by Lee Gesmer | Jul 15, 2023 | Copyright
A couple of people have asked me about the legal story behind Taylor Swift’s re-recording of her earlier albums.
Great question. In fact, she has re-recorded three of them.
This unusual story is a perfect “music copyright” teaching moment.
Why The Re-Recordings?
The background is a bit convoluted, but it arises out of an ugly split between Swift and her first recording company, Big Machine Records. Following the split Swift began releasing her re-recorded songs, Fearless (Taylor’s Version) and Red (Taylor’s Version) in 2021 and Speak Now (Taylor’s Version) in 2023.
Why did she re-record the songs on these albums? The gory details are discussed under the link above, but after the falling out with Big Machine, Swift decided to re-record the songs owned by it, apparently with the intention of diverting sales from her former recording company.
Swift’s popularity and financial resources allow her to do something few other artists could hope to undertake.
Copyright Law and Music
There is an important aspect of copyright law at the heart of what happened here. Every musical recording potentially has two copyrights – one in the musical work and one in each recording of the work. The musical work is the composition – the chords, melody and lyrics. Swift penned the songs on these three albums and as the author, retained ownership of these musical works. However, she assigned the recordings or “masters” to her recording company. Although she might earn royalties based on the sales and performances of these masters, she doesn’t own the copyright for them.
By not also assigning ownership of the musical works represented by the songs on the three albums, Swift retained what the music industry refers to as “publishing rights,” as in “hey, I own the publishing for this song, right?” Swift is therefore free to re-record them, as she has now done in the three “Taylor’s Version” albums.
Further Intricacies and Questions
It’s likely that there’s more to this story than has been revealed to the public. For instance, a contract between Swift and Big Machine may have temporarily delayed Swift from re-recording her songs. However, that’s more about contract law than copyright. The music industry, often a confusing maze, juggles both copyrights and contracts.
The extent to which Swift is getting her hoped-for revenge is unknown – we don’t know the extent to which the re-recordings are cutting into sales of the original masters. And, no doubt there are many other legal complications that have not been made public. For example, assume a movie producer wants a “synchronization license” (a “sync” license) to use one of these recordings with a movie or TV show. The producer needs a license to both the master and the musical work. I can imagine Taylor Swift saying, “if you want a license to the musical work you need to license the new master from me as well.” This would cut out the owner of the first recording, and no doubt lead to threats of contractual interference. But is it legal? It probably is.
When I introduced the distinction between the copyrights in musical works and masters above, I said that “every musical recording potentially has two copyrights.” Why did I say “potentially”?
An example will illustrate why. Assume that in 2023 a symphony orchestra records and releases a performance of Antonín Dvořák’s NewWorld Symphony, composed in 1893. The copyright in the musical work has expired. Anyone is free to record this work. However, a new copyright applies to the new recording and will last for decades. Thus, only one copyright – the copyright in the master – exists in this scenario.
If you’re interested in the drama between Taylor Swift and her former record company, this Wikipedia entry has most of it.
Image credit: Eva Rinaldi https://commons.wikimedia.org/wiki/File:Taylor_Swift_%286966830273%29.jpg
by Lee Gesmer | Jun 6, 2023 | Contracts, General
Any sufficiently advanced technology is indistinguishable from magic. Arthur C. Clarke
Do you recall when Netscape Navigator was released in December 1994? I suspect not. You may not have been born or you might have been too young to take notice. This software marked the public’s first widespread introduction to a user-friendly web browser, and it was a big deal at the time. I remember buying a copy on disk from Egghead Software in Boston and trying (with limited success) to access the World Wide Web using a dialup modem.
Of course, few people foresaw that Navigator would set off the “dotcom boom,” which ended with the “dotcom crash” in 2000, only to be followed by the ubiquitous internet technologies we live with today
Will OpenAI’s release of ChatGPT in November 2022 be remembered as a similar event for artificial intelligence? It may prove to be as significant as the invention of the printing press, as Henry Kissinger and his co-authors suggest. (link, WSJ paywall). Or, it may signal the demise of the human race, as Stephen Hawking warned. Or, once the novelty wears off it may simply become another forgotten episode in the decades-long AI over-hype cycle
However, for now one thing is clear: there will be a lot of lawyering to be done.
When the internet took off in the late ‘90s a vast number of legal issues emerged, keeping lawyers busy for years afterwards. However, it wasn’t immediately obvious that this would occur, and issues emerged slowly over time. By comparison, in 2023 generative AI – as represented by ChatGPT and other “large language models” (LLMs) – has landed like a bomb. Seemingly hundreds of new products are being released daily. Countless new companies are being formed to join the “AI gold rush” of 2023.
So, what are the legal issues (so far)? Warning, this topic is already vast, so what follows is a selective summary. I hope to write about these issues in more detail in the future.
AI and Copyright Law
At least for the moment, when it comes to generative AI, copyright law is the primary battlefield. The copyright issues can be divided into legal questions that deal with the “output” side versus the “input” or “training” side.
The Output Issue – Who Owns An AI Model’s Output? Who owns the copyright in works created by AI image generators, whether autonomously created or a human-AI blend?
I covered this topic from the perspective of the Copyright Office in a recent post. Generative AI Images Struggle for Copyright Protection. Shortly after I published that post the Copyright Office issued a policy statement, Copyright Registration Guidance: Works Containing Material Generated by Artificial Intelligence, reaffirming its policy that works be the product of human authorship, but noting that there is a substantial grey area that will need to be decided on a case-by-case basis:
[works] containing AI-generated material [may] also contain sufficient human authorship to support a copyright claim. For example, a human may select or arrange AI-generated material in a sufficiently creative way that “the resulting work as a whole constitutes an original work of authorship.” Or an artist may modify material originally generated by AI technology to such a degree that the modifications meet the standard for copyright protection. In these cases, copyright will only protect the human-authored aspects of the work, which are “independent of ” and do “not affect” the copyright status of the AI-generated material itself.
The Copyright Office has also created a web page tracking its activities in copyright AI, including an initiative to examine the copyright law and policy issues raised by AI technology. (link)
9th Cir.: Monkey selfie not copyright-protected
However, the Copyright Office is not the last word when it comes to AI and copyrightability – the federal courts are, and the issue is pending in a lawsuit before the Federal District Court for the District of Columbia (Thaler v. Perlmutter). Suffice it to say that there are no court decisions as yet, and all monkey-business aside who (if anyone) owns AI outputs scraped from the internet is an open (and rapidly evolving) question.
The Input Issue – Can You Use Copyrighted Content To Train An AI LLM? The training stage of AI tools requires the scraping and extraction of relevant information from underlying datasets (typically the internet), which contain copyright protected works. Can AI companies simply hoover up copyright-protected works without the consent of their owners and use that material to “train” LLMs?
AI companies think so, but content creators think otherwise. Getty has filed suit against Stability AI in the U.S. (link) and in a parallel case in London, claiming that this company illegally copied over 12 million photographs from Getty’s website to train Stable Diffusion. Other cases have been filed on the same issue (Andersen v. Stability AI, pending N.D. Cal.). The central legal issue in these cases is whether unauthorized use of copyrighted materials for training purposes is illegal or (as the AI companies are certain to assert) “transformative” and therefore protected under the fair use doctrine? The Supreme Court’s recent decision in Warhol v. Goldsmith is likely to have some bearing on this issue. (sarcasm ….)
While the legal question under U.S. law may be whether these activities qualify as fair use, in the EU the copyright aspects of training are likely to fall under the text and data mining (TDM) exceptions in the Copyright in Digital Single Market (CDSM) Directive. (To go in depth on the TDM exceptions see Quintais, Generative AI, Copyright and the AI Act).
However, the issues surrounding output ownership and the utilization of copyrighted materials to train LLMs are merely scratching the surface. It’s easy to foresee that copyright law and AI are going to intersect in other ways. An example of this is cases involving music that copies an artist’s “artistic style” or “voice”. At present copyright law does not protect artistic style. But for the first time, music AI systems make it easy to copy a style or an artist’s voice, so there will be pressure on the law to address this form of copying. It remains to be seen whether copyright law will expand to encompass artistic style, or whether artists will have to rely on doctrines such as the right of publicity or “passing off.”
Liability Shield Under CDA/Section 230
While the copyright issues in AI are complex, the legal issues around AI are not limited to copyright. An AI could generate defamatory content.
Even worse, it could be used to create harmful or dangerously wrong information. If a user prompts an AI for cocktail instructions and it offers a poisonous concoction, is the AI operator liable? What if the AI instructs someone on how to build a dangerous weapon, or to commit suicide? What if an AI “hallucination” (aka false information generated by an AI) causes harm or injuries?
Controversy over online companies’ liability for harmful content has led to countless litigations, and generative artificial intelligence tools are likely to be pulled into the fray. If ChatGPT and other LLMs are deemed to be “information content providers” they will not be immunized by Section 230, as it exists today.
Supreme Court Justice Neil Gorsuch alluded to this during oral argument in Gonzalez v. Google, where he suggested that generative AI would not be covered by Section 230’s liability shield. (link, p. 49) Two of Section 230’s 1996 congressional co-authors have publicly stated that it does not – “If you are partly complicit in content creation, you don’t get the shield.” (link)
Section 230 was enacted to protect websites from liability based on user inputs. However, given the unpopularity of Section 230 on both sides of the isle it seems unlikely that Congress will amend Section 230, or pass new laws, to limit the liability of AI companies whose products generate illegal content based on user inputs. The opposing view, as observed by internet law scholar Prof. Eric Goldman, is that “we need some kind of immunity for people who make [AI] tools . . . without it, we’re never going to see the full potential of A.I.” (link, behind NYT paywall).
Contracts and Open Source
Because copyright-protected works can also be the subject of contracts, there will be issues of contract law that intersect with copyright. We can already see examples of this. For example, In the Getty/Stability AI case mentioned above, Getty’s website terms prohibit the very use Stability AI made of Getty photos. A class action suit has been filed over AI scraping of code on Github without providing attribution required by the applicable OSS license agreements, raising questions about the risks of using AI in software development. That suit also relies on DMCA Section 1202 for removing copyright management information (CMI).
These cases point to the fact that companies need to monitor and regulate their use of AI code generators to avoid tainting their code bases. Transactional lawyers (licensing, M&A) will have to be alert to these issues. Suffice it to say that there are significant questions over whether using open source code requires compliance with restrictions of the open source licenses.
Patent Law
What if an AI creates a patentable invention? Similar to copyright, the USPTO will only consider inventions from “natural persons” and not machines. This has already been the subject of litigation (Thaler v. Vidal, CAFC 2022; yes, the same Thaler that’s the plaintiff in the copyright case cited above) and an unsuccessful Supreme Court appeal (cert. denied). The USPTO is conducting hearings concerning AI technologies and inventorship issues, however at present the law, as stated by the CAFC in Thaler, is that “only a natural person can be an inventor, so AI cannot be.” For the foreseeable future there will be significant questions about the ability to patent inventions that were conceived with the assistance of AI.
Government Regulation
Governments worldwide are waking up to the issues created by AI. The U.S. has issued policy statements and executive orders. The U.S. Senate is holding hearings into an AI regulatory framework. While there is no comprehensive U.S. federal regulatory scheme in place regarding AI technologies today, it may be just a matter or time. When AI scientists warn that the risk of extinction from AI is comparable to pandemics and nuclear war, Congress is likely to pay attention.
Pending federal umbrella legislation, individual agencies are not sitting on their hands. Every day seems to bring some new agency action. The FDA has weighed in on the regulation of machine learning-enabled medical devices. The SEC and CFTC have already weighed in, focusing on credit approval and lending decisions. The FTC is pondering how to use its authority to promote fair competition and guard against unfair or deceptive AI practices. Although not a government agency, in early January NIST, at the direction of Congress, published a voluntary AI Risk Management Framework that is likely to be one of the first of many industry standards. The CFTC, DOJ, EEOC, FTC have issued a joint statement expressing their concerns about potential bias in AI systems. (link) Homeland Security has announced formation of a task force to study the role of AI in international trade, drug smuggling, online child abuse and secure infrastructure.
Not wanting to be left behind, California, Connecticut, Illinois and Texas are starting to take action to protect the public from what they perceive to be the potential harms of AI technology. (For a deeper dive see How California and other states are tackling AI legislation)
However, it would be a mistake to focus solely on U.S. law. International law – and in particular the EU – will play a significant role in the evolution of AI. The EU’s Artificial Intelligence Act (a work in progress) is far ahead of the U.S. in creating a legal framework to regulate AI. While the AI Act would regulate the use of AI technologies only in Europe, it could set a global standard, much like the EU General Data Protection Regulation (GDPR) has done for privacy regulation. (To go in depth on this topic see Perkins Coie, The Latest on the EU’s Proposed Artificial Intelligence Act).
The Future of AI and Law
I expect that the topics I’ve touched on above will prove to be only the tip of the AI iceberg. Regulators are already looking at issues involving privacy, facial recognition, deep fakes and disinformation, substantive criminal law (criminal behavior by an AI), anti-discrimination law and racial or gender bias.
Just as it was nearly impossible to foresee the massive volume of litigation that would follow the growth of the internet following passage of the DMCA in 1998 and Section 230 of the CDA in 1996, the legal issues around AI are only beginning to be understood.
I’ve said it many times before on this blog, but I’ll say it again – stay tuned. And lawyers – Get ready!
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Update, June 26, 2023: it didn’t take long for the first defamation suit to be filed. See Australian mayor readies world’s first defamation lawsuit over ChatGPT content.
by Lee Gesmer | Apr 21, 2023 | Copyright
Software copyright is an important area of copyright law. However, it has proven devilishly difficult for the courts to apply. As the Second Circuit observed 30 years ago, trying to apply copyright law to software is often an “attempt to fit the proverbial square peg in a round hole.” Judges know this – I’ll never forget the time that Massachusetts Federal District Court Judge Rya Zobel, during an initial case conference in a copyright case, looked me in the eye and said, “we aren’t going to have to compare source codes in this case, are we Mr. Gesmer?” (We didn’t, the case settled soon afterwards).
The Court of Appeals for the Federal Circuit (the CAFC) has grappled with this challenge, most notably in its two controversial decisions in Oracle v. Google. (2014, 2018).
Now the CAFC has issued an important decision in SAS Institute, Inc. v. World Programming Limited (April 6, 2023; Newman dissenting). The issue in this case is one that I encountered in a copyright suit in Boston, so it’s of particular interest to me. More on that below.
SAS Institute and World Programming
SAS Institute is a successful software company. Its annual revenues exceed $3 billion, and it has more than 12,000 employees. Its statistical analysis software — the “SAS System” – is used in 3,000+ companies worldwide.
Success attracts imitation, and World Programming (now part of Altair) developed a “clone” of the SAS Software. SAS didn’t react kindly to the competition – it has conducted a more-than 10 year, multi-nation legal challenge, suing World Programming once in England and twice in the United States.
What makes SAS’s most recent copyright case against World Programming unusual is the subject matter. Most software copyright litigation involves the “literal elements” of computer programs – the “source” and “object” code – essentially the “written words” or the machine code (ones and zeros) of the software.
“Non-literal” Copyright Infringement
SAS v. World Programming, however, involved the “non-literal” elements of SAS’s system. The courts define “non-literal elements” as the structure, sequence, and organization and the user interface of software. Basically, anything other than the computer code. SAS alleged that World Programming illegally copied input syntax formats and output design styles – non-literal components of the SAS System.
The idea that non-literal components of a software program can be protected by copyright has been acknowledged since the 1980s. For the last 30 years most courts have followed the “abstraction-filtration-comparison” test (AFC test) established in the 1992 Second Circuit decision in Altai v. Computer Associates. The AFC test requires the court to (1) break a software program into its constituent parts (abstraction), (2) filter out unprotectable elements (filtration) and (3) compare the remaining protectable elements to the allegedly infringing work (comparison).
If this sounds challenging to you, you are right. However, relatively few cases have actually had to undertake the real-world application of this test to the non-literal elements of a software program. And, where they have the plaintiff has almost always lost.
The District Court Case
SAS filed this case in the Eastern District of Texas. The district court judge proceeded to apply the Altai AFC test by conducting a hearing to “filter out” unprotectable elements of the SAS software. Examples of unprotected elements include ideas, facts, information in the public domain, merger material, scènes à faire and conventional display elements. Case law has established that abstraction and filtration (steps 1 and 2 of the AFC test) is performed by the judge, not the jury.
The district court held what it termed a “copyrightability hearing” and implemented an alternating, burden-shifting framework in which SAS was required to prove a valid copyright and “factual copying.” The burden then shifted to defendant (World Programming) to prove that some or all of the copied material is unprotectable. The burden then shifted back to SAS to respond and persuade the court otherwise.
Think of this as a tennis volley in which the ball crosses the net three times.
SAS satisfied the first part of this test – it showed that it had a registered copyright, and that World Programming had copied some elements of the SAS System. However, World Programming responded with evidence that many of the non-literal components of the SAS System contained factual elements, elements that were not original to SAS or that were in the public domain, unprotected mathematical and method components, conventional display elements and merger elements. World Programming asserted that all of these components should be filtered out and excluded from step 3 of the AFC test – comparison of the two software programs.
At that point, under the judge’s burden shifting approach, the burden fell on SAS to respond and address these defenses.
Inexplicably, SAS failed to do this. The court stated –
SAS has not attempted to show what World Programming pointed to as unprotectable is indeed entitled to protection. . . . Instead, when the burden shifted back to SAS, it was clear SAS had done no filtration; they simply repeated and repeated that the SAS System was “creative.” . . . SAS’s failures have raised the untenable specter of the Court taking copyright claims to trial without any filtered showing of protectable material within the asserted work. This is not a result that this Court can condone. These failures rest solely on SAS and the consequences of those failures necessarily rest upon SAS as well.
The district court then dismissed the case. SAS appealed to the Federal Circuit – a court that is notoriously pro-copyright. (See the two Oracle decisions linked to above). SAS likely planned for any appeal to go to the Federal Circuit by asserting patent infringement against World Programming and later dropping its patent claims. Nevertheless, that was enough to give the Federal Circuit jurisdiction over any appeal.
Appeal to the Federal Circuit
On appeal the central question was procedural: Was it SAS’s burden to prove that the copied elements were protectable, or was it World Programming’s burden to prove that they were not? In other words, the issue was who bears the burden of proving, as part of the filtration analysis, that the elements the defendant copied are unprotectable – the plaintiff (copyright owner) or the defendant (alleged infringer)?
The Federal Circuit was not impressed with SAS’s arguments on appeal. It noted that rather than participate in the steps required by the Altai AFC test, SAS “failed or refused” to identify the constituent elements of the SAS software that it claimed were protectable. Instead, it argued that its software was “creative” and that it had provided evidence that World Programming had engaged in “factual copying.” But it provided no evidence in relation to the “filtration” step under the 3-part Altai AFC test.
The Federal Circuit found the trial court judge’s procedure to be appropriate: “a court may reasonably adopt an analysis to determine what the ‘core of protectable expression’ is to provide the jury with accurate elements to compare in its role of determining whether infringement has occurred.” The court concluded that SAS failed to “articulate a legally viable theory” and affirmed dismissal.
In other words, to continue the tennis analogy, SAS served the ball (showed that it had copyright registrations and that World Programming had copied some elements). World Programming returned the ball, introducing evidence that many of the elements SAS had identified were unprotected by copyright, and needed to be “filtered out” before the SAS and World Programming software programs were compared. However, SAS was unable to return that volley – “The district court found that SAS refused to engage in the filtration step and chose instead to simply argue that the SAS System was ‘creative.’”
20-20 Design v. Real View – Same Issue, No Controversy
While this is an important software copyright case and will be used defensively by copyright defendants in the future, it caught my attention for a second reason, which is that I dealt with the same issue in 20-20 Design v. Real View LLC, a copyright infringement case I tried to a jury in Boston in 2010. That case dealt with the graphical user interface of a software program – “nonliteral” elements of the software. Like World Programming in the SAS case, Real View allegedly created a “clone” program, but the cloning didn’t involve the source or object code, only parts of the graphical user interface.
Massachusetts Federal District Court Judge Patti Saris ordered 20-20 Design, the plaintiff/copyright owner, to identify the elements of its software that it claimed had been infringed. Unlike SAS, 20-20 Design complied. It provided a list of 60 elements, and the court held what Judge Saris called (by analogy) a “Markman”-style evidentiary hearing, which included evidence and testimony from experts on both sides. In effect, this was the “copyrightability hearing” held by the court in the SAS case.
Judge Saris then issued a copyrightability decision holding that almost all of the items were not individually protectible. They could, however, be protected as a “compilation.” However, she ruled that as a “compilation,” the plaintiff-copyright owner was required to prove that the defendant’s software interface was “virtually identical” – a much more difficult standard to meet than the “substantial similarity” standard applied in most copyright litigation.
(Humble brag: 20-20 Design was seeking damages of $2.8 million. However, the “virtually identical” standard proved to be its downfall. Without going into detail, suffice it to say that after a 10-day jury trial and post-trial motions the judge entered judgment for 20-20 Design against Real View (my client) in the amount of $4,200. (link)
When I read the decision in SAS v. World Programming I immediately related it to the 20-20 Design/Real View case, but I couldn’t recall how Judge Saris had allocated the burden-of-proof. When I refreshed my memory I realized why – the judge and the parties never discussed this issue. It seems that everyone assumed that the plaintiff-copyright holder (20-20 Design) had the burden of proof. After 20-20 identified the copied elements Real View argued that most of them should be filtered out and 20-20 Design (unlike SAS) responded with counter arguments. In other words, the ball went over the net three times, and the judge was able to apply the Altai AFC test and “filter” 20-20’s software before trial.
Thinking back on how smoothly this procedure went in my case, it’s difficult for me to imagine how SAS chose the strategy that cost it the World Programming case, unless this case was just an attempt to outspend a smaller competitor and drive it out of the market with litigation expenses. SAS is a multi-billion-dollar company. Its lawyers are highly experienced. Why SAS chose a case strategy that seemed doomed to failure is a bit of a mystery. One possibility is that SAS knew that if it identified the elements it would be forced into a copyright compilation theory that requires proof that the infringing work is “virtually identical” to plaintiff’s work, a burden that SAS believed it could not satisfy. Another is that it gambled that the Federal Circuit – which is notoriously protective of copyright owners – would see the law its way and reverse the district court. We will never know.
Although it remains a mystery why SAS chose a case strategy that seemed destined to fail, the SAS v. World Programming decision has important implications for software copyright law. It clarifies the burden-shifting process and emphasizes the importance that the plaintiff be fully prepared to engage in the Altai AFC test’s filtration step.
Will SAS appeal this decision to the Supreme Court? Given the resources that SAS has dedicated to its litigation with World Programming over the last decade it seems likely that it will. While I view it as doubtful that the Supreme Court will hear this case, you never know.
SAS Institute v. World Programming (Fed. Cir. April 6, 2023)
by Lee Gesmer | Mar 6, 2023 | Copyright
There are a number of computer programs and websites that will allow you to create an image using artificial intelligence. One of them is Midjourney. You can see some of the Midjourney AI-generated art here.
Kris Kashtanova used Midjourney’s generative AI tool to create a comic book titled Zarya of the Dawn. She submitted the work to the Copyright Office, seeking registration, and the Office issued the registration in September 2022. However according to the Copyright Office Ms. Kashtanova did not disclose that she used artificial intelligence to create Zarya.
Soon afterwards the Office became aware – via a reporter’s inquiry and social media posts – that Ms. Kashtanova had created the comic book using artificial intelligence. The Office reconsidered the registration and, after much correspondence and argumentation with Ms. Kashtanova’s attorneys, canceled the registration, concluding that:
. . . the images in the Work that were generated by the Midjourney technology are not the product of human authorship. Because the current registration for the Work does not disclaim its Midjourney-generated content, we intend to cancel the original certificate issued to Ms. Kashtanova and issue a new one covering only the expressive material that she created.
Image from Zarya
This conclusion is the denouement in a lengthy letter from the Copyright Office analyzing the copyrightability of the images contained in the Zarya comic in detail in light of how Midjourney creates images. In correspondence with the Copyright Office Ms. Kashtanova argued that she had provided “hundreds or thousands of descriptive prompts” to Midjourney to generate “as perfect a rendition of her vision as possible.” However, based on how Midjourney creates images – essentially via a random mechanical process, notwithstanding the prompts of the human “mastermind” – the Copyright Office concluded that she was not the “author” of the resulting images for copyright purposes. The Copyright Office reasoned that “unlike other tools used by artists” (such as Adobe Photoshop), Midjourney generates images using prompts in an “unpredictable way.” “Because of the significant distance between what a user may direct Midjourney to create and the visual material Midjourney actually produces,” Ms. Kashtanova did not have enough control over the final images generated to be the “inventive or mastermind” behind the images.
Here are some takeaways from this decision.
First, artists using generative AI to create images should not assume that they own a copyright in the images. At present the Copyright Office appears firmly committed to its position that they do not, and until there are court decisions to the contrary, or Congress amends the Copyright Act to accommodate these works, the better practice is to assume no protection.
Second, it may be possible to protect an AI-created work based on human modifications to the work. This was illustrated by the Zarya decision, where Ms. Kashtanova also sought registration for images that she created using Midjourney but altered post-production using Photoshop. With respect to one of these images the Copyright Office left open the possibility that copyrightable expression had been added, and therefore the image might receive registration. However, in these cases the burden will be on the human artist to establish that the human modifications or contributions reflect sufficient expression to receive protection. And, the scope of protection would likely be limited to the modifications, not the full image.
Image from Zarya
Third, this is a fast-moving area of law. Ms. Kashtanova – or any person or company denied registration – has the right to appeal the Copyright Office’s decision to a federal district court, from which the case may go on appeal to a circuit court, or even the Supreme Court. Whether Ms Kashtanova will take that action – or whether we will have to wait for another case – remains to be seen. A court – or Congress by amendment to the Copyright Act – could change the law on copyright protection of AI images.
Lastly, the Copyright Office’s reasoning on AI images is likely to extend to text as well. Thus, if a person uses a program such as ChatGPT to create a written work, it seems unlikely that the Copyright Office would accept it for purposes of registration. Despite the best efforts of the “prompt engineer,” the resulting output is likely to be too random to fall within the Copyright Office’s views of authorship.
Update: On March 10, 2023, less than a week after I published this post, the Copyright Office issued a “statement of policy to clarify its practices for examining and registering works that contain material generated by the use of artificial intelligence technology.” (link). Here is the heart of that policy statement: “In the case of works containing AI-generated material, the Office will consider whether the AI contributions are the result of ‘mechanical reproduction’ or instead of an author’s ‘own original mental conception, to which [the author] gave visible form.’ The answer will depend on the circumstances, particularly how the AI tool operates and how it was used to create the final work. This is necessarily a case-by-case inquiry.”
How this principle will be applied in practice remains to be seen.
by Lee Gesmer | Mar 2, 2023 | Contracts, General, Technology
I asked GPT 3.5 to create a license agreement using the following prompt:
Draft an End user object code software license agreement between LICENSOR and LICENSEE using the following terms.
• Formal delivery, acceptance testing, final acceptance within 30 days assumed unless notice within that period
• A site license limited to offices in Cambridge, MA
• The licensor will provide updates annually
• License should be limited to internal use; resale/redistribution prohibited
• The software should be treated as confidential
• The terms of this license agreement must be confidential
• The agreement is subject to Massachusetts law.
• Annual license fee $100,000, increased annually by 5%.
• Price exclusive of applicable taxes
• Term: five years
• Any dispute subject to arbitration, venue in Massachusetts, three person panel with SAAS subject matter expertise
• Agreement is non-assignable
• Agreement is terminable for non-payment; licensee may cure within 30 days notice of default
• Limited warranty in accordance with specifications. Exclusive remedy is damages limited to monies paid by Licensee
• No virus warranty
• Non-infringement warranty
• No claims pending warranty
• No implied warranty or warranty for specific purpose
• Indemnification against IP claims – yes
• Source code escrow accessible in event of material breach by Licensor
• Licensee may not reverse engineer
• Notices in writing – certified mail
• Any amendment must be in writing
Here is the agreement the AI created. What do you think?
________________________________
SOFTWARE LICENSE AGREEMENT
This Software License Agreement (“Agreement”) is made and entered into as of the date of acceptance by Licensee, by and between Licensor, and Licensee.
1. DEFINITIONS.
(a) “Software” means the object code form of the software products specified in the applicable order form or purchase order, and any related documentation, materials, updates, and upgrades provided by Licensor to Licensee under this Agreement.
(b) “Order Form” means the written or electronic document issued by Licensor and executed by both Licensor and Licensee, or submitted electronically by Licensee and accepted by Licensor, specifying the Software licensed by Licensee and any related services.
(c) “Documentation” means the user manuals, installation guides, and other technical documentation provided by Licensor to Licensee.
(d) “Licensee” means the individual or entity that accepts the terms and conditions of this Agreement.
(e) “Licensor” means the individual or entity that licenses the Software to Licensee under this Agreement.
(f) “Support Services” means the support and maintenance services described in Section 5 of this Agreement.
(g) “Confidential Information” means any information disclosed by either party to the other party, either directly or indirectly, in writing, orally, or by inspection of tangible objects, which is designated as “Confidential,” “Proprietary,” or some similar designation, or which should reasonably be understood to be confidential given the nature of the information and the circumstances of disclosure.
2. GRANT OF LICENSE.
(a) Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee a non-exclusive, non-transferable license to use the Software and Documentation, solely for Licensee’s internal business purposes, and only at Licensee’s offices in Cambridge, Massachusetts.
(b) Licensee shall not use the Software or Documentation for any purpose other than as expressly permitted by this Agreement.
(c) Licensee shall not modify, copy, reproduce, distribute, or create derivative works of the Software or Documentation.
(d) Licensee shall not remove or alter any proprietary notices or labels on the Software or Documentation.
(e) Licensee shall not disclose or distribute the Software or Documentation to any third party without the prior written consent of Licensor.
3. DELIVERY.
(a) Licensor shall deliver the Software and Documentation to Licensee within thirty (30) days after the date of execution of the Order Form.
(b) Licensee shall have a period of thirty (30) days following delivery to conduct acceptance testing of the Software and Documentation.
(c) Licensee shall notify Licensor in writing within thirty (30) days of delivery if Licensee determines that the Software or Documentation fails to meet the specifications set forth in the Order Form.
(d) If Licensee does not provide written notice of non-acceptance to Licensor within thirty (30) days after delivery, the Software and Documentation shall be deemed accepted by Licensee.
4. UPDATES.
(a) Licensor shall provide updates to the Software and Documentation annually during the term of this Agreement, at no additional charge.
(b) Licensee shall be entitled to install and use such updates during the term of this Agreement.
(c) Licensee shall not use any updates to the Software or Documentation in any manner that violates the terms of this Agreement.
5. SUPPORT SERVICES.
(a) Licensor shall provide Support Services to Licensee during the term of this Agreement, at no additional charge.
(b) Support Services shall include:
(i) Telephone and email support for Licensee’s designated technical support personnel during Licensor’s normal business hours;
(ii) Bug fixes and updates to the Software as necessary to correct material errors or malfunctions that materially affect the Software’s operation in accordance with the Documentation;
(iii) Assistance with installation, configuration, and troubleshooting of the Software;
(iv) Access to online support resources, including user forums and knowledge bases; and
(v) Any other support services agreed to by the parties in writing.
(c) Licensor shall not be obligated to provide Support Services if:
(i) The Software or Documentation has been modified, altered, or tampered with by anyone other than Licensor;
(ii) The Software or Documentation has been used in a manner not authorized by this Agreement;
(iii) The failure of the Software to operate is due to causes outside of Licensor’s control, including but not limited to failure of Licensee’s hardware or software systems; or
(iv) Licensee has not paid any applicable fees when due.
6. FEES.
(a) Licensee shall pay Licensor an annual license fee of $100,000, exclusive of any applicable taxes.
(b) The annual license fee shall be increased by five percent (5%) at the beginning of each subsequent year of the term of this Agreement.
(c) Licensee shall pay all fees within thirty (30) days of the date of the applicable invoice.
(d) Licensor reserves the right to suspend or terminate Licensee’s access to the Software and Support Services if Licensee fails to pay any fees when due.
7. TERM AND TERMINATION.
(a) This Agreement shall commence on the date of acceptance by Licensee and shall continue for a term of five (5) years.
(b) Either party may terminate this Agreement upon written notice if the other party materially breaches any provision of this Agreement and fails to cure such breach within thirty (30) days after receiving written notice of such breach.
(c) Licensor may terminate this Agreement immediately if Licensee fails to pay any fees when due.
(d) Upon termination of this Agreement, Licensee shall immediately cease all use of the Software and Documentation, and shall return or destroy all copies of the Software and Documentation in Licensee’s possession or control.
(e) The provisions of Sections 2(d), 2(e), 6, 7, 8, 9, 10, 11, 12, and 13 shall survive any termination or expiration of this Agreement.
8. WARRANTIES AND DISCLAIMERS.
(a) Licensor represents and warrants that it has the right to license the Software to Licensee, and that the Software does not infringe any third party’s intellectual property rights.
(b) Licensor warrants that the Software will materially conform to the specifications set forth in the Order Form and the Documentation.
(c) Licensee’s exclusive remedy for any breach of the warranties set forth in this Section 8 shall be for Licensor to use commercially reasonable efforts to correct or replace the non-conforming Software or Documentation, or if Licensor is unable to do so within a reasonable period of time, to refund the fees paid by Licensee for the non-conforming Software or Documentation.
(d) Licensor does not warrant that the Software or Documentation will be error-free or uninterrupted.
(e) Licensor makes no warranties, express or implied, regarding the Software or Documentation, including but not limited to any implied warranties of merchantability, fitness for a particular purpose, or non-infringement.
(f) Licensee acknowledges that it has not relied on any representations or warranties not expressly set forth in this Agreement.
9. INDEMNIFICATION.
(a) Licensor shall indemnify, defend, and hold harmless Licensee from and against any and all claims, damages, liabilities, costs, and expenses (including reasonable attorneys’ fees) arising out of or related to any third party claim that the Software infringes any third party’s intellectual property rights.
(b) Licensee shall promptly notify Licensor in writing of any claim covered by this Section 9, and Licensor shall have sole control over the defense and settlement of any such claim. Licensee shall provide Licensor with all necessary assistance, information, and authority to perform such defense or settlement.
(c) If any claim covered by this Section 9 arises or is likely to arise, Licensor may, at its sole option and expense:
(i) Obtain for Licensee the right to continue using the Software;
(ii) Modify the Software so that it becomes non-infringing;
(iii) Replace the Software with non-infringing software that is functionally equivalent;
(iv) Terminate this Agreement and refund the fees paid by Licensee for the infringing Software; or
(v) Defend Licensee against the claim.
(d) Licensor shall have no liability under this Section 9 to the extent that the claim is based on:
(i) Any modification of the Software or Documentation by anyone other than Licensor;
(ii) The combination of the Software with any product, service, or process not provided by Licensor, to the extent that such claim would not have arisen but for such combination; or
(iii) Licensee’s failure to use the Software or Documentation in accordance with this Agreement or the Documentation.
10. LIMITATION OF LIABILITY.
(a) In no event shall Licensor be liable to Licensee for any indirect, incidental, consequential, special, or punitive damages, including but not limited to lost profits, loss of business, or loss of data, arising out of or related to this Agreement, even if Licensor has been advised of the possibility of such damages.
(b) Licensor’s total liability to Licensee for all claims arising out of or related to this Agreement shall be limited to the fees paid by Licensee to Licensor under this Agreement during the twelve (12) month period preceding the claim.
11. CONFIDENTIALITY.
(a) Licensee acknowledges that the Software and Documentation contain valuable trade secrets and confidential information of Licensor.
(b) Licensee shall use the same degree of care to protect the confidentiality of the Software and Documentation as it uses to protect its own confidential information, but in no event less than a reasonable degree of care.
(c) Licensee shall not disclose the Software or Documentation to any third party without the prior written consent of Licensor.
(d) The terms of this Agreement shall be deemed Confidential Information of both parties.
(e) This Section 11 shall survive any termination or expiration of this Agreement.
12. ARBITRATION.
(a) Any dispute, claim, or controversy arising out of or related to this Agreement shall be resolved by binding arbitration in accordance with the rules of the American Arbitration Association.
(b) The arbitration shall take place in Massachusetts, and the arbitrators shall have experience in the software-as-a-service industry.
(c) The arbitration shall be conducted by a panel of three (3) arbitrators.
(d) The arbitration shall be conducted in the English language.
(e) The decision of the arbitrators shall be final and binding on the parties.
(f) This Section 12 shall not preclude either party from seeking injunctive relief in a court of competent jurisdiction.
13. GENERAL PROVISIONS.
(a) This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements, representations, warranties, and understandings, whether oral or written.
(b) This Agreement may not be amended except in writing signed by both parties.
(c) Licensee may not assign this Agreement or any rights or obligations hereunder, whether by operation of law or otherwise, without the prior written consent of Licensor.
(d) Licensor may assign this Agreement or any rights or obligations hereunder without the consent of Licensee.
(e) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.
(f) If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be deemed modified to the extent necessary to make it valid and enforceable, and the remaining provisions of this Agreement shall remain in full force and effect.
(g) No failure or delay by either party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.
(h) This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without giving effect to its conflict of laws provisions.
(i) Any notices required or permitted to be given hereunder shall be in writing and shall be deemed to have been given and received (i) when delivered by hand, (ii) three (3) business days after being sent by registered or certified mail, return receipt requested, postage prepaid, or (iii) one (1) business day after being sent by nationally recognized overnight courier, to the parties at the addresses set forth below or to such other addresses as either party may specify in writing.
Licensor:
[Insert Licensor’s Name and Address]
Attention: [Insert Name and Title]
Licensee:
[Insert Licensee’s Name and Address]
Attention: [Insert Name and Title]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
LICENSOR:
[Insert Licensor’s Name]
By: _____________________________
Name: [Insert Name and Title]
Title: [Insert Title]
LICENSEE:
[Insert Licensee’s Name]
By: _____________________________
Name: [Insert Name and Title]
Title: [Insert Title]
