IP Law Daily, COPYRIGHT—N.D. Cal.: On second attempt, artists’ claims against Stability AI hold up, (Aug 13, 2024)

By Matthew Hersh, J.D.

The artists came up with enough additional allegations to move forward to discovery on some of their claims.

A group of visual artists who contend that artificial intelligence software companies infringed on their copyrights by replicating their works within their AI models and by generating substantially similar output images had successfully repleaded their case, the federal court for San Francisco has held. But the court, in allowing the artists to move forward on their amended complaint, stripped DMCA and unjust enrichment claims from the case—and made clear that while the remaining allegations were sufficient to get to the next stage, they might not be enough to pass summary judgment (Andersen v. Stability AI Ltd., No. 23-cv-00201-WHO (N.D. Cal. Aug. 12, 2024)).

The three companies at the center of this lawsuit are Stability AI, DeviantArt, and MidJourney. Each offers a commercial software program that enables users to custom-generate artworks based on underlying images—over five billion, in fact—that were scraped from the internet. The three companies market their products under different names: Stability’s product is called DreamStudio, DeviantArt’s is called DreamUp, and MidJourney’s is called the Midjourney Product. However, each company relies on the training set and software, known as Stable Diffusion, provided by Stability AI.

The mid-2022 launch of the Stable Diffusion platform was not welcomed by everyone, especially by visual artists who claimed that their works were incorporated into the training database for the program. Three of those artists—cartoonist and illustrator Sarah Andersen, painter Kelly McKernan, and illustrator and fine artist Karla Ortiz—brought a class action lawsuit against the three software companies. Their complaint alleged copyright infringement, violations of the Digital Millennium Copyright Act, violations of the right of publicity, and unfair competition.

The court, in an order covered here by IP Law Daily, dismissed the original complaint with leave to refile. That led to the filing of an amended complaint, a renewed motion to dismiss, and this opinion.

Induced copyright infringement. The court first refused to dismiss the induced infringement claim. The court noted that there was some ambiguity as to whether the claim was really one for direct infringement or for induced infringement. That is, was Stability being accused of inducing its customers to create infringing works, or was the Stability platform being accused of constituting an infringing work itself? But that “potential overlap—or potential requirement for plaintiffs to elect one claim or another—was better addressed on summary judgment, after discovery.

The court also found that the allegations were sufficient to allow the case to proceed to discovery—at least on the inducement theory. The claim here was that Stability actively encouraged its users to create output images that resembled—and therefore infringed upon—some of the original images ingested by the platform’s training model. Here, the court noted, Stability’s CEO allegedly stated that Stability took 100,000 gigabytes of images and compressed them to a two-gigabyte file that can “recreate” any of those images. Moreover, the court noted, the amended complaint referenced articles by academics and others that training images can sometimes be reproduced as outputs from the AI products. “The plausible inferences at this juncture are that Stable Diffusion by operation by end users creates copyright infringement and was created to facilitate that infringement by design,” the court noted. The claim would go on to discovery.

DMCA claims. The court dismissed the claims under the Digital Millennium Copyright Act. The three artists asserted claims under 17 U.S.C. section 1202(a) for providing or distributing false copyright management information (CMI) and under section 1202(b)(1) for intentional removal of CMI. Both claims failed.

The claim for distribution of false CMI was easily resolved. The artists claimed that Stability distributed false CMI because it asserted copyright in its models. But this “generic license,” the court found, only “claims rights to Stable Diffusion as a work,” not to any works that were used to create the dataset. “It is implausible that a viewer reading the license disclosure for Stable Diffusion would understand that Stability is claiming rights to or conveying any false information regarding the rights of the plaintiffs whose copyrighted works are among the billions of images” in the datasets, the court found.

As to the claim for removal or alteration, this claim required somewhat more analysis—but it failed as well. The claim alleged that Stability removed distinctive marks such as watermarks or signatures, as well as image captions, when ingesting works during the training process. But the output images, while allegedly similar to many of the training images, were not identical to those images. Did that matter? On this the courts were split. One federal court in Texas found in 2023 that it did not, concluding that as long as a copy was “substantially similar” to the original, the removal or alteration of CMI could still be actionable under the DMCA. But in a more recent opinion from the same district, in Doe 1 v. GitHub, Inc., No. 22-CV-06823-JST, 2024 WL 1643691, at *2 (N.D. Cal. Apr. 15, 2024), the court found that “Section 1202(b) claims require that copies be identical.” The latter view was the better one, the court found—thus requiring the claim.

Unjust enrichment. This claim was preempted under the Copyright Act, the court found. The claim was that Stability unjustly misappropriated the training material to profit from them in their models. But that claim was “expressly based on the use of plaintiffs’ copyrighted works without consent,” the court noted, “and as a result is covered by and preempted by the Copyright Act.” They artists claimed, in briefing, that their claim revolved not around their works but around the artists themselves and their “artistic personas.” But this claim was not in the amended complaint, the court found, so it could not be considered now. That said, the court gave the artists one more chance: “If plaintiffs have a good faith theory of unjust enrichment that falls outside the scope of the protections provided by the Copyright Act, they are given leave to make one last attempt to state an unjust enrichment claim.”

Lanham Act claims against Midjourney. The court then rejected claims under the Lanham Act. Five of the plaintiffs claimed that one of the defendants, Midjourney, listed their names on Discord as part of a list of 4,700 artists—promoting the list as describing “the various styles of artistic works its AI product could produce.” Midjourney argued that just because the list of names existed and was promoted by the company “by itself cannot support an inference of endorsement”—but that was a claim that could be tested at summary judgment, not on a motion to dismiss, the court found. Trade dress claims would also go forward, the court found.

Midjourney argued that the artists did not describe their trade dress adequately, but the court found that they had done so sufficiently for a motion to dismiss. “While some of the alleged ‘concrete elements’ identified in the FAC are, standing alone, vague and possibly overbroad,” the court noted, “those elements cannot be considered alone but as a whole in the context of plaintiffs’ other, plausible allegations.” Here, the combination of identified elements and images, “when considered with plaintiffs’ allegations regarding how the CLIP model works as a trade dress database,” was sufficient.

Copyright claims against DeviantArt. The court found that copyright claims against DeviantArt could go forward. Unlike the other defendants, DeviantArt was accused only of implementing and using the AI tools provided by Stability. But the artists had added allegations to their amended complaint, the court noted, “regarding how copies or protected elements of their works remain, in some format, in Stable Diffusion and how those works can be invoked by use of all of the Stable Diffusion versions.” The copyright claim against DeviantArt would therefore go forward.

The Case is No. 23-cv-00201-WHO.

Judge: Orrick, W.

Attorneys: Arielle S. Wagner (Lockridge Grindal Nauen, PLLP) for Sarah Andersen. Joseph Charles Gratz (Morrison & Foerster LLP) for Stability AI Ltd.

Companies: Stability AI Ltd.

Cases: AINews Copyright TechnologyInternet CaliforniaNews GCNNews