US appeals court upholds Thomson Reuters' landmark win in AI training lawsuit

A US appeals court on Tuesday upheld a ​ruling for information services company Thomson Reuters in ​its copyright dispute with former legal-research rival ‌Ross ​Intelligence over Ross' alleged misuse of copyrighted material to train an AI-powered legal search engine.

The Philadelphia-based 3rd US Circuit Court of Appeals rejected Ross' argument ‌that its search engine made fair use of material from Thomson Reuters' Westlaw platform, a first-of-its-kind ruling by a U.S. appeals court in a wave of high-stakes copyright cases over AI training. The appeals court's reasoning for its decision ‌is currently sealed.

Thomson Reuters is the parent company of Reuters News. Thomson Reuters' 2020 lawsuit accused legal research ‌company Ross Intelligence of copying Westlaw's "headnotes," which summarize points of law in court opinions. It accused Ross of misusing thousands of headnotes to train its competing AI-based legal search engine.

Ross shut down its platform in 2021, citing the costs of Thomson Reuters' litigation. Authors, news outlets, music ⁠labels ​and others have filed dozens ⁠of lawsuits against tech companies over the unauthorized use of copyrighted works to train AI systems. Thomson Reuters' case is the first copyright ⁠dispute over AI training to be heard by a US appeals court, though unlike those disputes, Thomson Reuters' case does ​not involve generative AI -- artificial intelligence that creates new content.

Ross allegedly used Thomson Reuters' headnotes to train ⁠its search engine to identify relevant court opinions in response to user queries. The company argued that its AI training made fair use ⁠of ​the headnotes, raising a pivotal defense for legal disputes over AI training. Tech companies have argued that generative AI systems make fair use of the copyrighted material they are trained on by transforming it into something ⁠new, while copyright owners say the companies use their work to generate competing content that threatens their livelihoods.

A federal ⁠judge in Delaware federal ⁠court rejected Ross' fair use defense last year, prompting Ross' appeal. "Ross took the headnotes to make it easier to develop a competing legal research tool," the judge ‌said. "So Ross’s use is ‌not transformative."