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COURTS DEALING WITH THE ONSLAUGHT OF INTELLECTUAL PROPERTY ISSUES OVER
ARTIFICIAL INTELLIGENCE

Fredrikson & Byron PA
MEMBER FIRM OF
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USA February 12 2024

Artificial Intelligence (AI) has been used to create significant advancements in
technology and efficiencies for businesses and legal teams over the last decade.
One of the most significant ways AI has already impacted intellectual property
litigation is through enhancing document review and analysis through technology
assisted review. News headlines about chatbots such as ChatGPT show the
significant growth in this area. As this technology continues to evolve at a
rapid pace, generative AI (gen AI), which is a subset of AI, has arrived and
will also change the landscape of intellectual property issues and litigation.
The basic difference between AI (pattern recognition) and gen AI (pattern
creation) is that traditional AI is generally used to analyze data and make
predictions, whereas gen AI helps by creating new data based on its training
data from large language models.

This article highlights some of the key issues courts are facing with AI in
intellectual property litigation.

Copyright Litigation:

Is large-scale scraping of third-party content to train gen AI tools fair use
and under what circumstances do AI-generated works infringe on existing
copyrights?

Andersen v. Stability AI Ltd., 2023 WL 7132064 (N.D. Cal. Oct. 30, 2023):

 * The plaintiffs Sarah Andersen, Kelly McKernan and Karla Ortiz, on behalf of a
   putative class of artists, allege that Stability AI Ltd. scraped billions of
   copyrighted images from online sources, without permission, to use as
   training data to create Stable Diffusion, an AI image product, without
   consent from the creators of the images or the websites that hosted them.
 * The plaintiffs allege that Stable Diffusion is a “software library” providing
   “image-generating services” to products produced and maintained by the
   defendants including DreamStudio, DreamUp and the Midjourney Product.
 * According to the plaintiffs, consumers use these products by entering text
   prompts into the programs to create images “in the style” of artists. The
   plaintiffs claim that the new images are based entirely on the training
   images and are “derivative” of the training images. However, the plaintiffs
   conceded that none of the image outputs “is likely to be a close match for
   any specific image in training data.”
 * The plaintiffs filed a class action lawsuit against the defendants Stability
   AI Ltd., Stability AI, Inc., Midjourney, Inc., and DeviantArt, Inc. for:
   Direct and vicarious copyright infringement under 17 U.S.C. § 501; Violation
   of the Digital Millenium Copyright Act (DMCA), 17 U.S.C. §§ 1201-1205;
   Violation of the plaintiff’s statutory and common law rights of publicity,
   Cal. Civ. Code Section 3344; and Violation of unfair competition law, Cal.
   Bus. & Prof. Code §§ 17200, et seq.
 * In their motion to dismiss, the defendants argued that the models do not copy
   or store any images, copyrighted or otherwise, but rather, just analyze the
   properties of online images to generate parameters that were later used to
   assist the gen AI model in creating new images from text prompts, as opposed
   to copying any portion of the underlying images used for training.
 * On October 30, 2023, the court largely granted the motion to dismiss with
   leave to amend. However, the court allowed Andersen’s copyright infringement
   claim to proceed for registered works against Stability, acknowledging the
   plausibility that they were included in the training datasets.
 * The court found that the allegations that Stability “downloaded or otherwise
   acquired copies of billions of copyrighted images without permission to
   create Stable Diffusion” and used those images to train Stable Diffusion were
   sufficient to state a direct infringement claim.
 * Resolution of this question will certainly involve consideration of the
   doctrine of fair use, which protects certain unauthorized uses of copyrighted
   works – i.e., use that transforms an original work into something
   sufficiently different – against copyright infringement claims.

Key Takeaways:

 * Copyright owners should seek legal advice to make sure their copyrights are
   protected and identify potential claims for misuse of their work in gen AI
   models.
 * Companies using gen AI should carefully assess risks of using an AI model and
   whether it generates transformative outputs.
 * Companies should also assess whether its use of gen AI complies with
   copyright laws and seek legal advice on the possibility of obtaining the
   appropriate permissions or licenses for the use of copyrighted material.

Patents:

Are inventions created by AI or in conjunction with AI assistance eligible for
patent protection? Can AI be an “inventor” under U.S. patent law?

Thaler v. Vidal , 43 F.4th 1207, 1213 (Fed. Cir. 2022), cert. denied, 143 S. Ct.
1783 (2023):

 * Stephen Thaler filed two patent applications with the United States Patent
   and Trademark Office (USPTO) naming an AI software system called DABUS
   (Device for the Autonomous Bootstrapping of Unified Sentience) as the sole
   inventor for both applications.
 * The USPTO rejected the applications, finding them incomplete for lack of a
   valid inventor. Thaler sought judicial review and the district court agreed
   with the USPTO’s conclusion and denied inventorship status to DABUS. The
   district court found that Congress intended to limit the definition of
   “inventor” to natural persons or human being.
 * Thaler appealed to the Federal Circuit and argued that AI inventorship would
   increase innovation, encourage AI development, and encourage
   commercialization and disclosure of information for inventions created by
   humans and AI.
 * The Federal Circuit affirmed the district court’s decision, holding that the
   Patent Act clearly and unambiguously requires that the inventor of a patent
   be a natural person or “human being.”
 * The Federal Circuit explained that the Patent Act defines an inventor,
   whether singular or joint, as an “individual” (35 U.S.C. §§ 100(f), (g)) and
   highlighted that Supreme Court precedent shows that an “individual”
   ordinarily means human being.
 * However, the Federal Circuit left open the question of “whether inventions
   made by humans beings with the assistance of AI are eligible for patent
   protection.”

Key Takeaways:

 * As the law currently stands, an AI system cannot be the inventor of record on
   a patent because the Patent Act requires that an inventor of record be a
   human being.
 * After the Thaler decision, there is still uncertainty around AI inventorship.
   The Federal Circuit implied that inventions made by human beings with the
   assistance of AI are eligible for patent protection. But how much assistance
   by AI is too much for patentability?
 * A company’s ability to get a patent is a very important method for protecting
   its intellectual property and obtaining a competitive advantage in the
   marketplace and this will only increase with companies that develop and use
   AI technology.
 * Companies should seek legal advice regarding patent protection involving AI,
   but also consider other ways to protect its inventions generated by AI such
   as trade secrets.

Fredrikson & Byron PA - Timothy M. O’Shea

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FILED UNDER

 * USA
 * Copyrights
 * Internet & Social Media
 * IT & Data Protection
 * Litigation
 * Patents
 * Trademarks
 * Fredrikson & Byron PA


TOPICS

 * Artificial intelligence
 * ChatGPT
 * Generative AI


ORGANISATIONS

 * USPTO
 * US Congress


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