C & T Newsletters
February 2025
Court Rejects Fair Use Claim on Landmark Ruling on AI and Copyright
Takeaway: A U.S. court ruled that ROSS Intelligence’s use of Westlaw headnotes to train its AI was not fair use, emphasizing market harm and setting a precedent that could impact future AI copyright cases, especially regarding training data.
A U.S. district court ruled against ROSS Intelligence in Thomson Reuters v. ROSS Intelligence, the first major decision on fair use in AI-related copyright cases. The court found that ROSS’s use of Westlaw headnotes to train its AI-driven legal research tool was not fair use, setting a precedent that could impact future AI litigation.
The court determined that ROSS had copied 2,243 Westlaw headnotes and rejected defenses such as innocent infringement and fair use. While ROSS claimed its AI transformed the headnotes into numerical data, the court ruled that the use was not transformative since it served the same purpose as Westlaw. The ruling emphasized that ROSS’s commercial intent and direct competition with Westlaw weighed against fair use.
A key factor in the decision was market harm. The court found that ROSS could have developed its AI without infringing on Westlaw’s copyrights and that its use of the headnotes posed a threat to Westlaw’s business. While the ruling does not directly address generative AI, it signals that courts may take a strict approach when AI companies use copyrighted material for training, making future litigation likely.
Supreme Court Ruling in Dewberry Trademark Case Encourages Plaintiffs to Target Multiple Defendants
Takeaway: The U.S. Supreme Court’s ruling in the Dewberry trademark case suggests that plaintiffs may increasingly sue multiple defendants in trademark disputes to ensure they can access all profits from related companies, leaving unresolved legal questions about profit disgorgement, corporate separateness, and the potential use of the “just-sum” provision.
In a recent U.S. Supreme Court ruling, plaintiffs in trademark disputes may now be more inclined to include multiple defendants in their complaints if it is unclear who is profiting from alleged infringement. This follows the Court’s decision in a trademark case between Dewberry Group Inc. and Dewberry Engineers Inc., where the Court remanded the case due to an award of nearly $47 million being levied on nonparty affiliates of Dewberry Group. The justices clarified that federal trademark law only permits the disgorgement of profits from named defendants, leaving many questions unanswered for lower courts, including the potential use of the “just-sum” provision or veil-piercing tactics.
The dispute arose over the shared Dewberry surname used by both companies in real estate services. Dewberry Engineers sued Dewberry Group for rebranding in 2017, claiming trademark infringement. The case initially resulted in a judgment requiring Dewberry Group and its affiliates to pay $42.9 million plus legal fees. Dewberry Group, however, contended it was not profitable, while its affiliates generated substantial profits.
The ruling may encourage trademark plaintiffs to target multiple defendants, particularly in cases involving multiple related companies, though it also raises challenges, such as difficulties in identifying the correct defendants. The Court’s decision leaves open several complex issues for lower courts, which may include reconsidering the issue of corporate separateness and its impact on calculating damages.
Pepperdine University Sues Netflix and Warner Bros. for Trademark Infringement
Takeaway: Pepperdine University has filed a trademark infringement lawsuit against Netflix and Warner Bros. for using the university’s branding in Running Point, emphasizing the importance of protecting its identity and values.
Pepperdine University has filed a lawsuit against Netflix, Inc. and Warner Bros. Entertainment Inc. for trademark infringement and related claims due to the production companies’ unauthorized use of the university’s trademarks in the upcoming series Running Point, set to release on February 27, 2025. The series features a basketball team called the “Waves,” which closely mirrors Pepperdine’s branding, including its name, colors, and even the number “37,” associated with the university’s founding date.
The lawsuit, filed in the U.S. District Court for the Central District of California, seeks to prevent further use of Pepperdine’s trademarks and demands damages for the harm caused. The university has raised concerns about the show’s explicit content, which contradicts its Christian values. Despite multiple attempts to resolve the issue, Netflix and Warner Bros. have not taken corrective action, leading Pepperdine to seek legal intervention, with Cislo & Thomas LLP representing them as co-counsel.
Ninth Circuit Affirms Fair Use of Software Code in Aerospace Dispute
Takeaway: The Ninth Circuit upheld that Astronics’ use of Teradyne’s code qualifies as fair use under Google v. Oracle, reinforcing that functional software code is less protected by copyright to prevent monopolistic lock-in.
The Ninth Circuit upheld that aerospace contractor Astronics’ use of Teradyne’s copyrighted code qualifies as fair use, following the Supreme Court’s Google v. Oracle precedent. Teradyne had sued Astronics for copying its code to ensure compatibility with its testing instruments, but a California federal judge ruled in favor of Astronics, finding the use transformative and preventing monopolistic lock-in. The Ninth Circuit agreed, emphasizing the code’s functional nature and rejecting Teradyne’s claim that a jury should have decided the case. While unpublished, the ruling reinforces the legal standard for fair use in software disputes.
CheckWizard Sues Major Banks Over Mobile Check Deposit Patent
Takeaway: CheckWizard sued multiple financial institutions for allegedly infringing its mobile image capture patent, highlighting ongoing legal challenges businesses face when implementing digital transaction technologies.
CheckWizard has filed lawsuits in Texas federal court against several major banks and financial companies, including Bank of America, H&R Block, and Regions Bank alleging infringement of its 2018 patent covering mobile image capture and sharing technology. The suits claim that the defendants’ mobile check deposit features violate the patent, which protects a system for transferring digital images for a limited duration. The complaints assert that the companies directly infringed the patent through customer use and internal testing. H&R Block denied the allegations, stating it complies with federal patent laws. CheckWizard’s counsel has not commented.
Ninth Circuit Rules Kinetic Sculptures Eligible for Copyright Protection
Takeaway: The Ninth Circuit held that kinetic sculptures can qualify for copyright protection, reinforcing that creative works involving movement are still “fixed” under copyright law and allowing Tangle’s infringement claim against Aritzia to proceed.
The Ninth Circuit ruled that kinetic sculptures, despite their changeable nature, can qualify for copyright protection, reversing the dismissal of Tangle’s copyright claim against Aritzia while upholding the dismissal of its trade dress claim. The court rejected Aritzia’s argument that Tangle’s sculptures were only copyrightable in fixed poses, likening them to other protected works involving motion, such as dance and film. Additionally, the court found Tangle had plausibly alleged substantial similarity between its sculptures and Aritzia’s, allowing the case to proceed, though it left open questions about the scope of Tangle’s copyright protection for later litigation.
Federal Circuit Rejects Crocs’ Appeal in False Advertising Case Over Patent Claims
Takeaway: The Federal Circuit upheld a decision reviving false advertising claims against Crocs for falsely stating its shoes were made with patented materials, emphasizing that false claims about a product’s nature or characteristics can violate the Lanham Act, highlighting the importance of truthful advertising in consumer protection.
The Federal Circuit has declined to review a decision reviving false advertising claims against Crocs Inc. regarding its statement that its shoes were made with “patented, proprietary, and exclusive” materials, which were not actually patented. The appeals court rejected Crocs’ request for a rehearing, affirming a lower court’s decision that Crocs’ claims could fall under the Lanham Act’s false advertising provisions.
The case stems from a 2016 lawsuit where competitors, Double Diamond Distribution and U.S.A. Dawgs Inc., accused Crocs of misleading advertising. The court ruled that false claims about a product’s nature or characteristics, such as claiming a patent, could lead to false advertising claims. Crocs argued that past court decisions, including Dastar and Baden, did not support such claims under the Lanham Act, but the Federal Circuit disagreed. The case now moves forward to the trial court.
Cislo & Thomas LLP Spotlight
On our way to INTA 2025 in San Diego!
Cislo & Thomas LLP is proud to be exhibiting at the 147th Annual INTA Conference in San Diego, California this year from May 18, 2025 through May 21, 2025 and holding meetings at our Booth No. 1949 at the INTA Conference Center. We are looking forward to presenting in our home state. If you plan to attend, please come by and see us!
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