AI Copyright Litigation Update: Recent Rulings in Consolidated Cases Against OpenAI and Microsoft
Recent Activity in the Consolidated AI Lawsuits
Recent activity in the consolidated AI lawsuits brought by various authors, the New York Times, and others, against Open AI and Microsoft involves rulings by the magistrate judge on various discovery disputes among the various parties. The central allegations in the consolidated cases involve claims that OpenAI, Microsoft, and others committed direct copyright infringement by accessing and copying copyrighted material for the purposes of training each defendant’s given AI model.
Key Court Rulings in the AI Copyright Litigation Against OpenAI and Microsoft
In recent opinions issued in late November and early December, Magistrate Judge Ona Wang ruled in favor of the authors and newspaper Plaintiffs in the consolidated cases on two important points: (1) whether California Labor Code § 980 prohibits Open AI and Microsoft from gathering and producing work-related text and direct messages sent by their employers using their personal social media accounts; and (2) the discoverability of the New York Times’ use of its own and third-party Gen AI tools as well as the Times’ position on the use of Gen AI in general.
California Labor Code § 980 Does Not Bar All Discovery from Employee Social Media Accounts
As to the first dispute regarding California Labor Code § 980, the Plaintiffs sought to compel Open AI and Microsoft to produce work-related text and direct messages sent by Open AI and Microsoft employees using their personal social media accounts, including on X (formerly Twitter). In response to these discovery requests, Open AI and Microsoft both cited in part to California Labor Code § 980 as preventing them from requesting, gathering, and producing the employee text and direct messages sent through social media and asserting that, as a consequence of the prohibition, Open AI and Microsoft do not have “possession, custody, or control” of the requested information.
§ 980 provides, in relevant part, as follows:
(b) An employer shall not require or request an employee or applicant for employment to do any of the following:
Disclose a username or password for the purpose of accessing personal social media.
Access personal social media in the presence of the employer.
Divulge any personal social media, except as provided in subdivision (c).
(c) Nothing in this section shall affect an employer’s existing rights and obligations to request an employee to divulge personal social media reasonably believed to be relevant to an investigation of allegations of employee misconduct or employee violation of applicable laws and regulations, provided that the social media is used solely for purposes of that investigation or a related proceeding.
Cal. Labor Code § 980. In reviewing this matter of first impression, Magistrate Judge Wang first noted that “[t]he purpose of § 980 is to prevent employers from asking for and maintaining continued access to employees’ personal social media accounts (i.e. by turning over their usernames and passwords) as a condition of employment.” Wang then concluded, “nothing in the statute suggests that Open AI cannot ask for, collect, and produce in discovery messages sent by their employees for work purposes just because those messages were sent via social media.” To hold otherwise, the Court noted, would allow companies in California to permanently hide discoverable message from litigation by sending them on so-called “personal” social media accounts and “would stymie federal litigation.” The Court therefore held that California Labor Code § 980 does not prevent employers in California from asking in discovery in federal court that an employee produce work related messages sent via a social media account.
As the first written opinion issued on this specific issue, companies in California are advised to take note of the ruling and to craft and monitor internal employee practices specific to work-related discussions and communications undertaken via social media.
New York Times and Newspaper Plaintiffs’ Use of Gen AI Tools Held Irrelevant
Separately, Judge Wang denied Open AI’s attempt to compel the New York Times and other newspaper Plaintiffs to provide discovery of information pertaining to their own use of Gen AI tools. In an effort to show the requests relevant, Open AI maintained the information is relevant to its “fair use” defense and to combat the New York Times’ claim of AI’s “threat to journalism” by showing the public benefit of AI generators. Judge Wang disagreed, finding that “[w]hether nonparties’ Gen AI tools confer benefits in the journalism industry is not relevant to a determination of whether Defendants’ acts—i.e., the alleged copying involving Defendants’ Gen AI tools—constituted fair use.” More specifically, Judge Wang noted that “the fair use factors are concerned with the copier’s use of an original work” and, therefore, focuses on Defendants’ use of Gen AI tools, not that of the Newspaper Plaintiffs.
Open AI has requested the district judge in the case to vacate the order issued by Magistrate Judge Wang on the basis the information sought is “directly relevant” and the magistrate “misapplied the fair use inquiry in multiple respects.”
Next Steps and Court Deadlines
The Court instructed that no further discovery motions were to be filed between December 21, 2024, and January 10, 2025, and that the parties must “file a joint chart by January 17, 2025, that identifies (1) all outstanding disputes, (2) each party’s position in no more than two paragraphs, and (3) the relevant ECF numbers (with hyperlinks) for such dispute (including oppositions and replies). The next court hearing was set for January 22, 2025.
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