IP Law Daily, COPYRIGHT—D. Del.: Third Circuit should get first bite at deciding fair use in artificial intelligence case, (Apr 8, 2025)

By Matthew Hersh, J.D.

But the case, while it will be closely watched, turns on a form of AI that is non-generative.

The Third Circuit should be given a chance to weigh in on whether the creator of an artificial intelligence-driven legal research tool made a transformative use of Westlaw’s copyrighted headnote scheme by incorporating thousands of those headnotes into its AI training module, the federal court for Delaware has held. But the district court, while acknowledging that there were “substantial grounds for difference of opinion” that the court of appeals should be given a chance to address before trial, appeared to tamper down expectations about the implications of any future appellate decision by emphasizing that the case involved only a form of AI that was “non-generative” (Thomson Reuters Enterprise Centre GmbH v. Ross Intelligence Inc., No. 1:20-cv-613 (D. Del. Apr. 1, 2025)).

The case involves a now-defunct legal research company named Ross Intelligence. The company sought to create a “natural language search engine” using machine learning and artificial intelligence. Under Ross’s algorithm, as the district court explained, “users would enter questions and its search engine would spit out quotations from judicial opinions—no commentary necessary.” But rather than train its software on case opinions alone, Ross also trained its software by feeding the software a series of legal questions and answers that it derived, at least in part, from some of Westlaw’s copyrighted headnotes.

Thomson Reuters, the company behind Westlaw, sued Ross for copyright infringement in 2020. After discovery, both parties moved for summary judgment. The court, in a widely reported 2023 opinion, largely denied both motions. With respect to Westlaw’s claim of infringement, the court found, there were too many open questions in record about the originality of Westlaw’s headnotes—and the extent to which Ross’s training questions and answers were substantially similar to those headnotes—to grant summary judgment. The same was true for Ross’s fair use defense, the court found. If Ross merely “studied the language patterns in the headnotes to learn how to produce judicial opinion quotes,” the court noted, then it engaged in a transformative use of the headnotes. But if Ross “used the untransformed text of headnotes to get its AI to replicate and reproduce the creative drafting done by Westlaw’s attorney-editors,” the court noted, then it would not be a transformative use. Ultimately, the court found, this was “a material question of fact that the jury needs to decide.”

But the court had a change of heart on both questions. In a new summary judgment opinion, issued late last year, the court granted summary judgment to Thomson Reuters. With respect to originality, the court acknowledged, it had “wrongly viewed the degree of overlap between the headnote text and the case opinion text as dispositive” of the issue. But in fact, the court now reasoned, that was not the case. “I analogize[] the lawyer’s editorial judgment to that of a sculptor,” the court now noted. “A block of raw marble, like a judicial opinion, is not copyrightable. Yet a sculptor creates a sculpture by choosing what to cut away and what to leave in place.” The analogy was applicable here. “Even a headnote taken verbatim from an opinion is a carefully chosen fraction of the whole,” the court noted. “Identifying which words matter and chiseling away the surrounding mass expresses the editor’s idea about what the important point of law from the opinion is.” The headnotes were original as a matter of the law, the court therefore reasoned.

The court also granted summary judgment to Thomson Reuters on the fair use question—the aspect of the case most closely watched for its potential implications on pending AI cases. Ross was “using Thomson Reuters’s headnotes as AI data to create a legal research tool to compete with Westlaw,” the court noted. Importantly, the court noted, Ross’s system did not write new content itself. Rather, when a user entered a legal question, Ross “spits back relevant judicial opinions that have already been written”—a process that “resembles how Westlaw uses headnotes and key numbers to return a list of cases with fitting headnotes.” That aspect of Ross’s behavior was critical. “Ross took the headnotes to make it easier to develop a competing legal research tool,” the court noted. “So Ross’s use is not transformative.”

Interlocutory appeal. Ross, noting that the case presents “urgent questions governing the innovation at the heart of America’s preeminence—at least for now—in artificial intelligence systems,” asked the district court to stay any further proceedings in the case until the Third Circuit could hear its appeal on the originality and fair use questions. In a brief one-paragraph docket order, the court granted the motion. “Though I remain confident in my February 2025 summary judgment opinion,” the court noted, “I recognize that there are substantial grounds for difference of opinion on controlling legal issues in this case.” The court promised that a short order explaining its reasoning would follow.

Implications. Although the case will be closely watched for its fair use conclusions, especially by litigants in the many cases across the nation involving AI-generated works, it remains unclear how much of an impact a decision in this case will have on that other litigation. In granting summary judgment for fair use, the district court noted in its second opinion, it placed great weight on the fact that Ross’s AI “is not generative AI (AI that writes new content itself).” Rather, the court noted, it merely “spits back relevant judicial opinions that have already been written” in response to user questions. “Because the AI landscape is changing rapidly,” the court emphasized, in a seeming nod to the attention that would inevitably be focused on its opinion, “I note for readers that only non-generative AI is before me today.”

The Case is No. 1:20-cv-613.

Judge: Bibas, S.

Attorneys: Jack B. Blumenfeld (Tunnell LLP) for Thomson Reuters Enterprise Centre GmbH. David Ellis Moore (Corroon, LLP) for Ross Intelligence Inc.

Companies: Thomson Reuters Enterprise Centre GmbH; Ross Intelligence Inc.

Cases: AINews Copyright TechnologyInternet DelawareNews