thomson Reuters against AI start-up Ross Intelligence. That’s because the case involves Westlaw, a legal research tool that’s about as sexy as the underwear section in a 1940s Sears catalog. I say this with peace and love as a longtime Westlaw user, but let’s be honest—headnotes and key numbers are simply no match for the likes of Sarah Silverman and John Grisham.

It’s time to start paying attention though, because a Delaware District Court judge just ordered this low-profile AI case to trial, largely denying the parties’ motions for summary judgment on copyright infringement and fair use (read the opinion here). This means that a jury could weigh in on some of the thorniest copyright questions involving artificial intelligence as early as May 2024.

Thomson Reuters v. Ross Intelligence

The issues at play in Thomson Reuters v. Ross Intelligence largely mirror those I’ve discussed in connection with recent class action copyright lawsuits filed against the creators of Stable Diffusion, ChatGPT and other generative AI tools. In a nutshell, plaintiffs allege that Ross hired a third-party contractor to unlawfully copy Westlaw content—including its proprietary Key Number System and case headnotes—in order to train Ross’s own AI-driven natural language legal search engine.

Unlike the creative works ingested by AI tools in the recent lawsuits filed against OpenAI and Stability AI, the copyrights in Westlaw are more limited. Thomson Reuters doesn’t own any of the underlying judicial opinions that make up its database. It does, however, claim copyright in its keynote organization system as well as its original case summaries and headnote descriptions. These “editorial enhancements” are drafted by the company’s attorney-editors in what I’d imagine is the most thankless job this side of working for Louis Litt.

But according to Ross, it wasn’t interested in the Westlaw key numbers or headnotes. Instead, the goal of its system was for users to ask questions and for the search engine to spit out quotations directly from judicial opinions—no commentary necessary. In other words, Ross contends that the output of its tool won’t infringe any original copyrighted material owned by Thomson Reuters, notwithstanding the so-called “intermediate copies” of West’s key numbers and headnotes that may have been made to initially train Ross’s dataset. These copies, Ross claims, are fair use.

In January, Thomson Reuters moved for summary judgment on its copyright infringement claim, and both sides moved for summary judgment on Ross’s fair use defense.

Judge Stephanos Bibas ultimately declined to determine the scope of protection to be given the Key Number System or to decide whether Westlaw’s headnotes added sufficient non-trivial material to the underlying judicial opinions to meet copyright’s originality threshold. While the court did find that Ross committed an act of “actual copying” by scraping and reproducing headnotes during the AI training process, whether that copying constitutes infringement will depend on whether or not the headnotes are protected expression. That issue will be decided by a jury.

The court likewise ruled that a jury needs to decide whether there are substantial similarities in protectable expression (as opposed to unprotectable material) between Westlaw’s headnotes and summaries and thousands of “bulk memos” created by Ross’s third-party contractor to train Ross’s AI tool.

Fair Use

The court found disputed issues of fact on all four fair use factors, meaning that a jury will be tasked with answering most of the questions underlying this key defense.

The Purpose and Character of the Use

Interestingly, the court’s first factor analysis largely focused, not on the commercial nature of Ross’s competing tool, but on disputes over whether Ross’s copying was transformative—an inquiry that some observers (but, ahem, not this one) thought would take a backseat following the Supreme Court’s recent Warhol decision.

Judge Bibas noted that whether Ross’s so-called “intermediate copying” (copies made during the input stage of the training process) was transformative would depend on the precise nature of Ross’s actions: “It was transformative intermediate copying if Ross’s AI only studied the language patterns in the headnotes to learn how to produce judicial opinion quotes.” If, on the other hand, “Thomson Reuters is right that Ross used the untransformed text of headnotes to get its AI to replicate and reproduce the creative drafting done by Westlaw’s attorney-editors,” then the copying would weigh against a transformative fair use. This raised a material question of fact that a jury needs to decide.

The Nature of the Copyrighted Work

While declining to definitively rule that Westlaw’s headnotes were too unoriginal to satisfy the second fair use factor, the judge certainly signaled that he didn’t think plaintiffs’ contributions were at the “core of intended copyright protection,” and specifically distinguished them from “traditionally protected materials, such as literary works or visual art.”

The Amount and Substantiality of the Copying

Because it was unclear how much of Ross’s copying was of protectable expression, the court found that a jury would need to decide the third fair use factor too. Interestingly, the court also noted that copying could be deemed insubstantial if Ross’s AI actually works in the way the company claimed—i.e., if the tool outputs only the unprotectable judicial opinion, not any original expression. This suggests that the presence or absence of substantial similarity at the output stage may influence the court’s input stage rulings as well.

The Effect of the Use Upon the Market for the Work

Finally, on the fourth fair use factor, the court declined to decide whether Ross’s use of Westlaw’s material had a “meaningful or significant effect” on the value of the original or its potential market. Focusing not merely on economic effects, but “public benefits” of the copying, the court concluded that a jury would be best situated to answer these questions:

Link to the rest at Copywrite Lately

The OP brought to mind a case decided a very long time ago (BI – Before Internet) that caused PG to write an article for a legal publication. PG’s article was titled “Who Owns the Law?”

One problem with BI writings is that PG has not been able to locate an online copy of “Who Owns the Law?”

Basically, the copyright issue he wrote about BI was more than a little similar to the dispute described in the OP.

In PG’s ancient article, he wrote about West Publishing, now owned by the same Thomson Reuters mentioned in the OP.

Way back when, West was a closely-held and secretive company that claimed broad copyright protection for the volume and page numbers universally used by lawyers and judges to identify state and federal court opinions West published in printed form.

Here’s an example of a case citation:

Stearns v. Ticketmaster Corp., 655 F. 3d 1013 (9th Cir. 2011)

West assigned the 655 F. 3d 1013 portion of the citation. (Translated, it means the volume (655), reporter (F. 3d, which is an abbreviation for Federal Reporter, Third Series) and page number in volume 655, (1013) where the printed case may be found.

(The Federal Reporter series of books is reserved for decisions from the various United States Court of Appeals, the second-highest courts in the United States. 9th Cir means the decision was handed down by the 9th Circuit Court of Appeals. There are twelve regional circuits that cover the United States. The 9th Circuit is geographically the largest of the circuits by a large margin. It includes the states of California, Arizona, Nevada, Oregon, Washington, Idaho, Montana, Alaska and Hawaii. The 9th Circuit also includes Guam, and the Northern Mariana Islands.) (You’ve taken your first steps toward mastering legal research.)

West’s copyright rationale was that the company fixed the sort of typos and citation errors that were embarrassingly common during those times before spell check. West further added page numbers to the thick books containing lots of court opinions that the company printed.

West also added a short summary describing what the court case was all about. West also had (and may still have) an enormous outline of the law, which it called the West Key Number System. Its attorneys would go through each case and identify portions that correlated with its Key Number System for other court cases.

From an attorney’s point of view, if you found a case opinion similar to the one you were working on that included a West Key Number citation, you could look up that Key Number Citation and, hopefully, find a number of in-state and federal case opinions addressing issues you were working on at the moment. In some instantiations, the West Key Number index would also show you case opinions in other jurisdictions, which might suggest a line of legal argument for the hometown case you were handling.

The Key Number system was rendered obsolete almost immediately when online search systems were published that allowed an attorney to perform Boolean searches against all decisions rendered by courts in the jurisdiction. As extensive as West’s Key Number system was, it was a blunt instrument when computerized legal research came on the scene.

Additionally, West printed the cases in thick books with page numbers. Lawyers used the West page numbers in their court papers to point the judge to the particular portion of the case opinion they wanted the judge to examine.

This made it more likely that the judge would tell his judicial clerk or secretary to get a copy of a case or, at least, copies of the pages the attorney wanted the judge to read that were buried in a 50-page appellate case opinion.

A technology company then called Mead Data Central, later changed to Lexis-Nexis, referring to the Lexis online research system for lawyers and the Nexis news, magazine, academic journal, scientific publications, etc. repository that had the same computer search capabilities as were used by Lexis.

Lexis basically tore apart every West book full of court opinions, state and federal statutes and other similar collections of federal, state and local government publications that lawyers would find helpful.

After removing the materials West had added to the original government documents, Lexis sent the judicial opinions, statutes, etc., offshore, where a zillion less-expensive fingers and thumbs keyboarded them into the Lexis-Nexis computer systems. The computer systems made the electronic copies of the documents searchable.

West sued Mead Data Central, the owner of Lexis, for copyright infringement.

Mead said these were public documents and West couldn’t assert copyright protection for government documents prepared by government employees.

West said that its case citations and page numbers were copyrighted because West had developed a system of organization and included page breaks and page numbers that weren’t in the original court documents. The fact that inserting page numbers required no creativity activity that Congress intended to encourage with copyright laws didn’t bother West. It worked hard to do a good job, and Lexis shouldn’t be able to steal West’s hard work.

The hometown trial judge bought West’s dubious theory and agreed that the data West used- the words included in court opinions and government documents – were in the public domain and unprotected by copyright law. However, the hometown judge held that “the (West) arrangement and pagination of this public material reflects the skill, discretion and effort of the person crafting the arrangement.”

In other words, West didn’t own the words, but, by working hard to insert page numbers and put the cases from Alaska into a different printed book than the cases from California (“by the sweat of the West’s brow”), West was entitled to copyright to volume and page numbers in its case publications.

Since lawyers had used case numbers and page citations in documents submitted to the court to point the judge to the location of the particular court case the lawyers wanted the judge to consider out of a library full of books containing thousands of court cases (Judges don’t respond well to requests from lawyers to “Look it up yourself.”) West had built an effective monopoly on the way judges and lawyers had established so each group could do their jobs.

Mead appealed, and West, realizing that, sooner or later, some appellate court would reverse earlier court decisions, entered into a super-secret settlement agreement that effectively allowed Mead the right to use West case numbers and page numbers.

As mentioned, PG worked for Lexis a long time ago but never persuaded corporate counsel to let him see a copy of the West settlement documents. PG quickly realized that one reason for the secrecy was that the settlement provided West and Lexis with a shared monopoly on case citations.

The brutal truth about earning out

by

From Blake Atwood:

What does earning out mean?

When an author signs a book deal with a publisher, the publisher pays the author in the form of an advance on future sales, aka an advance against royalties, aka an advance.

Let’s be optimistic and say that your literary agent sold your book to a publisher for $100,000. That means that prior to your book having gone on sale, you will have made $85,000.

Don’t forget: your lit agent gets 15 percent of what you earn. That number isn’t always the same for every agent, but 15 percent is typical.

That advance money may be paid in a lump sum, but it may also be doled out to you at specific publishing milestones, e.g., when you sign the contract, when you submit your manuscript to the publisher, and when the book is published.

Let’s assume that it takes approximately two years for those three events to happen. At that rate, you’re paid $28,333 three times over two years. Can you already see how even a sizable advance may not mean an author can quit their day job? We haven’t even accounted for taxes yet!

To “earn out” means that a publisher sells enough of that author’s book so that the publisher recoups their investment in the author.

In other words, the publisher needs to earn $100,000 before the author will ever see more money as a result of sales of their book.

Considering that an author stands to earn maybe $2.50 per hardcover book and less for other editions, at best, the publisher will have to sell 40,000 books for the author to earn out their $100,000 advance.

. . . .

According to Jane Friedman, 70 percent of authors don’t earn out their advance.

In other words, a majority of authors are paid anywhere between $5,000 and $1,000,000 in an advance and their book sales never match how many the publisher thought they could sell.

Fortunately for these authors, they don’t have to pay the advance back to the publisher. The advance is a calculated financial risk that publishers take on their authors.

. . . .

Literary agent Jeff Kleinman shared an apt visual for advances and royalties: Imagine a jar filled with 100,000 marbles. When you sign a book deal, you and your agent are given those 100,000 marbles. The publisher takes the jar back. Once they fill it back up with 100,000 marbles made through book sales, then the jar overflows and the author (and agent) “earn out” and begin to see royalty checks on top of what they’ve already been paid through the advance.

But that only happens 30 percent of the time.

Link to the rest at Blake Atwood

Here’s a link to Blake Atwood’s Author Page on Amazon. If you appreciate Blake’s insights, you might want to check out his books.

PG notes that it’s not unusual for a wide variety of little nibbles that some publishers and agents sometimes take from the author’s royalties. Some publishers and some agents add little fees for this and that, which can add up. Fedex fees charged by the agent to send you your royalty statements and royalty checks are one small example.

PG regards items such as these as part of the cost of doing business as a literary agent and, as such, the costs should be borne by the agency.

(Note: For simplicity’s sake, the following hypothetical does not include book wholesalers that all large and many small publishers use to warehouse and ship orders to individual bookstores and book chains and whoever else wants to purchase them.)

And don’t forget the notorious reserve against returns. For those who are unfamiliar with this process and how it is sometimes manipulated, PG will provide a quick overview.

  1. Publishers are happy to ship bookstores as many printed copies as the store is willing to accept. How can you expect the bookstore to make towering stacks of a book unless they have lots and lots of copies?
  2. All big bookstores and most small bookstores have the right to return any unsold hardcopies of a book the publisher has shipped to them and receive for full credit of the wholesale price the publisher charged them for the books in the first place.
  3. As an example, Bob’s Big Books orders 200,000 printed copies of Lucky Anna’s first book at the wholesale price of of $10 per book. To spare you any arithmetic, this means that Bob is receiving books with a retail price of Two Million Dollars. If Bob sells all 200,000 copies of the books at the suggested retail price, Bob will be depositing Two Million Dollars into his bank account. Of course, out of the two million, he’ll be paying rent, salaries, taxes, etc., but if Bob is a good manager, he’ll make a bunch of money after paying the related expenses involved with selling 200,000 copies of the book.
  4. However, although Bob has plenty of Lucky Anna’s books to stack up in his bookstore, he sells only 25,000 copies of the book.
  5. What is Bob going to do with 175,000 unsold copies?
  6. Under a long-standing system used by traditional publishing in the US, Bob can send his unsold 175,000 copies of Lucky Anna’s book back to the publisher for full credit.
  7. Bob only has to pay for the 25,000 books he sells for a total of $250,000
  8. The publisher then has 175,000 more hardcopy books sitting copies sitting in a warehouse somewhere.

What’s a Publisher to Do?

1. In a reasonable-sounding accounting manner, the Publisher holds a financial reserve against book returns. Lucky Anna is only paid a royalty for amounts the publisher has actually received, less a reserve for returns.

2. Let’s assume hypothetically that a salesperson for a traditional publisher makes a two million dollar sale of a single title written by Lucky Anna to Bob’s Bookstore. The Publisher determined that setting a return against reserves of $1,900,000 would be prudent.

3. Conveniently, even though the Publisher shipped Two Million Dollars worth of one of Lucky Anna’s books to Bob’s Bookstore, after subtracting the $1,900,000, the reserve amount the Publisher set, The Publisher is required to pay Lucky Anna royalties only on the $100,000 remaining after subtracting the $1,900,000, the amount the publisher has set as a reserve against returns.

4. Multiply the calculations for Bob’s Books by 1,000 other bookstores, and you can see the calculations getting very sticky.

5. When Bob’s Bookstore returns $1,750,000 worth of Lucky Anna’s books to the Publisher, theoretically, the Publisher should pay Lucky Anna royalties on the $150,000 Bob sold beyond the amount the Publisher estimated that Bob would return for credit.

6. “However,” the Publisher thinks, “not every bookstore is like Bob’s. Some of the other bookstores will certainly return a higher percentage of books they didn’t sell than Bob did.”

7. Traditional publishing contracts allow the Publisher to withhold “a reasonable reserve for returns.”

8. “Reasonable” is, of course, in the mind of the Publisher.

9. Back to our hypothetical, the Publisher has sold books to a zillion other bookstores. The Publisher reasonably decides that not every bookstore is exactly like Bob’s. Some will sell a higher percentage of the books shipped to them than Bob did and others will sell a much smaller portion of the books shipped to them than Bob did.

10. Theoretically, a smart and highly computerized publisher would have track records on what the rate of returns each bookstore demonstrated for at least a few hundred of the titles the Publisher had released. But that would require the Publisher to spend a lot of money on analysts and statisticians to examine the data and calculate probable return rates for fiction, non-fiction, various genres, etc. And what English major wants to walk into that bramblebush?

11. PG’s understanding is that, to the extent traditional publishers think about the number or percentage of books that will be returned for credit, they either use intuition and listen to the music of the publishing spheres or they just lump almost all books into a big bucket. Rules of thumb prevail to the extent anyone thinks about accurate forecasting.

12. Given this fundamental truth, PG understands that most traditional publishers hold a higher amount of reserves against returns than they expect they will ever need.

13. Whether anyone does an accurate job of recalculating Lucky Anna’s past royalties should reserves for returns be much higher than the number of actual returns would justify, PG doesn’t know. He has his suspicions, however.

14. However, PG is certain that mistakes will be made by the Publisher and its underlings. He suspects that, on occasion, a mistake will be identified and remedied. On other occasions, a mistake will go unidentified or be ignored on the theory that the Lucky Anna will never ask about it.

15. Theoretically, Lucky Anna’s literary agent is double-checking the publisher’s reports for errors and jumping on the publisher when she locates one. Or, more often than not, the agent is out pushing for new business and delegates the arithmetic to the agent’s underpaid staff. This brings in more English majors earning low salaries into the mix.

16. More than a few agents have lots of turnover of back-office staff and not a lot of time to train newbies thoroughly. Or they have close to no back-office staff.

17. In the United States, there is no official set of requirements that must be met before an individual hangs out a shingle saying they’re a literary agent and are accepting new submissions.

18. Someone can get out of prison after serving a ten-year sentence for accounting fraud on one day and open up shop as a literary agent the next day.

19. What could go wrong?

20. PG acknowledges that there are some very hard-working and dedicated employees in at least some publishers and at least some literary agencies. He has no intention of slandering such individuals. However, he will say that for most authors, accurately assessing who will do a good job on their books and who will not is effectively impossible.

George R.R. Martin and other authors sue OpenAI for copyright infringement

by

From The Verge:

More authors sued OpenAI for copyright infringement, joining other writers in pursuing legal action against generative AI companies for using their books to train AI models.

The Authors Guild and 17 well-known authors like Jonathan Franzen, John Grisham, George R.R. Martin, and Jodi Picoult filed the lawsuit in the Southern District of New York. The plaintiffs hope to get the filing classified as a class action.

According to the complaint, OpenAI “copied plaintiffs’ works wholesale, without permission or consideration” and fed the copyrighted materials into large language models.

“These authors’ livelihoods derive from the works they create. But the Defendant’s LLMs endanger fiction writers’ ability to make a living in that the LLMs allow anyone to generate — automatically and freely (or very cheaply) — text that they would otherwise pay writers to create,” the lawsuit said.

The authors added that OpenAI’s LLMs could result in derivative work “that is based on, mimics, summarizes, or paraphrases” their books, which could harm their market.

OpenAI, the complaint said, could have trained GPT on works in the public domain instead of pulling in copyrighted material without paying a licensing fee.

OpenAI said in a statement to The Verge that the company is optimistic it is “having productive conversations with my creators around the world, including the Authors’ Guild, and have been working cooperatively to understand and discuss their concerns about AI.”

“We’re optimistic we will continue to find mutually beneficial ways to work together to help people utilize new technology in a rich content ecosystem,” the company said.

Link to the rest at The Verge

AI Update: Copyright And Other Things

by

From Kristine Kathryn Rusch:

It is probably not a bright idea for me to write this post. I finished it a few days ago, and things changed. You Patreon folk will see it at least a week before the website folk, and by then, I expect everything to be different again. So I’ll be updating it. Those of you hearing it on audio will hear a version recorded in the middle of September. Sorry about that.

Anyway…

At the beginning of September, Can Stock Photo announced it was going out of business. I have used Can Stock Photo since 2009 to source the art you usually find at the top of this blog. When AI art became good enough to pass as regular art, I got a lot more cautious with the downloads for reasons I’ll discuss later in this post.

What I did on Can Stock Photo, and apparently, what I’ll do going forward on a different site, is that I would only use art uploaded before 2020 or so. That way, I knew the art was the work and property of the artist, and not created by some website that more than likely stole someone’s artwork to train the bots.

I can’t improve on Can Stock’s words in their closing notice:

After nearly 20 years in business we have been forced to make this very difficult decision and would like to thank our many thousands of talented contributors and customers for making it possible. The industry has changed significantly over this time, with CanStock launched in 2004 during the early mass adoption of digital cameras, and before ‘social media’ was even a phrase. Today of course everyone has a capable digital camera in their pocket, and the advent of AI means amazing images can be created for free from programs with just a few keywords. Decreased business and increasing costs has made it no longer possible to keep operating, to our great disappointment.

In theory, the licenses that every person who used Can Stock Photo agreed to will remain in effect, although the prudent thing to do is download the license for each piece of art used, particularly on those used in for-profit ventures, like covers and the like.

You should be doing that anyway. When you contract with an artist, it should be a valid contract. When you download art from a commercial site, you should also download the license for that art. It’s easier and better for all around to keep these licenses in two files, one on your computer and one in paper…because, yes, folks, computers die, programs disappear, and sometimes you can’t access something you downloaded ten years ago because the programs have changed so much that the files are no longer compatible.

What remains compatible? Paper.

Why would you want to do this? Well, we’ve been reviewing our licenses at WMG Publishing, some twelve years old, because we’re opening stores with merchandise. Most of our covers come from artists like Philcold, whom we found on Dreamstime, and then worked with directly for projects like my Diving series and Dean’s Seeders series.

Not every license allows for merchandise. Many don’t even allow book covers over a certain number of sales. A lot of writers who are careless about such matters simply make an assumption that they have the right to use these things.

They don’t. And to make matters worse, the licenses and terms change all the time. So if you go on, say, Dreamstime, to look at the license today for something you licensed in 2015, today’s license does not cover the 2015 download. What covers the 2015 download is the 2015 license that existed on the day you downloaded the art.

Yes, some sites save their previous licenses, and some sites don’t. It is up to you to know what, exactly, you licensed.

Then you need to understand it. It isn’t something that’s a one and done. Copyright law shifts all the time. That’s why I took a two-semester class in copyright law at University of Nevada, Las Vegas, in 2021. I know copyright, but I don’tknow all of it. I have a current copy of The Copyright Handbook, and I use it.  I also keep track of various court cases and read a lot of law blogs on copyright.

That does not make me an expert or an intellectual property attorney. I’m not even close. But I am informed because this is my business. It’s my job to stay ahead of everything that’s going on.

And a lot is happening on the copyright front with the copyright of works that incorporate artificial intelligence.

In an important case that came down in August, Judge Beryl A. Howell of the US District Court for the District of Columbia ruled with the copyright office and against a computer scientist who claimed that a two-dimensional piece of art created by his AI program deserved copyright protection.

The essence of Howell’s decision, as explained by Bloomberg Law, is this:

Howell found that “courts have uniformly declined to recognize copyright in works created absent any human involvement,” citing cases where copyright protection was denied for celestial beings, a cultivated garden, and a monkey who took a selfie.

The ruling is the first in the country to examine whether or not AI art is copyrightable. That’s iimportant because, for now, that and the ruling from the copyright office are the guide. As Howell herself noted in the decision, there’s a lot more for the courts to decide. She wrote:

Undoubtedly, we are approaching new frontiers in copyright as artists put AI in their toolbox to be used in the generation of new visual and other artistic works. The increased attenuation of human creativity from the actual generation of the final work will prompt challenging questions regarding how much human input is necessary to qualify the user of an AI system as an“author” of a generated work, the scope of the protection obtained over the resultant image, how to assess the originality of AI-generated works where the systems may have been trained on unknown pre-existing works,how copyright might best be used to incentivize creative works involving AI, and more.

But these issues aren’t settled yet, and might not be settled for years. The way that novel questions of the law get settled in the United States is for them to wend their way through the courts. Sometimes the appellate courts agree, and then the issues are decided.

Occasionally, though, the issues are so complex and the courts are so divided that the issues will make their way to the United States Supreme Court. Unless that happens in an expedited manner, issues like that won’t see a resolution for eight to ten years, maybe more.

Link to the rest at Kristine Kathryn Rusch

Along with Kris, PG recommends The Copyright Handbook, published by Nolo Press as a good acquisition for an author’s library. It’s written with laypersons in mind. Much of the book is not difficult for a non-lawyer to read and digest.

One of the benefits of The Copyright Handbook for an author is issue-spotting. The book may help the author to suspect that she/he/they are on slippery ground or that they’re getting into an area that might end up being slippery.

That said, The Copyright Handbook is not a substitute for a competent attorney for anything but the simplest copyright questions/issues. (PG thinks he’s still competent on most days, but he’s no longer a practicing attorney.)

Peak TV Is Over. A Different Hollywood Is Coming.

by

From The Wall Street Journal:

Fewer new shows in production. A higher bar to get shows renewed. Rich paydays going only to an elite few.

The labor pact writers struck with studios and streamers this week, ending a five-month strike,  will likely accelerate the retrenchment that was already under way in Hollywood for more than a year. It represented a formal end to “peak TV,” a decade that included an explosion of programming for viewers—and job opportunities for talent in Tinseltown.

Writers won major concessions in the deal, including new bonus payouts and higher royalties. Those hard-won victories are especially important given the hard financial realities of the entertainment business. 

A combination of debt-laden mergers, mounting losses in streaming, and the fast-shrinking cable TV bundle, has led to a push on Wall Street for entertainment companies to rein in spending. 

The streamers will have to find a way to pay increased talent costs—from the writers’ settlement, along with an earlier deal with directors and whatever is finalized with actors—without adding to their overall production costs.

That will likely mean that companies will make fewer new shows and cancel even more that are on the bubble. In effect, while many people in Hollywood will get better pay as a result of the deal, the contraction in spending means there will be less work to go around.

“The gusher of spending—I don’t see that marketplace coming back,” said Kevin Reilly, who held top programming positions at Fox, NBC and the streaming service HBO Max, championing shows like “The Office” and “The Shield” along the way. “Everyone will get a better piece of what they’ve created. But if anyone is thinking, ‘Let the good times roll!’—that won’t happen.”

One veteran TV producer predicted the number of scripted shows Hollywood produces could fall by one-third in the next three years. “The contraction in investment in content will by definition restrict the amount of work that’s needed,” the executive said.

For most of a decade, streaming companies were antiestablishment insurgents. Now, streamers, from Netflix to Max to Disney+ to Amazon Prime Video, are the new establishment, and the negotiations with writers reflected that. 

Mike Royce, a writer-producer whose credits include “Everybody Loves Raymond” and the Netflix reboot of “One Day at a Time,” said pushing for better terms was a no-brainer, regardless of whatever programming cuts might be coming, because the old system wasn’t working.

“There is no, ‘You’ll cut off your nose to spite your face,’ ” he said. “Our faces had already been eaten. The world we were in, we had lost so much.”

Writers were upset that streaming didn’t offer the same rewards for success as traditional TV. Under the new deal, they secured bonuses when their streaming shows perform well. They were concerned about a movement toward smaller writing rooms—a cost-cutting measure as streamers continued to bleed money—and won a provision that imposes minimum staffing requirements. 

The studios held the line on key issues. Streamers won’t publicly release viewing data, despite the writers’ demands for transparency, but instead will give data on how shows fared to the Guild confidentially to share with its members in aggregate form. 

Link to the rest at The Wall Street Journal

What is Amazon’s [redacted] ‘Project Nessie’ algorithm?

by

From TechCrunch:

The FTC’s lawsuit against Amazon alleging anti-competitive practices is largely full of things we already knew in a general sense: price hikes, pressure to use Amazon fulfillment and so on. But then we get to a sea of redactions and the mysterious “Project Nessie.” What is it, and could it possibly be as alarming as the unredacted sections make it sound?

The project, product or process is referred to more than a dozen times in the complaint filed by the FTC. And it’s one of those situations where the redactions probably make it sound scarier than it actually is.

Probably.

The first reference comes on page 6:

Amazon has also [redacted] through a [redacted] operation called “Project Nessie.” [redacted] Amazon’s Project Nessie has already extracted over [redacted] from American households.

What is it extracting? Money? Data? Something quantifiable, or else the document would not say “over.” Though I wouldn’t put it past Amazon, the context does not suggest anything physical or private, like video or biometrics.

An Amazon blog post from 2018 spotted by GeekWire describes Nessie as “a system used to monitor spikes or trends on Amazon.com.” Much of the timeline in the lawsuit takes place since then, however, so this definition (such as it is) may no longer be accurate, if it ever was.

Then, on page 11, among discussions of “anti-discounting” tactics, we have:

Amazon has deemed Project Nessie [redacted]: it has generated more than [redacted] in excess profit for Amazon.

In addition to overcharging its customers…

So Nessie does result in profit, but not necessarily directly, even though the last sentence implies it.

A bit of redaction sleuthing: An earlier sentence describes Nessie as a “[redacted] algorithm,” with the blackout text composed of no more than five or six characters (and note, “a” not “an”). Price? Profit? Sales? “Search” would just about fit too.

Last in Nessie references in the lawsuit is the whole section 7, which is four pages dedicated purely to Project Nessie.

Project Nessie is an algorithm [redacted]. Aware that this scheme belies its public claim that it “seek[s] to be Earth’s most customer-centric company,” [redacted].

How distressing. It later refers to “Part VI.A.3, above” in the middle of a redacted paragraph; the section is about how “Amazon maintains its monopolies by suppressing price competition with its first-party anti-discounting algorithm.”

Amazon recognizes the importance of maintaining the perception that it has lower prices than competitors. Behind closed doors, however, Amazon executives actively [redacted].

Instead, [redacted] “prices will go up.”

So what are we to make of this mysterious Project Nessie? It’s a highly secret internal algorithm and associated operation that makes them a lot of money, likely by manipulating price or search.

Are those small, seemingly arbitrary changes to price we see on items — up by a few cents today, down by a few tomorrow — Project Nessie in action, increasing or decreasing the price as needed based on the immense amount of sales data they have access to? This seems the most likely explanation, and the ability to dictate price based on what a customer is likely to pay would be both highly profitable and fit the description of “belying” the customer-first narrative.

Or could it be that search — which we know Amazon heavily manipulates in favor of certain sellers — is also being juiced in some unknown way? It could also be something else entirely, more arcane or technical.

One thing is sure: Amazon doesn’t like talking about it. (I contacted the company for comment and have not heard back yet.)

Will we ever find out what it is? It seems very unlikely that this entire lawsuit and trial will not shed at least a little light on it.

Link to the rest at TechCrunch

Amazon’s latest actions against fake review brokers: 2 fraudsters found guilty of facilitating fake reviews in Amazon’s store

by

From Amazon:

Two individual fake review brokers were found guilty of illegal business operations intended to deceive Amazon customers and harm Amazon selling partners through the facilitation of fake reviews. These verdicts are the result of local law enforcement’s investigation and a criminal referral supported by Amazon.

From March 2021 to March 2022, the China-based defendants used third-party messaging applications to advertise and sell fake reviews to bad actors operating Amazon selling accounts. In exchange for a fee, the defendants left fake positive reviews to boost a bad actor’s product ranking, or fake negative reviews to lower the ranking of a competitor’s product.

Following the criminal referral, local law enforcement conducted an investigation and confirmed the review brokers’ illicit activities in Amazon’s U.S. store. The defendants were officially sentenced to two-and-a-half years in prison and three years of probation in China, marking Amazon’s second criminal judgement of this kind.

“Amazon is pleased to see that these fraudsters are being held accountable for their actions,” said David Montague, Amazon’s vice president of Selling Partner Risk. “The verdicts are a testament to the partnership of local officials in bringing down those who attempt to deceive our customers and harm our selling partners. We look forward to continuing to partner with law enforcement toward the mutual goal of bringing fake review brokers to justice.”

Link to the rest at Amazon

The most impressive part of the OP to PG is that Amazon relied upon local Chinese law enforcement to handle the arrest and whatever trial procedure China uses to punish the fake review scammers.

FTC Sues Amazon for Illegally Maintaining Monopoly Power

by

Today’s Press Release from The Federal Trade Commission:

The Federal Trade Commission and 17 state attorneys general today sued Amazon.com, Inc. alleging that the online retail and technology company is a monopolist that uses a set of interlocking anticompetitive and unfair strategies to illegally maintain its monopoly power. The FTC and its state partners say Amazon’s actions allow it to stop rivals and sellers from lowering prices, degrade quality for shoppers, overcharge sellers, stifle innovation, and prevent rivals from fairly competing against Amazon.  

The complaint alleges that Amazon violates the law not because it is big, but because it engages in a course of exclusionary conduct that prevents current competitors from growing and new competitors from emerging. By stifling competition on price, product selection, quality, and by preventing its current or future rivals from attracting a critical mass of shoppers and sellers, Amazon ensures that no current or future rival can threaten its dominance. Amazon’s far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small and affect over a hundred million shoppers. 

“Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies,” said FTC Chair Lina M. Khan. “The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them. Today’s lawsuit seeks to hold Amazon to account for these monopolistic practices and restore the lost promise of free and fair competition.”

“We’re bringing this case because Amazon’s illegal conduct has stifled competition across a huge swath of the online economy. Amazon is a monopolist that uses its power to hike prices on American shoppers and charge sky-high fees on hundreds of thousands of online sellers,” said John Newman, Deputy Director of the FTC’s Bureau of Competition. “Seldom in the history of U.S. antitrust law has one case had the potential to do so much good for so many people.”

The FTC and states allege Amazon’s anticompetitive conduct occurs in two markets—the online superstore market that serves shoppers and the market for online marketplace services purchased by sellers. These tactics include:

  • Anti-discounting measures that punish sellers and deter other online retailers from offering prices lower than Amazon, keeping prices higher for products across the internet. For example, if Amazon discovers that a seller is offering lower-priced goods elsewhere, Amazon can bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.
  • Conditioning sellers’ ability to obtain “Prime” eligibility for their products—a virtual necessity for doing business on Amazon—on sellers using Amazon’s costly fulfillment service, which has made it substantially more expensive for sellers on Amazon to also offer their products on other platforms. This unlawful coercion has in turn limited competitors’ ability to effectively compete against Amazon.

Amazon’s illegal, exclusionary conduct makes it impossible for competitors to gain a foothold. With its amassed power across both the online superstore market and online marketplace services market, Amazon extracts enormous monopoly rents from everyone within its reach. This includes:

  • Degrading the customer experience by replacing relevant, organic search results with paid advertisements—and deliberately increasing junk ads that worsen search quality and frustrate both shoppers seeking products and sellers who are promised a return on their advertising purchase.
  • Biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality. 
  • Charging costly fees on the hundreds of thousands of sellers that currently have no choice but to rely on Amazon to stay in business. These fees range from a monthly fee sellers must pay for each item sold, to advertising fees that have become virtually necessary for sellers to do business. Combined, all of these fees force many sellers to pay close to 50% of their total revenues to Amazon. These fees harm not only sellers but also shoppers, who pay increased prices for thousands of products sold on or off Amazon.  

The FTC, along with its state partners, are seeking a permanent injunction in federal court that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.

Connecticut, Delaware, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Hampshire, New Mexico, Nevada, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, and Wisconsin joined the Commission’s lawsuit. The Commission vote to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the Western District of Washington was 3-0.

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.

Link to the rest at The Federal Trade Commission

PG will spare visitors to TPV by not embedding the entire 172-page complaint.

If you need a bigger US v. Zon fix, the complaint is available for download at the FTC link above.

FTC Sues Amazon, Alleging Illegal Online-Marketplace Monopoly

by

From The Wall Street Journal:

The Federal Trade Commission and 17 states on Tuesday sued Amazon AMZN -4.35%decrease; red down pointing triangle, alleging the online retailer illegally wields monopoly power that keeps prices artificially high, locks sellers into its platform and harms its rivals.

The FTC’s lawsuit, filed in Seattle federal court, marks a milestone in the Biden administration’s aggressive approach to enforcing antitrust laws and has been anticipated for months.

The agency’s chair, Lina Khan, is a longtime critic of Amazon who wrote in the Yale Law Journal in 2017 that earlier generations of competition cops and courts abandoned the law’s concerns over conglomerates such as Amazon. She has had trouble convincing courts of her antitrust views, however, having earlier lost cases against both Microsoft and Meta Platforms.

The federal agency and the states alleged that Amazon violated antitrust laws by using anti-discounting measures that punished merchants for offering lower prices elsewhere. The government also said sellers on Amazon were compelled to use its logistics service if they want their goods to appear in Amazon Prime, the subscription program whose perks include faster shipping times.

The FTC said sellers feel they must use Amazon’s services such as advertising to be successful on the platform. Between being paid for its logistics program, advertising and other services, “Amazon now takes one of every $2 that a seller makes,” Khan said at a briefing with the media Tuesday.

“The lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to making that case in court,” said David Zapolsky, Amazon’s general counsel and head of public policy. “The practices the FTC is challenging have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store.”

The federal agency’s claim that Amazon prevents vendors from offering lower prices on competing websites echoes a claim made in a suit brought last year by the state of California.

“Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” Khan said in a statement.

The FTC said it is seeking a court order “that would prohibit Amazon from engaging in its unlawful conduct and pry loose Amazon’s monopolistic control to restore competition.” The lawsuit doesn’t say whether the FTC will ask the court to break up the company, and Khan declined in a briefing with reporters to say whether it would.

“The FTC doesn’t have a particularly good history of bringing monopolization cases,” said Rick Rule, who headed the Justice Department’s antitrust division during the Reagan administration. “Most of the last ones that they brought were in the ’60s and ‘70s and lasted into the ‘80s, and there were various theories but they never went anywhere.”

. . . .

Until recently, it has been rare for federal agencies to file monopoly lawsuits seeking to break up companies accused of anticompetitive behavior. While the FTC and Justice Department regularly seek to block what they see as illegal acquisitions, the government doesn’t often move against companies for anticompetitive behavior unrelated to acquisitions.

. . . .

The FTC’s lawsuit alleges that Amazon, despite its reputation for low prices and convenient delivery among many consumers, steadily grew from an online bookseller into a gatekeeper of online commerce that used its size to squash any budding rivals.

The Justice Department, in its lawsuit over Google search, similarly alleged that Alphabet used its scale to thwart competition. In that case, the government said Google used restrictive agreements with Apple and others to be the default search provider. That enhanced Google’s reach while starving other search engines of the data they needed to improve, the DOJ alleges.

Link to the rest at The Wall Street Journal

On a list of the many things PG is not, an antitrust expert or a political analyst would be among the most prominent.

That said, he wonders what the PR issues will be in the Justice Department suit. Amazon has about 230 million customers in the U.S. (out of a total adult population of about 260 million.)

Amazon is unlikely to do anything as a company to stir up the populace, but PG would be surprised if various groups of Amazon customers don’t arise to encourage their elected representatives to criticize the Amazon lawsuit.

Amazon also has 1.1 million sellers in the U.S. Per PG’s quick and dirty online research, KDP has over 1 million authors that publish through the platform. Informed estimates of total royalties paid by KDP to authors in 2022 place the amount as over $500 million.

In a popularity contest, Amazon would crush the Federal Trade Commission and, likely, the entire government of the United States.

Antitrust counsel representing Amazon will take a firm grip on official comments about the lawsuit coming from Amazon and its executives.

However, PG expects the formal and informal web of Amazon sellers will get vocal about this once the word gets around. Ditto for authors who earn most of their royalties from Amazon sales.

Antitrust lawsuits against large, well-known companies in the United States are relatively rare. In 2022, the Justice Department filed only 242 antitrust lawsuits, mostly involving companies/parties even the well-read group of people who visit TPV are unlikely to recognize.

PG is going to follow the progress of this lawsuit from afar and will provide whatever reports he believes would interest visitors to TPV.

Generative AI vs. Copyright

by

From Publishers Weekly:

The balance between copyright and free speech is being challenged by generative AI (GAI), a powerful and enigmatic tool that mimics human responses to prompts entered into an internet search box. The purpose of copyright law, according to the U.S. Constitution, is “to promote the Progress of Science and useful Arts, by securing to Authors and Inventors the exclusive Right to their exclusive writings.” The problem is that GAI’s ability to incentivize progress and innovation threatens the entertainment industry’s dependence on copyright to protect creative works.

Copyright law strikes a balance between those who create content and the public’s interest in having wide access to that content. It does this via granting authors a limited monopoly over the dissemination of original works by giving them the exclusive right to reproduce, distribute, and create derivative works based on copyrighted material. However, the concept of exclusive rights doesn’t really apply to artificially intelligent robots and computers scraping ideas and facts from public websites.

Because copyright does not protect ideas, facts, procedures, concepts, principles, or discoveries described or embodied in works, copying alone doesn’t constitute copyright infringement. To prove copyright infringement, one must prove that the defendant had access to the copyrighted work and that the defendant’s work is substantially similar to protected aspects of the first work.

For AI output to infringe upon a book, it must have taken a substantial amount of copyrightable expression from the author’s work. When it comes to text, GAI is an artful plagiarist. It knows how to dance around copyright. The predictive model emulates, it doesn’t copy. Insofar as text generated in response to a prompt is not substantially similar—a legal term of art—to the data it is scraping, it is not an infringement. In other words, don’t overestimate the value of litigation.

The fair-use doctrine is another limitation on the exclusive rights of authors. Its purpose is to avoid the rigid application of copyright law in ways that might otherwise stifle the growth of art and science. Fair use is highly fact specific. Which is another way of saying it’s a murky and contentious area of the law.

Several cases decided before the advent of GAI suggest fair use encompasses the ingestion and processing of books by GAI. For example, in 2015, in Authors Guild v. Google, the court ruled that Google’s digitizing of books without consent to create a full-text searchable database that displayed snippets from those titles was a transformative use that served a different purpose and expression than the original books.

Fair use favors transformative uses. However, over time, the concept evolved from using a protected work as a springboard for new insights or critiquing the original to taking someone else’s photographs or other images and including them in a painting and declaring it a fair use.

In 2023, in Andy Warhol Foundation for the Visual Arts v. Goldsmith, the U.S. Supreme Court held that the claim to fairness is severely undermined “where an original work and copying use share the same or highly similar purposes, or where wide dissemination of a secondary work would otherwise run the risk of substitution for the original or licensed derivatives of it.” AI-generated works can devalue human-created content, but is that the kind of economic harm contemplated in the Supreme Court’s decision?

To sum up, on a case-by-case basis, courts must determine if substantial similarity exists and then engage in line drawing—balancing free expression and the rights of creators.

. . . .

In an age of disinformation, an author’s brand, a publisher’s imprint, and the goodwill associated with them are valuable assets. I believe the industry is less vulnerable than many think. But, to quote Nick Lowe, “Where it’s goin’ no one knows.”

Link to the rest at Publishers Weekly

PG notes that the author of the OP is an attorney, so he will cut and paste his disclaimer from the post he just published so no one who reads only this TPV post will not be misled.

PG notes that nothing you read on TPV constitutes legal advice. If you want legal advice, you need to hire a lawyer, not read a blog post.

PG will also note that the OP includes some other suggestions by the author, who is an attorney, which you may want to consider, but hire your own lawyer because, just like PG, the author of the OP is not your attorney and isn’t giving legal advice by writing an article for Publishers Weekly.

Using Generative AI? Consider These 7 Tips From a Legal Expert

by

From Learn2G2:

As G2’s General Counsel, it’s my job to help build and protect the company, so it’s likely no surprise that generative AI is top of mind for me (and lawyers everywhere!).

While AI presents an opportunity for organizations, it also poses risks. And these risks raise concerns for all business leaders, not only legal departments.

With so much information out there, I recognize these waters can be difficult to navigate. So, to help get to the crux of these concerns and boil them down into a helpful guide for all business leaders, I recently sat down with some of the top minds in the AI space for a round-table discussion in San Francisco.

There, we discussed the changing landscape of generative AI, the laws affecting it, and what this all means for how our businesses operate.

We came to the agreement that, yes, generative AI tools are revolutionizing the way we live and work. However, we also agreed that there are several legal factors businesses should consider as they embark on their generative AI journeys.

Based on that discussion, here are seven things to consider when integrating AI into your company.

Understand the lay of the land

Your first task is to identify whether you’re working with an artificial intelligence company or a company that uses AI. An AI company creates, develops, and sells AI technologies, with AI as its core business offering. Think OpenAI or DeepMind.

On the other hand, a company that uses AI integrates AI into its operations or products but doesn’t create the AI technology itself. Netflix’s recommendation system is a good example of this. Knowing the difference is pivotal, as it determines the complexity of the legal terrain you need to navigate and deciphers which laws apply to you.

G2 lays out the key AI software in this developing field. When you have a bird’s-eye view of the possible tools, you can make better decisions on which is right for your business.

Keep an eye out on the latest developments in the law, as generative AI regulations are on the horizon. Legislation is rapidly developing in the US, UK, and Europe. Likewise, litigation involving AI is actively being decided. Keep in touch with your attorneys for the latest developments.

Choose the right partner, keeping terms of use in mind

You can tell a lot about a company by its terms of use. What does a company value? How do they handle the relationship with their users or customers? The terms of use can serve as a litmus test.

OpenAI, for instance, explicitly states in its usage policies that its technology shouldn’t be used for harmful, deceptive, or otherwise unethical applications. Bing Chat requires users to comply with laws prohibiting offensive content or behavior. Google Bard, meanwhile, focuses on data security and privacy in its terms – highlighting Google’s commitment to protecting user data. Evaluating these terms is essential to ensuring your business aligns with the AI partner’s principles and legal requirements.

We compared the terms of use and privacy policies of several key generative AI players to help us determine which AI tools would work best for our company’s risk profile and recommend you do the same.

Between your company and the AI company, who owns the input? Who owns the output? Will your company data be used to train the AI model? How does the AI tool process, and to whom does it send personally identifiable information? How long will the input or output be retained by the AI tool?

Answers to these questions inform the extent to which your company will want to interact with the AI tool.

Navigate the labyrinth of ownership rights

When using generative AI tools, it’s paramount to understand the extent of your ownership right to the data that you put into the AI and the data that is derived from the AI.

From a contractual perspective, the answers depend on the agreement you have with the AI company. Always ensure that the terms of use or service agreements detail the ownership rights clearly.

For example, OpenAI takes the position that between the user and OpenAI, the user owns all inputs and outputs. Google Bard, Microsoft’s Bing Chat, Jasper Chat, and Anthropic’s Claude similarly each grant full ownership of input and output data to the user but simultaneously reserve for themselves a broad license to use AI-generated content in a multitude of ways.

Anthropic’s Claude grants ownership of input data to the user but only “authorizes users to use the output data.” Anthropic also grants itself a license for AI content, but only “to use all feedback, ideas, or suggested improvements users provide.” The contractual terms you enter into are highly variable across AI companies.

Strike the right balance between copyright and IP

AI’s ability to generate unique outputs creates questions about who has intellectual property (IP) protections over those outputs. Can AI create copyrightable work? If so, who is the holder of the copyright?

The law is not entirely clear on these questions, which is why it’s crucial to have a proactive IP strategy when dealing with AI. Consider whether it is important for your business to enforce IP ownership of the AI output.

Presently, jurisdictions are divided about their views on copyright ownership for AI-generated works. On one hand, the U.S. Copyright Office takes the position that AI-generated works, absent any human involvement, cannot be copyrighted because they are not authored by a human.

Link to the rest at Learn2G2

The article goes on to discuss several other interesting legal and intellectual property points.

PG notes that nothing you read on TPV constitutes legal advice. If you want legal advice, you need to hire a lawyer, not read a blog post.

PG will also note that the OP includes some other suggestions by the author, who is an attorney, which you may want to consider, but hire your own lawyer because, just like PG, the author of the OP is not your attorney and isn’t giving legal advice by writing an online article.

The First App to “Help” Libraries and Schools With Book Bans Has Arrived–It’s Not What It Seems

by

From Bookriot:

In response to a manufactured panic over books, there comes a capitalist solution to eliminate the professional knowledge and expertise of those who work at the intersections of education and literacy. Last week, a new program was launched, marketing itself as a means to help schools, libraries, and parents navigate the new reality of life with book bans. BookmarkED, who soft launched their product during a Texas State Senate Committee on Education meeting March 30, 20023, is “a solution to the ongoing challenge of banned and challenged books in school libraries across North America, with Texas being the fastest growing in this space, followed closely by Florida.” The soft launch occurred two and a half months before Texas passed the READER Act.

Founded by Steve Wandler, who works in the education technology space, BookmarkED aims to “empower parents to personalize school libraries.” The purpose is to ensure that parents get to decide the “individual literary journey for their children, based on their personal values and interests,” while teachers and librarians can keep “confidently recommending and providing more personalized books to their students, knowing precisely the learning outcomes they will achieve.” As a bonus, the technology will help libraries “simply and efficiently navigate the ever-changing challenged books landscape.” BookmarkED’s website states the idea was conceptualized by a Texas superintendent.

In the press release for the technology, Wandler noted that library workers rely on year-old data on book bans and that BookmarkED would provide current data on the books being banned across the country. He notes that “we equip schools with real-time data at the state and national level for challenged books, which no other solution in the market is capable of.” The press release cites data on book bans from the American Library Association’s report earlier this year.

Parents would be able to decide which books their kids have access to at the school library and have “real time” access to what their students are checking out. School libraries would know which books are being challenged statewide, ostensibly so they can take part in the mass censorship or prepare for challenges to those titles in their own collection. The website for BookmarkED purports this would save districts money around the book challenge process and ensure educators can make “informed selections for materials that support curriculum.” In a lengthier explanation at his blog, Wandler notes that such information would protect librarians and educators from liability. Again citing American Library Association figures, he writes that “with more and more books being challenged, school districts need a solution to track the latest challenges to ensure compliance.”

As if developing an app that creates a “personalized reading experience” for parents to control for their students in public institutions weren’t enough of a claim, things get muddier as Wandler notes that there currently exist no tools to help educators and librarians know what books are being challenged. In the same blog post, he writes:

“Libraries currently rely on challenged book data from the previous year, which is immediately out of date as more books become challenged. This is a skyrocketing expense as challenged book reviews and duplicate requests must be checked and updated manually. The ALA estimates these challenged book reviews cost $20 thousand per challenge, which is upwards of $32 million total.”

He fails to include a citation to the information provided here, wherein ALA estimates book challenges at $20,000 per challenge — a staggering and, most likely, incorrect figure all together. I’ve conservatively estimated about $800 per book challenge previously, and there seems to be no data on ALA’s website to provide evidence of the $20,000 cost. That said, in some Texas districts such as Spring Branch Independent School District, officials have cited a $30,000 cost for a single book challenge.

Moreover, the press around the app claims that there is no resource out there tracking book challenges beyond ALA’s annual list. This is patently untrue. Dr. Tasslyn Magnusson began tracking book challenges in October 2021, and her work was later picked up by EveryLibrary (January 2022) and PEN America (February 2022).

Link to the rest at Bookriot

PG is of two minds regarding the legislation described in the OP.

  1. This law seems to be a very expensive way of dealing with the problems it purports to solve.
  2. If teachers are assigning or making available books, etc., that parents reasonably believe will be harmful to their children, PG believes that parents have a reasonable interest in helping their children avoid such books.

PG has noted a tendency in some areas of contemporary American civilization for those in public education to assume they know more than parents do about what their children should be taught, including what children should be reading.

Some parents are rightly concerned that some educators will encourage their children to read books that the parents believe will be harmful to the children’s welfare – personal, emotional, social and spiritual. Some parents believe their children are too young or too emotionally or socially immature to handle some of the books that some educators believe will be good for their children to read.

In saying this, PG acknowledges that there are always some crazies in any community who will exaggerate or overreact to things or practices they believe will be detrimental to some aspect of their children’s well-being.

Unfortunately, some teaching in higher educational institutions believe that one of their most important tasks involve inculcating their students with the latest in social justice theory and beliefs. In some cases, colleges and universities are graduating a significant number of social justice warriors who are anxious to use whatever influence or position they may hold to spread the social justice gospel to any who will listen to them.

And, of course, children are required to listen to their teachers. Parents are required to see that their children are properly educated, almost always in the public school system. The consequences for failing to carry out this obligation can result in the children being taken out of their custody and placed with foster parents or in various government institutions.

In a prior life, PG acted as the attorney for parents who were trying to keep custody of their children as well as juvenile justice authorities who were attempting to remove children from a horrible and dangerous home situation.

He has seen both sides of these sorts of legal proceedings and can say that, in some cases, the juvenile authorities were on the right side and in other cases, the juvenile justice authorities were acting improperly and not entitled to take custody to the children.

As an older attorney friend once commented to PG, “Thank goodness for human nature. Without it, lawyers wouldn’t have anything to do.” Parents, children, judges and government officers and everyone else (including PG) are all full to the brim with human nature.

In years past, PG has known a few families who adopted the unconventional practice of home-schooling their many children with extremely successful outcomes. The relevant state laws at the time required that the parents keep detailed records of their home-schooling activities and file periodic reports with local authorities describing the education of their children.

One such home-schooling family included a couple of children who became Medical Doctors when they grew up. To the best of PG’s knowledge, each of the many children in this family graduated from an accredited four-year college or university.

Supreme Court Rules Against Andy Warhol in Copyright Case

by

From The New York Times:

The Supreme Court ruled on Thursday that Andy Warhol was not entitled to draw on a prominent photographer’s portrait of Prince for an image of the musician that his estate licensed to a magazine, limiting the scope of the fair-use defense to copyright infringement in the realm of visual art.

The vote was 7 to 2. Justice Sonia Sotomayor, writing for the majority, said the photographer’s “original works, like those of other photographers, are entitled to copyright protection, even against famous artists.”

She focused on the fact that Warhol and Lynn Goldsmith, the photographer whose work he altered, were both engaged in the commercial enterprise of licensing images of Prince to magazines.

“To hold otherwise would potentially authorize a range of commercial copying of photographs, to be used for purposes that are substantially the same as those of the originals,” Justice Sotomayor wrote. “As long as the user somehow portrays the subject of the photograph differently, he could make modest alterations to the original, sell it to an outlet to accompany a story about the subject, and claim transformative use.”

In dissent, Justice Elena Kagan, joined by Chief Justice John G. Roberts Jr., wrote that the decision “will stifle creativity of every sort.”

“It will impede new art and music and literature,” she wrote. “It will thwart the expression of new ideas and the attainment of new knowledge. It will make our world poorer.”

The dueling opinions, from two liberal justices who are often allies, had an unusually sharp tone.

Justice Kagan’s opinion, Justice Sotomayor wrote, was made up of “a series of misstatements and exaggerations, from the dissent’s very first sentence to its very last.”

Justice Kagan responded that Justice Sotomayor wholly failed to appreciate Warhol’s art.

“The majority does not see it,” Justice Kagan wrote. “And I mean that literally. There is precious little evidence in today’s opinion that the majority has actually looked at these images, much less that it has engaged with expert views of their aesthetics and meaning.”

The decision was also unusual for including more than a dozen reproductions of artworks by Warhol and others, most of them in color.

The portrait of Prince at issue in the case was taken in 1981 by Lynn Goldsmith, a successful rock photographer on assignment for Newsweek.

In 1984, around the time Prince released “Purple Rain,” Vanity Fair hired Warhol to create a work to accompany an article titled “Purple Fame.” The magazine paid Ms. Goldsmith $400 to license the portrait as an “artist reference,” agreeing to credit her and to use it only in connection with a single issue.

In a series of 16 images, Warhol altered the photograph in various ways, notably by cropping and coloring it to create what his foundation’s lawyers described as “a flat, impersonal, disembodied, mask-like appearance.” Vanity Fair ran one of them.

Warhol died in 1987, and the Andy Warhol Foundation for the Visual Arts assumed ownership of his work. When Prince died in 2016, Vanity Fair’s parent company, Condé Nast, published a special issue celebrating his life. It paid the foundation $10,250 to use a different image from the series for the cover. Ms. Goldsmith received no money or credit.

The majority’s analysis, Justice Kagan wrote, was simplistic and wooden.

“All of Warhol’s artistry and social commentary,” she wrote, “is negated by one thing: Warhol licensed his portrait to a magazine, and Goldsmith sometimes licensed her photos to magazines too. That is the sum and substance of the majority opinion.”

The case, Andy Warhol Foundation for the Visual Arts v. Goldsmith, No. 21-869, concerned the limits of the fair-use defense, which allows copying that would otherwise be unlawful if it involves activities like criticism and news reporting.

Lower courts differed about whether Warhol’s alterations of the photograph transformed it into something different. Judge John G. Koeltl of the Federal District Court in Manhattan ruled that Warhol had created something new by imbuing the photograph with fresh meaning.

But a three-judge panel of the U.S. Court of Appeals for the Second Circuit said that judges should compare how similar the two works are and leave the interpretation of their meaning to others.

“The district judge should not assume the role of art critic and seek to ascertain the intent behind or meaning of the works at issue,” Judge Gerard E. Lynch wrote for the panel. “That is so both because judges are typically unsuited to make aesthetic judgments and because such perceptions are inherently subjective.”

Justice Sotomayor wrote that a crucial factor in the fair-use analysis — “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes” — weighed in Ms. Goldsmith’s favor.

“Warhol himself paid to license photographs for some of his artistic renditions,” Justice Sotomayor wrote. “Such licenses, for photographs or derivatives of them, are how photographers like Goldsmith make a living. They provide an economic incentive to create original works, which is the goal of copyright.”

Other Warhol works, like Warhol’s images of Campbell’s soup cans, were a different matter, she wrote.

“The purpose of Campbell’s logo is to advertise soup. Warhol’s canvases do not share that purpose,” Justice Sotomayor wrote. “Rather, the soup cans series uses Campbell’s copyrighted work for an artistic commentary on consumerism.”

Link to the rest at The New York Times and thanks to K. and others for the tip

PG has previously showed the original photo beside the Warhol print. Here it is again:

These are the two images that were considered by the Supreme Court in today’s decisions. The photographer, Lynn Goldsmith, who created the photo on the left, won her case against Andy Warhol (his foundation to be specific), the artist who created the painting on the right.

PG suggest that many appellate courts have problems with copyright cases involving visual images. Quite often he has the impression that the judges/justices begin with an approach that boils down to “I’ll know it when I see it,” and move on from there with references to various prior copyright cases that support their visual conclusions.

Copyright infringement cases involving written works tend to be slightly more predictable and involve multiple paragraphs from one book compared to multiple paragraphs from another. That said, decisions tend to go down to the judicial golden gut.

One of the other characteristics of the Supreme Court opinions on copyright infringement is that, most of the time, the Supremes tend not to accept such appeals, allowing the decisions of the U.S. Circuit Courts of Appeal to stand.

The problem with the Supremes not feeling particularly comfortable with copyright is that various Circuit Courts do not always agree on how copyright infringement should be assessed, so, excluding slam-dunk copyright violations, appealing a close federal trial court’s decision may result in a win for one party which would have likely gone another way had the appeal been heard in a different Circuit Court of appeal due to the differences between the Circuits.

That said, 90% of copyright lawsuits are slam dunks for one side or the other, which explains why only a small number of Federal District court cases end up going to trial because the party likely to lose is invented to reach an agreement to settle the case prior to a trial to save a lot of expensive legal fees.

Here’s the entire opinion so you can review all 87 pages, including pictures and giant traditional and historic margins!

Supreme-Court-opinionDownload

Judge Sets Second Hearing on Motion to Block Texas Book Rating Law

by

From Publishers Weekly:

On August 18, Federal Judge Alan D. Albright heard the first round of oral arguments in Austin, Tex., on a motion to block HB 900, Texas’s controversial new book rating law. But with Texas attorneys filing a motion to dismiss the case just days earlier, on August 16, Albright said he would need more time before ruling on either motion. The judge has set a second hearing for August 28, adding that he would rule before the law is set to take effect on September 1.

The plaintiffs in the case fighting HB 900 include two Texas bookstores—Austin’s BookPeople and Houston’s Blue Willow Bookshop—together with the American Booksellers Association, the Association of American Publishers, the Authors Guild, and the Comic Book Legal Defense Fund. Dubbed the READER Act by supporters (an acronym for “Restricting Explicit and Adult-Designated Educational Resource”), the bill was signed by Texas governor Greg Abbott on June 12. Among its provisions, the law requires book vendors to review books—including both new books and books it has previously sold—and to rate them for sexual content under a vaguely articulated standard. Books rated “sexually explicit” (if the book includes material deemed “patently offensive” by unspecified community standards) would be banned from Texas schools. Books rated “sexually relevant,” (if the books portrays any kind of sexual conduct) would be available only with written parental consent.

As articulated in their July 25 complaint, the plaintiffs argued that the law is an unconstitutional restraint on the freedom to read and that the law imposes an untenable burden on the book vendors tasked with rating millions of books. As evidence of this, the plaintiffs said that a survey of six school districts in Texas revealed more than six million books and items in circulation that would require rating. Texas has more than 1,250 independent school districts; Spring Branch Independent School District in Houston determined that the process for the district to review a single book required 220 staff hours and cost a total of $30,000.

Texas attorneys opened the August 18 arguments by reiterating their argument that the plaintiffs lack standing to challenge the law, asserting that there was no “economic injury” to the plaintiffs, who “feared too many things.” The harm was purely “speculative,” said the attorneys. Furthermore, the state argued that any prospective injury should be attributable to the individual school districts deciding which books to purchase, not the state. And finally, the state argued that the law does not compel or restrict speech as the plaintiffs argue. “If this bill didn’t exist,” the state argued, “you cannot sue the school district to force them to buy books from the vendor.”

In his questions, Albright pointed out that the law as currently written does appear vague and unclear. He focused on the plaintiffs’ inability to “get relief” from the school districts should books be rated incorrectly. In addition, he noted that the law must address the future implications of a law, in this case, the potential for financial injury.

Albright also offered several implied criticisms of the law in the course of seeking clarification, asking whether or not John Steinbeck’s Of Mice and Men would be deemed obscene because it contains a rape, and subsequently E. Annie Proulx’s Brokeback Mountain and the Bible, both of which have explicit sexual references. He also asked after the fate of books depicting paintings by Caravaggio (the judge’s “favorite painter,” he said) and Michelangelo. Albright acknowledged that there were certainly works that could easily be deemed “sexually relevant,” but the part of the law that allowed books to be objected to if they were “patently offensive” and violated community standards, he implied, was problematic.

“Community standards vary wildly across Texas,” Albright said, echoing a point often made by opponents of the law. “What would be deemed acceptable in Austin might likely be objected to somewhere else.”

In response, the state countered that there were “clear guidelines” as to what was considered sexual content. But Albright pointed out that the law’s broadly articulated standard is essentially cut-and-pasted from the state’s obscenity law, noting, for example, that anything depicting a female breast below the top of the areolae was considered sexual: “You just excluded Caravaggio and Michelangelo,” the judge told attorneys.

Link to the rest at Publishers Weekly

PG cautions that a judge’s comments and questions during a hearing do not always reflect how she/he will rule. However, the OP does lead one to conclude the court is skeptical of the state’s defense of the law.

New York Times considers legal action against OpenAI as copyright tensions swirl

by

From National Public Radio:

The New York Times and OpenAI could end up in court.

Lawyers for the newspaper are exploring whether to sue OpenAI to protect the intellectual property rights associated with its reporting, according to two people with direct knowledge of the discussions.

For weeks, the Times and the maker of ChatGPT have been locked in tense negotiations over reaching a licensing deal in which OpenAI would pay the Times for incorporating its stories in the tech company’s AI tools, but the discussions have become so contentious that the paper is now considering legal action.

The individuals who confirmed the potential lawsuit requested anonymity because they were not authorized to speak publicly about the matter.

A lawsuit from the Times against OpenAI would set up what could be the most high-profile legal tussle yet over copyright protection in the age of generative AI.

A top concern for the Times is that ChatGPT is, in a sense, becoming a direct competitor with the paper by creating text that answers questions based on the original reporting and writing of the paper’s staff.

It’s a fear heightened by tech companies using generative AI tools in search engines. Microsoft, which has invested billions into OpenAI, is now powering its Bing search engine with ChatGPT.

If, when someone searches online, they are served a paragraph-long answer from an AI tool that refashions reporting from the Times, the need to visit the publisher’s website is greatly diminished, said one person involved in the talks.

So-called large language models like ChatGPT have scraped vast parts of the internet to assemble data that inform how the chatbot responds to various inquiries. The data-mining is conducted without permission. Whether hoovering up this massive repository is legal remains an open question.

If OpenAI is found to have violated any copyrights in this process, federal law allows for the infringing articles to be destroyed at the end of the case.

Link to the rest at National Public Radio

As PG has mentioned on a couple of previous occasions, he has doubts about the copyright infringement claims like the Times is asserting because, to the best of PG’s knowledge, no AI stores the original copyrighted works or is capable of reproducing them.

Instead, the contents of the Times plus a huge number of other texts are used to train the AI model, then deleted after training is complete. The AI can then utilize the ingested texts in order to come to an understanding of the meanings of the texts and use that understanding to create new expressions of knowledge as needed to respond to a wide range of queries and commands that individual users submit.

PG doesn’t think the AI can ever recreate the words of the original Times stories. The AI uses the information it has ingested to create new responses to tasks individual users want it to perform.

The analogy PG thinks is correct happens when he reads a story in the Times or elsewhere, then uses that knowledge to answer questions posed by others or to create other writings that don’t replicate the original Times articles and may include ideas, facts, etc. that he has picked up during his extensive reading of a large collection articles from a great many sources.

Booksellers Want Justice Department to Investigate Amazon

by

From BookRiot:

As the Federal Trade Commission moves towards what looks like a lawsuit against Amazon, several authors, booksellers, and anti-trust activists want Amazon’s bookselling to also be investigated.

The Authors Guild, the American Booksellers Association, and antitrust think tank Open Markets Institute sent a letter Wednesday to the Justice Department and the Federal Trade Commission requesting that they disrupt the monopoly on the book market that Amazon has.

The retail giant’s influence on the book world can’t be overstated — 40% of physical books sold in the U.S. are sold by Amazon, as are 80% of e-books sold. Amazon’s 2008 purchase of Audible has also helped it dominate the realm of audiobooks. The reason this is an issue for the world of publishing is that, for one, it has resulted in fewer books sold by physical bookstores across the country. And Amazon has a tendency to highlight well-known authors, making it even harder for other, lesser-known authors to get attention on their books.

The letter cites the importance of free-flowing ideas within a democracy as the reason why Amazon’s role as a bookseller should be looked into by the government, “The open access to the free flow of ideas is essential to a well-functioning democracy. The government has the responsibility to ensure that actors with oversized power cannot control or interfere with the open exchange of ideas.”

Link to the rest at BookRiot

PG suggests that it’s difficult to make a case that Amazon is harming consumers with its low prices and the huge variety of books on offer — far, far more than any physical bookstore can stock.

As far as ebooks are concerned, how many ebooks do the members of the American Booksellers Association sell each year and what is the price of those ebooks?

Does anyone know of any evidence that Amazon interferes with “access to the free flow of ideas” with its huge collection of print books, old and new, and ebooks, offered at lower prices than anyone else provides? As PG has mentioned before, being a large and successful business organization is not a violation of antitrust laws.

He further suggests that selling printed and ebooks from a stock far larger than any physical bookstore has for sale at significantly lower prices than the members of the American Booksellers Association routinely charge doesn’t hurt readers or other consumers in any measurable way.

Judge Finds Revived Amazon E-book Monopoly Suit Should Proceed

by

From Publishers Weekly:

For a second time in two years, a magistrate judge in New York has recommended that a consumer class action lawsuit accusing the Big Five publishers of colluding with Amazon to fix e-book prices should be dismissed. But while the judge recommended tossing the case against the publishers, the court found that monopolization and attempted monopolization claims against Amazon should proceed.

In a 59-page report, magistrate judge Valerie Figueredo found sufficient facts at the pleading stage to “plausibly allege that Amazon’s conduct has allowed it to charge supracompetitive commission fees, leading to reduced competition in the e-book platforms-transaction market and higher e-book prices for consumers.”

The case was first filed in the Southern District of New York on January 14, 2021, led by Hagens Berman (which was also the firm that sued Apple and five major publishers for colluding to fix e-book prices in 2011). It alleged that the Big Five publishers—Hachette Book Group, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster—were co-conspirators in a hub-and-spoke scheme with Amazon to suppress retail price competition and keep e-book prices artificially high. In March 2021, a second, associated suit accusing Amazon and the Big Five publishers of a conspiracy to restrain price competition in the retail and online print trade book markets was also filed.

But last year, after a marathon July 27, 2022 hearing, Figueredo recommended that the presiding judge in the case, Gregory Woods, toss both cases for lack of evidence. In two brief September 29, 2022 orders, Woods accepted Figeuredo’s “well-reasoned” and thorough reports, and dismissed the cases without prejudice, giving the plaintiffs a chance to file amended complaints.

Which they did. In a 125-page Second Consolidated Amended complaint filed last November, Hagens Berman revised and refiled their claims, including arguments that Amazon’s dominance in the e-book market enables it to “coerce” e-book publishers into “entering into contractual provisions that foreclose competition on price or product availability,” which ultimately harms consumers by keeping e-book prices artificially high. “In a but-for competitive market, Amazon could not earn such a supracompetitive profit without price or product availability,” which ultimately harms consumers by keeping e-book prices artificially high. “In a but-for competitive market, Amazon could not earn such a supracompetitive profit without losing sales to a competitor and experiencing reduced profits,” the amended complaint argues. “Yet Amazon has been able to both maintain its market share and extract its supracompetitive transaction fees by exercising its market power to block competition.”

In its defense, Amazon insists that its MFNs and other contract terms are standard and “not inherently anticompetitive,” and that there is no evidence the company’s conduct “had the effect of raising agency commissions to anticompetitive levels.” But that’s not a question to be resolved at the pleading stage, Figueredo noted, concluding that the plaintiffs “have adequately pled anticompetitive conduct to support their monopolization and attempted monopolization claims.”

Link to the rest at Publishers Weekly

Judgment Phase of Internet Archive Copyright Case Appears Imminent

by

From Publishers Weekly:

It’s now been more than four months since a federal judge found the Internet Archive liable for copyright infringement for its program to scan and lend library books. But after a court order late last week, the parties finally appear headed toward the judgment phase of the litigation.

Since the verdict, the parties have (per the court’s order) been conferring over the contours an “appropriate procedure to determine the judgment to be entered in the case.” And after numerous extensions through the spring and summer, judge John G. Koeltl appears to have run out of patience. In a July 28 order, Koeltl gave the parties until August 11 to deliver their recommendations, adding “no more extensions.”

. . . .

In his emphatic March 24 opinion, Koeltl found the Internet Archive infringed the copyrights of four plaintiff publishers by scanning and lending their books under a legally contested practice known as CDL (controlled digital lending). “At bottom, IA’s fair use defense rests on the notion that lawfully acquiring a copyrighted print book entitles the recipient to make an unauthorized copy and distribute it in place of the print book, so long as it does not simultaneously lend the print book,” Koeltl held in his decision. “But no case or legal principle supports that notion. Every authority points the other direction.”

In court filings, the publishers have asked for damages and injunctive relief, including the destruction of potentially infringing scans. Lawyers for the Internet Archive have argued that statutory damages should be remitted per section 504 of the Copyright Act, which offers some relief where the infringer is a “nonprofit educational institution, library, or archives,” and the infringers “believed and had reasonable grounds for believing” that its use of the work was fair use.

Link to the rest at Publishers Weekly

A US Court Temporarily Blocks a Library and Bookstore Law

by

From Publishing Perspectives:

This weekend, Maria A. Pallante, president and CEO of the Association of American Publishers prepared a message for the association’s membership, writing, “I am very pleased to report that District Court Judge Timothy Brooks has granted preliminary injunctions today in Arkansas on both of AAP’s challenges to Act 372, pending final resolution on the merits.”

Arkansas’ Republican governor, Sarah Huckabee Sanders, had signed the act into law in March, making it in the opinion of many one of the United States’ most severe measures among waves of US book-banning efforts. This law, which was set to go into effect Tuesday (August 1) would, as Pallante describes it, “subject librarians and bookstore owners to criminal prosecution for making content deemed inappropriate (by the state) available to minors, including older minors.”

So repugnant was the thought of criminalizing librarians’ and booksellers’ work that on June 2, the association announced that it was part of a coalition taking Arkansas to court. The association characterizes banning access to various books as a violation of the First Amendment rights of Arkansas’ reading citizens.

You’ll hear this court action referred to as injunctions, plural, and what that refers to is the bench’s temporary blockage of two parts of Act 371. As the AAP describes these two sections, “One component made it a crime for libraries, booksellers, and any brick-and-mortar establishment to display or make available works that might be harmful to minors. This would have required libraries and booksellers to limit all readers to books appropriate for minors or exclude all minor readers from their premises.

“The second provision made it possible for any person in Arkansas to demand the removal of a book the person deemed inappropriate, limiting readers to one person’s opinion about what books should be in the library, and it would have permitted or encouraged review boards to engage in viewpoint- and content-based discrimination.”

. . . .

What has resulted from the court’s Saturday grant is not only a stay against the law going into effect on schedule but also an extensive and what seems to be a deeply felt 49-page document from Judge Brooks.

At a couple of headers, he includes literary quotes, such as Ray Bradbury’s Fahrenheit 451 lines, “There is more than one way to burn a book. And the world is full of people running
about with lit matches.”

In one of his most compelling passages, Judge Brooks writes:

“For more than a century, librarians have curated the collections of public libraries to serve diverse viewpoints, helped high school students with their term papers, made recommendations to book clubs, tracked down obscure books for those devoted to obscure pastimes, and mesmerized roomfuls of children with animated storytelling. So, the passage of Act 372 prompts a few simple, yet unanswered questions.

“For example: What has happened in Arkansas to cause its communities to lose faith and confidence in their local librarians? What is it that prompted the general assembly’s newfound suspicion? And why has the state found it necessary to target librarians for criminal prosecution?

“To better understand the present moment and why these questions have surfaced, we must first understand the history, purpose, and function of public libraries in America.”

The Arkansas Library Association was part of the coalition of plaintiffs involved in the effort to stop Arkansas’ Act 372, as was the Central Arkansas Library system; the Freedom to Read Foundation; Pearl’s Books; WordsWorth Books; and the now-familiar core four national organizations which include AAP, the American Booksellers Association; the Authors Guild; and the Comic Book Legal Defense Fund.

Link to the rest at Publishing Perspectives

PG says the Arkansas law was stupid in that it would almost certainly result in litigation that the state would lose. Although PG tends to be on the conservative side of some issues, he regards the law as a form of virtue signaling by the legislators who voted for it.

Local grassroots actions to engage librarians in discussions about how they handle books likely to offend some large portion of the local community is a much better approach in PG’s extraordinarily insightful opinion. Parents going to the library with their children would be the best approach to making certain the children didn’t cross any parental lines in their reading material.

That said, once children reach a certain age if they want to read a book, they’ll do so regardless of parental wishes or diligent supervision. This has been a pattern of behavior that has existed since the creation of libraries and probably before that in some other form.

Somehow, the world has continued and virtuous adults have continued to appear on a regular basis.

Authors Join the Brewing Legal Battle Over AI

by

From Publisher’s Weekly:

Authors have now joined the growing ranks of concerned creators suing tech developers over their much-hyped generative AI technology. And a pair of copyright class action suits recently filed on behalf of authors is raising broader questions about the most effective way to protect creators and creative industries—including authors and publishers—from the potentially disruptive aspects of AI.

Filed on June 28 and July 7 by the Joseph Saveri Law Firm on behalf of five named plaintiffs (Mona Awad and Paul Tremblay in one case, and Christopher Golden, Richard Kadrey, and comedian Sarah Silverman in the other), the suits claim that Microsoft-backed OpenAI (creators of ChatGPT) and Meta (creators of LLaMA) infringed the authors’ copyrights by using unauthorized copies of their books to train their AI models, including copies allegedly scraped from notorious pirate sites. While the authors’ attorneys did not comment for this story, a spokesperson for the firm suggested to Ars Technica that, if left unchecked, AI models built with “stolen works” could eventually replace the authors they stole from, and framed the litigation as part of “a larger fight for preserving ownership rights for all artists and creators.”

The authors join a spectrum of increasingly concerned creators on whose behalf the Saveri law firm has filed similar copyright-based lawsuits in recent months. In November 2022, the firm filed suit against GitHub on behalf of a group of software developers. And in January, the firm sued three AI image generators on behalf of a group of artists. Those cases are still pending—and, like most copyright cases involving new technology, they have divided copyright experts. Those who lean in favor of the tech side claim that using unlicensed copyrighted works to train AI is fair use. Those on the content creator side argue that questions of ownership and provenance cannot simply be waved away without major, far-reaching implications.

Neither Meta nor OpenAI has yet responded to the author suits. But multiple copyright lawyers told PW on background that the claims likely face an uphill battle in court. Even if the suits get past the threshold issues associated with the alleged copying at issue and how AI training actually works—which is no sure thing—lawyers say there is ample case law to suggest fair use. For example, a recent case against plagiarism detector TurnItIn.com held that works could be ingested to create a database used to expose plagiarism by students. The landmark Kelly v. Arriba Soft case held that the reproduction and display of photos as thumbnails was fair use. And, in the publishing industry’s own backyard, there’s the landmark Google Books case. One lawyer noted that if Google’s bulk copying and display of tens of millions of books was comfortably found to be fair use, it’s hard to see how using books to train AI would not be, while also cautioning that fair use cases are notoriously fact-dependent and hard to predict.

“I just don’t see how these cases have legs,” one copyright lawyer bluntly told PW. “Look, I get it. Somebody has to make a test case. Otherwise there’s nothing but blogging and opinion pieces and stance-taking by proponents on either side. But I just think there’s too much established case law to support this kind of transformative use as a fair use.”

Cornell Law School professor James Grimmelmann—who has written extensively on the Google case and is now following AI developments closely—is also skeptical that the authors’ infringement cases can succeed, and concurred that AI developers have some “powerful precedents” to rely on. But he is also “a little more sympathetic in principle” to the idea that some AI models may be infringing. “The difference between AI and Google Books is that some AI models could emit infringing works, whereas snippet view in Google Books was designed to prevent output infringement,” he said. “That inflects the fair use analysis, although there are still a lot of factors pointing to transformative use.”

Whether the AI in question was trained using illegal copies from pirate sites could also be a complicating factor, Grimmelmann said. “There’s an orthodox copyright analysis that says if the output is not infringing, a transformative internal process is fair use,” he explained. Nevertheless, some courts will consider the source, he added, noting that the allegedly “unsavory origins” of the copies could factor into a court’s fair use analysis.

Link to the rest at Publisher’s Weekly

OpenAI to face world’s first defamation lawsuit over false claims made by ChatGPT

by

From IB Times:

Artificial intelligence company OpenAI could be on the verge of facing the world’s first defamation lawsuit over the content generated by its AI chatbot, ChatGPT. An Australian Mayor has threatened to file a defamation lawsuit against ChatGPT, accusing the AI-based chatbot of making some false claims.

. . . .

Regional Australian mayor Brian Hood is planning to sue OpenAI, the company behind the popular AI chatbot, if it doesn’t correct the false claims made by ChatGPT. Apparently, the AI bot said that the Australian mayor had served time in prison on bribery charges.

The politician is understandably worried about his reputation online since people have started asking him about ChatGPT’s false claims. If the mayor decides to deal with this in court, then OpenAI could end up facing its first-ever defamation lawsuit against the AI chatbot. To recap, Hood was elected Mayor of the town of Hepburn Shire in November 2022.

Hood became concerned about his online reputation when he found out that ChatGPT had falsely accused him of being involved in a foreign bribery scandal. This early 2000s scandal centered on a Reserve Bank of Australia subsidiary. Although Hood worked for the subsidiary during this time, he was the person who informed authorities about the aforesaid bribes, according to a report by GizmoChina.

. . . .

Aside from this, the report claims Hood never faced any criminal charges. Another report by News18 suggests Hood’s lawyers sent a letter of concern to the AI company on March 21, urging them to revise the incorrect shred of misinformation. Hood’s lawyers have requested the company to either remove the misreported information or face a potential lawsuit.

Moreover, OpenAI has 28 days to change the inaccurate information. The AI firm is currently mum on Hood’s legal letter. It will be interesting to see whether Hood decides to follow through with the lawsuit, becoming the first individual to sue the company behind ChatGPT over false claims. A partner at Hood’s law firm Gordon Legal, James Naughton, pointed out that Hood is an elected official and his “reputation is central to his role.”

Link to the rest at IB Times

ChatGPT maker OpenAI faces a lawsuit over how it used people’s data

by

From The Washington Post:

A California-based law firm is launching a class-action lawsuit against OpenAI, alleging the artificial-intelligence company that created popular chatbot ChatGPT massively violated thecopyrights and privacy of countless people when it used data scraped from the internet to train its tech.

The lawsuit seeks to test out a novel legal theory — that OpenAI violated the rights of millions of internet users when it used their social media comments, blog posts, Wikipedia articles and family recipes. Clarkson, the law firm behind the suit, has previously brought large-scale class-action lawsuits on issues ranging from data breaches to false advertising.

The firm wants to represent “real people whose information was stolen and commercially misappropriated to create this very powerful technology,” said Ryan Clarkson, the firm’s managing partner.

. . . .

The lawsuit goes to the heart of a major unresolved question hanging over the surge in “generative” AI tools such as chatbots and image generators. The technology works by ingesting billions of words from the open internet and learning to build inferences between them. After consuming enough data, the resulting “large language models” can predict what to say in response to a prompt, giving them the ability to write poetry, have complex conversations and pass professional exams. But the humans who wrote those billions of words never signed off on having a company such as OpenAI use them for its own profit.

“All of that information is being taken at scale when it was never intended to be utilized by a large language model,” Clarkson said. He said he hopes to get a court to institute some guardrails on how AI algorithms are trained and how people are compensated when their data is used.

. . . .

The legality of using data pulled from the public internet to train tools that could prove highly lucrative to their developers is still unclear. Some AI developers have argued that the use of data from the internet should be considered “fair use,” a concept in copyright law that creates an exception if the material is changed in a “transformative” way.

The question of fair use is “an open issue that we will be seeing play out in the courts in the months and years to come,” said Katherine Gardner, an intellectual-property lawyer at Gunderson Dettmer, a firm that mostly represents tech start-ups. Artists and other creative professionals who can show their copyrighted work was used to train the AI models could have an argument against the companies using it, but it’s less likely that people who simply posted or commented on a website would be able to win damages, she said.

“When you put content on a social media site or any site, you’re generally granting a very broad license to the site to be able to use your content in any way,” Gardner said. “It’s going to be very difficult for the ordinary end user to claim that they are entitled to any sort of payment or compensation for use of their data as part of the training.”

Link to the rest at The Washington Post

Supreme Court Rejects Genius’ Preposterously Stupid Lawsuit Against Google

by

From Above the Law:

Look, we were not kind when Genius first accused Google of copying lyrics from its site. The only interesting bit was the cleverness with which Genius figured out Google had copied the lyrics from its site, by sneakily adding in curved or non-curved apostrophes to see if the same ones showed up in Google’s version of the lyrics.

But, as we noted at the time, even if Google copied the lyrics from Genius, that was not a legal matter. After all, Genius did not hold any rights in the lyrics, and its method of “getting” the lyrics was basically having people copy down what they heard (one of the stupid things about copyright and lyrics is that there are no official lyrics most of the time, and every lyric site, even those that “license” lyrics, still have to figure out what those lyrics are, which is just kinda crazy when you think about it). And, more importantly, we had a lawsuit almost exactly on this point years ago, where a phone book company inserted fake entries to capture those who “copied” their phone book, and the court said that you can’t copyright facts, and allowed it to stand.

We were even less kind when Genius stupidly sued Google anyway. And we were not at all surprised when a judge rejected the many, many, many ways in which the company tried to turn this into a legal claim. And so, it’s no surprise that this case ends with a complete whimper as the Supreme Court rejected Genius’ cert petition with no comment.

Link to the rest at Above the Law

Affirmative action is out in higher education. What comes next for college admissions?

by

From The Associated Press:

Colleges across the country will be forced to stop considering race in admissions under Thursday’s Supreme Court ruling, ending affirmative action policies that date back decades.

Schools that have relied on race-conscious admissions policies to build diversity will have to rethink how they admit students. It’s expected to result in campuses that have more white and Asian American students and fewer Black and Hispanic students.

The impact of the decision will be felt most strongly at the nation’s most selective colleges, which have been more likely to consider race as one of many factors in admissions. But some less selective universities also consider race, and hundreds of colleges may need to adjust their admissions systems in response to the decision.

Colleges say they’re still analyzing the decision, but it’s sure to have a dramatic impact nationwide. Here’s what we know so far.

WHEN WILL THE RULING TAKE EFFECT?

Today’s incoming high school seniors will be the first to see any change. Many of them will be applying for college over the next year as colleges remove race from admissions decisions. The process probably won’t look much different for students — maybe there will be another question or two about their life experiences — but behind the scenes, there could be big changes in the way colleges evaluate applications.

At Northeastern University, President Joseph E. Aoun said in a campus message the decision “will dramatically alter the use of race as a factor in college admissions.”

HOW MANY COLLEGES CONSIDER RACE?

No one knows for sure. Colleges aren’t required to disclose whether they consider race, and the federal government doesn’t track it. A survey of about 200 colleges in 2019 found that roughly four in 10 colleges said race had at least limited influence in admissions decisions. The practice is most common at highly selective institutions, while many less selective schools don’t consider race.

Nine states have separately banned affirmative action at private universities, including California, Michigan, Florida and Washington.

In states that already banned affirmative action, colleges responded by recruiting more low-income students, hoping that wealth would act as a proxy for race. Some colleges also started “percentage” plans that offer admission to top students at every high school in their state. Such approaches have had mixed results. But expect to see more colleges trying alternate approaches.

HOW ARE COLLEGES GOING TO CHANGE ADMISSIONS?

An alternate approach floated by some would put greater emphasis on students who overcome adversity. President Joe Biden endorsed that approach Thursday, saying adversity should be a “new standard” in college admissions, rewarding those who overcome challenges related to income, race or other factors.

The court’s decision appears to allow such an approach. The conservative majority wrote that “nothing prohibits universities from considering an applicant’s discussion of how race affected the applicant’s life,” as long as it’s tied to a particular quality the applicant brings to campus.

Applicants may see more colleges add questions about adversity or other life experiences. But the decision also warns about going too far, saying colleges can’t simply use essays to revive “the regime we hold unlawful today.”

What’s clear is that any direct consideration of race in admission decisions will have to end, meaning colleges will no longer be able to give an edge to underrepresented minorities simply because of their race.

WHAT DOES THIS MEAN FOR LEGACY ADMISSIONS?

With affirmative action off the table, colleges face mounting pressure to end other admission practices that disproportionately benefit white and wealthy students. Chief among those are legacy preferences, the practice of giving an admission boost to the children of alumni.

Within hours of the decision, activists and some Democrats in Congress were urging colleges to abandon the policy. Biden took a shot at it too, saying he’s asking the Education Department to examine legacy preferences and other practices that “expand privilege instead of opportunity.” A small but notable group of colleges have dropped the practice in recent years, including Johns Hopkins University and Amherst College, but it continues at many others, including Harvard and other Ivy League schools.

Activists are also taking aim at other policies seen as barriers for underrepresented students, including donor preferences and standardized tests like the SAT and ACT. Hundreds of colleges made entrance exams optional during the pandemic, and there’s a growing push to make the change permanent.

Link to the rest at The Associated Press

Supreme Court strikes down affirmative action programs in college admissions

by

From SCOTUSBlog:

In a historic decision, the Supreme Court severely limited, if not effectively ended, the use of affirmative action in college admissions on Thursday. By a vote of 6-3, the justices ruled that the admissions programs used by the University of North Carolina and Harvard College violate the Constitution’s equal protection clause, which bars racial discrimination by government entities.

Writing for the majority, Chief Justice John Roberts explained that college admissions programs can consider race merely to allow an applicant to explain how their race influenced their character in a way that would have a concrete effect on the university. But a student “must be treated based on his or her experiences as an individual — not on the basis of race,” Roberts wrote. The majority effectively, though not explicitly, overruled its 2003 decision in Grutter v. Bollinger, in which the court upheld the University of Michigan Law School’s consideration of race “as one factor among many, in an effort to assemble a student body that is diverse in ways broader than race.” Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, Brett Kavanaugh, and Amy Coney Barrett joined the Roberts opinion.

Justice Sonia Sotomayor – a graduate of Princeton and Yale Law School who once called herself “the perfect affirmative action baby” – dissented, in an opinion that was joined by Justices Elena Kagan and Ketanji Brown Jackson. Sotomayor emphasized that the majority’s decision had rolled “back decades of precedent and momentous progress” and “cement[ed] a superficial rule of colorblindness as a constitutional principle in an endemically segregated society.”

Thursday’s ruling was the latest in a series of challenges to the role of race in university admissions. In both the North Carolina and Harvard cases, the plaintiffs had asked the justices to overrule Grutter. In her opinion for the majority in that case, Justice Sandra Day O’Connor reaffirmed that “student body diversity is a compelling state interest that can justify the use of race in university admissions,” but she warned that race-conscious admissions policies should not last forever. In 25 years, she suggested, “the use of racial preferences will no longer be necessary to further the interest” in diversity.

Eleven years after the court’s decision in Grutter, a group called Students for Fair Admissions filed the North Carolina and Harvard cases in federal court. The group was founded by Edward Blum, a conservative activist who had also spearheaded a challenge to the admissions policy at the University of Texas at Austin as well as to Shelby County v. Holder, the 2013 case that narrowed the Voting Rights Act.

After the lower courts upheld both North Carolina’s and Harvard’s admissions policies, the Blum’s group came to the Supreme Court, where it asked the justices to overrule their decision in Grutter and bar the consideration of race in university admissions altogether. The court that agreed to take up both cases last year was a very different, and much more conservative, court than the one that had upheld the UT-Austin policy seven years before. Justice Anthony Kennedy, the author of the UT-Austin decision, retired in 2018 and was replaced by Justice Brett Kavanaugh, while Justice Ruth Bader Ginsburg was succeeded by Justice Amy Coney Barrett.

In a 40-page opinion that addressed both the Harvard and UNC cases, Roberts began with a review of the Supreme Court’s past decisions interpreting the equal protection clause. Those decisions, he concluded, reflect the clause’s “core purpose”: “doing away with all governmentally imposed discrimination based on race.” He emphasized that the Supreme Court had only allowed universities to use race-based admissions programs “within the confines of narrow restrictions.” But the Harvard and UNC programs, “however well intentioned and implemented in good faith,” Roberts explained, do not comply with those restrictions.

Both programs, Roberts began, consider race as part of their admissions program for commendable goals, such as “training future leaders in the public and private sector” and “promoting the robust exchange of ideas.” But those goals are too vague for courts to measure, Roberts reasoned. How, he queried, do courts determine whether future leaders have been sufficiently trained, or “whether the exchange of ideas is ‘robust’”? And even if courts could measure them, he continued, how would courts determine whether universities had accomplished those goals, “and when the perilous remedy of racial preferences may cease?”

The programs also use race in a “negative” manner, Roberts next explained, despite the Supreme Court’s admonition that “an individual’s race may never be used against him in the admissions process.” Although both universities contend that an applicant’s race is never a negative factor, Roberts wrote, “[c]ollege admissions are zero-sum. A benefit provided to some applicants but not to others necessarily advantages the former group at the expense of the latter.” Moreover, Roberts added, the programs also rely on prohibited racial stereotyping – the idea that minority students will always have the same views or perspectives on a particular issue.

Finally, Roberts observed, the Harvard and UNC programs lacked the “logical end point” suggested by Grutter: Both Harvard and UNC acknowledged that their programs do not have a “sunset” date. Indeed, Roberts noted, “UNC suggests that it might soon use race to a greater extent than it currently does.”

Roberts stressed that the court’s decision did not bar universities from ever considering race on a case-by-case basis. Schools, he indicated, can consider “an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise.” However, he cautioned, a “benefit to a student who overcame racial discrimination, for example, must be tied to that student’s courage and determination. Or a benefit to a student whose heritage or culture motivated him or her to assume a leadership role or attain a particular goal must be tied to that student’s unique ability to contribute to the university.” By contrast, he complained, programs like the ones used by Harvard and UNC have “concluded, wrongly, that the touchstone of an individual’s identity is not challenges bested, skills built, or lessons learned but the color of their skin. Our constitutional history does not tolerate that choice.”

The majority’s decision left the door open for service academies like the U.S. Naval Academy and West Point to continue to use, at least for now, race-conscious admissions programs. The Biden administration, which filed a brief as a “friend of the court” in support of Harvard and UNC, had emphasized that senior military leaders believe that it is important to have a diverse officer corps, which in turn requires the consideration of race for admission to the service academies. But the service academies did not participate in the Harvard and UNC cases and the lower courts did not consider that argument. Therefore, Roberts indicated in a footnote, the Supreme Court did not weigh in on the issue, “in light of the potentially distinct interests that military academies may present.”

Thomas filed a concurring opinion and took the relatively rare step of reading a summary of his opinion from the bench. He pushed back against the idea, advanced by Sotomayor in her dissent, that the 14th Amendment “does not impose a blanket ban on race-conscious policies.”

But Thomas, who in his memoir discussed the “stigmatizing effects of racial preference” that he felt after he was admitted to Yale Law School in the 1970s under a race-conscious admissions program, was also sharply critical of the UNC and Harvard programs from a practical perspective. Such programs, he argued, “do nothing to increase the overall number of blacks and Hispanics able to access a college education” but instead “simply redistribute individuals” among colleges and universities, “placing some into more competitive institutions than they otherwise would have attended” – and where they may be less likely to succeed academically. And if they do succeed, Thomas wrote, they may still be harmed by the stigma that race-conscious admissions programs create. Rather than solving existing issues of inequality, Thomas argued, these policies themselves divide students and “lead[] to increasing racial polarization and friction.”

Kavanaugh wrote his own concurring opinion in which he acknowledged that “racial discrimination still occurs and the effects of past racial discrimination still persist.” He observed that other paths, such as federal and state civil rights laws, can “deter and provide remedies for current acts of racial discrimination,” while governments and universities can also use race-neutral methods to remedy past discrimination. But he suggested that Thursday’s decision – which, he noted, will first apply to the admissions process for the class of 2028 – was consistent with Grutter’s “explicit” 25-year sunset.

Link to the rest at SCOTUSBlog

Supreme Court Rules Against Affirmative Action

by

From The Wall Street Journal:

The Supreme Court found it unconstitutional to consider race in university admissions, eliminating the principal tool the nation’s most exclusive schools have used to diversify their campuses.

Thursday’s 6-3 decision will force a reworking of admissions criteria throughout American higher education, where for decades the pursuit of diversity has been an article of faith. University officials have insisted no substitute for racial preferences exists that can ensure that a representative share of minority applicants—particularly Black students—gains admission to selective institutions.

No longer able to give such applicants an automatic boost, admissions offices now must decide where racial diversity ranks among priorities that can include academic performance, achievement in extracurricular activities such as athletics, and preferences for alumni and donors.

Before the court were admissions practices at two pillars of American higher education: Harvard College, the Ivy League titan whose name has symbolized achievement and power for centuries, and the University of North Carolina, a public flagship which, like other land-grant institutions, provides an elite education subsidized by taxpayers for state residents. Both schools said that, consistent with decades of Supreme Court precedent, a minority applicant’s race could serve as an unenumerated plus factor that raised chances of admission. 

Lower courts agreed, rejecting lawsuits organized by Edward Blum, a former stockbroker who has brought a number of cases against laws and policies that make distinctions based on race or ethnicity in areas such as voting and education. 

The 14th Amendment ensures that individuals receive equal protection of the laws from state agencies including public universities, a standard that also applies to most private colleges that receive federal funding. In general, the court has permitted racial preferences only to remedy specific acts of illegal discrimination, not compensate for general social injustices said to stem from historical practices. 

For 45 years, the Supreme Court has recognized a limited exception to that rule for university admissions, one based on the schools’ academic freedom to assemble classes that support their educational mission. Diversity was a compelling interest, the court had found, and race-conscious admissions as implemented at Harvard and similar schools were narrowly tailored to avoid unnecessarily disadvantaging other applicants. 

. . . .

In a 1978 case, Regents of the University of California v. Bakke, the controlling opinion by Justice Lewis Powell struck down a policy that set aside a minimum of 16 seats for minorities applying to the public medical school in Davis, Calif. 

. . . .

But while racial quotas were barred, the opinion permitted consideration of race as one of several characteristics a student could bring to the campus environment. Powell reasoned that under the First Amendment, a university’s academic freedom “to make its own judgments as to education includes the selection of its student body.”

As an example, Powell referenced the admissions policy at Harvard. When choosing among academically qualified students, “the race of an applicant may tip the balance in his favor just as geographic origin or a life spent on a farm may tip the balance in other candidates’ cases,” the university said then. “A black student can usually bring something that a white person cannot offer.”

Powell’s opinion was a compromise position; the other eight justices had evenly split, with four conservatives finding no justification for racial considerations and four liberals arguing that setting aside seats for racial minorities was permissible. 

. . . .

Higher education—and much of American corporations—embraced the diversity rationale, but conservatives have viewed affirmative action as a form of social engineering that elevates group identity over individual achievement. Public opinion, even among minority groups likely to benefit, was at best lukewarm to racial preference policies.  

By the 1990s, activists were challenging affirmative action in several arenas—at university boards, through voter initiatives and with test cases in court. A turning point seemed to come in 1996, when California voters passed a ballot initiative ending affirmative action at state universities and agencies and a federal appeals court struck down race-conscious admissions at the University of Texas. 

But when the issue reached the Supreme Court again in 2003, the justices in a pair of cases involving the University of Michigan affirmed Powell’s Bakke opinion. The justices struck down the undergraduate admissions formula that automatically gave minority applicants a 20-point boost on a 150-point admissions scale, but upheld the law school’s policy allowing consideration of race in “a flexible, nonmechanical way.” 

. . . .

But at oral arguments, several justices focused on another passage in O’Connor’s 2003 opinion, where she noted that minority enrollment had increased in the 25 years since the Bakke case. 

“We expect that 25 years from now, the use of racial preferences will no longer be necessary,” she wrote. 

Link to the rest at The Wall Street Journal

PG understands that this is nothing to do with books and hopes any comments will remain collegial and polite.

For those visitors from outside of the United States, affirmative action, race preferences in college admissions, has been a faultline in American politics.

As the OP describes, racial considerations in college admissions spread to racial considerations in employment decisions. In some cases, this took place via federal and state legislation and in others via judicial opinions in both federal and state courts.

Affirmative action has, from its origins in the Supreme Court cases that established it and follow-on litigation and legislation, has been a divisive topic in both legal and general public opinion. As mentioned in the OP, at least one of the justices involved in the series of Supreme Court decisions establishing and continuing the consideration of race in college admissions viewed it as a temporary means of rectifying the effects of prior racial discrimination.

In various other federal and state court decisions since that time, PG felt that at least some of the appellate judges were still uneasy with racial preferences in college admissions and hiring decisions of government and some large corporations.

The final quote from Justice O’Connor included in the OP suggested that court approval of racial preferences would be a temporary method of resolving past discrimination, which, at least for PG, was an indication that she, like many others in the United States, felt the court-approved racial discrimination, even to rectify past discrimination, was not a comfortable exception to the clear and general rule of the Constitution which provides for equal treatment under law in a race-blind manner.

PG expects that more than a little additional litigation on this subject will continue across a wide array of existing state and federal government and private agencies and actors as the 45-year impact of the original Supreme Court decision is reversed on the ground. There will also be a huge number of press and personal discussion of the implications of this judicial earthquake.

For those who choose to comment on this post or elsewhere on TPV, PG requests comity and tolerance of opposing opinions.

UPDATE: PG just checked and the published Supreme Court decision requires 237 pages of printed opinions. Even using wide margins in its published opinions, there is a whole lot of stuff in this decision that lots and lots of people in the US will have to consider.

The WSJ obviously wanted to get the news out to its readers as quickly as possible, but almost certainly had only the time to report the results and and a fraction of the details regarding what the the learned women and men on the Supreme Court had to say on the topic.

Why legal writing is so awful

by

From The Economist:

“The first thing we do, let’s kill all the lawyers,” is one of Shakespeare’s most memorable lines. You would struggle to find such a line in the writings of lawyers themselves—and not just because they would, presumably, disagree. Though some judges are sophisticated stylists, most legal language is fussy, tangled and incapable of producing anything so pithy. (This is no doubt one reason so many people want to kill all the lawyers.) But do lawyers write that way to impress, to bewilder—or perhaps because they must?

In a study published in Proceedings of the National Academy of Sciences, Eric Martínez and his colleagues from the Massachusetts Institute of Technology and the University of Edinburgh tried to find out. Contracts written in “legalese”, as well as simplified versions conveying identical concepts, were shown to American lawyers and laypeople. It turns out that lawyers struggle with, and dislike, legal language almost as much as their clients.

Legalese is heavy on “centre-embedding”, sentences in which related words are separated by a long insertion, as in “It is understood by artist and company that comprehensive liability insurance, protecting against any claim or demand up to $300,000, including attorney’s fees, related to company’s actions under this venue agreement, shall be purchased and maintained throughout the agreement by company.” This puts a heavy strain on the brain’s working memory. The word “insurance” must be held in the mind while some 20 other words go by before its attendant verb phrase “shall be purchased” arrives.

Another baleful feature of legal writing is jargon: uncommon words like hereinbefore, mala fides and lessor. These mean little more than above, bad faith and landlord. Even if most lawyers and many laypeople know the jargon, the words require more effort to recall than everyday ones.

Given the almost universal disdain for legal language, the obvious question is why it persists. Mr Martínez and his colleagues examined several hypotheses. One was “the curse of knowledge”. This is the idea that many learned people do not know how to write for those less informed than themselves. But the researchers found that the lawyers struggle with legal language too. They found the content of the legalese contracts harder to understand and remember. So did laypeople, of course, but they remembered the simple contracts as well as the lawyers did the complex ones; they understood them almost as well, too.

A more cynical idea was the “it’s just business” hypothesis. This holds that lawyers are intentionally opaque so as to gull clients into paying more for their supposed expertise. But that did not fit the data either, for the lawyers believed their clients would be more likely to sign the simplified contracts than the standard ones.

Perhaps legalese is a form of “in-group signalling”—behaviour used to signal belonging to a group, such as religious iconography or flag-waving at sports events, and aimed at fellow lawyers rather than clients? But the lawyers in the test group said they would be more likely to hire the writers of the simplified contracts than the authors of the traditional gobbledygook.

The most common defence of legalese is the need for precision, says Mr Martínez (who trained as a lawyer before switching to cognitive science). Legal language, in this view, is too important to leave to the imprecisions of ordinary style. But this argument was refuted too: the lawyers who read the simplified contracts rated them just as enforceable as the complex ones.

Link to the rest at The Economist

PG will add that many documents a lawyer writes include provisions that have been the subject of prior litigation and which courts of varying degrees of grandeur have determined have a specific meaning and will be enforced in a very predictable way. One or more judges have decreed that a particular organization of words will result in a result that all parties (with the assistance of counsel in some cases) to a contract understand will result in the desired outcome.

PG has no serious objection to the idea of plain-language contracts when such contracts are carefully written so they cover any sort of dispute over their meaning and don’t introduce ambiguity into the agreement.

A provision that the parties will resolve disputes arising from the subject of an agreement and the manner in which misunderstandings and disputes will be handled by sitting down and talking things out is usually a bad idea. It requires that parties agree about what the terms of an agreement really meant when each understood an obligation or benefit from the original agreement.

An agreement to agree about some contract provision in the future has proven by extensive experience to result in an unenforceable contractual provision. Essentially, to create some future common understanding about who will do what and when they will do it sound fine in theory, but if a common understanding of contract obligations and benefits had been carefully set down in a precise and clear manner in the first place, the parties might have found that they had not, in fact, had an actual meeting of minds concerning an important element of what each had thought was the actual agreement. One party had an obligation she/he thought would not be required or would not receive the all the benefits she/he thought would come to them from the agreement.

As an example, a contract provision that requires that the party who receives something of value will “promptly” pay a specified sum of money to the other is an invitation to a disagreement. One party might believe that “promptly” meant immediately after she/he delivered something of value to the other and the other party might believe that the obligation only applied to her/him at the end of the month or after the corn was harvested and he had the money to pay the debt.

PG readily admits that some legalisms don’t really add any clarity to contracts in this day and age. Whereas and therefores often introduce outdated terms that only obscure and don’t add to the clarity of a contemporary legal document.

An AI Cease-and-Desist Letter

by

PG decided to ask ChatGPT to write a cease-and-desist letter to someone who is stealing PG’s writing and selling it as his own, a fanciful thought if ever there was one.

PG’s prompt: Write a multi-paragraph cease-and-desist letter to John Smith, an author who is stealing my writing and selling it as his own.

The result:

[Your Name]
[Your Address]
[City, State, ZIP Code]
[Email Address]
[Phone Number]
[Date]

John Smith
[Address]
[City, State, ZIP Code]

Subject: Cease and Desist Copyright Infringement

Dear Mr. Smith,

I hope this letter finds you well. However, it has come to my attention that you have been engaged in a serious act of intellectual property infringement. It has been brought to my notice that you have been unlawfully reproducing, distributing, and selling written material that I have authored, thereby infringing upon my exclusive rights as the copyright holder. This unauthorized use of my work is a clear violation of applicable copyright laws.

I am the sole owner and creator of the written content in question, which includes [specific titles or descriptions of the work(s)]. These works are protected by copyright law under the [Copyright Registration Number, if applicable] and are subject to the provisions outlined in the United States Copyright Act [Title 17 of the United States Code].

Upon careful examination, I have gathered substantial evidence demonstrating that you have blatantly copied and utilized my original work without seeking my permission or obtaining the necessary licenses. This constitutes copyright infringement and undermines the rights and financial interests that are rightfully mine as the lawful copyright holder.

I demand that you immediately cease and desist from any further use, distribution, sale, or display of my copyrighted material. Additionally, I insist that you promptly remove all unauthorized copies of my work from any websites, platforms, or other mediums under your control or influence. Failure to comply with these demands will leave me with no choice but to pursue all available legal remedies to protect my intellectual property rights.

In order to resolve this matter swiftly and amicably, I request that you respond to this letter within [reasonable time frame, e.g., 10 business days] from the date of receipt. Your response should confirm your compliance with my demands and provide a detailed account of the actions taken to rectify the copyright infringement. Furthermore, I expect you to provide a written assurance that you will refrain from any future unauthorized use of my copyrighted material.

Please be advised that this letter is not intended to be a complete or exhaustive statement of my rights, legal or otherwise, in connection with the infringement. I expressly reserve all rights and remedies available to me under the law, including the right to seek injunctive relief, damages, and attorney fees.

I strongly urge you to reconsider your actions and rectify this situation promptly. By doing so, we can potentially avoid costly and protracted legal proceedings. I hope we can resolve this matter amicably and without further escalation.

Thank you for your immediate attention to this serious matter. I trust that you will comply with my demands and respect the rights of copyright holders going forward.

Sincerely,

[Your Name]

PG says this is better than some cease-and-desist letters written by other attorneys that he has reviewed.

Court to Hear Bids by Amazon, Publishers to Dismiss Revived Price Fixing Case

by

From Publisher’s Weekly:

It’s deja vu all over again: in a brief order this week, Magistrate judge Valerie Figueredo has set oral arguments for June 22 to hear motions from Amazon and the Big Five publishers to dismiss an amended civil lawsuit accusing them of an illegal conspiracy to fix e-book prices. The hearing comes some 10 months after Figueredo found insufficient evidence for the initial case to proceed, prompting a do-over.

The case was first filed in the Southern District of New York on January 14, 2021, led by firm Hagens Berman, the first firm to sue Apple and five major publishers for colluding to fix e-book prices in 2011. It alleges that the Big Five publishers—Hachette, HarperCollins, Macmillan, Penguin Random House, and Simon & Schuster—are co-conspirators in a hub-and-spoke scheme, with Amazon to suppress retail price competition and keep e-book prices artificially high. In March 2021, a second, associated suit accusing Amazon and the Big Five publishers of a conspiracy to restrain price competition in the retail and online print trade book markets was also filed. That case was also dismissed, amended, and refiled last year, though it is not clear whether the June 22 hearing will include the motions to dismiss that case as well.

From the outset, Amazon and the publishers have insisted the conspiracy claims are “implausible” and unsupported by any evidence. And after a marathon July 27, 2022 hearing, Figueredo agreed, recommending that presiding judge Gregory Woods dismiss both cases. Woods accepted Figeuredo’s “well-reasoned” and “thorough” reports, and dismissed both cases last September—but in a twist, the cases were dismissed without prejudice, giving the plaintiffs a chance to file amended complaints.

Amazon and the publishers insist there is still no case. “While the [second amended complaint] has swelled plaintiffs’ allegations by more than 30 pages and 100 paragraphs, those additions overwhelmingly consist of repetitions of the same alleged facts from the [complaint] that the court has already determined do not state a claim,” reads a December, 2022 letter from Amazon lawyers.

The plaintiffs argue that the case should be allowed to proceed. “The question at this stage is not whether Defendants have in fact violated the antitrust laws but, rather, whether Plaintiffs have met pleading requirements so that their claim—accepting all allegations as true and drawing all reasonable inferences in their favor—should get past a motion to dismiss,” the plaintiffs argue, insisting they have cleared that bar.

While the revived complaint adds details about the “supracompetitive” profit margins on e-book sales Amazon is able to reap and invokes Judge Florence Pan’s October 31 decision to block Penguin Random House’s acquisition of Simon & Schuster on antitrust grounds, it appears to still suffer from the key deficiency of its predecessor: the lack of any direct evidence suggesting coordination among Amazon and the publishers.

Link to the rest at Publisher’s Weekly

Five key takeaways from the House Judiciary Committee hearing on AI and copyright law

by

From Verdict:

In light of several high-profile lawsuits in recent months, countries’ legislative frameworks are finally beginning to grapple with the challenges thrown up by copyright law and generative artificial intelligence (AI).

In January 2023, Getty Images announced a lawsuit against Stability AI in London’s High Court of Justice, alleging that the Stable Diffusion image generator infringed Getty’s copyrighted photographs and trademarks.

And, in February, the award-winning visual artists Sarah Andersen, Kelly McKernan, and Karla Ortiz filed a class action complaint in a US District Court in California against defendants Stability AI, Midjourney and DeviantArt, alleging that their works were used without permission as part of the companies’ AI training set.

Earlier, in November 2022, a group of anonymous programmers filed a class action lawsuit against GitHub, a Microsoft subsidiary, and OpenAI, alleging unauthorised and unlicensed use of the programmers’ software code to develop the defendants’ AI machines, Codex and Copilot.

Recognising a need for action, the House Judiciary Committee in the US has held a hearing, examining the intersection of generative AI and copyright law. The hearing, which took place on 17 May 2023, followed the Senate hearing on AI oversight the previous day, in which OpenAI CEO Sam Altman took the stand. What were the five key takeaways from the witness testimony?

Sy Damle, Latham & Watkins LLP and former General Counsel of the US Copyright Office, argued that “the use of a copyrighted work to learn unprotectable facts and use those facts to create products that do not themselves infringe copyright is quintessential fair use”, and that the training of AI models generally adheres to this principle.

He spoke against the view that generative AI’s ability to replicate artistic styles undermines any fair use defence, saying, “This concern has nothing to do with copyright, which does not, and has never, granted monopolies over artistic or musical styles.”

2. Implementing a statutory or collective licencing regime would be a project “many orders of magnitude larger than any similar scheme in the history of American law”.

Sy Damle argued that it would be a bad policy to introduce statutory or collective licencing under which any use of copyrighted content to train an AI model would automatically trigger a payment obligation. This is because it would prevent case-by-case evaluation, eliminating the fair use doctrine.

Moreover, he observed that implementing such a regime would be overwhelmingly complex. A statutory licencing scheme would need to cover every publicly accessible work on the Internet – a body of work which likely numbers in the tens of billions. There are also an uncountable number of “orphan works” without identifiable owners, which would lead to massive volumes of unmatched royalties. 

3. AI systems could generate outputs that potentially infringe on artists’ copyrights and right of publicity in various ways.

Chris Callison-Burch, Associate Professor of Computer and Information Science at the University of Pennsylvania and Visiting Research Scientist at the Allen Institute for Artificial Intelligence, pointed out that outputs of generative AI can violate copyright laws. For example, via memorisation of datasets, AI systems can output identical copies of copyrighted materials.

However, he observed that Google and other companies are developing strategies to prevent sophisticated prompting by the user that would elicit the underlying training data.

Text-to-image generation systems also have the ability to produce images with copyrightable characters in their dataset – a problem that may be hard for AI developers to avoid without a registry of copyrighted or trademarked characters.

He suggested that other uses of generative AI may violate “right-of-publicity” rather than copyright law. For example, there is the case of the AI-generated song called “Heart on My Sleeve””, designed to sound like the artists Drake and The Weeknd. There is also the issue of “substantial similarity” where outputs of generative AI systems look very similar to some of their training data.

Callison-Burch pointed out that there are several technical mechanisms that are being designed by industry to let copyright holders opt out. The first is an industry standard protocol that allows for websites to specify which parts should be indexed by web crawlers, and which part should be excluded. The protocol is implemented by placing a file called robots.txt on the website that hosts the copyrighted materials.

Organisations that collect training data, like Common Crawl and LAION, follow this protocol and exclude files that have been listed in robots.txt as “do not crawl”. There are also emerging industry efforts to allow artists and other copyright holders to opt out of future training.

Link to the rest at Verdict

Supreme Court rules Twitter not liable for ISIS content

by

From SCOTUSblog:

The Supreme Court on Thursday ruled against the family of a 2017 ISIS attack victim who sought to hold tech companies liable for allowing ISIS to use their platforms in its terrorism efforts. The lawsuit seeking to hold Twitter, Facebook, and Google liable for aiding and abetting international terrorism cannot go forward, a unanimous court found. And based on that decision, the justices sidestepped a major ruling in a separate case on the scope of Section 230 of the Communications Decency Act of 1996, which generally shields tech companies from liability for content published by users. The justices sent that case, Gonzalez v. Google LLC, back to the lower court for another look – suggesting that it too was unlikely to survive.

Justice Clarence Thomas wrote for a unanimous court in Twitter v. Taamneh, a lawsuit filed by the family of a Jordanian citizen, Nawras Alassaf, who was killed in an ISIS attack on an Istanbul nightclub in 2017. The lawsuit relied on the Antiterrorism Act, which allows U.S. nationals to sue anyone who “aids and abets, by knowingly providing substantial assistance,” international terrorism. The Taamneh family argued that Twitter and the other tech companies knew that their platforms played an important role in ISIS’s terrorism efforts but nonetheless failed to take action to keep ISIS content off those platforms.

The U.S. Court of Appeals for the 9th Circuit allowed the family’s lawsuit to go forward, but on Thursday the Supreme Court reversed. Thomas noted that the “mere creation of” social-media platforms “is not culpable,” even if “bad actors like ISIS are able to use” those platforms for “illegal — and sometimes terrible — ends. But the same could be said of cell phones, email, or the internet generally,” Thomas emphasized.

Instead, Thomas explained, what the family’s argument really boils down to is that the tech companies should be held liable for “an alleged failure to stop ISIS from using these platforms.” But the family has not demonstrated the kind of link between the tech companies and the attack on the nightclub that it would need to show to hold the companies liable, Thomas reasoned. Instead, he observed, the companies’ “relationship with ISIS and its supporters appears to have been the same as their relationship with their billion-plus other users: arm’s length, passive, and largely indifferent.” And the relationship between the companies and the attack on the nightclub is even more attenuated, Thomas wrote, when the family has never alleged that ISIS used the social-media platforms to plan the attack.

Indeed, Thomas noted, because of the “lack of concrete nexus between” the tech companies and the Istanbul attack, allowing the family’s lawsuit to go forward would effectively mean that the tech companies could be held liable “as having aided and abetted each and every ISIS terrorist attack” anywhere in the world.

Link to the rest at SCOTUSblog

Librarians, Publishers, Bookstores Join Lawsuit Over Arkansas Library ‘Obscenity’ Law

by

From Publisher’s Weekly:

Some 17 plaintiffs—including the ALA’s Freedom to Read Foundation, the Association of American Publishers, the American Booksellers Association, and the Authors Guild—will file a federal lawsuit over a recently passed law in Arkansas, Act 372 of 2023 (also known as SB 81), which exposes librarians to criminal liability for making allegedly “obscene” books available to minors.

According to a report in the Arkansas Advocate, news of the suit comes after the Central Arkansas Library System board of directors voted on May 25 to proceed with the litigation. At press time, the suit had yet to be filed.

In a statement to PW, ALA officials confirmed their participation in the suit. “The American Library Association is pleased that the Freedom to Read Foundation, our First Amendment legal defense arm, and our state affiliate, the Arkansas Library Association, are participating in the lawsuit to vindicate Arkansas residents’ freedom to read,” ALA president Lessa Kanani’opua Pelayo-Lozada told PW. “The government has no place in deciding what books people can borrow or buy.”

The law in question, which was signed by governor Sarah Huckabee Sanders on March 31 and is set to take effect on August 1, removes an exemption from prosecution for school and public libraries and would empower virtually anyone to challenge the appropriateness of library materials in Arkansas. Library staff found to have “knowingly” distributed or facilitating the distribution of allegedly obscene material to a minor—defined as anyone under 18—would be open to a potential felony charge.

The impending lawsuit in Arkansas is the latest in an escalating legal offensive being waged by freedom to read advocates in response to the ongoing surge in book bans and legislative restrictions nationwide.

Link to the rest at Publisher’s Weekly

Legally Literary: A Reading List of Lawyers (or Law Students) Turned Writers

by

From The Literary Hub:

Over the past two decades, I’ve worked on fiction between the spaces of my various law related jobs. Law firm associate. Federal judicial clerk. Law professor (which, happily, I still am). My debut novel, Late Bloomers, was recently released by Random House, and I found myself thinking about the lawyers-turned-writers that have inspired me over the years.

During the many years I worked on my own novel, dreaming of publication, I’d always notice if an author mentioned a J.D. degree in their bio, filing it away as inspiration. I’d feel a tiny jolt and think that maybe I, too, could someday join this club of lawyers (or former law students) who had published a book of fiction.

Now that my debut novel has been published, I’m often asked about my law background and why law-trained people are drawn to (and sometimes, quite good at) writing fiction. As I’m not inclined to make generalizations without supporting data (the academic life beats that trait out of you), I can only offer unsupported guesses. And here are a few.

Writers and lawyers pay careful attention to language. If you are a lawyer who drafts contracts, one wrong word or unartful phrase can have real consequences. Fiction writers, too, think hard about the words they choose. If you are a lawyer litigating cases, you likely write briefs and write them in ways designed to generate empathy for your client. Fiction writers, too, are in the empathy business. To empathize with another person, in circumstances different than one’s own, is why many of us write and read fiction.

Also, lawyers are in the constant company of hypotheticals: what if the facts of a case changed this way or that, what outcome then? In law school, professors pepper their students with hypotheticals (sometimes bordering on the bizarre). As a novelist, I’m engaged in a years-long hypothetical exercise; what if my characters did this or that, what then? And then, of course, there is this: The best legal writing can shine a light on inequity and remind us of our shared humanity. Great fiction often does that too.

. . . .

Again, these are just some guesses for why lawyers are drawn to writing fiction. But as I look back on the authors whose work has inspired me over the years, it is hard not to be struck by how many of them were lawyers for a time—or, at least, went to law school, even if they didn’t practice law. Here are nine novels and short story collections by former lawyers or law students that have inspired me along the way.

Elizabeth Strout received a J.D. from Syracuse University College of Law and worked briefly as a legal services lawyer. In a Fresh Air interview with Terry Gross, Strout described herself as a “bad lawyer” (I don’t believe that) but said that her law school training was nonetheless beneficial to her writing because “it stripped away the excessive emotion.”

Strout is one of my favorite writers, and I love all her story collections and novels, including her most recent, Lucy by the Sea. But Olive Kitteridge has a special place in my heart, and I re-read it often. Winner of the 2009 Pulitzer Prize, Olive Kitteridge is a deeply insightful and moving collection of thirteen linked stories that follow Olive, a retired schoolteacher, and other residents of Crosby, Maine, as they grapple with love, loss, loneliness, marriage, parenting, and familial estrangement.

Min Jin Lee’s first novel, Free Food for Millionaires, introduces the unforgettable character of Casey Han, a Princeton-educated Korean-American woman raised in Queens, who struggles with debt, loneliness, heartache, ambition, and parental expectations in her post-grad twenties.

Lee studied law at Georgetown and worked as a corporate lawyer in New York for a few years before leaving to focus on her writing. In numerous interviews, she has described the grueling billable hours of her law firm job and the health concerns that drove her to quit. Despite having experienced the unrealistic demands of New York law firm life firsthand, I’m almost grateful for its unpleasantness—if for no other reason than it prompted Lee to devote herself to writing her incredible novels and sharing her astonishing talent with the world.

After graduating from Duke Law School, Ben Fountain practiced real-estate law at a large Dallas law firm for five years before deciding to pursue fiction writing full-time. Fountain discusses his law background in a New Yorker article by Malcolm Gladwell titled “Late Bloomers” (not the reason I picked my own novel’s title, I promise). In it, Fountain describes the challenges of writing fiction at night after working law firm hours and the eighteen long years that passed between his decision to quit law and the publication of his first book, Brief Encounters with Che Guevara, which won the Pen/Hemingway Award.

The stories in this terrific collection, set in locations as varied as Haiti, Columbia, Myanmar and Sierra Leone, are heartbreaking, surprising, complex, and darkly funny.

Link to the rest at The Literary Hub

Supreme Court Rules Against Warhol Estate in Copyright Dispute Over Use of Photo of Prince for Magazine Cover — Potentially Wide-Reaching Implications for Generative AI for Visual Art

by

From The National Law Review:

On May 18, 2023, the US Supreme Court affirmed the Second Circuit’s decision that artist Andy Warhol’s silkscreen portrait of Lynn Goldsmith’s photograph of musician Prince, used for a Vanity Fair cover, was not a fair use under US Copyright Law.

In a 7-2 decision, the Court found the “purpose and character” factor of the copyright fair use analysis did not weigh in favor of a finding of fair use where the use of a new work encompassing an original work shares the same purpose as the use of the original work and is commercially licensed.

Although the addition of a new meaning or message is a relevant consideration in assessing the purpose and use of a work for purposes of determining fair use, it is not dispositive. According to the Court, the “purpose and character” fair use factor must consider “the reasons for, and nature of, the copier’s use of an original work,” balanced against the original creator’s exclusive right to make derivative works. If the new work achieves the same or similar purpose to the original work, and the new use is of a commercial nature, the first fair use factor likely weighs against a finding of fair use, absent another justification of copying. Ultimately, the inquiry is objective and questions how the original user has used the original work.

The case comes with much anticipation and could have significant implications on the availability of the “fair use” defense in copyright infringement cases, including potentially with respect to the hotly contested use of generative artificial intelligence to create new works.

Background

Vanity Fair magazine originally commissioned Warhol to create an image of Prince for publication alongside an article of the musician in 1984. Photographer Lynn Goldsmith granted the magazine a “one time” license for it to use one of her Prince photographs as an “artist reference for an illustration.” Warhol created a purple silkscreen portrait using Goldsmith’s photograph. The magazine credited Goldsmith for the “source photograph” and paid her $400.

Unbeknownst to Goldsmith, Warhol created 15 other silkscreen prints and pencil drawings from Goldsmith’s same image of Prince. Goldsmith claimed she did not learn of the Prince series until 2016, when Condé Nast published some of the images in a posthumous tribute to Prince. In particular, in 2016, the Andy Warhol Foundation for the Visual Arts, Inc. (AWF) licensed an “Orange Prince” silkscreen image to the magazine for $10,000 for its cover. Goldsmith did not receive any compensation or credit.

(PG note. Both images are from the Opinion of The Supreme Court.)

In response to Goldsmith’s objections, AWF sued for a declaratory judgment of non-infringement of Goldsmith’s alleged copyright. Goldsmith counterclaimed for infringement. On Goldsmith’s counterclaim, the district court granted summary judgment for AWF, finding all four copyright fair use factors, under 17 U.S.C. §107, weighed in the foundation’s favor. The Court of Appeals for the Second Circuit however reversed and remanded, finding all fair use factors favored Goldsmith.

Decision

The only issue before the Supreme Court was whether the “purpose and character of the use” weighed in favor of AWF such that its commercial licensing to Condé Nast would be considered fair use. The Court ultimately agreed with the Second Circuit, finding in favor of Goldsmith, and that the factor did not favor AWF’s fair use defense to copyright infringement.

Goldsmith had licensed her works for years, with images appearing in Life, Time, and Rolling Stone magazines. People magazine had also paid Goldsmith to use one of her Prince images in a special collector’s edition of its publication following Prince’s death. Because Goldsmith’s original photograph and AWF’s work licensed to Condé Nast were both portraits of Prince, “used in magazines to illustrate stories about Prince[,]” the Court found the works had the same purpose and that AWF’s use did not favor a finding of fair use.

A determination of fair use requires consideration of the following four factors set forth in §107 of the Copyright Act:

  1. The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
  2. The nature of the copyrighted work;
  3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  4. The effect of the use upon the potential market for or value of the copyrighted work.

The Court explained that the central question in determining the first fair use factor asks whether and to what extent the new use adds something new, with a further purpose or different character. The larger the work supersedes the objects of the original creation and goes beyond that required to qualify as a derivative work, the more likely the purpose and use factor will weigh in favor of a finding of fair use. Works that merely supersede the objects in the original creation — without adding something new, with a different character or further purpose — are unlikely to be found transformative and thus fair.

Included in the Court’s fair use analysis was significant discussion of its 1994 Campbell decision, a case involving 2 Live Crew’s copying of Roy Orbison’s song, “Oh, Pretty Woman,” and from which it created a rap derivative, “Pretty Woman.” There, the Court found the new work clearly transformative in that it was a parody, had a different message and aesthetic, and had the distinct purpose of commenting on the original.

Conversely, Warhol’s image was substantially the same as Goldsmith’s original photograph in that both were used to illustrate a portrait of Prince, AWF received compensation for doing so, and the degree of difference (i.e., the flattening, tracing, and coloring of the photo) was not enough for the first factor to favor AWF, according to the Court.

The Court compared AWF to other would-be users who may attempt to seek the shelter of the fair use defense, including musicians who sample songs, playwrights who adapt novels, and filmmakers who create spinoffs, noting that a finding of fair use in the case might authorize a range of commercial copying for use in a substantially same manner as the original work.

Link to the rest at The National Law Review

PG would have come down on the fair use side of the argument, but nobody ever nominated him to serve on the US Supreme Court.

2 Supreme Court justices failed to recuse themselves from cases involving their publisher after receiving large amounts in book advances and royalties

by

From Business Insider:

Two Supreme Court justices did not recuse themselves from cases that arose before the court involving their book publisher, Penguin Random House, according to a recent CNN report.

There have been two cases that came before the Supreme Court involving publishing conglomerate Penguin Random House. In both situations, the Supreme Court declined to take on the copyright infringement cases, allowing the publisher to win at a lower court level.

Liberal Supreme Court Justice Sonia Sotomayor, who was confirmed in 2009, was on the high court during both cases, which occurred in 2013 and 2019-2020. Conservative Justice Neil Gorsuch was confirmed in 2017 and was also a member of the Supreme Court during the second case. 

Sotomayor and Gorsuch had both signed major book deals with the publisher before the cases occurred, and both justices declined to recuse themselves from the cases involving Penguin Random House. Former Justice Stephen Breyer, who had reported receiving royalties from the publisher, recused himself from each of the cases.

According to Sotomayor’s financial disclosures, as CNN reported, she’s made approximately $3.6 million in royalties and advances for the several books she’s published under Knopf Doubleday Publishing Group, which is part of Penguin Random House.

As for Gorsuch, his financial disclosures note he’s made at least $655,000 from Penguin Random House over the past few years from his book, “A Republic, If You Can Keep It.”

. . . .

“The Supreme Court should have a code of ethics to govern the conduct of its members, and its refusal to adopt such standards has contributed to eroding public confidence in the highest court in the land,” Van Hollen said. “It is unacceptable that the Supreme Court has exempted itself from the accountability that applies to all other members of our federal courts, and I believe Congress should act to remedy this problem.”

Link to the rest at Business Insider

PG suggests this is not a gray area. Justices who have received large payments for their books should absolutely recuse themselves in cases that might impact the finances of their publishers.

While PG may not agree with Senator Chris Van Hollen on some issues, but he firmly supports actions that will require recusal of justices who have received financial benefits of more than a trivial amount from a person or entity who has a matter before the Supreme Court.

For those unfamiliar with US appellate court practices, when a member of the Supreme Court recuses her/himself from a particular case, the Chief Justice or, if the Chief Justice has recused from a matter, the senior justice on the Court appoints another federal judge, typically a judge from one of the thirteen Circuit Courts of Appeal who have been appointed in the same manner as the members of the Supreme Court have been.

In PG’s opinion, some of the Circuit Court judges are more competent at their profession than some of the Supreme Court justices are.

UK’s Competition and Markets Authority Launches Review into AI Foundation Models

by

From Inside Privacy – Covington:

On 4 May 2023, the UK Competition and Markets Authority (“CMA”) announced it is launching a review into AI foundation models and their potential implications for the UK competition and consumer protection regime. The CMA’s review is part of the UK’s wider approach to AI regulation which will require existing regulators to take responsibility for promoting and overseeing responsible AI within their sectors . . . . The UK Information Commissioner’s Office (“ICO”) has also recently published guidance for businesses on best practices for data protection-compliant AI.

The CMA’s focus is on foundation models – a type of AI model trained on large amounts of data that can be adapted to a wide range of different tasks and services such as chatbots and image generators – and how their use could evolve in the future. The review will focus on three main themes:

  • Competition and barriers to entry in the development of foundation models;
  • The impact foundation models may have on competition in other markets; and
  • Potential risks to consumers arising from the use of foundation models in products and services.

As part of its evidence gathering efforts, the CMA will issue “short information requests” to key players including “industry labs developing foundation models, developers… leading technology firms” and others 

Link to the rest at Inside Privacy – Covington

“Covington” in the source refers to Covington & Burling, an extremely large world-wide law firm, founded in 1913 in Washington, DC., by the two original partners. Covington grew to 100 attorneys by 1960, more than 200 attorneys by 1980. Today, Covington & Burling has more than 1,300 attorneys plus many, many more paralegals, assistants and inside experts in 13 offices, including places like Dubai, Johannesburg and Frankfurt.

One of the more recently-created practice areas focuses on legal issues related to artificial intelligence and robotics. It’s managed by three senior partners located in Washington, New York and Frankfurt. In a couple of weeks, the Artificial Intelligence and Robots group will host its 2023 Robotics Forum which will include presentations on subjects like Regulation of Data in Machine Learning and AI.

Per the OP, lots of non-technical law makers are trying to understand AI and, PG suspects, have no idea how they will or can regulate it in one way or another. Since a great deal of AI can be reached and used via the internet and, PG suspects, that AI can or will soon be able to live in distributed computing environments linked by high speed data connections, the question of what government or collection of governments has the ability to regulate AI usage will be a real hairball. PG suspects Covington and similarly large international law firms want to be exceedingly involved in those sorts of questions.

Self-published authors earn more than traditionally published counterparts, according to ALLi report

by

From The Bookseller:

New research by the Alliance of Independent Authors (ALLi) claims authors who self-publish currently earn more than traditionally published authors.

ALLi circulated the survey to its members and subscribers, as well as “through other key self-publishing and author organisations” in February 2023. It was answered by more than 2,000 respondents – 60% of whom were in North America, with 21% from the UK and 8% respectively for Australia/New Zealand, and Europe. It found the the median revenue for independent authors in 2022 stands at $12,749 (£10,229).

This compares to the findings of a report into authors’ earnings commissioned by The Authors’ Licensing & Collecting Society (ALCS) and published in December 2022, which showed that median earnings from writing alone for authors with third-party publishers stands at approximately $8,600 (£7,000).

The ALCS’ report showed “a sustained fall in professional writers’ real terms income from writing over the past 15 years of around 60%, pushing median earnings down to minimum wage levels,” a trend which ALLi suggests self-published authors are “bucking” in light of its survey’s findings, which suggest average incomes of self-published authors are rising, with a 53% increase in 2022 over the previous year.

By contrast, its report goes on, “previous author income surveys, which have focused on revenues received by authors with third-party publishers, have repeatedly reported falling incomes.”

. . . .

ALLi has commissioned the UK Copyright & Creative Economy Centre, CREATe – which conducted the ALCS’ survey – to expand analysis of the findings, particularly in relation to “key demographic groups and factors that contribute to higher incomes.” ALLi will publish the full report including demographic data in June 2023, together with a collection of insights from several peer self-publishing organisations, as the Big Indie Author Data Drop. This compilation and final 2023 report will be presented at the Self-Publishing Live conference in London in June 2023 and will repeat as an annual event, which the organisation says will fill “a notable gap in author income research”.

Orna Ross, ALLi director, said of the findings: “ALLi has always believed that authors are financially better off self-publishing. Now that the results of this survey confirm that belief, we want to make sure all authors know that they can make a living as an author, if they do the work and acquire good publishing skills, alongside good writing skills. And that they are not alone. There is full support for talented and dedicated authors at ALLi and throughout the self-publishing community.”

Link to the rest at The Bookseller

PG notes that Orna Ross, the founder of The Alliance of Independent Authors, has been doing good things for indie authors for a long time (ALLI was founded in 2012).

Those who recall 2012 (including PG, just barely), will remember that this year included a notable antitrust suit filed by the U.S. Justice Department against Apple, Hachette, HarperCollins, Macmillan Publishers, Penguin, and Simon & Schuster for trying to fix prices for ebooks, and strangle Amazon’s ebook business in the crib.

Basically the five big publishers agreed to refuse to sell ebooks to Amazon unless Amazon sold their ebooks at the publisher’s list price. The agreement was made at the instigation of a top Apple exec and provided that Apple would sell the majority of e-books between $9.99 and $14.99, with new releases being $12.99 to $14.99.

Apple also adopted the agency model which it used in its App Store for distribution of e-books. This let Publishers control the price of the e-books with Apple receiving a 30% commission. The joint agreement provided that the Publishers would establish ebook prices on Amazon so ebook prices on both platforms would be identical.

On the day Apple launched its ebook store, a Wall Street Journal reporter asked Jobs why people would pay $14.99 for a book in the iBookstore when they could purchase it for $9.99 from Amazon. In response Jobs stated that “The price will be the same… Publishers are actually withholding their books from Amazon because they are not happy.”

As PG has opined on more than one previous occasion, doing this reflected the rank business and legal stupidity of the major publishers. What Jobs and the publishers agreed to do was a classic example of illegal price-fixing that was (and still is) clearly prohibited by US antitrust laws.

Jobs was a highly magnetic and innovative individual who built Apple from nothing into a major world-wide computer brand, a wonderful American business success story.

However, Jobs was dying of cancer at the time, kept this information secret and (PG suspects) decided to propose this agreement without any input from Apple’s lawyers at all. A law student who had taken a single antitrust class would have recognized this was prohibited conduct.

After being sued, the publishers quickly caved, took their financial licks from the Justice Department and some state attorneys general who joined in the suit, and went back to business as usual. Apple lost at the trial level, lost at the United States Court of Appeals. The US Supreme Court declined to take the case.

Amazon kept pushing ebooks, including more generous royalty terms than authors could get from traditional publishing, and never looked back. PG has suggested on numerous occasions that traditional publishers missed a wonderful opportunity to earn a lot of money from ebooks because they didn’t want to harm their printed book sales or relationship with traditional bookstores.

It was a classic example of one bad decision after another.

Orna Ross and ALLI have provided a lot of help for indie authors ever since the Apple antitrust case was still roaring along, so she’s seen the thick and thin of indie authors. You may want to check out the membership benefits the organization offers.

Texas County to Consider Shutting Down Library After Book Ban Ruling

by

From Publisher’s Weekly:

After a federal judge ordered the return of more than a dozen books improperly pulled from the Llano County Public Library shelves for their content, the county’s commissioners have called a special meeting for April 13 to discuss shutting the library down altogether.

According to a notice and agenda posted to the Llano County website, the Llano County Commissioners Court has set a meeting to discuss whether to “continue or cease operations of the current physical Llano County Library System,” the continued employment of library staff, and the “feasibility of the use of the library premises by the public.”

A tweet from the American Library Association’s Unite Against Book Bans account shared news of the meeting, and urged local library supporters to contact their local officials to support the library and to show up to the special meeting to advocate for their library. ALA officials say Unite Against Book Bans and ALA will continue to work closely with the Texas Library Association to support “at-risk library workers” in Llano County, as well as with Texans for the Right to Read and other Texas activists “who are on the front lines of the fight to protect every person’s right to read in Llano County and across the state of Texas.”

Closing the library would be an extreme reaction, notes ALA’s Deborah Caldwell-Stone, director of the American Library Association’s Office for Intellectual Freedom.

“Rather than return twelve books to the library’s collection that reflect the lives and experiences of LGTQIA+ and BIPOC persons, the members of the Llano County Commission and its Library Board are prepared to fire the dedicated staff of the Llano County Library System and deny Llano County residents access to all the information and community services that the library staff provides,” Caldwell-Stone said, “simply to prevent anyone from reading certain books that these officials don’t ever have to read.”

The new developments come after a federal judge found that the library board in Llano County likely infringed the constitutional rights of readers in the community by unilaterally removing books it deemed inappropriate. In a 26-page decision, judge Robert Pitman affirmed that “the First Amendment prohibits the removal of books from libraries based on either viewpoint or content discrimination,” and found that the evidence presented in the case showed that county officials illegally “targeted and removed books, including well-regarded, prize-winning books, based on complaints that the books were inappropriate.”

Link to the rest at Publisher’s Weekly

PG did a little research and determined that Llano, Texas, is a small rural town – about 3500 people – that is located about 65-70 miles from the state capital, Austin.

When PG says small town, Llano has what appears to be a struggling newspaper that includes stories and photos of the local high school athletic teams and contestants for the annual Rodeo Queen contest. The town is surrounded by ranches raising livestock and and doing crop farming.

The population of Llano is about 80% white, including descendants of early German settlers, 15-17% Latino – mostly Mexican – with a sprinkling of a few other races.

PG expects that the library lawsuit was probably the biggest thing Llano (and Llano County) had experienced in a very long time. He doesn’t know if the county paid for its legal representation in the lawsuit or if some or all of its litigation expenses were covered by some type of insurance.

The honor of serving on the King’s Island Library Board sounds like a post that doesn’t attract very many candidates. While a federal lawsuit was certainly a source of a lot of publicity, PG suspects that the members of the County Library Board found that dealing with out of town reporters who regarded them as hicks from the sticks and spending time talking with the Library Board’s attorney during the runup to the trial was not what they had in mind when they decided it was their civic duty to support the local library.

PG found an article from TheDailyTrib.com (covering the news from Marble Falls, Burnet, Kingsland, Llano, Spicewood, Horseshoe Bay, and ALL of the Highland Lakes) that described what appears to be the current situation:

Closing the three libraries in the Llano County Library System will not affect the Little v. Llano County lawsuit, which will move forward, according to an attorney for the plaintiffs. Also, Llano County Precinct 4 Commissioner Jerry Don Moss and Library Advisory Board Vice-chairman Bonnie Wallace still will have to appear before the court as ordered by a U.S. District judge on April 27 or face possible sanctions.

“We will continue to see a permanent injunction against censoring books in case they ever reopen the library,” said Katherine Chiarello of Wittliff Cutter law firm in Austin, when asked about what would happen if the libraries were closed. 

Llano County commissioners are meeting at 3 p.m. Thursday, April 13, to discuss that possibility. According to the agenda, they will meet in executive session to also discuss “action regarding the continued employment and/or status of the Llano County Library System employees and the feasibility of the use of the library premises by the public.”

The county’s four commissioners and County Judge Ron Cunningham are holding the special meeting in response to an order enjoining the county to return 17 books to library shelves and the digital catalog system. The books were back in circulation on March 31. 

In a different ruling, U.S. District Judge Robert Pitman of the U.S. District Court for the Western District of Texas, Austin Division, ordered Moss and Wallace to appear in person at 10 a.m. April 27. The two did not appear for depositions on March 22 and 27, respectively. They could face sanctions that would include contempt of court charges, rendering a default judgment against the disobedient parties, or paying expenses accrued, including attorney fees, for missing the scheduled appointments. 

The U.S. District Court does not have a say in whether the libraries should remain open, but people supporting the libraries can have an impact, according to Chiarello.

“The citizens of Llano can make themselves heard,” she said. “It is un-American, it is against the rule of law, and it is not good for the people of Llano County to be deprived of the many services the library offers to the community.” 

People on both sides of the issue plan to show up in force at the meeting, which is being held in the Justice of the Peace Precinct 4 courtroom, 2001 Texas 16 North in Llano. The small room holds about 40 people and is often crowded, even when a meeting is not controversial. 

“I am aware that several people are very upset by this,” said Leila Green Little, one of seven plaintiffs in the case. “I think there will be a big turnout.” 

Buchanan Dam resident Wayne Shipley is also upset over the issue, but for different reasons. He plans to be there and hopes to speak during public comment. He, too expects a big crowd to overflow the small courtroom. 

“I was taken by surprise that the county is having to look at this step,” he told DailyTrib.com. “Seems to me this issue is being forced by the plaintiffs. It’s not about banning books. The books in question are explicitly pornographic in nature. They should not be available for children to pick up off the shelves.” 

Shipley did agree that not all 17 books listed fit in that category, including one about the Ku Klux Klan, another about the caste system, and a children’s series about farting animals and imaginary figures.

“Those aren’t the ones driving the issue,” he said. “I think those are put in there to blur the issue.” 

PG is sympathetic with residents of Llano who get upset by being ordered by a Federal District Judge to show up in court in Austin to be potentially held in contempt of court and/or ordered to pay attorneys fees to a relatively large law firm (17 attorneys) in Austin. PG’s quick and dirty research into the fees charged by Austin attorneys leads him to believe that they’ll be about $300 per hour.

The quote from one of the attorneys on the winning side was, in PG’s personal legal judgement, really stupid:

“We will continue to see a permanent injunction against censoring books in case they ever reopen the library,” said Katherine Chiarello of Wittliff Cutter law firm in Austin, when asked about what would happen if the libraries were closed. 

PG has gone way farther along this trail than he should have, however, here is his last point.

PG just checked and the average per capita income in Llano County is a little over $44,000 per year. That translates to about $12 per hour. PG suspects that very few people living in Llano County, including the lawyers who practice there, earn $300 per hour, which is likely in the general range that the the Austin law firm will seek in the form of attorneys fees should the federal judge decides to hold anyone in contempt of court.

Business Musings: AI, Copyright, And Writers

by

From Kristine Kathryn Rusch:

Here we are—the mess of the mess of the mess. Right now, we’re in one of those technological befuddling moments, where the technology is ahead of the law.

What that means, exactly, is this: We’re not sure what the technology can do, so we don’t know if what it’s doing is legal, in a whole variety of ways.

The law is both a scalpel and a cudgel. If we use the law one way, it becomes a cudgel that smashes behavior and does its best to prevent the behavior from ever occurring again. Look at the laws against homicide in your state. Those laws are not scalpels. Those laws are cudgels, deliberately. As civilized humans, we don’t want other humans to commit murder for any reason. End of story.

(Please don’t write to me about exceptions. I know. I write entire novels about them.)

There are many times, however, that we need the law to be a scalpel. We need it to delicately carve good behavior from bad. We also don’t want it to accidentally smash something good to smithereens.

Just today, Dean and I were walking home in a wind tunnel created by the buildings near ours. The wind was bad anyway, but in that little area, it was extreme, like usual. Dean mentioned that there are entire computer programs that could explain why.

Those programs are often used now to examine how the wind works around bridges and tall buildings in relation to other tall buildings. In the past, those calculations were done by engineers and often by hand. One mathematical error and even brand-new bridges and buildings collapse.

. . . .

Now, though, tech allows us to prevent all kinds of wide-ranging disasters because of computer modeling.

In some ways, generative artificial intelligence in art, audio, and writing is nothing more than computer modeling. The artificial intelligence isn’t intelligence at all, at least as we know it. It’s an algorithm trained to respond in a particular way to a variety of inputs.

The inputs make the AI program reactive, not creative. My post last week titled “AI And Mediocre Work” dealt with a lot of this, but a comment by Matt Weber capsulized it with a quote from Oliver Sacks, in his book, An Anthropologist on Mars:

Creativity, as usually understood, entails not only a “what,” a talent, but a “who” — strong personal characteristics, a strong identity, personal sensibility, a personal style, which flow into the talent, interfuse it, give it personal body and form. Creativity in this sense involves the power to originate, to break away from the existing way of looking at things, to move freely in the realm of the imagination, to create and recreate worlds fully in one’s mind — while supervising all this with a critical inner eye.

These generative AI programs are useful for a variety of things, some of them mentioned in the comments on the last post, others mentioned in analysis about the programs that you can find most anywhere. What they are not is creative.

Let’s set that aside, though. We will all end up using these programs for one task or another.

What started this little miniseries of blogs was, in fact, my desire to start using AI audio. It had gotten to a level that I feel comfortable putting not only the blog posts into audio, but some of the nonfiction books as well. If you want to find out what I’m thinking about the various audio opportunities for my own work, please look at this post.

Up until that point, a lot of my readers thought I was opposed to using generative AI. I’m not. I have already used several different programs for minor things, and I’m going to use others for relatively major things.

I’m just as interested in the AI art programs as I am in the AI audio programs. I’ve used some mapping programs to help artists visualize the layout of my various worlds. I’m using the free programs, so the tools are often wrong in a variety of ways. I have to use words and bad maps to get my point across. But that’s okay.

I like some of the art I’m seeing from the various programs, and that art would be good enough to use on, say, short story ebook covers, where we don’t want to spend a lot of money. (If any.)

We’re not doing that yet, though, and there’s a really good reason.

Copyright.

The copyright issues on much of the AI usage are a complete mess and that, in my opinion, makes them dangerous to use in any commercial manner.

I don’t use the word “dangerous” lightly. Copyright issues could mean something as simple as removing the item from sale to hundreds of thousand paid in statutory damages.

The problem is that we don’t know what’s happening yet, and because we don’t know, we have to be really careful.

Some of the copyright issues can be resolved with a contract. The Terms of Service on these sites are contracts that you agree to, either by affirmatively clicking I accept or by using the site or by paying money for the service.

The problem with Terms of Service is that they can change on a whim. In its paper on artificial intelligence and copyright published in February, the Congressional Research Service made the passing comment about OpenAI, the developer of ChatGPT and DALL-E.

OpenAI’s current Terms of Use, for example, appear to assign any copyright to the user: “OpenAI hereby assigns to you all its right, title and interest in and to Output.” A previous version of these terms, by contrast, purported to give OpenAI such rights.

As I said, these terms can change drastically. It’s up to the user to check the terms constantly.

Contracts can supercede copyright if done properly, but doing the contracts properly means understanding the law.

And the law is just plain unclear. The article that I quoted above, from the Congressional Research Service, has a good overview of where the law stands right now in the U.S., and provides links.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

PG says AI is going to continue developing very quickly with or without changes in the copyright laws.

Yes, there undoubtedly will be changes in copyright laws, but legislators move at a snail’s pace compared with software engineers and designers. AI is a huge breakthrough and it will take some time for humans to coalesce around where lines are to be drawn between permitted and not permitted uses of AI.

There are certainly going to be some copyright infringement lawsuits and judges (who are anything but technically-oriented, but generally possess a respectable level of general intelligence) will make different and sometimes conflicting decisions for awhile.

Legislatures gonna legislate. Some will do better than others, but the first laws are going to be rough around the edges.

Wherever there are meaningful copyright laws, copyright attorneys are already thinking hard about AI and there will certainly be some lawsuits. That said, on the internet, there are plenty of places that are effectively beyond the reach of western copyright legislation. (China, Russia and a variety of island kingdoms come to mind.)

It’s going to be a legal Wild West for awhile. PG has already read articles about the various ways attorneys can use AI in litigation and contract drafting. He expects to read a lot more.

PG PS:

You should check out the comments to this post. Two valued and prolific TPV commenters elaborate on their forecasts and expectations regarding AI and courteously disagree with some of the thoughts the other has posted.

IPA welcomes Internet Archive Judgement.

by

From The New Publishing Standard:

IPA Secretary General José Borghino said:

“Given the enormous significance of this case to the global publishing industry, the IPA is deeply heartened by the comprehensive judgement of the US Court. Its firm backing of basic copyright principles is particularly comforting. IPA affirmed these principles in our Amicus brief to the Court, along with additional concerns about the United States’ international treaty obligations to uphold copyright protections on the Internet.”

The IPA statement further includes remarks from the President and CEO of the Association of American Publishers, Maria A. Pallante, who said:

“The publishing community is grateful to the Court for its unequivocal affirmation of the Copyright Act and respect for established precedent. In rejecting arguments that would have pushed fair use to illogical markers, the Court has underscored the importance of authors, publishers, and creative markets in a global society. In celebrating the opinion, we also thank the thousands of public libraries across the country that serve their communities everyday through lawful eBook licenses. We hope the opinion will prove educational to the defendant and anyone else who finds public laws inconvenient to their own interests.”

Link to the rest at The New Publishing Standard

Let it be noted that this is one set of statements from Big Publishing that PG agrees with.