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With the U.S. Supreme Court beginning a new session, many are wondering what new issues the Court will address this term. One case the Court is scheduled to hear involves the relationship between the Lanham Act and First Amendment. Specifically, the Court will determine whether Section 1052(c) of the Lanham Act, which prohibits individuals from registering for a trademark that includes the name of a living person without their consent, violates the free speech clause of the First Amendment.

A Little Background

In 2018, California attorney Steve Elster applied for a trademark for the slogan “TRUMP TOO SMALL.” The U.S. Patent and Trademark Office (PTO) rejected Elster’s application, citing Section 1052(c) of the Lanham Act. In response, Elster argued that refusing his trademark application violated his free speech right to criticize public officials. The PTO was not persuaded by Elster’s First Amendment claim, deeming it irrelevant whether the trademark was intended to be an exercise of free speech rights or political commentary, because there is “no statutory or case law carve out for political commentary.” Elster appealed to the PTO’s Trademark Trial and Appeal Board (TTAB), again arguing that the Lanham Act’s prohibition was an unconstitutional restriction on free speech. The board denied Elster’s appeal.

The Appeal

Elster then appealed the board’s decision to the U.S. Court of Appeals for the Federal Circuit. In February 2022, a three-judge panel reversed the TTAB’s decision and found that applying Section 1052(c) of the Lanham Act to prohibit Elster’s trademark application was unconstitutional content-based discrimination. Because trademarks are considered a form of private speech, the Federal Circuit’s decision focused on “whether the government has an interest in limiting speech… if that speech involves criticism of government officials.” According to the panel, Section 1052(c) must be subject to some form of heightened constitutional scrutiny. In this regard, the panel found that statute would fail to satisfy both strict and intermediate scrutiny “because the government does not have a privacy or publicity interest in restricting speech critical of government officials or public figures in the trademark context…” Therefore, while the Court held that the application of Section 1052(c) to Elster’s trademark was unconstitutional, the Court did not decide whether the statute itself was unconstitutional. However, the Court did suggest as much. Specifically, the panel commented that the statute “raises concerns regarding overbreadth… [and] a substantial number of [it’s] applications would be unconstitutional.”

The PTO appealed the Federal Circuit’s decision, and on June 5, 2023, the Supreme Court granted the government’s petition for a writ of certiorari. The Court is scheduled to hear oral arguments November 1, though how the Court will rule remains to be seen. This case highlights the juxtaposition of protecting free speech while ensuring that individuals retain their privacy and publicity rights. Whatever the Court decides, the decision will have consequences for both First Amendment and intellectual property law. Follow Bradley’s IP IQ blog for updates after oral arguments in November.

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In Corephotonics, Ltd. v. Apple Inc., the Federal Circuit partially signed off on Apple’s win before the Patent Trial and Appeal Board (PTAB) invalidating a number of patents owned by Corephotonics relating to dual-aperture cameras and methods of using the images from both lenses when zooming while capturing video to prevent “jumping” (U.S. Patent Nos. 9,661,233, 10,230,898, 10,326,942, and 10,356,332 referred to here as the Camera Patents). One of the main questions on appeal, according to Corephotonics, was whether the PTAB erred in finding Apple’s prior art analogous to the Camera Patents. Unfortunately for Corephotonics, the Federal Circuit did not see the image in the same way as presented by the patent owner.

Pre-Appeal

After Corephotonics sued Apple for infringement of the Camera Patents in the Northern District of California in 2017, Apple shot back and filed a number of inter partes review (IPR) petitions challenging the validity of all of the claims asserted by Corephotonics (Apple IPRs). In all of its petitions, Apple included grounds for unpatentability citing a combination of prior art references, including U.S. Patent No. 8,081,206 to Martin and U.S. Patent Publication No. 2012/0026366 to Golan. Briefly, Martin teaches ways to make 2D images look like 3D images by “critically aligning images” captured from different points of view. Golan teaches camera systems with a one-time calibration process that corrects for the different points of view of two lenses. Specifically, Golan’s calibration technique stops an image from “jumping” while digitally zooming in or out (i.e., when switching from a wide lens to a telephoto lens and vice versa). 

Despite the fact that Corephotonics filed preliminary responses to the petitions, Corephotonics waited until after the PTAB instituted the Apple IPRs to complain about purported flaws in Apple’s analogous art arguments — namely that Apple’s contention regarding the same field of endeavor was at least ambiguous because it appeared that Apple was comparing Martin and Golan to each other and not the Camera Patents. In response to Corephotonics’ criticism, Apple sharpened its position in its reply briefs stating that the Camera Patents, Golan, and Martin are all in the same field of endeavor. Apple also argued that Martin and Golan were pertinent to the problem faced by the inventors of the Camera Patents. In its final written decision, the PTAB agreed that Martin was “reasonably pertinent to the problem” and ultimately found all challenged claims of the Camera Patents obvious over Martin and Golan (along with other references).

The Appeal

On appeal, Corephotonics argued that the Board improperly (procedurally) allowed Apple to cure its legally flawed analogous art contention made in its petitions and then further erred by making analogous art findings that were different from what Apple promoted in its petition and reply. The Federal Circuit reviewed the PTAB’s legal determinations de novo.

Recall that, according to Corephotonics, Apple first made its analogous art argument in its replies — not its petitions. While Corephotonics believed the lateness of Apple’s analogous art arguments to be an issue, the Federal Circuit did not agree. Instead, the appellate panel clarified that “petitioners may use a reply to respond to such [deficiencies in analogous art] arguments raised by patent owner.” More specifically, Apple’s arguments and evidence in its replies were not considered to be part of a new theory of unpatentability, but were instead responsive to Corephotonics contentions regarding analogous art. In fact, as further explained by the appellate panel,

[t]here is nothing “entirely new” about arguing that the same combination of prior art references identified in a petition as being in the same field of endeavor as the patent being challenged are also pertinent to the same problem faced by the inventor of the challenged patent.

In other words, the appellate panel found no procedural error in the PTAB’s acceptance of Apple’s analogous art arguments at the reply phase because those arguments merely bolstered its previous arguments. In contrast, had Apple brought forth a new prior art reference in its replies for a contention that was meaningfully distinct from what was identified in the petitions or that was not in its petitions at all, the PTAB would not have been able to invalidate the Camera Patents  based on that new prior art because Apple would have violated the “newness” and “responsiveness” procedural restrictions. 

Corephotonics also substantively disagreed that Martin and/or Golan were analogous art.    Since the determinations that each of the cited prior art was analogous art are issues of fact, the Federal Circuit reviewed the PTAB’s findings for substantial evidence. While the appellate panel deemed the PTAB’s determination that Golan was in the same field of endeavor (and, thus, analogous art) to be supported by substantial evidence, it found the PTAB’s determination that Martin was reasonably pertinent to the problem to be quite blurry. In this aspect, because the PTAB made an undisputed error when providing its conclusion regarding Martin’s analogous nature, the Federal Circuit remanded to the PTAB for it to explain why Martin is (or is not) analogous art and to determine how this finding affects its overall obviousness conclusion. 

The PTAB’s overall obviousness conclusion may change in part or as a whole if it did, as suggested by the Federal Circuit, confuse “fields of view” and “points of view” when assessing the problem addressed by Martin and its analogous nature and Martin then becomes unavailable as prior art. Or, the PTAB may explain that its error was indeed “a mere ‘typographical error’ and . . . harmless,” rationalize why Martin remains analogous art, and leave its obviousness conclusion intact. We will have to wait to see once the picture more fully develops.

Nevertheless, this decision provides some good reminders regarding analogous art and obviousness:

  • Prior art references are applicable to the obviousness inquiry only when they are analogous to the claims being challenged. This decision demonstrates why it is important to focus on even the smallest of distinctions when arguing that a reference is or is not analogous art since it may make a difference in whether a reference is able to be used in an obviousness argument.
  • Showing that a reference is analogous requires satisfying at least one of two separate tests: “(1) whether the art is from the same field of endeavor, regardless of the problem addressed and, (2) if the reference is not within the field of the inventor’s endeavor, whether the reference still is reasonably pertinent to the particular problem with which the inventor is involved.” While field of endeavor and pertinent problem are separate tests used to determine whether a reference is analogous prior art, these two tests do not provide independent, different grounds for obviousness or new rationales.
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On Wednesday, a divided panel of the Federal Circuit issued a precedential decision reversing the USPTO’s cancellation of a registered trademark (Great Concepts, LLC v. Chutter, Inc., No. 2022-1212).  As detailed in the opinion, the majority held that the Trademark Trial and Appeal Board lacked the power to cancel a trademark registration based on fraud in a declaration of incontestability.

The Back Story

In 2003, Great Concepts applied to register DANTANNA’S for restaurant services.  In March 2005, the mark was registered (Registration No. 2929764).  Then, in June 2005, Dan Tana applied to register DAN TANA for restaurant services.  The USPTO refused registration at the end of the year based on the DANTANNA’S registration. 

In June 2006, Dan Tana argued against the refusal and also filed a petition to cancel DANTANNA’S registration alleging a likelihood of confusion with Dan Tana’s common law DAN TANA mark for the LA-based restaurant.  According to the petition, Dan Tana’s is known as a “legendary Hollywood hotspot” and the “ultimate LA hangout” with patrons such as George Clooney, Matt Damon, and Brad Pitt.  To even things out—for those that have not had the opportunity to visit any of the Atlanta area DANTANNA’S—the self-described “upscale sports restaurants” offer a tasty, braised beef short rib.  In any event, three and a half years later, in December 2010, the TTAB dismissed the cancellation proceeding with prejudice “based on petitioner’s apparent loss of interest” after Dan Tana failed to respond to an order to show cause.

Tana had also filed a civil action for trademark infringement against Great Concepts in the Northern District of Georgia (Civil Action No. 1:08-CV-975-TWT) in 2008.  The district court granted summary judgment in favor of Great Concepts, which was ultimately upheld on appeal by the Eleventh Circuit and made final in August 2010 (and likely the cause for Dan Tana’s “loss of interest” in the cancellation proceeding). 

Earlier in 2010, Great Concepts’ former counsel had submitted a combined Section 8 and 15 declaration that sought to both maintain the DANTANNA’S registration (under Section 8) and obtain incontestable status (under Section 15).  The Section 15 affidavit, among other statements, explicitly stated that no proceedings involving the DANTANNA’S mark were pending:

The mark is in use in commerce on or in connection with the goods and/or services identified above, as evidenced by the attached specimen(s) showing the mark as used in commerce. The mark has been in continuous use in commerce for five (5) consecutive years after the date of registration, or the date of publication under Section 12(c), and is still in use in commerce. There has been no final decision adverse to the owner’s claim of ownership of such mark, or to the owner’s right to register the same or to keep the same on the register; and there is no proceeding involving said rights pending and not disposed of either in the U.S. Patent and Trademark Office or in the courts.

However, as previously discussed, the cancellation proceeding (and related litigation) were still ongoing.

In 2015, Chutter, Inc. (Dan Tana’s successor) filed a new petition to cancel the DANTANNA’S registration, alleging Great Concepts’ 2010 Section 15 declaration constituted fraud warranting cancellation of its registration under Section 14 of the Lanham Act.  The TTAB agreed, found Great Concepts’ prior counsel knowingly made false statements with intent to deceive the USPTO, held that the fraudulent declaration enabled Great Concepts to obtain a new right—incontestability, and issued a cancellation order.  Great Concepts appealed the TTAB’s cancellation of its DANTANNA’S mark to the Federal Circuit.

The Appeal

The appeal primarily centered around how Section 15 and Section 14 relate to one another.  Obtaining “incontestability” status for a mark requires compliance with Section 15 of the Lanham Act (15 U.S.C. § 1065). Specific to the facts here, the statute requires the mark owner to file “an affidavit … with the Director” that includes a number of required statements.  One such statement is that “there is no proceeding involving said rights pending.”  As discussed above, Great Concepts’ Section 15 affidavit made this statement (even though the cancellation proceeding was still pending).

Section 14 of the Lanham Act (15 U.S.C. § 1064(3)) gives the USPTO the power to act on a petition to cancel a registered trademark on a number of bases including, but not limited to, whether the “registration was obtained fraudulently.”  Recall that the TTAB cancelled DANTANNA’S because it found that Great Concepts’ prior counsel knowingly made false statements with intent to deceive the USPTO and held that the fraudulent declaration enabled Great Concepts to obtain a new right—incontestability.  Thus, the question on appeal was whether Section 14 gave the USPTO the power to cancel a registration for fraudulent acts committed while attempting to establish incontestability.

The majority found that Section 14 statute permits cancellation only for fraudulent acts taken while obtaining the registration—not for establishing incontestability.  More specifically, the majority explained that, even though the Section 8 and 15 filings were combined, the fraudulent statement in question pertained only to the Section 15 declaration.  As “a Section 15 declaration only relates to a mark’s incontestability, not its registration,” Section 14 does not apply here.  By way of further explanation, the majority distinguished a scenario where a fraudulent statement was made on renewal under Section 8 because, in that case, the registration itself would be compromised.  Long story short, the TTAB exceeded its power.

Notably, in the dissent, Judge Reyna argued that the majority’s statutory interpretation improperly restricts the TTAB’s ability to combat fraud before the agency.  The majority addressed this argument and passed the baton to Congress:

Even if it were true that our decision would result in an unwelcome increase in fraud perpetrated against the Board – which, again, we do not believe it will – we would nonetheless adhere to the unambiguous language of the statute.

. . .

Whether we would prefer a different result be reflected in the statute is irrelevant to our responsibility to decide the case before us based on the law as it exists.

The Warning

This opinion also serves as a cautionary tale for those filing affidavits with the USPTO.  While checking a box or including a form paragraph for trademark practitioners and corporate declarants certainly seems like a relatively easy and/or harmless task, the statements that are being averred have real consequences both from a potential loss of rights for the mark holder and sanctions and penalties for the declarant.  Indeed, if the warning that a “Section 15 declaration is filed under penalty of perjury . . .  (‘The undersigned being hereby warned that willful false statements and the like are punishable by fine or imprisonment, or both, under 18 U.S.C. Section 1001.’)” is not enough to garner attention, the majority also noted that the USPTO has other means for punishing fraud, including sanctions and penalties against an attorney declarant.

In its final decision in the 2015 cancellation proceeding filed by Chutter, the TTAB explained that “reckless disregard satisfies the requisite intent for fraud on the USPTO in trademark matters.”  So, what it is reckless disregard in this context?  For one, “failing to make an appropriate inquiry into the accuracy of the statements.”  According to the TTAB, this qualifying failure applies even if the declarant is not aware of the legal requirements for a particular affidavit.  In fact, the TTAB explained that Great Concepts’ attorney acted with reckless disregard because he “paid little, or no, attention to the document he was signing under oath and thereby disregarded the significance of the benefits he was obtaining for his client.” 

Moreover, the TTAB considered the failure to attempt to correct the false statement as related to the assessment of whether the requisite intent to deceive the USPTO was met.  Indeed,

a person can commit fraud upon the Office by willfully failing to correct his or her own misrepresentation, even if originally innocent, as long as that person subsequently learns of the misrepresentation, and knows that the Office has relied upon that misrepresentation in conferring a substantive benefit upon that person to which the person knows it is not entitled.

In other words, a cavalier approach toward statements in affidavits is risky business and could result in sanctions, actions (as permitted under 37 CFR 11.18(c)) or criminal prosecution.

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With only two precedential IP decisions coming down from the Federal Circuit in the second half of September, pickings were a little slim for blogging. That said, the opinion in Baxalta v. Genentech (2022-1461) — drafted by Chief Judge Kimberly Moore and joined by Judges Raymond Clevenger and Raymond Chen — is an important one to cover since it demonstrates how the court interpreted and applied the Supreme Court’s recent enablement decision in Amgen v. Sanofi.

Recall in Amgen, the Supreme Court articulated its view that 35 U.S.C. § 112 plainly requires that “[i]f a patent claims an entire class of processes, machines, manufactures, or compositions of matter, the patent’s specification must enable a person skilled in the art to make and use the entire class” and warned that “the more a party claims, the broader the monopoly it demands, the more it must enable.” In this vein, the court characterized the Amgen claims as an attempt to “monopolize an entire class of things defined by their function” even though the class was much broader than the 26 expressly disclosed antibodies and opined that Amgen’s “roadmap” for obtaining antibodies other than those expressly disclosed “amount[ed] to little more than two research assignments.”

The Baxalta claims at issue here were also related to antibodies, i.e., claims covering monoclonal antibodies that could provide an alternative treatment for the blood-clotting disorder Hemophilia A. Claim 1 of U.S. Patent No. 7,033,590 reads as follows:

An isolated antibody or antibody fragment thereof that binds Factor IX or Factor IXa and increases the procoagulant activity of Factor IXa.

The District of Delaware granted summary judgment of invalidity for lack of enablement under 35 U.S.C. § 112. On appeal, Baxalta argued that summary judgment was improper because skilled artisans could make and identify claimed antibodies (with new variable regions) using the hybridoma technology disclosed in the ’590 patent and that such routine screening does not amount to undue experimentation.

The Federal Circuit disagreed. It explained that the hybridoma methods in the ʼ590 patent only disclosed 11 antibodies by amino acid sequence that had the claimed binding properties and that these 11 antibodies amounted to “only 1.6% of the thousands of screened antibodies” resulting from the hybridoma protocol employed by the inventors. Yet, the scope claims at issue could cover “millions of potential candidate antibodies.” As such, the disclosure of only 11 antibodies that possessed the two required functions in the claims and the lack of explanation as to why those 11 antibodies perform the claimed functions (or why the other screened antibodies do not) does not allow a skilled artisan “to predict which of these potential millions of antibodies would have the claimed function.” In fact, according to the Federal Circuit,

[t]he only guidance the [ʼ590] patent provides is ‘to create a wide range of candidate antibodies and then screen each to see which happen to bind’ to Factor IX/IXa and increase procoagulant activity

that, in the eyes of the appellate panel, amounts to nothing more than the type of trial and error found in Amgen to be incapable of satisfying the enablement requirement.

To summarize with the exact words of the appellate panel, “[t] he facts of this case are materially indistinguishable from those in Amgen.” As such, it is no surprise that the Federal Circuit upheld the invalidity finding by the lower court. However, we will need to wait and see how the appellate court will interpret and apply Amgen to different types of inventions. For example, the Supreme Court in Amgen did provide that “[a] specification may call for a reasonable amount of experimentation to make and use a claimed invention, and reasonableness in any case will depend on the nature of the invention and the underlying art.” 

In short, while more cases from the Federal Circuit would be helpful to fully flesh out the Amgen enablement standard, the panel did make it clear that it “see[s] no meaningful difference between Wands’ ‘undue experimentation’ and Amgen’s ‘[un]reasonable experimentation” standards’” and that it “do[es] not interpret Amgen to have disturbed our prior enablement case law, including Wands and its factors.”  Given that the Amgen decision pretty much solidified the Federal Circuit’s general trend of limiting claim scope to what is (mostly) expressly disclosed, it may not be reasonable to expect that genus-type claims in other types of inventions will fare much better.

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As artificial intelligence (AI) grows in prevalence and accessibility, it is important for employers to consider the implications of its use by their employees. One method of anticipating and quelling potential liabilities that may arise is through deploying certain internal AI policies. This article focuses on certain issues employers should strongly consider when drafting and implementing an internal AI policy. In later articles, the use of AI in software development, intellectual property issues, and confidentiality concerns, among other issues, will be explored.

What is AI?

As the modern workplace becomes increasingly more open to and reliant on the use of technology generally referred to as AI for daily tasks, this begs the question, what exactly is AI? At present, there is no uniform definition of AI, however, it is generally understood to refer to computer technology with the ability to simulate human intelligence in order to analyze data and reach conclusions, find patterns, and predict future behavior along with the ability to learn from such data and adapt its performance over time. At its core it is computer software programed to execute algorithms. Additionally, generative AI is a certain type of AI that uses unsupervised learning algorithms to create new digital content based on existing content, which can include things such as images, video, audio, text, or computer code.

Employer Considerations

Employers have many things on their plate, which now includes managing how their employees use AI in the workplace. In looking, for example, specifically at healthcare IT companies, the types of employees can generally be divided into roughly three categories: (1) those involved in the administrative side of the business, (2) those involved in healthcare technology services, and (3) those involved in software development. The considerations relevant to developing an AI policy applicable to the administrative side (human resources, the C-suite, and marketing) are detailed below, while technology services and software specific concerns will be addressed in later editions of this series.

Human Resources

Companies are increasingly using AI for certain repetitive, and data-based human resources and employee management functions. Certain common uses include recruiting, hiring, and onboarding new employees. While it can be more efficient and potentially cost reducing to automate these tasks through the use of AI, there are certain practical, legal, and regulatory challenges that all employers should consider.

Arguably one of the more contentious uses of AI is in the screening, interviewing, and hiring process. While AI is revered for its ability to streamline these processes by automatically ranking, eliminating, and selecting candidates with minimal human intervention, employers should not get lost in the ease of this process without considering the host of federal, state, and local anti-discrimination laws that loom over this process. Violation of these laws could be detrimental to a business.

While some argue that AI programs actually reduce bias in these sorts of decision-making scenarios, it is important to remember that AI is a product of its data set. AI may take into account certain things employers are not legally allowed to consider during the hiring process such as an applicant’s age, race, religion, sexual orientation, or genetic information. This is because certain AI tools may use the internet, social media, or certain public databases to collect information. Further, it is possible that based on the data set and algorithms used, AI recruiting programs may duplicate past discriminatory practices.

Not only are employers exposed to discrimination claims, but they are also exposed to disability discrimination claims. In May 2022, the Equal Employment Opportunity Commission issued a Technical Guidance on AI decision-making tools and algorithmic disability bias that identifies the following three ways in which an employer using these tools may violate the ADA:

  1. Failure to provide a reasonable accommodation needed for the algorithm to rate the individual accurately.
  2. Using a tool that “screens out” a disabled individual (whether intentionally or unintentionally) when the individual is otherwise qualified to do the job, with or without a reasonable accommodation. This may occur if the disability prevents the individual from meeting minimum selection criteria or performing well on an online assessment.
  3. Using a tool that makes impermissible disability-related inquiries and medical examinations.

While no federal law currently regulates the specific use of AI during the recruiting or hiring process, it is necessary to evaluate state and local laws and regulations when drafting internal policies for AI use in human resources. As these laws and regulations are rapidly changing, it is also necessary to monitor changes to state and local laws to ensure all recruiting and hiring practices comply with any applicable laws and regulations so as to protect a business from any liability resulting from any claims of discrimination or other legal issues.

C-Suite

When it comes to the C-Suite, there are certain higher level concerns at play. It is necessary to outline how, and more importantly how not, to use AI as a C-Suite member. One major concern is confidentiality, to include protecting valuable trade secrets. If an employee inputs confidential information into a generative AI program, that information becomes part of the AI program’s data set and ultimately its education. That information can then be recalled or used by the AI program to provide another user, potentially someone outside of the company, that information. This exposure can be detrimental to a business.

This can be particularly problematic when trade secrets are involved. One key to maintaining trade secret protection is to preserve the secrecy of the information. Once that information is input into an AI program, it is likely no longer a trade secret. This can cause a huge hit to a company that holds a lot of value in a trade secret or even in confidential information. As such, it is important to place boundaries and rules regarding how AI programs can be used by employees, but specifically C-suite members who would generally have higher level access to confidential information.

Marketing

Conversely, the marketing team is an example of an internal team that may be able to use AI programs with lesser risk to a company. Generative AI tools can be especially helpful and time saving for a marketing department. Especially when it comes to healthcare IT companies, the marketing team is generally the farthest removed from confidential patient information. While certain policies should be put in place for outlining proper use of generative AI tools, such as ChatGPT, these restrictions can be of lesser concern to employers.

Further, while concerns regarding intellectual property and AI are still early on in their journey through the courts, it is prudent to anticipate any intellectual property issues, specifically regarding copyright or trademark ownership, prior to allowing a marketing team to use AI tools. This helps to avoid issues and confusion at a later date and can negate the need for costly litigation in the future.

As AI programs become more common in the workplace, it is important for employers to begin implementing appropriate internal policies for employee management to avoid costly liability. These internal policies are just one small aspect of properly onboarding and using AI tools within a business. Other potential concerns will be highlighted in later editions of this multi-part series.

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Meta Platforms (parent company of Facebook) and OpenAI (creator of ChatGPT) have individually filed a Motion to Dismiss the class-action lawsuit filed by comedian Sarah Silverman and authors Richard Kadrey and Christopher Golden for alleged copyright infringement. These lawsuits highlight the potential legal consequences industry leading AI technologies will begin to face as these technologies become more mainstream. Both Meta and OpenAI moved to dismiss all claims except the direct infringement claim, as the companies plan to contest this claim later as a matter of law.

Meta and OpenAI moved to dismiss the authors’ claims alleging vicarious copyright infringement, violation of the Digital Millennium Copyright Act (DMCA), unfair competition, negligence, and unjust enrichment “so that [this case does] not proceed to discovery and beyond with legally infirm theories of liability.” OpenAI claimed that the authors “misconceive the scope of copyright, failing to take into account the limitations and exceptions (including fair use) that properly leave room for innovations like the large language models now at the forefront of artificial intelligence.”

OpenAI argued that the purpose of copyright law is “to promote the Progress of Science and useful Arts” by protecting an author’s expression of their ideas but “not the underlying idea itself, facts embodied within the author’s articulated message, or other building blocks of creative”, which are arguably the elements of authors’ works that would be useful to OpenAI’s ChatGPT training model. According to OpenAI, Silverman’s attempt to convince the court that every ChatGPT output represents a derivative work, “regardless of whether there are any similarities between the output and the training works” is an “erroneous legal conclusion.” 

While both Meta and OpenAI stated that their use of the books when training their respective AI programs was of “quintessential fair use,” it appears the parties plan to address the question of fair use more thoroughly at a later date, with a more complete record. As predicted, OpenAI cited the 2nd Circuit Court’s decision in Authors Guild v. Google and reminded the court that “while an author may register a copyright in [its] book, the ‘statistical information’ pertaining to ‘word frequencies, syntactic patterns, and thematic markers’ in that book are beyond the scope of copyright protection.” OpenAI stated that “[u]nder the resulting judicial precedent, it is not an infringement to create ‘wholesale cop[ies] of [a work] as a preliminary step to develop a new, non-infringing product, even if the new product competes with the original.” Because fair use is an affirmative defense (to be proven by the defendant), Meta and OpenAI will likely explore this issue further at a later stage of the case.

As this case continues to develop, the court will have to address the fast-paced innovation in the artificial intelligence space and decide how it will address potentially novel intellectual property ownership issues. If Meta and Open AI succeed in their dismissal of the majority of the authors’ claims, the only thing left for the court to decide would be whether their training models directly infringe the authors’ respective copyrights under the law. The authors are unlikely to give up without a fight, as it is their opinion that generative AI represents a copy of “human intelligence” that has been “repackaged and divorced from its creators.”

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In just over two years since the inception of college Name, Image, and Likeness (NIL) rights, a groundbreaking lawsuit has emerged, alleging a violation of Florida’s NIL laws. On September 1, 2023, Gervon Dexter Sr., a former University of Florida Gator and current Chicago Bear, filed a lawsuit aimed at invalidating an NIL contract that he signed during his junior year at the University of Florida. The contract in question exemplifies the very concerns that advocates for increased oversight and regulation in the NIL landscape have been cautioning against. 

Dexter’s lawsuit, brought in the Northern District of Florida, seeks to void his NIL agreement with Delaware-based entity Big League Advance Fund II, LP (BLA). His claims revolve around the contract’s alleged violations of Florida’s Athlete Agent Act and NIL law. Under the terms of the agreement, BLA pledged to pay Dexter $436,485 for the use of his NIL during an “initial term” and an “extended term.” The initial term commenced upon contract signing and concluded with Dexter’s ineligibility under NCAA rules. In contrast, the extended term started after his NCAA eligibility ended and spanned an astonishing 25 years. During this extended period, Dexter was obligated to allocate 15% of his pre-taxed NFL earnings to BLA. Notably, Dexter signed this contract in May 2022, ahead of his junior collegiate season and declared for the NFL Draft in December 2022. Dexter was subsequently drafted by the Chicago Bears in the second round of the April 2023 NFL Draft. Dexter signed a four-year contract worth $6,723,732 with the Bears on June 16, 2023, that included a $1,889,983 signing bonus. As such, Dexter would potentially owe BLA over $1 million from his initial four-year deal alone. 

BLA was founded seven years ago, with a business model focused on “investing” in athletes by providing upfront lump sum payments in exchange for potential future earnings. In the beginning, BLA was primarily focused on Minor League Baseball players who received immediate lump sums in exchange for a percentage of their future earnings. With the inception of college NIL, BLA has expanded its business model to include college athletes. Essentially, BLA gives college athletes a chunk of money upfront in exchange for a piece of their future earnings, and they get to keep the upfront cash even if they don’t make it big in professional sports. According to BLA’s website, “BLA is not a bank that you need to pay back.  The capital players receive from BLA is not a loan.” Notably, Dexter is not the only college athlete to ink an NIL deal with BLA.  Former Georgia defensive standout and first-round pick Nolan Smith purportedly also signed an NIL deal with BLA.

Dexter’s lawsuit contends that the NIL agreement is invalid for multiple reasons. First, he argues that the extended term violates Florida’s NIL law because it extends beyond his period of student-athlete eligibility. Florida’s NIL law explicitly prohibits NIL contracts from extending beyond a student-athlete’s participation in an athletic program at a postsecondary educational institution: 

The duration of a contract for representation of an intercollegiate athlete or compensation for the use of an intercollegiate athlete’s name, image, or likeness may not extend beyond her or his participation in an athletic program at a postsecondary educational institution. Fla. St. § 1006.74(2)(j).

Moreover, Dexter alleges that the agents representing BLA were not licensed as agents in the state of Florida, thus rendering the agreement in violation of Florida’s Athlete Agent Act. Dexter’s argument hinges on the assertion that the contract authorized BLA to represent him in marketing his athletic ability and reputation, effectively constituting an agent contract. Furthermore, he contends that since the extended term surpassed his student-athlete eligibility, the agreement should have included the conspicuous notice mandated by Florida’s Athlete Agent Act.  Pursuant to Florida law, an agent contract must include a boldface type, capital letters notice in close proximity to the student athlete’s signature stating:

WARNING TO STUDENT ATHLETE

1. YOU MAY LOSE YOUR ELIGIBILITY TO COMPETE AS A STUDENT ATHLETE IN YOUR SPORT;

2. IF YOU HAVE AN ATHLETIC DIRECTOR, WITHIN 72 HOURS AFTER ENTERING INTO THE CONTRACT, YOU AND YOUR ATHLETE AGENT MUST NOTIFY YOUR ATHLETIC DIRECTOR; AND

3. YOU MAY CANCEL THIS CONTRACT WITHIN 14 DAYS AFTER SIGNING IT. HOWEVER, CANCELLATION OF THIS CONTRACT MAY NOT REINSTATE YOUR ELIGIBILITY.

Fla. St. § 468.454(3). 

Additionally, Dexter contends that BLA, failed to provide the University of Florida’s athletic director notice of the agreement, in violation of Florida law.  Pursuant to Florida’s Athlete Agent Act, within 72 hours of entering into an agent contract, “the athlete agent must give notice in a record of the existence of the contract to the athletic director of the educational institution at which the student athlete is enrolled.”  Fla. St. §468.454(6). 

The Dexter NIL contract serves as a stark warning to those navigating the complex NIL landscape, underscoring the importance of prioritizing student-athletes’ best interests. It also highlights the crucial need for student-athlete education and resources to help them navigate the intricate world of NIL agreements. Notably, neither BLA nor Dexter informed the University of Florida about the existence of the agreement, raising questions about whether the university’s involvement could have prevented its approval. Whether or not Dexter succeeds in having his contract voided, the lawsuit underscores the critical importance of implementing at least some measure of regulations, whether at the state or federal level, to safeguard student-athletes from entering contracts without a full understanding of the implications.

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The U.S. District Court for the District of Columbia recently found that human prompting of AI-generated works does not satisfy the “authorship” requirement for copyright protection. Under the Copyright Act of 1976, copyright protection attaches “immediately” upon the creation of “original works of authorship fixed in any tangible medium of expression,” provided those works meet certain requirements. Human authorship is one such requirement. In order to sure up protection, a copyright claimant can register their work with the Register of Copyrights. Through this process, the Register will confirm that the work is indeed eligible for copyright protection and ultimately — assuming the work is copyrightable — issue a certificate of registration. However, where the Register denies an application for registration for lack of copyrightable subject matter, the work at issue was never subject to copyright protection at all.

The district court considered whether the Copyright Office was correct in denying Stephen Thaler’s copyright application for a piece of art generated by a computer system he owns — the Creativity Machine. The district court found that “the Copyright Office acted properly in denying copyright registration for a work created absent any human involvement.”

In Thaler’s original application, “he identified the author as the Creativity Machine, and explained the work had been ‘autonomously created by a computer algorithm running on a machine,’ but that plaintiff sought to claim the copyright of the ‘computer-generated work’ himself ‘as a work-for-hire to the owner of the Creativity Machine.’” In its most basic sense, work made for hire is work that “the employer or other person for whom the work was prepared is considered the author for purposes of this title . . . [and] owns all of the rights comprised in the copyright” (17 U.S.C. § 201). Neither the Copyright Office nor the district court were persuaded by Thaler’s argument.

The district court ultimately decided that the “single legal question presented… is whether a work generated autonomously by a computer falls under the protection of copyright law upon its creation.” The district court acknowledged that copyright is designed to adapt with the times but that there “has been a consistent understanding that human creativity is the sine qua non at the core of copyrightability, even as that human creativity is channeled through new tools or into new media.” Further, “[h]uman involvement in, and ultimate creative control over, the work . . . [is] key to the conclusion that [a] new type of work [falls] within the bounds of copyright.” The district court acknowledged that it is dealing with “new frontiers in copyright as artists put AI in their toolbox…” but was unwilling, at least for now, to relax the 1976 Copyright Act’s human authorship requirement.

 This decision does not act as a complete ban on any and all AI-generated work. The district court was instead more nuanced in its decision, finding that “the Copyright Office acted properly in denying copyright registration for a work created absent any human involvement.” This leaves open the question of just how much human involvement is necessary for a work to qualify for copyright protection. Bradley will continue to stay abreast of these development as the courts begin to address this question, among others.

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A trio of senators have joined the list of federal lawmakers circulating drafts of federal college name, image, and likeness (NIL) bills. This time, Sens. Richard Blumenthal (D-CT), Jerry Moran (R-KS), and Cory Booker (D-NJ) are joining across party lines to create the College Athlete Protection and Compensation Act. We’ll refer to it as the “CAPC Act” (mainly because nobody wants to read “College Athlete Protection and Compensation Act” over and over). As discussed in previous posts, NIL rules and laws are currently a unique blend of NCAA rules and varying state laws, which many within the NCAA and college athletics believe to be problematic. While not the first federal NIL bill released or introduced this legislative session, and likely not the last, the CAPC Act signals some bipartisan support for federally standardized NIL regulation.

The CAPC Act formalizes federal NIL rights, establishes an NIL clearinghouse, and offers protections for student-athlete scholarships and medical expenses. The bill broadly prohibits schools, conferences, and athletic associations from punishing or prohibiting a student-athlete from earning money from the use of their NIL. Uniquely, the bill would allow schools to prohibit college athletes from entering NIL contracts that are contradictory to the school’s code of conduct or for moral reasons. As with all NIL-related rules and laws, the bill also contains a restriction on pay-for-play NIL deals by prohibiting NIL compensation from being used as an inducement for recruits or retention of current players.

Under the CAPC Act, schools cannot engage in representing college athletes in endorsement contracts, regulate their representation, certify individuals for such representation, or influence the choice of representation for college athletes. However, schools may allow third parties to use the school’s intellectual property in endorsement contracts, but the school must not be involved in determining the amount of compensation provided to the college athlete.

Similar to the other federal bill drafts, the CAPC Act also contains a reporting requirement. College athletes would be required to provide a copy of each endorsement contract to the school within seven days after entering the contract. Additionally, recruits would be required to provide all current and expired NIL contracts to a school before signing a letter of intent with that school. The contents of the disclosed NIL contracts and financial information provided to the schools would not be subject to public disclosure or open-records laws. However, in an attempt to provide transparency regarding the NIL value of student-athletes, schools would be required to submit annual reports of NIL deals, including information about average and total value, which would then be used for a national public database.

The bill also contains several provisions aimed at protecting college athletes from potentially exploitative or unfair NIL deals or agent representation. For example, college athletes who are no longer participating in college athletic competitions would be able to cancel NIL contracts with more than one year remaining without liability for breach and without returning previously earned payments.

In addition, the bill establishes the College Athletics Corporation (CAC), which would serve as a clearinghouse for NIL contracts and provide guidance to safeguard the interests of student-athletes. The CAC would be responsible for enforcing rules, investigating violations, certifying agents, and certifying endorsement contracts for college athletes. As proposed, the CAC would be comprised of 15 voting members, including current and former college athletes, school representatives, NCAA representatives, athletic conference administrators, and professionals with expertise in sports marketing, contracting, and public relations.

The CAC would have express authority to establish rules and investigatory processes to enforce the CAPC Act. It would also be authorized to bring actions to enforce the CAPC Act with respect to agents, schools, conferences, and the NCAA for violations of the act or CAC rules. The NCAA would be granted authority to enforce the CAPC Act and the standards established by the CAC. This includes the power to declare college athletes ineligible, withhold one or more revenue distributions from schools that breach NIL rules, and suspend or remove from involvement any athletic personnel who violate the NIL regulations. Notably, the CAC would also have subpoena power enabling it to gather necessary evidence, conduct investigations, and take appropriate actions against entities or individuals that may have violated the act or its established rules and standards. The ability to subpoena documents and testimony could have significant implications on the CAC’s ability to enforce NIL rules, especially in contrast to the current status quo where, to date, the NCAA has only issued one NIL infraction-related ruling.

Additionally, the bill would expressly preempt state NIL laws. One noticeable absence in the bill is any provision regarding the employee status of student-athletes, an issue that is currently before the U.S. Court of Appeals for the Third Circuit and the subject of a National Labor Relations Board complaint in California.

The bill does contain several non-NIL related provisions. For example, under the bill, schools would be required to honor scholarships of college athletes until they complete their undergraduate degree. Former college athletes who had received scholarships while enrolled but did not complete their undergraduate degree due to pursuing a career in professional sports would continue to receive grants-in-aid to cover tuition, books, and fees. However, schools would still be able to revoke scholarships for reasons such as transferring to another school or not meeting academic or conduct standards. Additionally, the bill would permit college athletes to enter a professional sports draft and retain eligibility if they do not receive compensation from a professional sports league, team, or agent and declare their intent to resume college athletic competition within seven days after the draft’s completion. The bill would require schools making in excess of $20 million in athletic revenue to cover medical expenses for student-athletes for at least two years after their final competition. And schools making $50 million or more would be required to cover medical expenses for student-athletes for at least four years after their final competition. The bill would also require the CAC to establish a medical trust fund for college athletes, and schools making $50 million or more in athletic revenue would be required to contribute to the fund annually. The purpose of this trust fund is to provide financial support and coverage for medical expenses related to injuries and health conditions incurred during the student-athlete’s participation in intercollegiate athletics.

For the CAPC Act to have a chance of being passed during this legislative session, it must be introduced soon. With an upcoming election cycle on the horizon, the prospects for the bill to make significant progress in the coming years are slim. However, the approach to standardizing NIL regulations without making sweeping changes and bipartisan support may improve the chances for this bill as compared to other federal NIL bills that have been circulating. In particular, as an increasing number of state laws continue to lift NIL restrictions, the pressure on the NCAA to establish national NIL standards is mounting. Thus, the attempt to address the issue of varying NIL rules and laws across states could position the CAPC Act as a potential solution to the ongoing debate surrounding college athlete compensation. As the discussions evolve, it will be crucial for lawmakers, the NCAA, and other stakeholders to work together to find a balanced and fair resolution that benefits college athletes while also addressing the concerns of educational institutions and the broader sports community.

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Comedian Sarah Silverman and authors Richard Kadrey and Christopher Golden recently filed class-action lawsuits against Meta Platforms (parent company of Facebook) and ChatGPT maker OpenAI (backed by Microsoft Corp.) for allegedly using their copyrighted content without authorization to train artificial intelligence (AI) language models. Meta and OpenAI’s AI language models, known as large language models, aim to replicate human conversation and automate tasks. The lawsuits, filed in San Francisco federal court, highlight the legal challenges faced by developers of chat bots who rely on copyrighted material to create realistic responses.

Silverman, Kadrey, and Golden allege that Meta and OpenAI used copies of the authors’ books without their permission by copying illegal online “shadow libraries” that contain the texts of thousands of books. Specifically, the lawsuit against Meta cites the company’s own research paper “LLaMA: Open and Efficient Foundation Language Models” published in February 2023, which explains the large-language model Meta uses to train its chatbots. This paper outlines the dataset used by Meta, which the authors allege demonstrate that “the copyrighted materials were copied and ingested as part of training,” because “many of the plaintiffs’ books appear in the dataset that Meta admitted to using.” In the suit against OpenAI, the authors allege that summaries of the plaintiffs’ work generated by ChatGPT demonstrate that the bot was trained on their copyrighted content. In fact, a summary of Silverman’s memoir “The Bedwetter” composed by ChatGPT was provided as an exhibit to the complaint. The plaintiffs are seeking awards for damages and injunctive relief on behalf of a nationwide class of copyright owners whose works were allegedly infringed upon.

One hurdle plaintiffs may struggle to overcome is the 2nd Circuit Court’s decision in Authors Guild v. Google. Authors Guild was a copyright case concerning fair use in copyright law and the transformation of printed copyrighted books into an online searchable database through scanning and digitization. Under the fair use doctrine of the U.S. copyright statute, it is permissible to use limited portions of a work including quotes, for purposes such as commentary, criticism, news reporting, and scholarly reports. The court found that “Google’s unauthorized digitizing of copyright-protected works, creation of a search functionality, and display of snippets from those works are non-infringing fair uses. The purpose of the copying is highly transformative, the public display of text is limited, and the revelations do not provide a significant market substitute for the protected aspects of the originals. Google’s commercial nature and profit motivation do not justify denial of fair use.” While not dispositive, this case addresses the issue of the fair use defense in a context similar to that at issue here, and the court may find fair use by Meta and OpenAI.

These lawsuits highlight the potential legal consequences faced by developers who utilize copyrighted material without proper authorization. Attorneys for plaintiffs assert that “much of the material in the training datasets used by OpenAI and Meta comes from copyrighted works — including books written by plaintiffs — that were copied by OpenAI and Meta without consent, without credit, and without compensation.” These lawsuits are not only intended to assert the plaintiffs’ rights in their copyrighted material, but also have the potential to begin the process of defining the appropriate boundaries for artificial intelligence and what role copyright laws will play in the continued development of AI.