NEWS
AI and Copyright: Court Rules Against Fair Use in Training AI Models
On February 11, 2025, the U.S. District Court for the District of Delaware delivered a landmark decision in Thomson Reuters Enterprise Centre GmbH v. Ross Intelligence Inc.
The court ruled that the use of copyrighted materials to train AI models does not qualify as fair use. This ruling represents a significant development in the ongoing legal debate over AI and intellectual property rights.
Background of the Case
Thomson Reuters owns the legal research platform Westlaw.
Westlaw provides users with legal texts, statutes, and editorial content, including headnotes that summarize key aspects of cases. Westlaw also employs a proprietary classification system called the “Key Number System” to organize legal materials.
Ross Intelligence, an AI-powered legal research platform, sought to develop a competing tool. Initially, Ross attempted to license Westlaw’s data for training purposes. When Reuters declined, Ross turned to a third-party company, LegalEase. LegalEase compiled “Bulk Memos,” which contained legal questions and answers based on Westlaw headnotes. Ross then used these memos to train its AI system.
Reuters filed a lawsuit in May 2020, alleging copyright infringement. The company argued that Ross used proprietary Westlaw content without authorization to build its AI-driven research tool.
Court Ruling and Rejection of Fair Use
Judge Stephanos Bibas granted Reuters’ motion for partial summary judgment and rejected Ross’s fair use defense. The court applied the four-factor test under U.S. copyright law.
1. Purpose and Character of the Use
The court found Ross’s use to be commercial and non-transformative. Ross used Reuters’ copyrighted material to create a directly competing product. The court concluded that the AI training process did not add a new or distinct purpose.
2. Nature of the Copyrighted Work
This factor slightly favored Ross because Westlaw headnotes contain factual elements. However, the court noted that the headnotes also reflect editorial judgment.
3. Amount and Substantiality of the Work Used
The court ruled in Ross’s favor on this factor. The headnotes were used only in training and were not displayed to end users.
4. Market Effect
The ruling heavily favored Reuters, as Ross’s tool directly competed with Westlaw, threatening its market share. The court emphasized that Ross could have developed its AI training data independently or through licensed sources. Because the fourth factor carried significant weight, the court ruled against Ross. The opinion made clear that fair use does not protect unauthorized use of copyrighted content for AI training.
Implications for AI and Copyright Law
This ruling is a major victory for copyright holders. It affirms their rights over proprietary content and may open new licensing revenue streams. On the other hand, AI developers now face stricter limitations on sourcing training data. They must rely on non-copyrighted works or obtain proper licensing agreements.
What This Decision Means for Generative AI
However, this decision is not the final word on AI copyright disputes. Judge Bibas noted that Ross’s system was not a generative AI tool. Instead, it functioned as a legal search engine.
Future cases involving generative AI may lead courts to take a different approach. That shift may be particularly likely on the transformative use factor. As AI continues to evolve, the legal landscape will likely shift as well.
This case sets an important precedent but leaves open questions about AI-generated content.
For now, AI companies should proceed carefully. They should ensure that their training data complies with copyright law to avoid similar litigation.
AI and Fair Use related articles: Developments in Copyright and Artificial Intelligence
Federal Circuit Reverses ITC Decision, Strengthening Patent Eligibility for Composition Claims
The Federal Circuit has issued a significant ruling in US Synthetic Corp. v. Int’l Trade Comm’n. It reversed the ITC’s controversial decision that had invalidated composition of matter claims as abstract ideas. This case provides an important clarification on patent eligibility under Section 101 and limits the expansive application of the abstract idea doctrine in composition claims.
Case Overview: ITC Invalidates Composition of Matter Claims Under Section 101
US Synthetic Corp. (USS) had patented polycrystalline diamond compacts (PDCs) used in drill bits. The claims defined the PDCs by their material properties, such as coercivity and thermal stability. The ITC had determined that these claims were abstract because they described the PDCs through functional properties rather than specific manufacturing steps.
This decision drew criticism from industry groups, including PhRMA, for expanding the abstract idea analysis into composition claims. Critics warned that the ruling could have undermined long-standing patent protections for chemical and material innovations.
Federal Circuit Reversal: Material Properties Are Not Abstract Ideas
Writing for a unanimous panel, Judge Chen rejected the ITC’s reasoning. The court affirmed that the claimed material properties were concrete and measurable rather than abstract.
The Federal Circuit emphasized that these properties are inherently tied to the PDC’s physical structure. The court stated that they are “integrally and necessarily intertwined” with the composition itself.
The ITC’s position was that these characteristics were mere “side effects” of manufacturing. However, the Federal Circuit ruled that they meaningfully define the PDC’s structure and composition.
Distinguishing Composition Claims from Software Patent Eligibility
A key takeaway from the decision is that defining a composition of matter by its properties differs from claiming an abstract idea.
Functional limitations alone may be problematic in software patents. But chemistry and materials science inventions often rely on measurable properties to describe structure. The court made clear that this distinction matters under Section 101.
Key Takeaways on Section 101 Patent Eligibility
This decision preserves decades of precedent allowing composition claims to be defined by physical and material properties. The ruling clarifies several important principles.
Material Properties Can Serve as Valid Claim Limitations
When claimed properties correlate with structure, they can function as legitimate definitional elements rather than abstract concepts.
A Perfect Correlation Between Property and Structure Is Not Required
The court acknowledged that no property is a perfect proxy for a composition’s structure. However, a reasonable correlation is sufficient to support patent eligibility.
Issued Patents Are Presumed Valid Under Section 101
The Federal Circuit reaffirmed that issued patents are presumed valid, including with respect to eligibility. The court criticized the ITC for applying an incorrect burden of proof to USS.
Limited Scope: A Narrow but Important Patent Eligibility Ruling
Although this ruling strengthens patent eligibility for chemical and material compositions, it offers little relief for software-related claims.
The court explicitly distinguished this case from software patents, noting that software’s functional limitations are often untethered to physical structures.
The decision also leaves open the broader question of when a composition of matter claim could be considered abstract. Rather than establishing a rigid test, the court provided guidance through example and preserved flexibility for future cases.
Practical Implications for Patent Prosecutors and Litigators
The court’s reversal is a significant win for industries that depend on composition of matter patents, including pharmaceuticals and materials science.
By reinforcing that material properties can define structure, the ruling protects the enforceability of many existing patents.
For patent practitioners, the case underscores the importance of clearly explaining how claimed properties relate to physical structure in the specification. Careful drafting may prove decisive in future Section 101 challenges.
Related patent eligibility articles: USPTO AI subject matter eligibility guidance
Federal Preemption and Fast-Tracked Dismissals: Lessons from BearBox LLC v. Lancium LLC
Overview of BearBox LLC v. Lancium LLC
Plaintiffs often prefer federal courts because cases typically move faster than in state courts. But speed can work against weaker claims. That happened in BearBox LLC v. Lancium LLC, where the Federal Circuit dismissed both a state law conversion claim and an inventorship challenge. Federal preemption and strict evidentiary rules played a key role.
The Case at a Glance: How the Dispute Started
The dispute began at a Bitcoin mining conference in 2019. BearBox’s founder, Austin Storms, shared technology details with Lancium’s co-founder after a brief conversation and follow-up email. Five months later, Lancium filed a patent application, which became U.S. Patent No. 10,608,433.
BearBox’s Claims: Inventorship and State Law Conversion
BearBox filed suit, claiming:
- Correction of inventorship – arguing Storms should be named as an inventor under federal patent law.
- Conversion under Louisiana law – alleging that Lancium “stole” BearBox’s technology.
However, federal law preempted the state law claim, and the inventorship challenge failed due to strict evidentiary requirements.
Why Federal Preemption Blocked BearBox’s State Law Claim
Not all state law conversion claims are preempted. In this case, the court ruled BearBox’s claim too closely resembled a patent infringement case. The Federal Circuit emphasized a key principle: state law cannot create “patent-like” protection for ideas that are not patented or protected as trade secrets.
BearBox had shared its technology without restrictions. Because of that, it could not later claim exclusive rights under state law.
The court cited Bonito Boats, Inc. v. Thunder Craft Boats, Inc., reinforcing the importance of public access to unpatented ideas.
Strict Evidentiary Standards Doomed the Inventorship Challenge
To prove inventorship, BearBox needed clear and convincing evidence, including independent corroboration. The court found the evidence—mainly a single email with attachments—insufficient. This strict standard ensures that inventorship claims are not made lightly and prevents retroactive attribution without strong proof.
Fast-Tracked Federal Court Proceedings: What Happened Step by Step
Federal court speed helped streamline the case:
- Early dismissal of the state claim – Federal preemption ended BearBox’s state law argument quickly.
- Summary judgment for inventorship – The district court granted summary judgment because the evidence failed to meet the clear-and-convincing standard.
- Quick appellate review – The Federal Circuit affirmed the rulings without remanding, showing how efficiently federal courts dispose of meritless claims.
This illustrates that while federal courts move quickly, that speed can be a double-edged sword for plaintiffs.
The Takeaway: Federal Court Speed Cuts Both Ways
Plaintiffs often choose federal courts for faster resolutions. BearBox shows the risk when claims are weak:
- ✅ Strong claims benefit – Federal courts can advance legitimate cases rapidly.
- ❌ Weak claims suffer – Cases with insufficient evidence or preempted claims get dismissed just as fast.
For intellectual property disputes, this case highlights the importance of securing patent protection or trade secret safeguards before sharing technology. Otherwise, federal preemption could end your case before it even starts.
Related trade secret articles: When Inventors Leave: A Hard Lesson in Trade Secret Law
Updated IDS fees
The USPTO has changed how fees for Information Disclosure Statements (IDS) work, this change was implemented 2025-01-19.
A brief overview of the changes are as follows:
There are now fees for when the cumulative number of references that the applicant supplies exceed the following thresholds: 50, 100, 200. These fees are not insignificant and do not scale by entity size.
Between 51 and 100 references = $200
Between 101 and 200 references = $500
Over 200 references = $800
However, do note you reduce the larger fee by the smaller. So if you had cited over 50 citations and then cited over 100, but you already paid the $200 fee earlier, you would pay $300 for the second fee instead of $500. This applies to the over $200 fee as well.
These fees apply to applications filed before these changes.
These new fees do not replace the standard IDS filing fee. This is now called the “IDS timing fee” and these new fees are “IDS size fees”.
These numbers do not include references that were filed by the examiner or a “third party”. Duplicate items are counted.
Related IDS updates: USPTO’s New Fee Structure for Large Information Disclosure Statement Filings
Divided Infringement
Understanding System and Method Claims
System claims describe the overall arrangement and interaction of different components within a system. They protect the “what” and “how they work together” of an invention.
Method claims focus on the specific steps to achieve a result, essentially protecting the “how” of an invention.
System claims define the components and their interactions within a system, while method claims detail the steps or actions taken to perform a function.
Example:
- Method claim: “A method for cleaning a surface, comprising the steps of applying a cleaning solution, scrubbing with a brush, and rinsing with water.”
- System claim: “A cleaning system including a spray nozzle, a brush attachment, and a water reservoir, wherein the nozzle delivers cleaning solution to the brush.”
Enforcing Method vs. System Claims
Typically, method claims are easier to obtain but more difficult to enforce. To prove infringement, all steps must be performed by a single entity.
System claims, by contrast, can be infringed by creating a system with the described components.
However, questions arise when different agents control different components of a system. Who is responsible for infringement in such cases?
Legal Precedent on System Use
Courts have held that to “use” a system, a party must “control the system as a whole and obtain benefit from it.”
For example, in Centillion Data Systems, LLC v. Qwest Communications International, Inc., backend components were operated by the service provider (Qwest), and front-end components by customers.
The court ruled that customers, not Qwest, were using the system. Qwest was therefore not liable for infringement.
Case Study: CloudofChange LLC v. NCR Corporation
A recent case involved a Point-of-Sale (PoS) system called NCR Silver. CloudofChange’s patents claimed a system requiring vendor-operated webservers and subscriber-operated PoS terminals. NCR controlled the backend, while merchants controlled the frontend.
CloudofChange alleged direct infringement, arguing that NCR controlled and benefitted from each component. The district court sided with CloudofChange, noting that the merchant agreement required merchants to maintain internet access. The court held this demonstrated that NCR was directing the merchants and thus using the patented system.
Federal Circuit Reversal
The Federal Circuit reversed the decision based on the Centillion framework. The court emphasized that NCR’s merchants, not NCR, used the system. Simply requiring merchants to maintain internet access does not constitute directing or controlling the system’s use as a whole.
The court also highlighted the difference in liability analysis between method and system claims:
- Method claims: A party must control each step of the method. If steps are divided among multiple parties, no single party can be said to perform the complete method.
- System claims: Liability depends on control over the entire system, not individual components. The focus is whether someone puts the complete system into service and benefits from it.
Key Takeaways on Divided Infringement
- For method claims, divided actions among parties may result in no infringement unless one party directs all steps.
- For system claims, control over the system as a whole is the key factor.
- Dividing the action among multiple parties can avoid liability in both cases, but the analysis differs depending on claim type.
Related articles to method or system claims: Jazz Loses the Tune: Courts Strike a Sour Note on System Patents
Generic Drug Label Doesn’t Induce Patent Infringement Just by Listing Optional Refrigeration
New FishFAQ Trademark video: What is a Trademark?
We have started uploading a new series of FishFAQ videos directed towards Trademarks. This first video starts with the most basic question: What is a Trademark?
It covers the purpose of trademarks, who they are meant to protect, and why the government is interested in doing so; the basic things that can be protected under trademark rights, and the historical beginning of the modern trademark system.
The USPTO’s New Fee Structure for Large Information Disclosure Statement Filings.
“When in doubt, cite it” is the wisdom handed down regarding prior art on the edges of relevance. After all, it didn’t cost much to cite such art by filing an IDS, but there was a big potential risk if the art wasn’t cited. That wisdom, however, may cost you now with the new USPTO fees for filing large IDS’s.
The USPTO is contending that in many instances, these large IDS submissions contain clearly irrelevant, marginally irrelevant, or cumulative information. To cover the extra time examiners must put in to check so many references, and incentivize practitioners to think harder about what information needs to be included, the PTO has upped the fees:
$200 for 51-100 items
$500 for 101-200 items
$800 for 201+ items
The PTO says about 5% of applications contain 51-100 items; 4% of applications have 101-200 items; and 4% have over 200 items. This should translate to only about 1 in 8 applications being affected.
It will be interesting to see how this affects filing. Historically, the choice has been clear. Patent filers have been able to avoid both the extra effort and inherent liability in identifying the most relevant references, by simply citing everything that is even marginally relevant. Are the new fees high enough to discourage that strategy? And seen from a more cynical viewpoint, are the new fees high enough to offset the fees that would otherwise be charged to clients from filing large IDSs. Are they high enough to discourage filers from trying to hide the most relevant references within a mountain of less relevant references?