Time For Hollywood's "Fair Use" AI Knockout Punch!
The Courts & Copyright Office's 1-2 Punches Have AI Developers On The IP Ropes. Now It's Time For Big Media To Enter The Ring & Finish The Job.
Wake Up! It’s “brAIn” dump time. My “mAIn event” is a “call to arms” for a media and entertainment “fair use” AI smackdown. The Courts and Copyright Office, for the most part, are going there. Now it’s time for Hollywood to finally enter the ring. Then, it’s the “cocktAIl” — my special mixology of key AI/media stories and networking events. Finally, it’s the “AI Litigation Tracker” — updates on key generative AI-media IP infringement cases by Partner Avery Williams of McKool Smith (access the “Tracker” here via this link).
But First …
A few newsletters ago, I featured a poll that asked you, my readers, whether you agreed with famed film director James Cameron that copyright scrutiny should apply only to AI “outputs”, not on “inputs” (i.e., scraping of copyrighted works for AI training should be legally permissible). An overwhelming 76% of you said “NO!”
I. The mAIn Event — Hollywood’s “Fair Use” AI Knockout Punch. Coming Soon?
The Creative Community is right to feel wronged about the current state of things in generative AI media land. After all, the world’s most powerful tech titans — like now fully “jumped the shark” Elon Musk — call for the outright obliteration of copyright. But “The Donald” — never one to be one-upped — went beyond words. He erased Shira Perlmutter, head of the Copyright Office, within 24 hours after the Office issued its preliminary report that generally sided with copyright owners on the central issue of “fair use” in the world of generative AI.
So where do things stand right now in this “fair use” battle royale that pits copyright owners in one corner and the Big Tech copyright takers in the other?
Copyright Owners 1*, Big Tech 0
The first federal judge to expressly decide the “fair use” issue — Judge Stephanos Bibas of the U.S. District Court in Delaware — recently flatly rejected it as a defense to unlicensed AI model training in Thomson Reuters v. Ross Intelligence. While that was not a generative AI case (a fact that Bibas pointed out himself), his central rationale is not dependent on an “AI v. generative AI” distinction (I explained this in my newsletter at the time).
Bibas’ Thomson Reuters decision is now under review by the Third Circuit Court of Appeals on what’s called an “interlocutory appeal” — a relatively rare process that gives the appellate court a chance to decide a critical decision while the underlying case is put on hold. There’s no timeline for that Appellate decision. But given the fact that Judge Bibas awaits the Appeals Court’s ruling, you can expect that it will be coming soon. [NOTE: the asterisk next to the number 1 in the caption above means that Bibas’ “fair use” decision is not final yet.]
Split Decisions Coming Soon By Two Other Courts?
So, Thomson Reuters is not a generative AI case — and AI developers seize on that fact to discount Judge Bibas’ rejection of “fair use.” But two other key fast-moving AI copyright cases are genAI-focused — and the federal judges presiding over them are expected to announce their “fair use” decisions in the days or weeks ahead.
Kadrey v. Meta: Rejection of “Fair Use” Expected
First up, federal Judge Vince Chhabria (Northern District of California) is likely to make his pivotal “fair use” decision any day now in the closely watched Kadrey v. Meta case — and all signs point to a mega Meta loss (as I laid out in an earlier newsletter). I expect Chhabria to find Meta liable for widespread — and perhaps even willful — copyright infringement for its unlicensed AI training. He’ll likely make his decision on “market replacement” grounds, a rationale consistent with both the U.S. Copyright Office (as I explained here) and the U.S. Supreme Court in its most recent “fair use” case, Andy Warhol-Prince (about which I previously wrote at length).
This is what Judge Chhabria said to Meta’s lawyers in a recent hearing:
"You have companies using copyright-protected material to create a product that is capable of producing an infinite number of competing products. You are dramatically changing, you might even say obliterating, the market for that person's work, and you're saying that you don't even have to pay a license to that person. I just don't understand how that can be fair use.”
Bottom line: it’s not looking good for “The Zuck,” who seemingly has no Clue about who holds the power — it’s The Judge, in The Courtroom, with The Gavel (see what I did there?). No amount of tech-bro gold necklaces can protect him from the Court’s powerful punch.
Bartz v. Anthropic: Judge Leaning the Other Way
But in a separate boxing venue not so far away, federal Judge William Alsup (also in the Northern District of California) signaled that he may do a “Costanza” — i.e., do the opposite in Bartz v. Anthropic. When hearing oral arguments in his court, Alsup said things that didn’t look so good for copyright owners. About Anthropic’s “fair use” defense, Alsup said this: "That's kind of the way I'm leaning right now."
But hold the phone! Alsup also said this immediately after seemingly showing his cards and even before Silicon Valley bros could “high five” each other: "Sometimes I say that and change my mind." He also expressed disdain for Anthropic's use of pirated books: "I have a hard time seeing that you can commit what is ordinarily a crime, but get exonerated because you end up using it for a transformative use,” he told the room. So maybe Judge Alsup is saving more wiggle room than Chhabria.
In any event, it’s not unusual for federal Judges to reach very different conclusions when they face the same fundamental issue, especially when that issue is a novel and industry-defining one, as it is here — i.e., is unlicensed AI training actionable infringement or defensible “fair use”? So don’t be surprised if there’s a split decision here. That’s what Courts of Appeal are here for — and ultimately, the Supreme Court if it gets that far.
And if an AI/media “fair use” case ultimately does make its way to the Supremes, my bet is that those nine robed politicos will ultimately reject “fair use” on “market replacement/substitution” grounds a la their own precedent in Andy Warhol-Prince.
Come On Hollywood, Make Some Noise!
Let’s keep it real. Big Tech developed their AI models on the backs of the Creative Community. They’ve taken copyrighted works without consent and compensation to fuel their relentless AI development — amassing hundreds of billions of dollars in market value in the process. Litigation discovery in the Kadrey v. Meta case discussed above reveals that even Meta senior execs didn’t buy their “fair use” arguments. Yet CEO Mark Zuckerberg ordered them to continue to pillage the Creative village.
So why isn’t Hollywood screaming from the high heavens?
Now is the time for the entertainment industry to come out of the shadows and take a stand. After all, if not now, when?
A few — too few — media and entertainment companies have stepped up to fight to establish “ethical AI” rules of the game right now, including The New York Times (vs. OpenAI and MIcrosoft), Universal Music Group (vs. Anthropic, Suno and Udio), and SAG-AFTRA (which just recently filed an Unfair Labor Practices complaint). So some industry pushback exists, but mostly in the courts.
But where are other major entertainment companies? Where’s Disney, for example, the long-time master of IP protection?
Some influential Hollywood players instead seem to be distancing themselves from this righteous fight and are falling in line. Yes — I’m pointing the finger at you AMC Networks. You just brokered a deal to use generative video platform Runway to cut marketing and VFX “costs” — a not too subtle dig at the less elegant word “jobs.” Did you insist on “ethical AI” in your deal?
This Is Not About Stopping AI. It’s About Doing It Legally & Ethically.
I’m not against generative AI tech. Nor am I against Hollywood players like AMC Networks using AI tools. But I AM against Hollywood using AI “tools” that have not been “ethically sourced” — i.e., AI models trained only on licensed content. Generative video platform Moonvalley is (100% ethically sourced). Runway reportedly is not. And THERE’s my fundamental “rub.”
AI developers are feeling the heat. Because of the court developments I discuss above, they’re at serious, knowing risk right now if they continue to scrape, take and devalue copyright owners — especially when a vibrant content licensing market now exists to solve the problem AI developers need to solve — i.e., their insatiable appetite for high quality content.
Case in point Amazon and The New York Times. These two seemingly strange bedfellows just struck a major AI content licensing deal. And if they could do it, so can you fellow Big Tech players. Here’s an idea to help, a NATO for news that consolidates the content of “opt in” participating media companies to create a “one-stop shop” for licensing.
AI licensing shouldn’t be — and isn’t — that hard. It’s certainly not a money issue, after all. Big Tech AI developers are expected to spend $1+ trillion on AI investments alone. So why not spend some reasonable share of those mega-dollars on people (the creative community that makes the high quality content you need) and not just on hardware (servers/infrastructure)? Seems fair to do that, since Big Tech’s AI models have no commercial utility whatsoever without the content needed to fuel them.
It’s in the best interests of the AI development community to play nice with media partners. Reducing litigation friction will accelerate generative AI adoption. Big Tech certainly believes its proprietary IP can’t simply be taken. In a nice rather hypocritical encapsulation of it all, OpenAI’s CEO Sam Altman recently — and very loudly — cried “foul!” when he accused China-based competitor DeepSeek of stealing his patents.
So why is it different simply because the victims of IP theft hail from Southern California instead of Silicon Valley?
What do you think? Send me your feedback to peter@creativemedia.biz.
II. The cocktAIl — My AI/Media Mixology
(1) Attention Marketing Execs, Advertisers & All of Us!
A few newsletters back, my feature story focused on “AI’s Holy Sh*t! Moment” — forecasts that by next year 25% of Google search will be lost to ChatGPT-esque AI search (which generates 96% fewer website referrals). Here’s more sobering news. OpenAI’s Sam Altman predicts AI will replace 95% of all ad agency work. Meanwhile, Dario Amodei, CEO of Amazon-backed Anthropic, goes further. He believes AI could wipe out HALF of all entry level white-collar jobs. What does it mean for the Creative Community (filmmakers, etc.)? Read my recent newsletter, “My Son Just Graduated From Film School. What’s the Point in an AI World?”
(2) Can “Artificial” Intelligence Be Liable for Defamation?
Here’s a legal mind-bender. Radio host Mark Walters sued OpenAI in Georgia when ChatGPT hallucinated (fabricated) allegations of a fictional lawsuit against him. But OpenAI just won. The judge ruled that Walters couldn’t prove AI’s “intent” to defame. But does that mean that defamatory outputs — no matter how much harm they cause — can never be actionable because it’s impossible to prove bad intent by “artificial” intelligence? That can’t be right! Expect endless lawsuits to come.
(3) Westside Digital Mix Hosts Great Networking Events
For those of you interested in AI/media networking in LA, check out Westside Digital Mix. This savvy group of media and tech pros host an ongoing series of great networking events. Their newsletter is also a helpful resource for all major AI/entertainment events in the LA area. Check it out here.
Want to Work Together?
Reach out to me at peter@creativemedia.biz.
III. AI Litigation Tracker: Updates on Key Generative AI/Media Cases (by McKool Smith)
Partner Avery Williams and the team at McKool Smith (named “Plaintiff IP Firm of the Year” by The National Law Journal) lay out the facts of — and latest critical developments in — the key GenAI-focused IP litigations below. All those detailed updates can be accessed via this link to the “AI Litigation Tracker”. McKool is a leader in both copyright and patent-related AI litigation — and all IP and general media, entertainment, AI and tech matters.
(1) Kadrey v. Meta
(2) Ziff-Davis v. OpenAI
(3) The New York Times v. Microsoft & OpenAI
(4) Thomson Reuters v. Ross Intelligence
(5) In re OpenAI Litigation (class action)
(6) Dow Jones, et al. v. Perplexity AI
(7) UMG Recordings v. Suno
(8) UMG Recordings v. Uncharted Labs (d/b/a Udio)
(9) Getty Images v. Stability AI and Midjourney
(10) Universal Music Group, et al. v. Anthropic
(11) Sarah Anderson v. Stability AI
(12) Raw Story Media v. OpenAI
(13) The Center for Investigative Reporting v. OpenAI
(14) Authors Guild et al. v. OpenAI
NOTE: Go to the “AI Litigation Tracker” tab at the top of “the brAIn” website for the full discussions and analyses of these and other key generative AI/media litigations. And reach out to me, Peter Csathy (peter@creativemedia.biz), if you would like to be connected to McKool Smith) to discuss these and other legal and litigation issues. I’ll make the introduction.
About My Firm Creative Media
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