Business
Column: OpenAI just scored a huge victory in a copyright case … or did it?
The snap judgment among legal experts was that a federal judge’s dismissal on Nov. 7 of a copyright infringement lawsuit against OpenAI, the leader in advanced chatbots, will short-circuit an ever-growing effort by artists and writers to keep AI firms from stealing their content.
There’s no question that the ruling handed down Thursday by Judge Colleen McMahon in New York landed with a thud among lawyers trying to bring such cases.
McMahon went beyond merely dismissing the lawsuit brought against OpenAI by Raw Story Media, the owner of progressive news websites. She undermined the basic argument that content creators have made against AI firms: that the process of feeding their AI models data indiscriminately “scraped” from the internet inevitably involves using copyrighted content without permission.
I don’t put a lot of stock in anyone who tells you how these cases are going to turn out.
— Copyright expert Aaron Moss
McMahon’s ruling, based on a Supreme Court decision in an unrelated case, “could leave AI copyright claims on shaky ground,” wrote Los Angeles intellectual property lawyer Aaron Moss on his website. The judge not only dismissed Raw Story’s case; she implied that no copyright holder might be able to show enough harm from AI scraping to win an infringement case.
That’s because the amount of content fed to AI bots such as OpenAI’s ChatGPT to “train” them is so immense that it’s almost impossible to pinpoint any particular content that has been infringed when the bot spits out an answer to a user’s query.
“Given the quantity of information,” McMahon asserted, “the likelihood that ChatGPT would output plagiarized content from one of [Raw Story’s] articles seems remote.”
McMahon’s ruling may also undermine what has been a growing trend toward the licensing of copyrighted content by AI developers — in part to forestall copyright infringement claims. Dow Jones, the parent of the Wall Street Journal, reached a licensing deal with OpenAI in May that could be worth more than $250 million over five years. That followed multimillion-dollar licensing deals OpenAI reached with the Axel Springer, the owner of Business Insider and Politico; the Financial Times; and the Associated Press.
“This court is allowing this thriving, lucrative market for licensed content for AI training to be taken away from Raw Story Media,” Peter Csathy, chairman of Creative Media, a Los Angeles entertainment and media marketing and consulting firm, told me.
That may have happened because Raw Story didn’t make much of that market’s potential in its lawsuit. In its complaint it mentioned the licensing deals OpenAI reached with the Associated Press and Axel Springer, but noted only that the AI firm has “offered no compensation” to Raw Story.
For all that, the full import of McMahon’s decision is anything but clear. That’s because the case brings together two muddy legal regimes: copyright law, which is renowned for its craziness and confusion; and AI law, which may be years away from coalescing into coherence.
At least 12 lawsuits against AI developers alleging copyright violations are currently wending their way through the federal courts — with plaintiffs including the publishers of Mother Jones, the Wall Street Journal and the New York Times; the music recording industry; and writers Michael Chabon and Sarah Silverman.
Intermediate court rulings in these cases contradict each other and raise issues that haven’t been seen before even in high-tech intellectual property law.
Judges have struggled even to define how copyright infringement principles apply to technology that doesn’t output exact copies of copyrighted works but “mimics” them — rather like how the beverage machine in Douglas Adams’ “Hitchhiker’s Guide to the Galaxy” delivered “a cupful of liquid that was almost, but not quite, entirely unlike tea.”
All those cases are still in their early stages. “I don’t put a lot of stock in anyone who tells you how these cases are going to turn out,” Moss says.
Before wading into the legal morass these lawsuits are attempting to navigate, let’s take a quick look at how the technology is developed and why copyright has become an issue.
The models that are in the forefront of artificial intelligence research and development just now don’t think for themselves. They’re repositories of billions of articles, software lines and music or art made by humans. When asked a question, they ply through their database and try to synthesize from it the most probable answer. Often they get it right; often they get it wrong.
Sometimes they’re confused enough to output obvious errors, as Apple researchers found when asking the models to solve math problems written in plain English. Sometimes they show that they don’t know what they don’t know, and fill in the blanks in their knowledge with fabrications — or as AI developers call them, “hallucinations.”
As McMahon observed, the sheer volume of materials the bots draw from and the synthesizing process make it unlikely that any answer will replicate any specific content exactly.
That has been an obstacle for some of the plaintiffs in the copyright cases. Most of those claiming their written content has been infringed assert chiefly that the databases known to have been fed to some AI models are known to include their books or other writing. (At least one of the content repositories used by some AI developers includes three of my own books, but I’m not a party to any of the lawsuits.)
In its lawsuit, the New York Times cites text output by OpenAI’s ChatGPT-4 that reproduces portions of its articles verbatim, without credit or permission. (Microsoft, named as a defendant as an investor in OpenAI and a user of its technology, replied that the New York Times had effectively “coaxed” the chatbot to reproduce its texts by artfully framing its queries to elicit infringing answers.)
That brings us back to Raw Story Media’s lawsuit. The company, which operates the Raw Story and AlterNet news sites, didn’t fashion its claim as a copyright infringement complaint. Instead, it asserted that OpenAI had deliberately removed author, title and copyright labels — collectively known as copyright management information, or CMI — from the articles it imported to train its bots.
Raw Story argued that this process facilitated future infringement by leaving users unaware that they were receiving, and possibly distributing, copyrighted material without permission.
Deliberately removing CMI with the intention of fostering copyright violations is a direct violation of the 1998 Digital Millennium Copyright Act, which governs intellectual property rights of producers of digital content. Raw Story sought damages for OpenAI’s violation of the law and an injunction requiring the AI company to remove from its database all Raw Story content from which the CMI had been removed.
That’s where Raw Story ran into a roadblock erected by the Supreme Court. In a 5-4 decision involving the credit bureau TransUnion in 2021, the court declared that it is not enough for a plaintiff to sue over a defendant’s violation of a federal statute. To have the standing to bring a federal case, the court ruled, a plaintiff must show that they have suffered a “concrete harm” stemming from the violation.
Raw Story couldn’t show that because it couldn’t produce evidence that any of its content had been copied in answers to user queries and therefore that it had suffered “concrete harm.” As a result, McMahon dismissed the lawsuit on grounds that Raw Story didn’t have standing to bring it.
Indeed, McMahon seemed irked at the thought that Raw Story was trying to pull a fast one. “Let’s be clear about what’s really at stake here,” she wrote. The supposed injury for which Raw Story was seeking relief, she wrote, “is not the exclusion of CMI” from OpenAI’s database, but the “use of Plaintiffs’ articles to develop Chat GPT without compensation for Plaintiffs.”
McMahon gave Raw Story the opportunity to refile its lawsuit to show that it was damaged by OpenAI’s acts. She didn’t sound sanguine, calling herself “skeptical” that the company will be able to allege a “cognizable injury.”
But Csathy contends that McMahon overlooked the possibility that her ruling might undermine the licensing market — if AI developers can remove CMI from training data with impunity, they might not feel any need to license copyrighted material in the future. “There’s some real substantial money there,” he says.
Raw Story may well cite the loss of licensing income as a “cognizable injury” if and when it files an amended complaint. That would be a new wrinkle in a field that at this point is virtually nothing but wrinkles.
Business
L.A. City Council postpones vote on wage hike for hotel and airport workers over tourism concerns
The Los Angeles City Council on Wednesday postponed a vote on a major boost to wages for hotel and airport workers, voicing concerns that the pay hike could damage the city’s tourism industry.
The council’s decision to put off the vote until Dec. 11 came as hotel owners were threatening to pull out of a deal to provide tens of thousands of rooms during the 2028 Olympic Games if the pay increase is approved, saying it would decimate their bottom line.
The council had been scheduled to vote Wednesday on whether to finalize changes to an existing city ordinance that would raise the minimum hourly wage for workers at large hotels and Los Angeles International Airport from the current $20.32 to $25 on Feb. 1. The minimum pay would then climb incrementally each year to reach $30 an hour by July 1, 2028, as the Olympics are set to open.
During a heated discussion of the proposed wage boosts, several council members questioned whether an analysis of the economic impact of the wage hike that was commissioned by the city had been thorough enough.
“People are going to lose their job if we do this as currently proposed,” Councilmember Traci Park said during the meeting.
Doane Liu, executive director of the City Tourism Department, warned the council that the report understated the effect the proposed minimum wage increases would have on the prices of hotel room rates. Higher wages, he said, would lead to “unintended consequences” as hotels would have to increase rates or cut back on staff and services, which would hurt the luxury and convention business.
As Wednesday’s meeting went on, council members introduced several amendments that, if adopted, would narrow the scope of the proposal and slow down its implementation. One amendment suggested by Councilmember John Lee would delay the jump to a $25 hourly minimum wage until six months after occupancy rates at hotels and LAX passenger traffic had returned to pre-pandemic levels. Lee also proposed slowing down the annual increases to $1 each year — a pace that probably would mean not reaching the $30 hourly wage until after the Olympics.
Marqueece Harris-Dawson, the council’s president, directed the city’s chief legislative analyst to answer questions raised by council members in advance of the council’s Dec. 11 meeting. If the council votes at that meeting to have city lawyers rewrite the ordinance, it would still need to vote at a later date on whether to formally approve and implement the wage increases.
After the council moved to table the discussion, dozens of hotel and airport workers represented by unions that backed the wage boosts filed out of council chambers, chanting, “We’ll be back” and waving red and purple signs that read, “Stands with tourism workers” and “Olympic wage now.”
In City Hall’s cavernous lobby, Kurt Petersen, co-president of a union that represents hotel workers, told workers the council had been swayed by pressure from the tourism industry.
“Today some of our council members unfortunately listened to the CEOs,” Petersen said.
Nelly Hernandez, 57, an employee at airline catering company Flying Food Group, said she currently makes $20 per hour, and a wage increase would help her achieve economic stability.
She sends money back home to her sister in El Salvador and wants to be able to save for retirement. “Everything is so expensive right now,” she said.
In a last-ditch effort to sway the council, the board of directors of the Hotel Assn. of Los Angeles sent a letter this month to the city’s Olympic organizing committee arguing the proposed ordinance would jeopardize contracts requiring the hotels to provide the committee with about 40,000 rooms during the Games at prices that were negotiated in 2020 with a lower minimum wage in mind. The higher wages, it said, would balloon hotels’ labor costs so much that sticking to the terms of the deal would be untenable.
“Renting rooms under these circumstances would result in devastating financial losses that could not be recouped under any reasonable scenario,” the letter said. “To put it plainly, this staggering increase in costs makes it unfeasible for most if not all signatory hotels to participate in LA28’s hotel room block.”
If the wage hike goes through, the letter said, “many if not all” the hotels represented by the group would use a clause in the contracts to back out of the deal. The rooms were to be used to house thousands of people associated with the International Olympic Committee, the U.S. Olympic Committee, corporate sponsors, journalists and others during the Olympics and Paralympics, the letter said.
Even if the council doesn’t abandon the pay hike altogether, the hotel association said it hoped to be able to persuade the council to amend its terms in order to lessen the financial impact on hotels. Particularly worrisome was a provision in the proposed ordinance that would require hotels to cover an hourly $8.35 “health payment” for workers on top of the wage hikes.
The ordinance was first proposed last year by Councilmembers Curren Price and Katy Yaroslavsky, with Hugo Soto-Martínez and several other council members supporting the measure. Movement forward on the law was stalled for more than a year as contract negotiations between scores of local hotels and Unite Here Local 11, the politically powerful union that represents their workers, were underway.
The push for the increased wages for hotel workers is the latest demonstration of Unite Here Local 11‘s political muscle. A decade ago, the union successfully got elected officials to approve a minimum wage for hotel workers that is higher than the one that covers most other workers in the city, which currently is $17.28.
While the council’s support for the wage hike aligns with the progressive tack elected officials in the city have typically taken, the wage increase proposal comes at a time when voters across the state have been somewhat more ambivalent, rejecting a statewide measure to boost the minimum wage and booting out progressive Los Angeles County Dist. Atty. George Gascón in the November election.
Workers in the city’s tourism industry have for years raised alarms about the cost of living in Los Angeles, and amid concerns the Olympics will drive up housing costs even more, unions backing the proposed pay hike have said increased pay is necessary to keep workers from being priced out of the city.
An estimated 23,000 workers would be covered by the proposed increases, and about two-thirds of them live in the city of L.A., according to the report released in September, which was commissioned by the city’s chief legislative analyst. Although the majority of those affected by the pay raises would be airport workers, hotel workers’ wages tend to be lower and those employees would therefore receive a bigger boost, according to the report. Airport workers would see average hourly increases of $3.87 and pay for hotel workers would climb on average $6.24, the report finds.
Petersen said the wage proposal is a fair way to improve workers’ lives as hotels and other businesses stand to reap the benefits of the city hosting the Olympics.
“Right now the way it’s set up is a corporate giveaway,” Petersen said of the Olympics. “L.A. should be loud and proud about doing this.”
Times staff writer David Zahniser contributed to this report.
Business
UC service and hospital workers launch two-day strike over contract talks
A union representing nearly 40,000 University of California workers began a two-day strike Wednesday to protest what it claims is bad faith bargaining by university negotiators as the two sides try to hammer out new labor agreements.
The work stoppage, which affects service and patient care workers at all UC campuses and medical facilities, will continue until 11:59 p.m. on Thursday. AFSCME Local 3299 and the university system have been in talks over new contracts for nearly a year.
“Instead of being a constructive and transparent partner seeking to bring us closer to agreement, UC has sought to drive us farther apart,” said AFSCME Local 3299 President Michael Avant in a statement. “By failing to meet its most basic legal responsibilities to the dedicated professionals who clean its facilities, serve students food, and treat its patients, UC has left workers with no choice but to exercise their legal right to strike,” he said.
University officials disputed the union’s allegations, saying in a statement that “we fundamentally disagree with AFSCME’s claims of bad faith bargaining and characterization of unacceptable bargaining proposals.” Negotiators for the two sides, the university said, had met more than 20 times between January and May and the university system had proposed salary increases for union members that would hike pay by an average of 26% over a five-year contract.
Union members authorized the strike with 99% of members voting in support just weeks after filing formal charges with the state’s Public Employment Relations Board alleging bad faith bargaining.
Business
'Juror #2' will stream on Max in December after mysteriously small theatrical campaign
Clint Eastwood’s legal drama “Juror #2” is set to debut on Warner Bros. Discovery’s streaming service Max on Dec. 20, adding to the controversy over the limited theatrical run for what could be the storied star and filmmaker’s final movie.
The Warner Bros. Pictures film, which was directed by Eastwood and stars Nicholas Hoult as a juror in a high-profile murder trial, had its world premiere last month at the American Film Institute’s festival in Hollywood.
The film was then released in a limited number of theaters starting Nov. 1, leading to outcry that the narrow run was an affront to the legendary actor and director’s career and also a missed opportunity for theaters to capitalize on the 94-year-old Eastwood’s popularity.
To date, the film has played in about 1% of all U.S. theaters and represents just 0.1% to 0.2% of all total show times for every movie in this time span, said Daniel Loria, senior vice president of box office business intelligence at the Boxoffice Co. By contrast, another adult-oriented film, “Conclave,” has made up about 5% to 6% of market share in U.S. show times over the same period, he said. The papal drama has so far garnered almost $28 million in worldwide box office.
Warner Bros. did not report box office figures for “Juror #2,” which reportedly played in only a few dozen U.S. cinemas.
“These types of films perform differently than they did in the pre-pandemic era,” Loria said. “But what we’ve seen from this type of market is that the right type of film can still connect with viewers and succeed on a limited to moderate level. The film was not made available to markets and theaters and parts of the country that would have turned out to see that movie.”
The studio had not publicly disclosed the streaming-first plan until recently, leading many Hollywood observers to question the decision. Warner Bros. Discovery Chief Executive David Zaslav has taken much heat since taking over the studio, in large part because of decisions to shelve movies such as “Batgirl” and “Coyote vs. Acme.” Those moves were widely seen as part of a larger strategic shift and cost-cutting effort.
The studio has pushed back on the notion that it did Eastwood dirty with its release strategy.
A studio spokesperson said “Juror #2” was always destined for a streaming release on Max, as deals were made for that at the beginning, and filmmakers were aware of and agreed to the plan. The AFI Fest premiere gave the movie a “prestige theatrical showcase” that highlighted Eastwood’s “pedigree and history,” the spokesperson said.
The studio and filmmakers had agreed to reconsider the option to first release the film in a limited theatrical run once the studio had screened the film, the spokesperson said. They added that the limited theatrical run was intended to generate word-of-mouth anticipation ahead of the Max debut.
The filmmakers were made aware of the limited theatrical release in mid-August, according to a person familiar with the matter but not authorized to comment publicly.
Eastwood’s decades-long career has yielded massive theatrical hits, such as “Million Dollar Baby” and “American Sniper,” though his 2021 film “Cry Macho” underperformed at the box office. However, reviews for “Juror #2” have been strong and Eastwood’s name recognition likely could have generated box office traffic, Loria said. “The Mule,” released in 2018, raked in almost $175 million worldwide on a modest budget of $50 million.
“Not everything is going to be ‘American Sniper,’ ” he said. “You can have movies like ‘The Mule’ that are going to be out there and find an audience. But in order to find the audience, … you have to make your movies findable.”
“Juror #2” has managed to find an audience in countries overseas where it did open in theaters, including France. The film has generated $9.6 million in international box office, according to Box Office Mojo.
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