Senators aim to rein in digital replicas with the “NO FAKES” Act which proposes a limited federal right to control one’s likeness using some DMCA-like notice-and-takedown elements.
Guest post by Professor Justin Hughes
This week, Senators Blackburn, Coons, Klobuchar, and Tillis introduced the bipartisan “NO FAKES” Act in Congress, a bill that has been under discussion for months and is intended to provide centerpiece legislation addressing the problem of digital replicas. The recording industry (RIAA) and the actors’ union (SAGAFTRA) have been the leading proponents of such a law. Senate Judiciary staff led a process with those groups–and with the Motion Picture Association (MPA)–that went through a long series of drafts. AI companies were also part of the drafting process.
The bill is substantively complex and structurally complicated, partly the result of so many cooks in the kitchen. What follows here are only the bill’s basics – as well as some concerns.
Neuropublic S.A., a Greek technology company, has filed a federal lawsuit against the law firm Ladas & Parry LLP, with several claims stemming from the firm's alleged mishandling of Neuropublic's confidential invention disclosure -- sending it out to a third party ("PatentManiac") for a preliminary novelty search which then (again allegedly) further leaked the disclosure. Although the case does not involve submission to AI algorithms, some of the questions here are similar to those many IP attorneys are considering when onboarding new AI tools.
The pending Hearst v. Martinelli case may be the "dead letter" offered by Justice Gorsuch. This time, the Supreme Court might actually decide whether the "discovery rule" applies to the Copyright Act's statute of limitations.
On May 9, 2024, the Supreme Court issued its opinion in Warner Chappell Music v. Nealy, No. 22-1078, 601 U.S. ___ (2024), resolving a circuit split over the availability of back-damages in copyright infringement cases. In a 6-3 decision authored by Justice Kagan, the Court affirmed the Eleventh Circuit's ruling, permitting recovery of damages for acts that occurred more than three years before the filing of the lawsuit under the "discovery accrual rule."
For those of you who have not been following the case, the Plaintiff Sherman Nealy, a music producer, helped create musical works in the 1980s with his collaborator, Tony Butler. Nealy was incarcerated from 1989 to 2008 and again from 2012 to 2015
This may be a useful case for patent prosecutors to cite to the USPTO because it creates a strong dividing line for the printed matter doctrine -- applying the doctrine only to cases where the claims recite the communicative content of information.
In this decision, the Federal Circuit partially reversed a PTAB invalidity finding against several IOEngine patent claims. The most interesting portion of the opinion focuses on the printed matter doctrine. Under the doctrine, certain "printed matter" is given no patentable weight because it is deemed to fall outside the scope of patentable subject matter. C R Bard Inc. v. AngioDynamics, Inc., 979 F.3d 1372 (Fed. Cir. 2020). In this case though the Federal Circuit concluded that the Board erred in giving no weight to IOEngine's claim limitations requiring "encrypted communications" and "program code."
The printed matter doctrine a unique and somewhat amorphous concept in patent law that straddles the line between patent eligibility under 35 U.S.C. § 101 and the novelty and non-obviousness requirements of §§ 102 and 103.
The leading case on copyrightability of AI created works is now pending before the Court of Appeals for the District of Columbia. The case, Thaler v. Perlmutter, No. 23-5233 (D.C. Cir. 2024), centers on Dr. Stephen Thaler's attempts to register a copyright for an artistic image autonomously generated by his AI system that he has named the "Creativity Machine." The U.S. Copyright Office refused registration on the basis that the work lacked the required human authorship. Thaler filed suit challenging this determination. The parties have now filed their briefs, along with one law professor amicus brief in support of Thaler.
The Supreme Court is set to hear oral arguments on February 21 in an important copyright case - Warner Chappell Music v. Nealy. The central issue is whether copyright plaintiffs can recover damages for infringing acts that occurred more than three years before filing suit, under the "discovery accrual rule."
The U.S. Copyright Office published a Notice of inquiry (“NOI”) and request for comments, Artificial Intelligence and Copyright, Docket No. 2023-6 on August 30, 2023, calling for comments from interested parties addressing dozens of questions. The Office’s questions focused on a wide range of issues including the copyright implications of the use of in-copyright works as training data, on the feasibility of licensing such uses, the impact on competition and innovation in AI industries depending on how courts resolved training data copyright issues, the copyrightability of AI outputs, whether new laws regulating generative AI were needed, whether AI developers should be obliged to disclose the sources of their training data, and whether AI outputs should be labeled as such.
The Office received roughly 10,000 comments on October 30, 2023. We, who have been writing and teaching about copyright law and how it has responded to challenges posed by new technologies for decades, were among those who submitted comments, see https://www.regulations.gov/comment/COLC-2023-0006-8854.
Substance of the Samuelson, Sprigman, Sag Reply Comments:
We should begin by noting our appreciation for the FTC’s work enforcing both federal antitrust and consumer protection laws and helping to lead policy development in both areas. In our view, the FTC plays a vital role in keeping markets open and honest, and we have long been admirers of the intelligence and energy that the agency brings to that task. More specifically, we recognize the usefulness of examining intellectual property issues through the lenses of competition and consumer protection.
However, in the case of its response to the Copyright Office’s NOI on Artificial Intelligence and Copyright, the FTC has submitted Comments that are unclear and thus open to a variety of interpretations—and possibly to misinterpretations as well. The FTC’s Comments also raise questions about the scope of agency’s authority under Section 5 of the Federal Trade Commission Act, 15 U.S.C. 45, to bring enforcement actions aimed at activities, including those involving the training and use of AI, that might involve copyright infringement—although we would note that the copyright consequences of AI are, as yet, undefined.
We have three principal criticisms of the FTC’s comments:
First, the FTC’s submission is not a model of clarity: indeed, later in these Comments we will focus on a particular sentence from the FTC Comments that is worrisome both for its opacity and for the ways in which it may be interpreted (or misinterpreted) to chill innovation and restrict competition in the markets for AI technologies.
Second, the FTC Comments do not appear to be based on a balanced evidentiary record; rather, the Comments appear largely to reflect views articulated by participants in an Oct. 4, 2023, FTC Roundtable event[1] that featured testimony largely from artists and writers critical of generative AI: 11 of the 12 witnesses appeared to be or to represent individual creators, and one represented open-source software developers who objected to AI training on their code. Not a single witness provided perspectives from technologists who have developed and work with AI agents. Perhaps not surprisingly given the imbalance in the record, the FTC comments do not seem to appreciate the variety of use cases for AI technologies or the broader implications of those technologies for competition policy.
Third, and finally, certain of the FTC’s Comments could, if misunderstood, upset the careful balance that the copyright laws create between private rights to control copyrighted works and public access and use of those works. Upsetting that balance could chill development not only of useful AI technologies, but of a range of new technologies and services that augment consumers’ opportunities to access and use copyrighted works and increase the value of those works to consumers.
In the remainder of these Comments we will focus on a specific sentence from the FTC Comments that illustrates all of these problems.
A federal court has dealt a blow to the prospect of granting copyright protections to works created entirely by artificial intelligence systems. In their recent decision, Judge Howell ruled that because AI systems lack human authorship, their output is ineligible for copyright.
The copyright lawsuit between the data-software company SAS Institute and its scrappy copycat World Programming has been interesting to follow over the past several years, and the Federal Circuit has now issued a controversial opinion in the case. SAS Inst. v. World Programming Ltd., --- F.4th --- (Fed. Cir. 2023). The majority opinion authored by Judge Reyna and joined by Judge Wallach affirmed the lower court ruling that SAS failed to establish copyrightability of its claimed program elements. Writing in dissent, Judge Newman argued that the majority's rejection of copyrightability represents a "far-reaching change" not supported by either precedent or good policy. I called this outcome controversial. The outcome would also be controversial had Judge Newman's position prevailed.
The case is properly seen as an extension of the Supreme Court's decision in Google LLC v. Oracle America, Inc., 141 S. Ct. 1183 (2021). In that case, the Court found that Google's use of Java API naming conventions in its Android operating system was fair use under copyright law. Because its fair use decision decided the case, the court did not rule separately on whether the API was even copyrightable in the first place. In SAS v. WPL, the Federal Circuit squarely addressed the copyrightability question.
To be clear, computer software can still be copyrightable. But, parties asserting protection will need to do a much better job of showing how their creative authorial input survives the "abstraction-filtration-comparison test," which the Federal Circuit applied in its decision.
Copyright law's abstraction-filtration-comparison (AFC) test is used to determine whether a particular work is entitled to copyright protection. The AFC test involves breaking down a work into its constituent parts, abstracting the unprotectable elements, filtering out any remaining unoriginal or unprotectable elements, and then comparing the remaining protectable elements to the allegedly infringing work. The AFC test has been previously adopted by the Second, Fifth, and 10th Circuits.
Here, the court did not delve into the comparison step -- and instead simply held that there was nothing left to infringe after abstraction & filtration.
The decision is also substantially procedural. The district court held a copyrightability hearing and followed a burden shifting procedure created by the 11th Circuit in Compulife Software Inc. v. Newman, 959 F.3d 1288 (11th Cir. 2020). In particular, the court first assumed that the work was copyrightable based upon the registration documents. It then allowed the defense to present its filtration argument to show a lack of copyrightability. If that evidence is sufficient (as it was here), the burden then shifts back to the copyright holder to rebut -- and "to establish precisely which parts of its asserted work are, in fact, protectable." The difficulty for SAS is that it offered no rebuttal and instead "refused to engage in the filtration step and chose instead to simply argue that the SAS System was 'creative.'" Slip Op. SAS presented an expert witness on copyrightability, but the district court found it extremely unreliable and thus excluded the testimony. (The expert had not seen anything to filter out -- even clearly unprotectable elements).
The majority walked through each of these issues and ultimately affirmed on all grounds.
= = = =
Some background: SAS makes data analysis software. A key feature of the SAS product is that folks can write programs using SAS syntax in order to get certain results. Thus there are a number of data jockeys who are experts in SAS code. WPL is a UK based software company who obtained several copies of SAS statistical software and made their own clone version by rewriting the code and by relying upon an early version of SAS that is not protected by copyright. The WPL version allows folks to use SAS language to get the same results -- but at a much lower price. When I sa "same results" -- the clone pretty much identically copied output styles so that a chart made with WPL looks basically identical to a chart made in SAS using the same code.
SAS sued in E.D.Tex for copyright infringement. Judge Gilstrap dismissed the copyright claims — holding that the software was unprotectable. Copyright infringement appeals are ordinarily not heard by the Federal Circuit, but in a case of what appears to be appellate-forum shopping, SAS had also included patent infringement allegations that they eventually stopped pursuing. Under the rules of procedure, if patent claims were raised in the case at some point, then the appeal heads to the Federal Circuit.
The copyright case is not about copying code. It appears rather to be about copying the input syntax format used by individuals to input their programs and the output design styles for outputting data in some particular style. In the filtration analysis, WPL provided a host of evidence to show that these features should be "filtered out" of the SAS copyrights.
WPL established that an earlier version of the SAS System, "SAS 76," was in the public domain.
WPL showed that many Input Formats and Output Designs in the current SAS System are identical or nearly identical to those in SAS 76 and should be filtered.
WPL demonstrated that the SAS Language should be filtered because it is open and free for public use.
WPL's expert identified various allegedly copied materials that contained unprotectable elements such as open-source, factual, data, mathematical, statistical, process, system, method, and well-known and conventional display elements.
Bringing these together the Federal Circuit concluded that the defense had presented sufficient evidence to show uncopyrightability and that the district court was justified in requiring SAS to directly and particularly rebut the evidence rather than simply allowing a trial on the copyright as a whole.
The district court was correct to exercise its authority and require SAS to articulate a legally viable theory on which it expected to base its copyright infringement claims. Conversely, it would be improper for a district court to permit a matter to proceed to trial on the basis of vague and unidentified theories.
Slip Op.
Writing in dissent, Judge Newman argued that Fifth Circuit law protects this sort of computer software architecture even from non-literal copying. The key citation is likely to a the Fifth Circuit's 1994 Engineering Dynamics case:
Most courts confronted with the issue have determined that copyright protection extends not only to the literal elements of a program, i.e., its source code and object code, but also to its “nonliteral” elements, such as the program architecture, “structure, sequence and organization,” operational modules, and computer-user interface.
Eng’g Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335 (5th Cir. 1994). Judge Newman noted that "computer programs" are expressly protected within the Copyright Act
Copyright protection subsists . . . in original works of authorship . . . including . . . (5) computer programs.
17 U.S.C. 102. As the Nimmer treatise explains, this 1980 amendment to the laws "dispels any lingering doubts as to the copyrightability of computer programs. It is
therefore now firmly established that computer programs qualify as work of authorship in the form of literary works, subject to full copyright protection."
1 NIMMER ON COPYRIGHT § 2A.10(B) (2022 ed.).
Here, Judge Newman particularly noted that the collection of the various input functions and output designs is easily copyrightable. And, this is the same analysis done by the Federal Circuit in its original Oracle v. Google decision.
Judge Newman also concluded that the district court improperly shifted the burden of proof to the copyright holder.
