Thomson Reuters Wins Landmark AI Copyright Fair Use Ruling Against Ross Intelligence

First Federal Appeals Court Ruling on AI Copyright

The Philadelphia-based 3rd US Circuit Court of Appeals delivered a landmark decision on Wednesday, ruling that defunct legal research company Ross Intelligence did not make fair use of Thomson Reuters' copyrighted material to train an AI-based legal search engine1

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. The appeals court ruling represents the first time a US federal appeals court has weighed in on fair use in the AI copyright context, setting a potential legal precedent as tech companies face a wave of high-stakes lawsuits over AI training3

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US Circuit Judge Tamika Montgomery-Reeves wrote for the unanimous three-judge panel that despite Ross' framing, "this case appears to concern the future of AI legal technology. But appearances can be deceiving. In truth, this is no more than an ordinary copyright case"2

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. The court emphasized it must determine whether Thomson Reuters' materials are sufficiently original for copyright protection and whether Ross' use of those materials constituted fair use.

Ross Intelligence's Use of Westlaw Headnotes

Thomson Reuters' 2020 lawsuit accused Ross Intelligence of copying thousands of Westlaw headnotes to train its competing AI-based legal search engine1

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. Westlaw headnotes are brief summaries written by attorney editors that identify important legal issues in court opinions, helping lawyers quickly locate portions addressing particular legal questions2

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. Ross worked with third-party LegalEase Solutions to create training materials connecting legal questions with passages from judicial opinions, incorporating these copyrighted headnotes into the process.

Ross shut down its platform in 2021, citing the costs of Thomson Reuters' litigation1

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. The company had developed an AI-powered legal research platform allowing lawyers to submit legal questions and receive relevant passages from court opinions, directly competing with Westlaw's core functionality.

Copyright Protection for Editorial Content

The 3rd US Circuit Court of Appeals rejected Ross' argument that headnotes were too close to underlying court opinions to qualify for copyright protection2

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. The court found that Westlaw's headnotes met the low originality threshold required for copyright protection because editors had to decide which legal issue each headnote would cover, what facts and reasoning to include, and how to describe the point accurately and concisely.

"Each headnote had to convey enough factual background and reasoning to stand on its own without reference to the opinion or any other headnote, while accurately reflecting the corresponding opinion passage," Montgomery-Reeves wrote2

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. The court determined these editorial decisions showed the requisite minimal "creative spark" making the headnotes original copyrightable works.

This conclusion carries significant implications for AI companies working with material built around public records. While court decisions are public domain and cannot be copyrighted, the appeals court ruling establishes that editorial content built around those decisions can receive copyright protection when it reflects independent judgment and expression2

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Non-Transformative Use and Market Harm

The court found Ross' use of copyrighted material to train AI was "minimally transformative at best"1

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. The appeals court determined that Ross used the headnotes to help train a product performing the same core legal research function as Westlaw, representing a directly competing commercial service rather than a transformative new purpose.

"Ross took an intermediate step of using the headnotes to train an AI program, which arguably presents a slight degree of difference in use," Montgomery-Reeves wrote. "But the undisputed evidence demonstrates that Ross used the headnotes to train an AI program for the benefit of its legal-research platform"2

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. The fact that Ross used headnotes during training rather than displaying them to users did not settle the fair use question, as training was merely an intermediate step toward building a competing service.

The Copyright Act directs courts to weigh four factors when deciding fair use claims, with market harm often proving most decisive4

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. The court ruled that Ross' use caused market harm to Thomson Reuters by undercutting Westlaw's ability to market its service through a directly competing offering. "By copying the headnotes and using them to build its own competing legal research platform, Ross appropriated the headnotes' value for finding and analyzing judicial opinions and diminished their value as a draw for users to Thomson Reuters' legal research platform," the opinion stated4

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Distinction from Generative AI Cases

The 3rd Circuit distinguished Thomson Reuters' case from other AI training lawsuits involving generative AI systems that create new content1

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. Ross' now-defunct search engine was not generative AI but merely returned passages taken directly from judicial opinions in response to user queries4

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. The appeals court noted in a footnote that concerns raised by the US Department of Justice in a copyright lawsuit against OpenAI "do not apply here"1

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The court was careful to distinguish its finding from earlier district court rulings holding that use of copyrighted works to train AI models constituted fair use4

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. Tech companies have argued that generative AI systems make fair use of copyrighted material by transforming it into something new, while copyright owners contend companies use their work to generate competing content threatening their livelihoods3

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Implications for AI Industry and Intellectual Property

A Thomson Reuters spokesperson stated the company was pleased with the decision, saying "The appellate court agreed that Westlaw's editorial content -- created and maintained by our attorney editors -- is protected by copyright and that ROSS's copying of Thomson Reuters content did not constitute fair use"1

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. The spokesperson added that "Thomson Reuters believes that strong copyright protections are essential to promoting innovation and safeguarding the intellectual property that powers our Fiduciary-Grade AI solutions."

Authors, news outlets, music labels and others have filed dozens of lawsuits against tech companies over unauthorized use of copyrighted works to train AI systems3

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. Thomson Reuters' case marks the first copyright dispute over AI training heard by a US appeals court, though the legal precedent may be limited given the specific circumstances involving non-generative AI and direct competition.

The ruling puts added weight on examining the source and function of training data used to develop AI systems2

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. AI developers can often obtain public documents, but the appeals court ruling establishes that access to public records does not necessarily grant rights to use a publisher's summaries, labels, rankings or other editorial work built around those documents. Watch for how courts apply this reasoning to pending generative AI copyright infringement cases, particularly regarding whether AI training for competing products can qualify as transformative fair use when using copyrighted material.