How Generative AI Litigation Is Changing the Meaning of "Fair Use"

Courts in the United States are grappling with whether long-standing copyright rules apply to machine learning practices. The outcomes of these cases are worth watching because they will shape how authors and creators are compensated in the future. The most pressing question is whether training algorithms on copyrighted material qualify as a protected use.

If courts reject broad interpretations of fair use, technology companies may need to completely rethink how they gather training data. The Lyon Firm's AI privacy lawyers are following closely. Contact us to learn more.

The Thomson Reuters Case Study

In February 2025, a federal judge in Delaware issued a closely watched opinion in Thomson Reuters Enterprise Centre GmbH v. ROSS Intelligence Inc. The case involved an AI startup that used Westlaw headnotes to build a legal research tool. The court concluded that ROSS infringed on Thomson Reuters’ copyrights, finding that its reliance on fair use was legally insufficient.

The ruling said that copying large volumes of headnotes was not justified under the doctrine, and the judge emphasized the competitive relationship between ROSS’s product and Westlaw’s own services. Market harm, traditionally the fourth factor of the fair use test, was deemed relevant, and the decision favored Thomson Reuters.

Rethinking Transformative Use

Tech companies have argued that training a model transforms copyrighted content into something fundamentally different. Courts, however, are asking whether the training itself serves a truly distinct purpose from the original material, rather than focusing only on the outputs an AI system generates.

In the Thomson Reuters case, the court analogized the creation of headnotes to artistic judgment, rejecting the idea that their factual connection to judicial opinions stripped them of protection. This approach broadens what courts may view as creative expression and increases the scope of materials shielded by copyright.

Industry Reactions to AI Fair Use

In light of these rulings, some AI developers are abandoning reliance on fair use and instead negotiating licenses with content owners. Publishers, and news organizations are beginning to license libraries of material to AI companies, and Big tech is hoping these agreements reduce litigation risk.

AI firms claim training merely extracts statistical patterns and does not reproduce works in a meaningful sense. Others emphasize public benefits of AI innovation, likening training to research rather than commercial interests.

The U.S. Copyright Office has suggested that ingesting copyrighted material to train AI could itself be an infringing act. The risk grows stronger if model outputs bear resemblance to training data.

In a separate case, the AI company Anthropic successfully settled copyright claims brought by authors. That ruling offered a different take on fair use, showing how fact-specific these cases can be.

Copyright Claims in Music and Publishing

Musicians and software developers have long battled over where to draw the line between inspiration and infringement. The AI cases may prove to be the modern equivalent of sampling disputes in music or digital copying controversies from the early internet era.

Why Hire The Lyon Firm

AI copyright lawsuits are legally complex and are evolving faster than most areas of intellectual property law. For artists and creators, it is prudent to hire a knowledgable attorney.

Each AI dispute is unique, and we tailor our legal approach to the facts of your case. We believe creators deserve to be compensated for their work, and we work on your behalf to fight for maximum compensation.