Speaker 1: This is Bloomberg Law with June Brosso from Bloomberg Radio.
Speaker 2: The Federal Trade Commission and seventeen states are suing Amazon
Speaker 2: over allegations the e commerce giant abuses its position in
Speaker 2: the marketplace to inflate prices on and off its platform,
Speaker 2: overcharged sellers, and stifle competition. The lawsuit is one of
Speaker 2: the most significant legal challenges brought against Amazon in its
Speaker 2: nearly thirty year history, accusing it of monopolizing online marketplace
Speaker 2: services by degrading quality for shoppers and overcharging sellers. The
Speaker 2: case also represents a career defining moment for FTC Chair
Speaker 2: Lena Khan, whose long had Amazon in her sights.
Speaker 3: So this case is entirely pro business. It is tens
Speaker 3: of thousands of businesses that are dependent on Amazon to
Speaker 3: reach shoppers that increasingly are paying one out of every
Speaker 3: two two dollars, as well as being subjected to all
Speaker 3: sorts of arbitrary tactics. So we believe that this lawsuit
Speaker 3: of where successful will actually entirely restore the promise of
Speaker 3: free competition. Our free enterprise system is one where a
Speaker 3: companies should be competing on the merits and not be
Speaker 3: able to protect their monopoly power through illegal tactics.
Speaker 2: Joining me is Jennifer Ree, Bloomberg Intelligence Senior litigation analyst,
Speaker 2: jen this lawsuit comes as no surprise.
Speaker 1: Oh not at all.
Speaker 4: I mean, we've all been expecting this for years. The
Speaker 4: investigation of Amazon actually started during Trump's FTC and it
Speaker 4: was already ongoing when the chair, the current chair, Lina Kahan,
Speaker 4: took her position, which was back in twenty twenty one.
Speaker 4: And when she did, I mean, it was sort of
Speaker 4: widely thought that she was hired partially because of her
Speaker 4: very overt outspoken antagonism toward Amazon. She had written a
Speaker 4: long article in twenty seventeen while in law school or
Speaker 4: at least for the Yale Law Journal, basically saying that
Speaker 4: she thought that Amazon behaved as an anti competitive monopoly.
Speaker 1: So this is no surprise at all.
Speaker 2: So tell us what the FTC and the seventeen states
Speaker 2: are accusing Amazon of.
Speaker 4: You know, they're really focusing on it's marketplace, right, because
Speaker 4: Amazon has other businesses outside of what we as consumers
Speaker 4: know of Amazon, So they're focusing on the way Amazon
Speaker 4: treats sellers. And they're essentially saying that some of the
Speaker 4: policies and some of the conditions they impose on these sellers.
Speaker 4: One cause prices outside of Amazon to go up. In
Speaker 4: other words, sellers if they discount a product where they're
Speaker 4: selling somewhere outside of Amazon more so than they have
Speaker 4: on Amazon, haven't offered Amazon the lowest price that they offer,
Speaker 4: that that seller then gets punished. That's one thing. And
Speaker 4: they also allege that Amazon punishes sellers by sort of
Speaker 4: pushing them down in search results or taking them out
Speaker 4: of the buybox if they don't use Amazon's fulfillment services.
Speaker 4: That's using Amazon to store the product package of the
Speaker 4: product and send the product when somebody buys it. So
Speaker 4: it's really all about sort of unfair treatment of the
Speaker 4: sellers that are on the marketplace.
Speaker 2: And it's really important where you are in those Amazon
Speaker 2: on searches, because a lot of people don't get past
Speaker 2: the first two or three. Lena Khan said Amazon is
Speaker 2: a monopolist and is exploiting its monopolies in ways that
Speaker 2: leave shoppers and sellers paying more for worse service. But
Speaker 2: are shoppers paying more because I find that the prices
Speaker 2: on Amazon are often cheaper than they are elsewhere.
Speaker 4: Well, of course, that's exactly what Amazon's defense is going
Speaker 4: to be no. We offer convenience and speed and low prices.
Speaker 4: And part of the reason that we have some of
Speaker 4: our policies in place that require these sellers on our
Speaker 4: platform to provide the lowest price on Amazon is because
Speaker 4: that's what our consumers expect.
Speaker 1: That's what we've.
Speaker 4: Held ourselves out to be the lowest price that you
Speaker 4: can get out there in the marketplace.
Speaker 1: And this is pro.
Speaker 4: Competitive, not anti competitive. But on the other side, you know,
Speaker 4: there may be some evidence that because it's a little
Speaker 4: more expensive for a company to sell a product on
Speaker 4: Amazon than some other website, let's say Etsy or their
Speaker 4: own proprietary website, that they end up raising the price
Speaker 4: outside of Amazon on those websites because if they have
Speaker 4: to offer the lowest price on Amazon, they don't want
Speaker 4: to kill their margins selling on Amazon. So instead of
Speaker 4: lowering their price everywhere, they're increasing it outside. So people
Speaker 4: who bought that product outside of Amazon are actually paying
Speaker 4: a higher price. And I think that's part of the
Speaker 4: allegation of the increased prices.
Speaker 2: Amazon is a monopolist. Is that accepted that it's a
Speaker 2: monopolist or not?
Speaker 1: You know, yes and no.
Speaker 4: The thing about it address law is whether or not
Speaker 4: you're a monopolist all depends on how the market's defined.
Speaker 4: You have to look at the contours of the market.
Speaker 4: What is the market you're competing in now?
Speaker 1: I think the FTC in this lawsuit's basically.
Speaker 4: Provided two market definitions. One is the consumer side. It's
Speaker 4: a broad online marketplace to buy all sorts of goods,
Speaker 4: and the other one it's a broad online marketplace for
Speaker 4: sellers to sell all their goods. Two pieces of the market.
Speaker 4: And I suppose if that is accepted as the relevant
Speaker 4: market by the court, then you might be able to
Speaker 4: argue that they're a monopolist, that they have monopoly power.
Speaker 4: But the fact of the matter is that I at
Speaker 4: least haven't yet seeing it defined that way. I've seen
Speaker 4: market definitions like an online seller of ebooks right that
Speaker 4: they have monopoly power in ebook sales, or they have
Speaker 4: monopoly power in certain segments. Because for each of these
Speaker 4: items that Amazon sells, there are alternatives, and those alternatives
Speaker 4: may be different depending on what type of item it is.
Speaker 4: They may be broader, they may be narrower, depending on
Speaker 4: the items. So it's going to depend on how that
Speaker 4: market's defined, and that's something the FTC is actually going
Speaker 4: to have to support and prove in this trial the
Speaker 4: proper definition of the market.
Speaker 2: I mean, if you had to be on one side
Speaker 2: of this case, would you rather be on the FTC
Speaker 2: side or would you rather be on Amazon side?
Speaker 4: You know, I think I'd rather be on Amazon side.
Speaker 4: And the reason I say that is because I think
Speaker 4: this is a tough case for the FTC to win
Speaker 4: to start, And I'm not saying that they can't because
Speaker 4: facts matter, and we don't know what the facts and
Speaker 4: the evidence are yet. It will matter what they prove
Speaker 4: in court, what the experts say, and what the testimony is,
Speaker 4: and what Amazon's documents look like. But I think the
Speaker 4: reason I ultimately come down on Amazon side is because
Speaker 4: I don't think if liabilities proven that ultimately those remedies
Speaker 4: are going to be particularly drastic. I don't really see
Speaker 4: a structural breakup. What I think will happen are behavioral changes.
Speaker 1: Amazon.
Speaker 4: You simply can't do this anymore. You can't push a
Speaker 4: seller way down in the search results simply because they
Speaker 4: don't use your fulfillment surfaces, or you can't force them
Speaker 4: to provide the lowest price on Amazon dot Com, and
Speaker 4: very Interestingly, Amazon's already promised to do most of that
Speaker 4: in the UK and in the EU, so it clearly
Speaker 4: is willing to change some of its rules and change
Speaker 4: some of the way it treats sellers in order to
Speaker 4: make these lawsuits go away. But the FDC didn't accept
Speaker 4: those concessions.
Speaker 2: But the FDC in this suit, unlike even mentioning it
Speaker 2: in the Google suit, is not seeking a breakup of Amazon.
Speaker 1: Well, we don't really know yet.
Speaker 4: I'd say that they haven't specifically said that, but their
Speaker 4: language is vague. You know, they're asking for a permanent
Speaker 4: injunction and they're asking for the court to do what
Speaker 4: it needs to do to stop the monopolistic conduct. And
Speaker 4: really what that means is it gives them leeway down
Speaker 4: the road after liability is proven, because that's obviously the
Speaker 4: first step to actually seek a remedy, which is a breakup.
Speaker 4: And normally when these kinds of cases are brought by
Speaker 4: the DOJ or by the FDC, they don't explicitly state
Speaker 4: what they're looking for in a remedy early on. That
Speaker 4: comes later, and I think they still could ask for
Speaker 4: something like that.
Speaker 2: So Amazon's general counsel said, if the FTC gets its way,
Speaker 2: the result would be fewer products to choose from, higher prices,
Speaker 2: slower deliveries for consumers, and reduced options for small businesses,
Speaker 2: the opposite of what antitrust law is designed to do.
Speaker 2: And that's what I'm saying about. How can you beat
Speaker 2: Amazon for like getting it to you the next day?
Speaker 4: Well, you know this is why I say, I think
Speaker 4: this is an uphill climb for the FDC. It's really
Speaker 4: difficult to argue against the pro competitive aspects of the company.
Speaker 4: I mean, it has created a very efficient, very consumer
Speaker 4: friendly marketplace essentially that consumers love. They do get low prices,
Speaker 4: they do get speed delivery. They makes it very easy.
Speaker 4: There's one stop shopping, this is all and returns and
Speaker 4: returns exactly and a lot of help by the way,
Speaker 4: when there's an issue with the product.
Speaker 1: Because I've done that myself.
Speaker 4: So I think that when you look at monopolization cases,
Speaker 4: they're based.
Speaker 1: On a reasonableness standard. So what a judge has to do.
Speaker 4: Is they have to weigh sort of the harm against
Speaker 4: the pro competitive side, and whichever side wins out, that's
Speaker 4: where you land whether you violate the law or not.
Speaker 4: Is it a reasonable or unreasonable restraint of trade that
Speaker 4: we're looking at. And I think that when you have
Speaker 4: strong pro competitive justifications for what you're doing, it makes
Speaker 4: it harder for a plaintiff, even the FTC, to win
Speaker 4: a case. And so I think you just put your
Speaker 4: finger on the head of what the issue is here.
Speaker 2: Is this the third time that the FTC is suing
Speaker 2: Amazon this year or recently.
Speaker 1: Something like that.
Speaker 4: The other suits are all consumer protection suits, so this
Speaker 4: is their first antitrust suit against Amazon. The others had
Speaker 4: to were on their consumer protection side. Quite differ from this.
Speaker 2: Fewer states joined the Amazon suit than the Justice Department
Speaker 2: suit against Google or the FTC's earlier suit against Meta.
Speaker 2: Is there a reason for that?
Speaker 1: You know, It's very difficult to say.
Speaker 4: The states probably were all asked, and they weigh the
Speaker 4: pros and cons of being part of a suit. They
Speaker 4: tend to be more political the state attorney's general, let's say,
Speaker 4: than the FTC, I think, and some of them may
Speaker 4: be more concerned about consumer perception here that consumers tend
Speaker 4: to really like Amazon, whereas I think the perception about
Speaker 4: Google is maybe less positive generally when you look at
Speaker 4: consumer polls, and they also do see the pro competitive
Speaker 4: side of Amazon's business. So I think that's probably why
Speaker 4: you see fewer states joining here than in the Google case,
Speaker 4: but they could still join going forward.
Speaker 2: You know, it's been in business thirty years. Do you
Speaker 2: think the Amazon sees this as a real threat to
Speaker 2: its business?
Speaker 4: You know, I think that anytime you're sued by the
Speaker 4: Federal Trade Commission, it's a risk, right and your documents,
Speaker 4: your information, your executives are exposed what's mostly public trial,
Speaker 4: it's always a risk, and it can bring bad pr
Speaker 4: to the company. You know, there certainly have to be
Speaker 4: somewhat unhappy about it, but I don't think they view
Speaker 4: it as a long term major risk to the company.
Speaker 2: Talking about Lena Kahan, and they have tried to get
Speaker 2: her recused from the cases against them, right, Yes, didn't work.
Speaker 1: You know, it didn't work.
Speaker 4: So they got tried to get her recused because it
Speaker 4: was clear what her position was about Amazon back in
Speaker 4: twenty seventeen. And that's why we've all expected this lawsuit
Speaker 4: for so long, because we knew that her view was
Speaker 4: that this company behaves illegally in an anti competitive manner.
Speaker 4: The issue is that she's not the one who's going
Speaker 4: to make this decision. This is in federal court, so
Speaker 4: she's acting as a prosecutor, and when you act as
Speaker 4: a prosecutor, that is what you do.
Speaker 1: You know, if she.
Speaker 4: Did a new investigation of Amazon looking at the same
Speaker 4: facts that she looked at three years ago, I don't
Speaker 4: think she'd come out any Differently. Where a lawsuit is
Speaker 4: brought internally at the FTC, that can be a different
Speaker 4: matter because ultimately the Commissioners are the appellate panel for that,
Speaker 4: an administrative law judge makes the first decision and.
Speaker 1: Then the commissioners.
Speaker 4: The appeal goes to the commissioners and they are acting
Speaker 4: as judge. And in that kind of an instance, I
Speaker 4: think it would have been different with respect to recusal.
Speaker 4: But in this instance, where it's out of her hands
Speaker 4: now she's just prosecuting, presenting the facts, presenting evidence. Some
Speaker 4: other party. The judge in this case will make the decision.
Speaker 4: I think it's less impactful.
Speaker 2: Earlier this year, the FTC challenged Meta acquiring the virtual
Speaker 2: reality company Within and lost that. FTC also lost a
Speaker 2: similar suit attempting to block Microsoft's acquisition of Activision. So
Speaker 2: how much will this case define Lena Khan's career?
Speaker 4: You know, I think those two cases are quite different
Speaker 4: from this one, different standards. They were pursued under a
Speaker 4: different antitrust statute, and to be fair, by the way,
Speaker 4: the FTC is still appealing the Microsoft activision decision, so
Speaker 4: it's not completely finished yet, even though I do think
Speaker 4: the companies will be able to close that deal. I
Speaker 4: think these more than those, this one, this Amazon case
Speaker 4: more so than those two, because it's just a long
Speaker 4: time coming, and it's been her goal to try to
Speaker 4: pull the way antitrust laws have been interpreted back to
Speaker 4: the way they were interpreted more like in the nineteen sixties.
Speaker 4: You know, there was a big change in the nineteen
Speaker 4: seventies and nineteen eighties and the way the antitrust laws
Speaker 4: were interpreted and then in the way that enforcement played out.
Speaker 4: And her view is that because of that change, anti
Speaker 4: trust enforcement became too lenient and too lax, and that
Speaker 4: we have to go back to where we were sometime
Speaker 4: before the nineteen seventies, where we really looked at market structure.
Speaker 4: It just made a presumption that if a market was concentrated,
Speaker 4: it was likely to cause harm to consumers, rather than
Speaker 4: looking at whether prices to consumers are going up or
Speaker 4: output is getting low, but putting the structure aside. So
Speaker 4: even if it's an oligopolistic structure, so long as prices
Speaker 4: to consumers are low and output stays up, we're okay.
Speaker 4: And she's trying to bring it back to where it was.
Speaker 4: And I think this suit is a big step in
Speaker 4: that direction, as those two merger suits were, but they
Speaker 4: were sort of baby steps.
Speaker 2: This is a big step and we'll see just how
Speaker 2: this big step goes for the FTC. Thanks so much, Jen,
Speaker 2: that's Bloomberg Intelligence Senior Litigation analyst, Jennifer Ree.
Speaker 5: I will be working alongside humans to provide assistance and
Speaker 5: support and will not be replacing any existing jobs. Sure
Speaker 5: about that, Gus, Yes, I am sure.
Speaker 2: It was the first human robot press conference. In July,
Speaker 2: a United Nations tech agency assembled a group of robots
Speaker 2: that look like humans to answer reporters questions about the
Speaker 2: future of artificial intelligence.
Speaker 6: I think my great moment will be when people realize
Speaker 6: that robots like me can be you to help improve
Speaker 6: our lives and make the world a better place. I
Speaker 6: believe it's only a matter of time before we see
Speaker 6: thousands of rombots just like me out there making a difference.
Speaker 2: That time is already here in many respects. Apple's Siri
Speaker 2: has been responding to your questions for more than a decade,
Speaker 2: and the release last year of chat GPT has opened
Speaker 2: a worldwide debate about artificial intelligence and led to the
Speaker 2: filing of lawsuits over intellectual property rights. The latest a
Speaker 2: proposed class action by more than a dozen well known authors,
Speaker 2: including John Grisham and George R. R. Martin, against open
Speaker 2: Ai for copyright infringement, calling its chat GPT program a
Speaker 2: massive commercial enterprise that relies on systematic theft on a
Speaker 2: mass scale. My guest is intellectual property litigator Terence Ross,
Speaker 2: a partner at Katin Yuchen Rosenmann. This is, I believe,
Speaker 2: the third lawsuit like this over chat GPT. What's about
Speaker 2: the complaint?
Speaker 7: So, this particular lawsuit is brought by the Author's Guild,
Speaker 7: which is association that represents authors for various reasons, and
Speaker 7: here they have taken the position that open AI's chat GPT,
Speaker 7: which is an artificial intelligence system with a learning module
Speaker 7: built in so that it can actually improve its ability
Speaker 7: to function by learning. But the Author's Guild has alleged
Speaker 7: that feeding the chat GPT the works of its authors
Speaker 7: to help it learn, and then the chat GPT using
Speaker 7: that to answer queries, which often involves quoting passages from
Speaker 7: the author's works, is a copyright infringement. And the lawsuit
Speaker 7: is brought as a class action on behalf of a
Speaker 7: very large class of authors here in the United States,
Speaker 7: and it'll have to be determined at some subsequent date
Speaker 7: during the legation whether or not it's a legitimate class
Speaker 7: action or not. But it's a sally all the authors
Speaker 7: in the United States suing open Ai, the owner of
Speaker 7: chat GPT, over how they're using the author's works through
Speaker 7: chat GPT.
Speaker 2: In another suit brought by authors last month, open Ai
Speaker 2: move to dismiss the complaint and argued that the training
Speaker 2: basically constitutes fair use. So it seems like their defense
Speaker 2: is going to be fair use.
Speaker 7: That's absolutely correct, and a fair use's statutory provision in
Speaker 7: the Copyright Act of nineteen seventy six that provides that
Speaker 7: in certain instances, copyright work can be used for secondary
Speaker 7: purposes that society deems as worthwhile useful. You know, the
Speaker 7: most important from your perspective is for news gathering and
Speaker 7: news broadcasting. But teaching is one of the expressly listed
Speaker 7: peeps of uses secondary uses that would be considered fair use.
Speaker 7: And it's a very interesting defense. Now, the statute Section
Speaker 7: one US the Copyright Act actually says nonprofit educational purposes,
Speaker 7: and that may pose a problem to open AI because
Speaker 7: I'm not sure if this would legitimately qualifies a nonprofit
Speaker 7: educational purpose or not. But it's a colorable defense.
Speaker 2: Quite Frankly, we talked last term about the Supreme Court's
Speaker 2: decision in the Warhol case that rained in the scope
Speaker 2: of fair use. So do you think that courts are
Speaker 2: likely to maybe rein in fair use in this case?
Speaker 7: So I'm not sure that the Warhol case is going
Speaker 7: to have any impact on this case whatsoever. I think
Speaker 7: the Warhol case does reign in the uses of the defense,
Speaker 7: the fair use on the margins. But as I understand
Speaker 7: the defense being raised by open AI in these lawsuits,
Speaker 7: it's really the core of fair use. You know, the
Speaker 7: statute was intended to protect certain types of secondary uses,
Speaker 7: and it listed examples of them. It's not all encompassing,
Speaker 7: it's not exclusive list, but one of the expressly listed
Speaker 7: purposes and nonprofit educational purposes, and therefore this is at
Speaker 7: the core of the fair use doctrine, and I really
Speaker 7: don't see how the Andy Warhol case will limit that anyway.
Speaker 2: The authors claim that chat gpt can produce works that
Speaker 2: mimic their books, and there are businesses that sell prompts
Speaker 2: allowing users to create what's essentially works of fan fiction.
Speaker 7: That's exactly what the concern here is. And in one sense,
Speaker 7: the fair use defense being raised by OpenAI is really diversionary.
Speaker 7: They are saying that they are feeding all of this
Speaker 7: data into chat gpt so that it learns, and part
Speaker 7: of that process of feeding data into it is feeding
Speaker 7: into the machine entire novel as well as fact based
Speaker 7: works which have lower copyright protection. That's all being fed
Speaker 7: in purportedly so that the machine learned. The problem is
Speaker 7: less with that, in my view, than what happens after
Speaker 7: it learns. It's the output of chat GPT that is
Speaker 7: the problem. And when it, in response to queries quotes
Speaker 7: copyright it works, or on behalf of a query from
Speaker 7: an individual, creates a purportedly original work that incorporates copyrighted
Speaker 7: language or large portion of a copyright work, that copyright
Speaker 7: infringement in the classic sense straight up and up copying,
Speaker 7: and that is the core problem here, that there is
Speaker 7: no apparent restraint on chat gpt from doing that in
Speaker 7: response to queries from individual users of the machine.
Speaker 2: And there's also a question of whether you can get
Speaker 2: a copyright on works created by artificial intelligence, and there
Speaker 2: was an interesting first time ruling on that by DC
Speaker 2: Federal Judge Beryl Howell tell us about that.
Speaker 7: So the whole area of artificial intelligence is raising a
Speaker 7: host of problems for intellectual property laws. The Author's guild
Speaker 7: lawsuit against Open AI is one aspect of that. Another
Speaker 7: aspect is whether the creations of chat GPT or other
Speaker 7: AI type machine is protected by intellectual property. And so
Speaker 7: a gentleman by the name of Stephen Taller has an
Speaker 7: AI system that he refers to as the Creativity Machine,
Speaker 7: and it created, according to him, an autonomously generated piece
Speaker 7: of visual art. I eat, a painting which the machine
Speaker 7: entitled a recent entrance to paratus. It's actually quite attractive painting.
Speaker 7: And mister Taller applied for copyright registration with the United
Speaker 7: States Copyright Office on behalf of the Creativity Machine, reporting
Speaker 7: to the Copyright Office that the painting had been autonomously
Speaker 7: generated by his AI machine, and the Copyright Office rejected
Speaker 7: that application on the grounds that copyright only protects creations
Speaker 7: by human beings. Mister Toller appealed that ruling to the
Speaker 7: United States District Court for the District Columbia, where the
Speaker 7: Copyright Office is based, and that court just issued a
Speaker 7: very important opinion of first impression saying that artificial intelligence
Speaker 7: is not entitled to claim copyright in anything it quote
Speaker 7: unquote creates, going further to say that human authorship is
Speaker 7: an essential, unrequired part for a valid copyright claim. It's
Speaker 7: a very important decision in this field of artificial intelligent
Speaker 7: will almost certainly be appealed to the DC Circuit.
Speaker 2: I mean, was the judge on solid ground.
Speaker 7: So Judge Howell's decision is actually really quite good. The
Speaker 7: DC courts do not often see copyright cases. It's just
Speaker 7: simple fact. We've talked about this before. The bulk of
Speaker 7: copyright cases come from the Second Circuit of New York
Speaker 7: in the Ninth Circuit California, specifically Los Angeles. And so
Speaker 7: this was usual and so really outstanding decision by Judge
Speaker 7: how in which she lays out the history of copyright
Speaker 7: in the United States. So she points out that James
Speaker 7: Madison in the Federalist papers referred to authors as beating persons.
Speaker 7: And that's important because after we actually got the government
Speaker 7: up and running, he was a congressman in the House Representatives,
Speaker 7: he was on the committee that drafted the first Copyright Act.
Speaker 7: That Copyright Act, very first Act uses words like executor, administrator, administrate,
Speaker 7: takes he, she, which seems to imply that copyright is
Speaker 7: held by humans. The nineteen oh nine Copyright Act expressly
Speaker 7: described the right a quartered by copyright as going to
Speaker 7: a person. The nineteen seventy six Act, the one we
Speaker 7: currently operate under, has multiple references to people. For example,
Speaker 7: Section two three the Copyright Act sss when an author
Speaker 7: is dead, and that's a quote that's implying that the
Speaker 7: author has to be a human. It uses the terms widow, widow, we'er,
Speaker 7: surviving children in connection with succession of ownership of copyright.
Speaker 7: These are all indications that Sugg points to in the
Speaker 7: history of copyright that indicate that copyright is limited to
Speaker 7: human beings. Of course, we had that famous case a
Speaker 7: couple of years ago I have I think it was
Speaker 7: a ninth circuit, the Rudo versus Slater about a monkey selfie.
Speaker 7: A monkey had somehow I guess accidentally triggered a camera
Speaker 7: and taken a picture of himself. And the ninth Circuits
Speaker 7: that know that doesn't work. That human beings have to
Speaker 7: be people who get copyright. So there is this case
Speaker 7: law as well as the text of the language of
Speaker 7: the statue which supports this notion that it has to
Speaker 7: be you would be something. You know, we've had this
Speaker 7: long history of copyright having to deal with new technology.
Speaker 7: When fortography first came around, there was lots of questions
Speaker 7: about whether a photograph was copyrightable, and the Supreme Court said, yeah,
Speaker 7: it is because there's a human who's involved in controlling
Speaker 7: the process and making decisions like lighting poses, you know,
Speaker 7: how to develop it. And that was sufficient human involvement
Speaker 7: to justify photographs being copyrightable. And more reason, they's computer programming.
Speaker 7: The human being writes something called source code, computer then
Speaker 7: translates that into object code, which is quote unquote machine
Speaker 7: readable code, so the computer can actually process the bits
Speaker 7: and bytes you know, one zero zero one one zero.
Speaker 7: And the supports have said, well, that again involves human
Speaker 7: development and control, and the computer is merely translating the
Speaker 7: human actions into machine readable code, and so that's copyrightable.
Speaker 7: But now we're at a point where we're saying, at
Speaker 7: least in this case, that there was no human interaction,
Speaker 7: that this painting was a comanimously generated by an AI machine.
Speaker 7: And Judge Hall makes an important point that human activity
Speaker 7: is required even when technology is used to some extent.
Speaker 7: Praises a lot of questions for a future. But I
Speaker 7: think there's a decision score easily hold up on appeal Terry.
Speaker 2: I'm curious. So when Taylor made the application of the
Speaker 2: Copyright Office, was it in his name? He was asking
Speaker 2: for a copyright for himself.
Speaker 7: No, he was asking for a copyright on behalf of
Speaker 7: his creativity machine. He was asking for a copyright on
Speaker 7: behalf of the AI. Now, interesting thing happened after this
Speaker 7: case came out of the Copyright Office and was taken
Speaker 7: to the District Court in DC. All of a sudden,
Speaker 7: mister Taller started talking about well he issued prompts to
Speaker 7: the AI machine to do this, and Judge Howell said, well,
Speaker 7: that's not the record before me. The record before me
Speaker 7: is you reported to the Copyright Office that the AI
Speaker 7: autonomously generated this painting, and under that set of facts.
Speaker 7: There's no copyright issue because machines can't get copyrights on
Speaker 7: the humans can. But it leaves open this question, and
Speaker 7: one of my colleagues here kat has argued that there
Speaker 7: may be a point at which there are so many
Speaker 7: human prompts to the AI that the resulting work is
Speaker 7: copyrightable because it fits into this notion in the history
Speaker 7: of copyright that some human activity and control is required. Now,
Speaker 7: the question is how much of that is going to
Speaker 7: be acquired in context of ag on a few prompts.
Speaker 7: Probably isn't going to be good enough. So talking about
Speaker 7: the author's guilt case, if some high school student says,
Speaker 7: write an essay for me, and the machine writes the essay,
Speaker 7: is that sufficient of a human propt? Probably not, And
Speaker 7: to the extent that it then just regurgitates something from
Speaker 7: a copyrighted novel that's out there, such as John Grisham's work,
Speaker 7: that would indeed be copyright infringement on the part of
Speaker 7: both the student and the AI machine. So I don't
Speaker 7: know where the courts are going to draw that line,
Speaker 7: or whether they will at all, Whether the to say
Speaker 7: no AI is never going to be entitled to copyright
Speaker 7: the registration or at some point they say, well, if
Speaker 7: you give it a thousand commands, maybe that's sufficient to
Speaker 7: get you. You, not the AI, but the individual who
Speaker 7: gave the commands a copyright registration.
Speaker 2: Had there been a lot of other federal court judges
Speaker 2: ruling on AI and copyright.
Speaker 7: This is the first of its kind. We lawyers call
Speaker 7: it a case of first impression. And why it's so
Speaker 7: unusual that it's here in the District of Columbia instead
Speaker 7: of New York or Central District, California or Los Angeles
Speaker 7: is that the Copyright Office is located here in DC,
Speaker 7: and so you take appeals from their decisions to the
Speaker 7: DC District Court and it work itself up to the
Speaker 7: DC Circuit Court, which gets a copyright case maybe every
Speaker 7: other year. So again they'll be writing on blank slate,
Speaker 7: and I assume this will go all the way up
Speaker 7: to the Supreme Court eventually, and we'll see what they say.
Speaker 2: Coming up next, I'll continue this conversation with Terrence Ross
Speaker 2: and we'll talk about patents and artificial intelligence. I'm Jim Gross,
Speaker 2: and you're listening to Bloomberg. I've been talking to Terrence
Speaker 2: Ross of Katin Yuchen Rosaman about intellectual property and artificial intelligence.
Speaker 2: This is copyright? How is patent law handling AI?
Speaker 7: The issues of artificial intelligence are not limited to the
Speaker 7: copyright realm. The same gentleman whose AI created work was
Speaker 7: involved here, Stephen Tholer, had previously applied for a patent
Speaker 7: with the United States Patent and Trademark Office on what
Speaker 7: he claimed was an invention developed by an artificial intelligence,
Speaker 7: and the Patent Office follows similar route to the Copyright
Speaker 7: Office and said that no, machines can't be inventors for
Speaker 7: purposes of the patent laws, only humans can and rejected
Speaker 7: the patent application. He took that on appeal to the
Speaker 7: United States Cord of Appeals for the Federal Circuit, which
Speaker 7: is where you appealed decisions of the the Patent Office,
Speaker 7: and the Federal Circuit agreed on with the United States
Speaker 7: Patent Office and said only humans can be inventors for
Speaker 7: purposes of patents and affirm the decision the Patent Office.
Speaker 7: Mister Poler, apparently having unlimited resources, then filed a petition
Speaker 7: for rit asserts sory on that decision with the United
Speaker 7: States Supreme Court, which just this past spring denied that petition.
Speaker 7: So the law is on the patent side the same
Speaker 7: as on copyright side, that humans are the only ones
Speaker 7: who can be listed as inventors on patents. And he
Speaker 7: goes back for in a time. Every now and then
Speaker 7: corporation supply make the mistake of applying for a patent
Speaker 7: in the corporate name, and the patent offices no, no, no, no.
Speaker 7: The only the inventor, the human can. They can then
Speaker 7: assign the patent to the corporation. But corporations can't be inventors.
Speaker 7: Only individuals can. So it's consistent with past patent office practice,
Speaker 7: it's consistent with the approach taking and copy right. So
Speaker 7: we're starting to see this evolution within intellectual property that
Speaker 7: comes to the same point, which is that only humans
Speaker 7: are entitled to intellectual property rights in the United States.
Speaker 2: What about these robots that have the characteristics of humans?
Speaker 2: Can you get a patent on those?
Speaker 7: Inventors can get patents on an artificial intelligence system, just
Speaker 7: as they can get a patent on most other computer software.
Speaker 7: AI is usually more than just software. It's usually some
Speaker 7: sort of system, so there may be a method patent
Speaker 7: as well as utility patent on it. But no, I'm
Speaker 7: actually representing someone right now who has obtained a patent
Speaker 7: in the AI field. That the really interesting question, though,
Speaker 7: is this we're using. We're seeing the use of artificial
Speaker 7: intelligence in a lot of activities that traditionally are considered creative.
Speaker 7: One example is encoding writing software programs. There are now
Speaker 7: artificial intelligence programs that help programmers to write code. You
Speaker 7: set up a framework, you say I want to do
Speaker 7: this in this section of the program, and the AI
Speaker 7: writes that code. Similarly, in Hollywood, we see movies and
Speaker 7: television artificial intelligence doing special effects and providing and being
Speaker 7: involved in some elements of a production. Indeed, the recent
Speaker 7: writers strike and Actors strike had at their core demand
Speaker 7: by the unions that AI be prohibited in movies intelevision.
Speaker 7: But in both these contexts and the use of AI
Speaker 7: to help encoding, the use of AI to help in
Speaker 7: film and television. Now that we know that AI generated
Speaker 7: work is not copyrightable, what impact does that legally have
Speaker 7: upon the computer programs, the motion pictures, the television shows
Speaker 7: that have used artificial intelligence as part of the creative process.
Speaker 7: All of a sudden is Star Wars deprived of its
Speaker 7: copyright because artificial intelligence machine helped on portions of it
Speaker 7: is a software program or a video game, which is
Speaker 7: essentially software program. Are they because they have used AI
Speaker 7: to help in the coding, have they lost their copyright?
Speaker 7: I mean, this is a really important legal issue that
Speaker 7: a lot of companies rushing to use AI have not
Speaker 7: considered the questions whether in the act of employing A
Speaker 7: help in the creation of your work, you're losing the
Speaker 7: ability to obtain copyrights. I mean, this is for studios.
Speaker 7: This should be something that's on the front page of
Speaker 7: their agenda of things to think about. This has to
Speaker 7: be on their radar screen. Have never understood why they
Speaker 7: were so opposed to the union demands on artificial intelligence,
Speaker 7: because in a fact, by incorporating AI, they're taking away
Speaker 7: the most valuable asset they have, their copyrights in their
Speaker 7: motion picture and it's something that's you don't hear much
Speaker 7: discussion about.
Speaker 2: Maybe that will be the next topic we hear a
Speaker 2: lot about. Thanks so much, Terry. That's Terrence Ross of
Speaker 2: Catain Euchen Rosenman, And that's it for this edition of
Speaker 2: the Bloomberg Law Show. Remember you can always get the
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