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Designated Informative: PTO Director Declines IPR Institution Following District Court § 101 Invalidation

by Jodi Benassi | May 15, 2025 | Patents

The US Patent & Trademark Office (PTO) designated a recent Director Review decision as informative, signaling its significance for future proceedings. The decision emphasizes that a final district court ruling invalidating a patent weighs heavily against instituting inter partes review (IPR) under the Fintiv framework, reinforcing the agency’s stance on minimizing duplicative litigation. Hulu LLC v. Piranha Media Distribution LLC, IPR2024-01252; -01253 (PTAB Director Review Apr. 17, 2025) (Stewart, PTO Dir.)

Piranha requested Director Review of the Patent Trial & Appeal Board’s decision granting institution of two IPRs filed by Hulu. Piranha argued that the decision should be reversed and the IPRs denied institution, citing a district court final judgment invalidating the challenged claims under 35 U.S.C. § 101 issued before the institution decision was made. Hulu argued that Director Review was unwarranted.

In the district court litigation, Piranha asserted that Hulu infringed claims from two patents related to integration of advertising content into digital media streams. Hulu moved to dismiss the complaint, arguing that the asserted patents were ineligible for patenting under § 101. The district court determined that the asserted claims were directed to the abstract idea of “displaying an advertisement in exchange for access to copyrighted material, as well as the abstract idea of receiving, organizing, and displaying data,” and contained no inventive concept. The district court granted Hulu’s motion to dismiss and held the claims patent ineligible and therefore invalid under § 101.

The Director explained that since a district court had already ruled the patent claims invalid, launching separate IPRs to assess their patentability on other grounds was unnecessary. The Director noted that if the Federal Circuit overturned the district court’s decision, Hulu could still pursue its invalidity arguments during remand proceedings. Declining to institute review was the more efficient and practical path under the circumstances, the Director said.

While the Board applied the Fintiv framework in its institution decision, the Director observed that the framework does not align neatly with the facts of this case, where a final district court judgment under § 101 preceded the Board’s decision. The Director ultimately concluded that a second review proceeding was unwarranted given the claims’ current invalid status.

No Protectable Code: No Literal or Nonliteral Copying

by Keval Amin | May 15, 2025 | Copyrights

The US Court of Appeals for the Eighth Circuit affirmed a district court’s ruling that a plaintiff failed to establish copyright protection for its software platforms, drawing a distinction between “literal” copying (direct duplication of source code) and “nonliteral” copying (reproduction of structure, sequence, or user interface). InfoDeli, LLC v. Western Robidoux, Inc., et al., Case No. 20-2146 (8th Cir. May 5, 2025) (Gruender, Kelly, Grasz, JJ.)

InfoDeli partnered with Western Robidoux, Inc. (WRI), a commercial printing and fulfillment firm co-owned by family members, in 2009 to form a joint venture. The agreement leveraged InfoDeli’s expertise in developing custom webstore platforms and WRI’s capacity for printing and fulfillment. Their collaboration served major clients such as Boehringer Ingelheim Vetmedica Inc. (BIVI) and CEVA Animal Health, LLC, both providers of animal health products. InfoDeli built webstores enabling the companies’ sales teams to order promotional materials, which WRI then fulfilled. InfoDeli developed the Vectra Rebate platform for CEVA, allowing marketing staff to issue customer coupons that were also fulfilled by WRI.

By early 2014, tensions emerged. Without informing InfoDeli, WRI hired a competitor, Engage Mobile Solutions, to replace InfoDeli’s platforms for CEVA and BIVI. Engage used open-source software, in contrast to InfoDeli’s proprietary systems. WRI also shared InfoDeli-developed content with Engage to aid the transition. Shortly thereafter, WRI abruptly terminated its joint venture with InfoDeli.

InfoDeli sued WRI, CEVA, BIVI, and Engage for copyright infringement, tortious interference, and violations of the Missouri Computer Tampering Act related to certain webstores. The defendants counterclaimed conversion and tortious interference. The district court ruled in favor of the defendants on the copyright claims and denied InfoDeli’s motion on the counterclaims. After a jury sided with the defendants, InfoDeli filed motions for judgment and a new trial, both of which were denied. InfoDeli appealed.

The Eighth Circuit found that InfoDeli failed to prove its platforms were protected by copyright. The Court distinguished between “literal” and “nonliteral” copying, explaining that literal copying referred to direct duplication of original source code while nonliteral copying involved reproducing the overall structure or user interface. The district court had already determined that the nonliteral elements of InfoDeli’s platforms were not copyrightable. On appeal, InfoDeli did not challenge this determination regarding the individual elements. Instead, InfoDeli argued that the platforms should be protected “as a whole,” claiming that the interrelationship of elements made them protectable. However, the Eighth Circuit found that InfoDeli did not explain how the elements’ arrangement exhibited the required creativity for copyright protection.

InfoDeli further argued that the district court erred in not considering the verbatim copying of its source code. However, since InfoDeli’s complaint only alleged infringement of nonliteral elements, the Eighth Circuit found that the district court properly focused on those claims.

InfoDeli also argued that the district court erred by relying on InfoDeli’s expert’s list of protectable elements for the BIVI platform. However, the Court rejected this claim, pointing to precedent holding that when a plaintiff identifies specific elements as protectable, it effectively concedes that the remaining elements [...]

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RAW Confusion? No Error Where Trial Court Declines to Clarify Agreed Jury Instruction

by Connor M. Larson | May 8, 2025 | Trademarks

The US Court of Appeals for the Seventh Circuit affirmed a district court’s jury verdict that found trade dress infringement and liability under state deceptive practices law, and the court’s order entering a nationwide permanent injunction. The Seventh Circuit found the district court’s agreed jury instruction accurate and determined that there was no error in refusing to further clarify the instruction for the jury. Republic Techs. (NA), LLC v. BBK Tobacco & Foods, LLP, Case No. 23-2973 (7th Cir. Apr. 25, 2025) (Hamilton, Scudder, Lee, JJ.)

Republic Technologies and BBK Tobacco are competitors in the business of organic, hemp-based rolling papers for cigarettes. Republic manufactures and markets its own papers under the name OCB, and BBK markets papers manufactured by others, including its house brand, RAW. After BBK formally requested that Republic change its OCB trade dress to avoid potential confusion with the RAW trade dress, Republic sued for a declaratory judgment of noninfringement, unfair competition, and deceptive advertisement under the federal Lanham Act, Illinois common law, and the Illinois Uniform Deceptive Trade Practices Act (IUDTPA). BBK filed a counterclaim for trade dress infringement and copyright infringement.

At trial, the parties agreed on the jury instruction for the Lanham Act false advertising claim. However, during deliberations, the jury asked for clarification on the definition of “consumer.” Over Republic’s objection, the district court answered the jury’s question by stating that “the answers are contained in the instructions,” and directed the jury “to refer to and review all the instructions.” The jury returned a mixed verdict, finding against Republic on the federal false advertising claims but finding for Republic on its common law and IUDTPA claims. Republic then sought, and the district court granted, a permanent injunction that set limitations on the statements BBK was permitted to make in its advertisements.

On BBK’s counterclaim of trade dress infringement, the jury found that Republic’s trade dress for its OCB papers infringed BBK’s trade dress for its RAW papers. Republic moved for judgment as a matter of law of noninfringement and for a new trial on its false advertising claim based on the disputed answer to the jury’s question. The court denied both motions. Both parties appealed.

On appeal, the Seventh Circuit affirmed on all issues. First, the Seventh Circuit ruled that the district court did not abuse its discretion in its response to the jury’s question or in denying the request for a new trial because a trial judge’s responsibility is to strike “a balance between giving the jury all it needs but without unnecessary detail” and the judge’s answer in this case did not result in the prejudice necessary for a reversal.

Second, the Seventh Circuit reviewed the evidence presented to the jury concerning the trade dress infringement claim and determined that substantial evidence supported the jury’s verdict and the verdict was not irrational. Republic argued that it was not reasonable to confuse the OCB packaging with the RAW packaging “given the prominent display of the brand names in great big letters [...]

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Assessing Inputs: Determining AI’s Role in US Intellectual Property Protections

by Anisa Noorassa | Feb 6, 2025 | Copyrights

The US Patent & Trademark Office (PTO) issued additional guidance on the contribution of artificial intelligence (AI) in its January 2025 AI Strategy. Similarly, the US Copyright Office issued part two of its “Copyright and Artificial Intelligence” report, addressing the copyrightability of AI- or partially AI-made works. Both agencies appear to be walking a fine line by accepting that AI has become increasingly pervasive while maintaining human contribution requirements for protected works and inventions.

In its published strategy, the PTO states that its vision is to unleash “America’s potential through the adoption of AI.” The strategy describes five focus areas:

Advancing the development of intellectual property policies that promote inclusive AI innovation and creativity.
Building best-in-class AI capabilities by investing in computational infrastructure, data resources, and business-driven product development.
Promoting the responsible use of AI within the PTO and across the broader innovation ecosystem.
Developing AI expertise within the PTO’s workforce.
Collaborating with other US government agencies, international partners, and the public on shared AI priorities.

The PTO stated that it is still evaluating the issue of AI-assisted inventions but reaffirmed its February 2024 guidance on inventorship for AI-assisted inventions. That guidance indicates that while AI-assisted inventions are not categorically unpatentable, the inventorship analysis should focus on human contributions.

Likewise, the Copyright Office discussed public comments regarding AI contributions to copyright, weighing the benefits of AI in assisting and empowering creators with disabilities against the harm to artists working to make a living. Ultimately the Copyright Office affirmed that AI, when used as a tool, can generate copyrightable works only where a human is able to determine the expressive elements contained in the work. The Copyright Office stated that creativity in the AI prompt alone is, at this state, insufficient to satisfy the human expressive input required to produce a copyrightable work.

Vimeo’s Fleeting Interaction With Videos Doesn’t Negate Safe Harbor Protections

by Taylor MacDonald | Jan 23, 2025 | Copyrights

The US Court of Appeals for the Second Circuit affirmed a district court’s decision, granting Vimeo qualified protection under the Digital Millennium Copyright Act (DMCA) safe harbor provision. Capitol Records, LLC v. Vimeo, Inc., Case Nos. 21-2949(L); -2974(Con) (2d Cir. Jan. 13, 2025) (Leval, Parker, Merriam, JJ.) This case addresses, for the second time, whether Vimeo had “red flag knowledge” of the defendant’s copyrighted works under the DMCA.

DMCA Section 512(c) provides a safe harbor that shelters online service providers from liability for indirect copyright infringement on their platforms under certain conditions. Congress provided two exceptions that would remove the safe harbor protection:

Actual or red flag knowledge of infringing content
The ability to control content while receiving a financial benefit directly attributable to the accused infringement activity.

EMI, an affiliate of Capitol Records, vehemently opposed Vimeo’s inclusion of videos containing EMI’s music on its site and initiated the present suit in 2009. The district court granted summary judgment in favor of Vimeo, dismissing the plaintiffs’ claims on the ground that Vimeo was entitled to the safe harbor protection provided by Section 512(c). EMI appealed.

In a 2016 appeal (Vimeo I ), the Second Circuit considered Vimeo’s activities under the DMCA. In Vimeo I, the Court (in the context of an interlocutory appeal) ruled that the copyright holder must establish that the service provider (e.g., Vimeo) had “knowledge or awareness of infringing content,” and that the service provider bore the initial burden to prove it qualified for the DMCA safe harbor, whereupon the burden shifted to the copyright holder to prove a disqualifying exception.

Knowledge of Infringement

In Vimeo I, the Second Circuit cited its 2012 decision in Viacom Int’l v. You Tube and explained that red flag knowledge incorporates an objective standard. The facts actually known to the service provider must be sufficient such that a reasonable person would have understood there to be infringement that was not offset by fair use or a license. Vimeo I clarified that service provider employees who are not experts in copyright law cannot be expected to know more than any reasonable person without specialized understanding.

The Second Circuit explained that this knowledge analysis is a fact-intensive one, and that copyright owners cannot rely on service provider employees’ generalized understanding to prove red flag knowledge for any video (or other work). The Vimeo I court also noted that the DMCA did not place a burden on service providers to investigate whether users had acquired licenses. In Vimeo I, the Second Circuit further instructed that because the legal community cannot agree on a universal understanding of fair use, it would be unfair to expect “untutored” service provider employees to determine whether a given video is not fair use on its face.

Right and Ability to Control

In analyzing what constitutes the right and ability to control, the Second Circuit emphasized that Congress’ purpose behind the DMCA was to effect a compromise between rightsholders and safe harbor claimants: “Congress recognized that the [...]

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Untwisting the Fixation Requirement: Flexible Rules on Moveable Sculptures

by Hannah Hurley | Jan 23, 2025 | Copyrights

The US Court of Appeals for the Ninth Circuit reversed and remanded a district court’s dismissal of a claim of copyright infringement for kinetic and manipulable sculptures, finding that movable structures were sufficiently “fixed” in a tangible medium for copyright purposes. Tangle, Inc. v. Aritzia, Inc., et al., Case No. 23-3707 (9th Cir. Jan. 14, 2024) (Koh, Johnstone, Simon, JJ.)

Tangle, a toy company, holds copyright registrations for seven kinetic and manipulable sculptures, each made from 17 or 18 identical, connected 90-degree curved tubular segments. These sculptures can be twisted or turned 360 degrees at the joints, allowing for various poses. Aritzia, a lifestyle apparel brand, used similar sculptures in its retail store displays, leading Tangle to file a lawsuit alleging copyright and trade dress infringement. Aritzia’s sculptures were larger, were a different color, and had a chrome finish.

The Copyright Act requires that a work of authorship be “fixed in any tangible medium of expression.” 17 U.S.C. § 102(a). At the pleading stage, the district court concluded that the sculptures were not fixed and thus dismissed Tangle’s copyright claim. The district court also dismissed the trade dress claim for failure to provide adequate notice of the asserted trade dress. Tangle appealed.

While the Ninth Circuit agreed with the district court’s dismissal of the trade dress claim, it disagreed with the district court’s ruling on the copyright claim. Comparing the kinetic, movable sculptures to music, movies, and dance, the Court found that Tangle’s dynamic sculptures were entitled to copyright protection and that Tangle adequately alleged valid copyrights in its sculptures. The Court held that the works’ ability to move into various poses did not, by itself, support the conclusion that they were not “fixed” in a tangible medium for copyright purposes.

The Ninth Circuit held that under the “extrinsic test” test, which looks at “the objective similarities of the two works, focusing only on the protectable elements of the plaintiff’s expression,” as set forth in the Court’s 2018 decision in Rentmeester v. Nike, Tangle plausibly alleged copying of its protected works by alleging that the creative choices it made in selecting and arranging elements of its copyrighted works were substantially similar to the choices Aritzia made in creating its sculptures.

Since Aritzia failed to dispute that Tangle had properly alleged copying, the Ninth Circuit stated that Tangle only needed to show that the sculptures were substantially similar to prove infringement. Applying its 2004 decision in Swirsky v. Carey, the Ninth Circuit explained that “substantial similarity can be found in a combination of elements, even if those elements are individually unprotected.”

The Ninth Circuit found that the copyrighted and accused sculptures were similar enough to the ordinary observer to constitute infringement because both were comprised of identical, connected 90-degree curved tubular segments that could be twisted and manipulated to create many different poses. The Court further explained that the vast range of possible expressions could afford the sculptures broad copyright protection.

Just Compensation Based on Hypothetical Negotiation

by Paul Devinsky | Jan 16, 2025 | Copyrights

In a long-standing copyright dispute on its second visit to the US Court of Appeals for the Federal Circuit, the Court affirmed the modest damages award from the US Court of Federal Claims, ruling that a hypothetical negotiation between the parties would have resulted in a license in the amount awarded by the claims court. Bitmanagement Software GmBH v. United States, Case No. 23-1506 (Fed. Cir. Jan. 7, 2025) (Dyk, Stoll, Stark, JJ.)

In 2016 Bitmanagement sued the US Navy for copyright infringement of its software. The Court of Federal Claims awarded damages based on usage of the software, rather than the number of copies made. In the first appeal, the Federal Circuit agreed with the claims court that the Navy had an implied license to make copies of the software but was limited as to simultaneous users of the software, a condition that the Navy breached. The Federal Circuit remanded the case with the following instruction:

Because Bitmanagement’s action is against the government, it is entitled only to “reasonable and entire compensation as damages . . . , including the minimum statutory damages as set forth in section 504(c) of title 17, United States Code.” 28 U.S.C. § 1498(b).

The Federal Circuit further instructed the claims court that Bitmanagement was:

. . . not entitled to recover the cost of a seat license for each installation. If Bitmanagement chooses not to pursue statutory damages, the proper measure of damages shall be determined by the Navy’s actual usage of BS Contact Geo in excess of the limited usage contemplated by the parties’ implied license. That analysis should take the form of a hypothetical negotiation. . . . As the party who breached the . . . requirement in the implied license, the Navy bears the burden of proving its actual usage of the . . . software and the extent to which any of it fell within the bounds of any existing license.

Following this mandate, the claims court denied Bitmanagement’s damages demand of almost $86 million and awarded $154,000. Bitmanagement appealed, arguing that it was entitled to damages based on each copy of the software made, rather than damages based on use exceeding the implied license.

The Federal Circuit disagreed, explaining that the law does not require that every award of copyright damages be on a per-copy basis:

. . . whenever the copyright in any work protected under the copyright laws of the United States shall be infringed by the United States . . . the exclusive action which may be brought for such infringement shall be an action by the copyright owner against the United States in the Court of Federal Claims for the recovery of his reasonable and entire compensation as damages for such infringement . . .

As the Federal Circuit noted, the methods used to determine recovery of “actual damages” under § 504 are those “appropriate for measuring the copyright owner’s loss.” Therefore, in § 504(b) cases, the copyright owner must prove “the actual [...]

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Interoperability Doesn’t Imply Derivative Work

by Jodi Benassi | Jan 9, 2025 | Copyrights

The US Court of Appeals for the Ninth Circuit explained that to be a derivative work, a program interoperative with another must actually incorporate aspects of the underlying work. The Court further ruled that licensees of a copy of a computer program are not “owners” of the copy and therefore are not entitled to make copies for the purposes permitted by 17 U.S.C. § 117(a). Oracle International Corp. v. Rimini Street, Inc., Case No. 23-16038 (9th Cir. Dec. 16, 2024) (Bybee, Bumatay, Bennett, JJ.)

Rimini provides third-party support for Oracle software and is a direct competitor with Oracle in the software support services market. For more than a decade, Oracle and Rimini have been involved in what the Ninth Circuit describes as a “pitched copyright war.” This latest battle relates to changes Rimini made to its business model after a district court determined that Rimini had infringed Oracle’s copyrights. Rimini developed a new process for servicing customers using Oracle software and sought a declaratory judgment that its revised process did not infringe Oracle’s copyrights. Oracle counterclaimed for copyright infringement and Lanham Act violations.

The district court found that Rimini created infringing derivative works because its new process interacted and was usable with Oracle software. The district court found that Rimini violated Oracle’s PeopleSoft and Database licensing agreements and made several statements violating the Lanham Act. The court struck Rimini’s affirmative defense to copyright infringement under 17 U.S.C. § 117(a), granted Oracle summary judgment that Rimini infringed Oracle’s copyrights, and issued a permanent injunction against Rimini. Rimini appealed.

Derivative Works

The Ninth Circuit disagreed with the district court’s analysis of Rimini’s new process, noting that the district court focused on an “interoperability test,” which does not exist under the text of the Copyright Act or in precedent. In effect, the district court’s test would find that if a product interoperates with a preexisting copyrighted work, then it must be derivative. The Ninth Circuit explained that while the Copyright Act uses broad language to describe derivative works, the derivative work must actually incorporate the underlying work. For Rimini’s new process to be a derivative work, it must incorporate Oracle’s copyrighted work, either literally or nonliterally. The Court found that just because Rimini’s new process interacted with Oracle’s software, that was insufficient to find it was a derivative work.

Affirmative Defense: Section 117(a)

The Copyright Act permits an owner of a copy of a computer program to make a copy or adaptation of that program for certain purposes under 17 U.S.C. § 117(a). The Ninth Circuit vacated the district court’s ruling, striking Rimini’s affirmative defense under Section 117(a), because the district court erred in determining whether Oracle’s customers “owned” a copy of Oracle’s software, PeopleSoft. The Court explained that to determine whether a party is an “owner of a copy” of a computer program, the courts look to whether the party has “sufficient incidents of ownership” over the “copy” of the software, in view of the totality of the parties’ agreement. Factors that [...]

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Let’s Not Get It On: Battle of the Greatest Hits

by Kavya Rallabhandi | Nov 14, 2024 | Copyrights

The US Court of Appeals for the Second Circuit affirmed a district court ruling that Ed Sheeran’s 2014 hit “Thinking Out Loud” does not infringe the copyright on Marvin Gaye’s 1973 classic “Let’s Get It On.” Structured Asset Sales, LLC v. Sheeran, Case No. 23-905 (2d Cir. Nov. 1, 2024) (Calabresi, Parker, Park, JJ.)

In 1973, Ed Townsend and Marvin Gaye wrote the Motown hit “Let’s Get It On.” Townsend subsequently registered a copyright for the song’s melody, harmony, rhythm, and lyrics by sending the deposit copy of sheet music to the US Copyright Office. Townsend, Gaye, and Motown Records each held a one-third share in the copyright. Structured Asset Sales (SAS) purchases royalty interests from musical copyright holders, securitizes them, and sells the securities to other investors. SAS owns a one-ninth interest in the royalties from “Let’s Get It On.” Townsend’s remaining two-ninths share in the copyright is split between Kathryn Griffin, Helen McDonald, and the estate of Cherrigale Townsend.

In 2014 Ed Sheeran and Amy Wadge wrote the global chart-topper and Grammy-award-winning song “Thinking Out Loud.” In 2018, SAS brought a copyright infringement suit against Sheeran, Wadge, and various entities that produced, licensed, and distributed “Thinking Out Loud” (collectively, Sheeran). SAS alleged similarities in harmonies, drums, bass lines, tempos, and chord progression combined with anticipation (harmonic rhythm). SAS’s lawsuit followed the Griffin/McDonald/estate of Cherrigale Townsend’s 2017 lawsuit against Sheeran (Griffin lawsuit) alleging materially similar claims.

The district court determined that SAS’s infringement claim was limited to the scope of Townsend’s registration as reflected in the deposit copy (i.e., the sheet music) and excluded the sound recording of “Let’s Get It On.” As evidence that the songs were similar, SAS’s expert witness testified that the “Let’s Get It On” deposit copy included an inferred bass line that matched the bass line in Gaye’s sound recording of “Let’s Get It On” and the bass line in “Thinking Out Loud.” The district court rejected this testimony, concluding that “copyright law protects only that which is literally expressed, not that which might be inferred or possibly derived from what is expressed.”

The district court then denied Sheeran’s two motions for summary judgment without prejudice, determining that whether chord progression and harmonic rhythm in “Let’s Get It On” demonstrated sufficient originality and creativity to warrant copyright protection was a factual question to be determined at trial. Sheeran filed a motion for reconsideration. After the jury in the Griffin lawsuit found that Sheeran did not infringe the “Let’s Get It On” copyright, the district court granted Sheeran’s motion for reconsideration and concluded that “[t]here is no genuine issue of material fact as to whether defendants infringed the protected elements of [‘Let’s Get It On’]. The answer is that they did not.” SAS appealed.

SAS argued that the district court erred in limiting the evidence SAS could present to support its infringement claim and in granting summary judgment in favor of Sheeran. The Second Circuit rejected both arguments.

The Second Circuit explained that excluding the audio recording of “Let’s Get It On” was not error because the 1909 Copyright Act protects [...]

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Data Mining for AI Systems Training Permitted Under German Law

by Paulina Simons, LL.M. | Nov 7, 2024 | Copyrights, EU Update

In a landmark decision, a German district court recently decided that copying images to create a data set that can potentially be used for training generative artificial intelligence (AI) systems does not infringe German copyright law. Robert Kneschke v. Large Scale Artificial Intelligence Open Network, Case No. GRUR-RS 2024, 25458 (Hamburg District Court Sept. 27, 2024)

The nonprofit Large Scale Artificial Intelligence Open Network (LAION) created a data set containing 5.85 billion image-text pairs publicly available on the internet. This data set can be used to train generative AI systems. For the creation of the data set, LAION accessed a preexisting data set with uniform resource locators (URLs) referencing images and their descriptions. First, LAION extracted the URLs and downloaded the referenced images, including a copyrighted work by photographer Robert Kneschke, even though a reservation of use against web scraping was declared on a subpage of the website. LAION analyzed the image descriptions with a software application. The application excluded image-text pairs where text and image content did not match sufficiently. LAION only added validated image-text pairs to its data mining.

Robert Kneschke claimed copyright infringement based on LAION’s download of his images.

The district court explained that LAION’s mere downloading of Kneschke’s images did not encroach on his right of reproduction under German copyright law. The district court further held that LAION’s actions were justified under and in compliance with Section 60d(1) of the German Act on Copyright and Related Rights (UrhG) – a scientific research exception.

Section 60d(1) authorizes reproduction of text and data mining for scientific purposes by research organizations. The district court clarified that the creation of the data set was data mining, even if the purpose of the creation was AI training. As the district court explained, analysis of an image to compare it with a preexisting description is analysis for the purpose of obtaining information. The district court held that even the creation of the data set, which could form the basis for training AI systems, should be regarded as a scientific purpose (i.e., activity in pursuit of new knowledge irrespective of an immediate knowledge gain or subsequent research success). The creation of the data set was found to be a fundamental step for the purpose of using the data set to gain knowledge later. Of note, the data set was published free of charge and thus also made available to researchers involved in AI. According to the district court, because the training and development of AI systems (even by commercial enterprises) is still scientific research, it was irrelevant that the data set could additionally be used by commercial enterprises to train or develop their AI systems.

Although not legally relevant to the outcome, the district court considered the reservation of use declared in natural language (English) on a subpage to be machine-readable and therefore effective.

Practice Note: This judgment will have far-reaching implications for the use of copyright as a barrier to training AI systems.