The Ticketmaster and Live Nation Lawsuit: Everything You Need to Know About the Department of Justice’s 2024 Lawsuit Against the Merged Entity

The Ticketmaster and Live Nation Lawsuit

After Ticketmaster and Live Nation merged in 2010, the merged entity was called Live Nation Entertainment.

In a significant development that could reshape the landscape of live event ticket sales, Ticketmaster and its parent company, Live Nation, find themselves in a high-stakes legal battle that raises critical questions about monopolistic practices and consumer rights. The lawsuit, initiated by the U.S. Department of Justice (“DOJ”), alleges that Ticketmaster and Live Nation engaged in anti-competitive behavior, leveraging their dominant market position to impose exorbitant fees and restrict access to tickets. Additionally, the plaintiffs argue that these practices have stifled competition and innovation within the industry, ultimately harming artists, venues, and fans alike. This case not only puts the spotlight on the business practices of Ticketmaster and Live Nation, but also has the potential to set an important precedent in antitrust litigation.

The 2010 Merger

The 2010 merger between Ticketmaster and Live Nation marked a pivotal moment in the live entertainment industry, creating a behemoth with unprecedented control over concert ticket sales, event promotion, and artist management. Prior to the merger, Ticketmaster was already dominant in the ticketing industry, having built a reputation as the go-to platform for purchasing tickets to major events. At the time, Ticketmaster’s market share in primary ticketing was 80%.¹Live Nation, on the other hand, was the largest concert promoter in the world, responsible for producing and marketing live concerts, managing artists, and operating entertainment venues.

The merger, valued at approximately $2.5 billion, was initially met with significant scrutiny.² Concerns were raised about the potential for anti-competitive behavior and the creation of³ a monopoly. Central to this scrutiny was Section 7 of the Clayton Act, which prohibits mergers and acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”⁴ The DOJ conducted an extensive investigation under this legal framework to assess the merger’s impact on competition within the industry. The investigation involved defining the relevant market for ticketing services, concert promotion, and artist management, analyzing the potential competitive effects of the merger, examining whether new competitors could easily enter the market to challenge the merged entity’s dominance, and assessing the market shares of Ticketmaster and Live Nation before the merger and the combined entity’s projected market share.⁵ Ultimately, the DOJ approved the merger but imposed several conditions designed to mitigate potential anti-competitive effects. These conditions included the requirement for Ticketmaster to license its ticketing software to AEG Presents, a major competitor, and to divest its subsidiary Paciolian, a company that provides ticketing services to venues and promoters.⁶

Despite these regulatory safeguards, the Ticketmaster-Live Nation merger fundamentally altered the competitive landscape of the live entertainment industry. By combining Ticketmaster’s extensive ticketing infrastructure with Live Nation’s vast portfolio of concerts and venues, the merged entity gained a significant advantage over its competitors. This consolidation enabled the company to exert greater control over ticket prices, fees, and availability, often to the detriment of consumers. The conditions imposed by the DOJ, while aimed at preserving competition, have faced criticism for being insufficient to curb the power of the merged entity.

The Taylor Swift Effect

After the chaos of the presale ticket sale, Ticketmaster announced via X.com (formerly Twitter.com) that the general
sale would be cancelled “due to extraordinarily high demands.”

Over the years, the merged entity has faced ongoing criticism and legal challenges related to its market dominance and business practices. These concerns came to a head with, what is now colloquially known as, “The Taylor Swift Concert Ticket Fiasco”.

The Taylor Swift concert ticket fiasco in late 2022 served as a significant catalyst for the current lawsuit against Ticketmaster and Live Nation. When tickets for Swift’s highly anticipated “Eras Tour” went on sale, the overwhelming demand led to widespread technical issues on Ticketmaster’s platform, resulting in a frozen queue or forced logouts, and countless fans being unable to secure tickets despite hours of waiting. The situation was exacerbated by the rapid appearance of tickets on resale platforms at outrageous prices, highlighting concerns over transparency, fairness, and the monopolistic control of Ticketmaster over the ticketing market.

This debacle drew intense public and regulatory scrutiny, with fans, artists, and lawmakers criticizing Ticketmaster’s handling of the sale and its dominant market position. Swift herself expressed frustration over the ticketing issues, posting on her Instagram story, “It’s really difficult for me to trust an outside entity with these relationships and loyalties, and excruciating for me to just watch mistakes happen with no recourse . . . I’m not going to make excuses for anyone because we asked them, multiple times, if they could handle this kind of demand and we were assured they could.”⁷ This incident underscored long-standing grievances about high service fees, limited ticket availability, and the company’s alleged anti-competitive practices, which many argued were a direct consequence of the 2010 merger.

In response to the public outcry, several lawmakers called for an investigation into Ticketmaster and Live Nation’s business practices. The U.S. Senate Judiciary Committee held hearings where industry experts, consumer advocates, and representatives from Ticketmaster testified about the state of competition in the ticketing market.⁸ These hearings highlighted the systemic issues within the industry, including allegations that Ticketmaster’s control over both primary and secondary ticketing markets stifled competition and harmed consumers.⁹ The Taylor Swift ticketing debacle significantly influenced the current lawsuit by bringing these issues to the forefront of public and legal discourse.

The Current Allegations

The DOJ now alleges that Ticketmaster and Live Nation have engaged in a series of anti-competitive tactics that violate the Sherman Act, a foundational piece of U.S. antitrust legislation designed to prohibit monopolistic practices and promote fair competition.¹⁰ Specifically, the DOJ’s allegations focus on how Ticketmaster and Live Nation have leveraged their dominant market position to stifle competition, inflate prices, and limit consumer choice in the live entertainment industry.

Central to the DOJ’s case is the accusation that Ticketmaster and Live Nation have employed exclusive dealing arrangements with venues, which effectively blocks competitors from the market.¹¹ By requiring venues to use Ticketmaster as their sole ticketing provider as a condition for hosting Live Nation-promoted events, the company allegedly creates significant barriers to entry for other ticketing services.¹² This practice not only reinforces Ticketmaster’s control over ticket sales but also prevents rival companies from gaining a foothold in the market.

Another key aspect of the DOJ’s allegations involves the use of retaliatory tactics against venues that do not comply with these exclusive agreements. According to the DOJ, Live Nation has threatened to withhold its concerts from venues that choose to partner with competing ticketing services.¹³ The DOJ argues that these actions violate Section 2 of the Sherman Act, which addresses the conduct of monopolies and attempts to monopolize any part of trade or commerce.¹⁴ By threatening to pull valuable Live Nation tours and events from non-compliant venues, the company allegedly coerces these venues into exclusive contracts, shutting out rival ticketing firms and cementing its dominance.¹⁵

The DOJ also contends that Ticketmaster and Live Nation’s control over both primary and secondary ticketing markets allows them to manipulate ticket prices and availability.¹⁶ This means that the company can benefit from both the initial sale and the resale of tickets, often at significant markups, leading to higher costs for consumers and more revenue for Ticketmaster and Live Nation. Such practices, the DOJ argues, exemplify how the entities exploit their market power to the detriment of consumer welfare.

In sum, the DOJ’s allegations paint a picture of a monopolistic entity that uses a combination of exclusive deals, retaliatory threats, and market manipulation to maintain and expand its dominance in the live entertainment industry. These tactics not only violate the Sherman Act but also illustrate the need for regulatory intervention to restore competitive balance and protect consumers from the adverse effects of monopolistic practices.

Impact of the Alleged Conduct

The anticompetitive tactics alleged in the complaint have drastic impacts on the live music industry as a whole. The primary result of the alleged conduct by Ticketmaster and Live Nation is the inhibition of choices made by fans, artists, and venues – choices that should exist in a free market. For artists, the opportunities to play concerts will dwindle and they will be left with fewer and fewer choices for promoting their concerts, selling tickets, and performing at certain venues. Similarly, venues are limited in their choices for obtaining concerts and ticketing services. Additionally, the evolution of the live music industry as a whole suffers as a result of the conduct that Ticketmaster and Live Nation are allegedly engaged in. It is a known fact that competition drives industries to innovate and improve, fostering advancements in technology, service quality, and consumer choice. In a competitive market, businesses are incentivized to differentiate themselves through better products, lower prices, and enhanced customer experiences. This dynamic encourages efficiency and drives continuous improvement, ultimately benefiting consumers with greater variety, higher quality products, and more favorable pricing. When competition ceases to exist, it is the fans that are harmed the most, because the controlling company in a monopoly has no incentive to improve or cater to the consumer experience. As a result, fans are left with no alternative to turn to, and instead are forced to endure whatever pitfalls Ticketmaster and Live Nation’s system may present.

What is the Remedy?

It seems the DOJ is fully receptive to the consequences of Ticketmaster and Live Nation’s anticompetitive conduct; the agency is not merely seeking new conduct rules against the practices, similar to the results of the 2010 investigation. Rather, the DOJ has stated that it will seek to split Ticketmaster off from Live Nation.¹⁷ What is the reason for this seemingly drastic remedy? The basic answer is that nothing else would work. The DOJ has previously attempted to rein in Ticketmaster and Live Nation and, historically, has been vastly unsuccessful. Therefore, the DOJ is taking the matter a step further, with the primary ask being the forced sale of Ticketmaster, and potentially forcing Live Nation to divest control of venues as well as ending all exclusive contracts.¹⁸ While there are ample possibilities, if Ticketmaster and Live Nation are found to be in violation of antitrust law, the remedy will be up to a judge to decide.

Future Implications

The Ticketmaster lawsuit holds significant implications for the live music industry, potentially reshaping the landscape of ticketing practices and competition. A successful outcome for the plaintiffs could lead to increased regulatory scrutiny, potential reforms aimed at promoting fair competition and transparency in ticketing, and potentially the divestiture of Ticketmaster and Live Nation. This could foster a more open marketplace where alternative ticketing providers can thrive, enhancing competition and offering consumers greater options and potentially lower fees. Conversely, a ruling favoring Ticketmaster and Live Nation could solidify their market position, reinforcing current practices and potentially further cementing their control over ticket sales and concert promotions. As the lawsuit unfolds, its outcome will likely shape the future dynamics of how live events are accessed and experienced by audiences worldwide.

¹ Busting the Live Nation-Ticketmaster Monopoly: What Would a Break-Up Remedy Look Like?, AMERICAN ANTITRUST INSTITUTE (July 11, 2023), https://www.antitrustinstitute.org/work-product/busting-the-live-nation-ticketmaster-monopoly-what-would-a-break-up-remedy-look-like/. (last visited 2/23/24).

² Krista Brown & Zach Freed, How Antitrust Enforcers Helped Create a Live Events Monster, AMERICAN ECONOMIC LIBERTIES PROJECT, 1, 1 (Oct. 2022), https://www.economicliberties.us/wp-content/uploads/2022/10/LiveNation_QuickTake_R3-3.pdf. (last visited 2/23/24).

³ Ticketmaster, Live Nation Announce $2.5 Billion Merger Into Live Nation Entertainment, FORBES (June 19, 2013, 4:47 PM), https://www.forbes.com/2009/02/10/ticketmaster-live-nation-technology_0210_paidcontent.html (last visited 2/23/24).

⁴ 15 U.S.C. § 18.

⁵ Justice Department Requires Ticketmaster Entertainment Inc. to Make Significant Changes to Its Merger with Live Nation Inc., U.S. DEPARTMENT OF JUSTICE: OFFICE OF PUBLIC AFFAIRS (Jan. 25, 2010),https://www.justice.gov/opa/pr/justice-department-requires-ticketmaster-entertainment-inc-make-significant-changes-its. (last visited 2/23/24).

⁶ Id.

⁷ Taylor Swift (@taylorswift), INSTAGRAM (Nov. 18, 2022).

⁸ Ben Sisario & Matt Stevens, Ticketmaster Cast as a Powerful ‘Monopoly’ at Senate Hearing, THE NEW YORK TIMES (Jan. 24, 2023), https://www.nytimes.com/2023/01/24/arts/music/ticketmaster-taylor-swift-senate-hearing.html.

⁹ 15 U.S.C. §§ 1-38.

¹⁰ Complaint at 36, U.S. v. Live Nation Entertainment, Inc., No. 1:24-cv-3973 (S.D.N.Y. May 23, 2024).

¹¹ 15 U.S.C. §§ 1-38.

¹² Id. at 37.

¹³ Id.

¹⁴ Id. at 7; 15 U.S.C. § 2.

¹⁵ Id. at 37.

¹⁶ Id. at 16.

¹⁷ Id. at 104.

¹⁸ See id.

The Struggle Continues: NYC’s Rent-Stabilized Tenants Face Third Year of Price Hikes

Rent stabilization in new york | NYC’s Rent-Stabilized Tenants Face Third Year of Price Hikes

Rent Stabilization in New York City: Rising Challenges for Tenants

Introduction

New York City is renowned for its vibrant culture and bustling streets. It is also infamous for its soaring rent prices. For many residents, rent stabilization offers a sense of security in an otherwise volatile market. However, with a third year of consecutive price hikes underway, the plight of rent-stabilized tenants is deepening. Concerns about affordability and housing security are now at the forefront.

The Challenge of Rent Stabilization

Rent stabilization in New York City was created to protect tenants from exorbitant rent increases. It also provides predictability in an increasingly unaffordable housing market. Under these regulations, landlords are limited in the amount they can raise rents annually. This has become a crucial lifeline for countless New Yorkers.

The Escalating Crisis for Rent-Stabilized Tenants

Despite these safeguards, rent-stabilized tenants face an unwelcome reality. Rents continue to climb. The past two years have seen consecutive increases, placing strain on already stretched budgets. For many, the promise of stability is fading. Anxiety grows over looming hikes and the threat of displacement.

Factors Driving the Rent Hikes

Several forces are pushing rents higher for stabilized tenants. The city’s booming real estate market, fueled by gentrification and speculative investment, plays a major role. Rising maintenance costs, property taxes, and utility expenses also add pressure. Landlords often pass these costs onto tenants. Rent stabilization in New York is protective, but it is not immune to broader economic forces. These challenges complicate the intended benefits of the policy.

Impact on Affordability and Local Communities

The consequences extend beyond individual households. As rents soar, communities weaken. Long-term residents, often vital to neighborhood culture, now face displacement. This threatens the social cohesion and diversity that define New York City.

Challenges for Vulnerable Populations

The impact is especially harsh on vulnerable groups. Low-income families, seniors on fixed incomes, and marginalized communities are at the greatest risk. For these individuals, finding affordable housing in today’s market is daunting. The struggle deepens poverty and inequality across the city.

Calls for Stronger Housing Action

Advocates, lawmakers, and community organizations are rallying for change. Demands for stronger rent regulations are growing louder. Calls for affordable housing investment and protections against predatory practices are also increasing. The movement reflects a widespread sense of urgency.

The Path Forward for Rent Stabilization

Solving this crisis requires multiple strategies. Stronger enforcement of existing regulations is essential. Expanding affordable housing and supporting community-led initiatives must also be priorities. Together, these measures can help secure housing stability for New Yorkers.

Conclusion: Safeguarding Housing Rights in NYC

Rent-stabilized tenants in New York City now face a third year of price hikes. The urgency of action cannot be overstated. This is more than a housing issue. It is a question of social justice and the fundamental right to affordable housing. Only through collective effort can we protect the vibrancy and inclusivity of the city for generations to come.

For more information and legal assistance, visit our Google Business profile https://g.co/kgs/YsGHRgR.

Understanding Corporate Law & Its Importance

Understanding Corporate Law: A Guide for Businesses

The world of business is complex, with intricate rules and regulations shaping every move. For companies to succeed, a clear understanding of the legal framework governing corporations is essential. This article breaks down the fundamentals of corporate law, its key areas, and its importance in the business landscape.

What is Corporate Law?

At its core, this branch of law governs the formation, operation, and dissolution of corporations. It covers a wide range of issues, including:

Formation: Establishing a corporation, choosing a structure (e.g., LLC, C-Corp), drafting bylaws, and meeting registration requirements.
Governance: Creating internal structures, outlining director and officer roles, ensuring fiduciary duties, and holding shareholder meetings.
Financing: Raising capital through stock or bond issuance, complying with securities regulations, and managing investor relations.
Mergers and Acquisitions: Managing the legal aspects of combining or acquiring other businesses, including antitrust compliance and shareholder rights.
Taxation: Structuring the company for efficiency and complying with tax regulations.
Compliance: Following labor, environmental, and industry-specific laws.

Is Corporate Law Different from Business Law?

While the terms are often used interchangeably, there is a distinction. Business law applies broadly to all types of businesses regardless of structure or size. Corporate law focuses specifically on the legal matters tied to corporations, which are unique entities with their own rights and responsibilities.

Types of Corporate Law

The diversity of corporations creates several areas of specialization, such as:

Mergers & Acquisitions (M&A) Law: Covers the legal process of acquiring or merging companies while protecting shareholder interests.
Securities Law: Governs issuing and trading stocks, bonds, and other securities.
Governance & Compliance: Advises on internal structures, risk management, and regulatory compliance.
Tax Law: Helps corporations minimize liability and navigate complex codes.
Intellectual Property Law: Safeguards patents, trademarks, and copyrights.

Why Corporate Law Matters

For corporations, navigating the legal landscape without proper guidance can be risky. Strong legal foundations provide:

Protection: Ensuring compliance reduces exposure to lawsuits, penalties, and reputational harm.
Growth: Legal frameworks make raising capital and expanding through acquisitions smoother.
Fairness: Transparent governance protects shareholders, directors, and stakeholders.
Stability: A predictable legal environment fosters business confidence and economic growth.

Final Thoughts

Corporate law is more than technical regulations — it is the foundation that allows corporations to thrive. Whether you’re a business owner, investor, or stakeholder, understanding its role is crucial. Working with an experienced attorney ensures your company can operate confidently while minimizing risks.

If you need professional guidance, the Law Firm of Dayrel Sewell, PLLC, is available to help navigate these challenges.

¹ What Is Corporate Law? www.theforage.com/blog/careers/what-is-corporate-law (last visited 2/23/24).

² What Is The Difference Between Corporate And Business Law?, https://www.lobbplewe.com/what-the-difference-between-corporate-business-law/#:~:text=Business%20law%20is%20much%20more,shareholders%2C%20including%20laws%20surrounding%20stocks (last visited 2/23/24).

³ Types of Corporate Law www.fridmanlawfirm.com/corporate-law/types/ (last visited 2/23/24).

⁴ What Is Corporate Law and Why Is It Important? https://legamart.com/articles/corporate-law/#purpose-of-corporate-law (last visited 2/23/24).

Intellectual Property Litigation: Strategies for Resolving Disputes and Protecting Rights

Intellectual Property (IP) litigation has become increasingly complex in the modern era, as technological advancements continue to blur the lines between creativity, innovation, and ownership. This article explores key strategies for resolving disputes and protecting rights in IP litigation, with a focus on recent case law that has shaped the legal landscape. From patent and trademark infringement to copyright disputes, understanding effective litigation strategies is crucial for both rights holders and accused infringers.

Intellectual Property encompasses a range of rights, including patents, trademarks, copyrights, and trade secrets. Disputes often arise when parties assert their rights or defend against allegations of infringement. The dynamic nature of technology and creativity requires a nuanced approach to litigation.

Before initiating litigation, parties should explore alternative dispute resolution methods, such as negotiation, mediation, or arbitration. These methods can be cost-effective and lead to quicker resolutions. Patent infringement cases rarely go to bench or jury trial and are settlement before going to trial at the claim construction stage.ⁱ Additionally, conducting a thorough pre-litigation investigation is crucial, involving the identification of key evidence, estimated legal costs, potential witnesses, and the assessment of the strength of the case.

I. Recent Case Law Trends

A. Notable Cases in Patent Litigation and Strategy Implications

a. Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014): The Supreme Court’s decision clarified the patent eligibility of software and business method claims, impacting the approach to patent litigation in these areas. The court used the two-step framework from Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012) to determine patent eligibility of a computer-implemented schedule for mitigating settlement risk. The court determined that the generic computer implementation did not provide an “inventive concept” to transform the abstract idea into a patent-eligible application under 35 U.S.C. § 101. The invention must be something that could lead to a patent.ⁱⁱ

Careful Claim Drafting: Post-Alice, patent holders must draft claims with an emphasis on technical details and inventive concepts to overcome eligibility challenges and to avoid ceasing at abstract ideas of a concept.

b. TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1219 (2017): This case reshaped venue rules for patent infringement lawsuits, limiting the jurisdictions where cases can be filed. The court held that a domestic corporation “resides” only in its state of incorporation for purposes of the patent venue statute.ⁱⁱⁱ

Strategic Venue Selection: On both the plaintiff and defendant’s side, TC Heartland has led to a strategic consideration of the most favorable venue for patent litigation, impacting case outcomes. Fact-intensive inquiry may ensue depending on whether parties select their venue based on where “the defendant had committed acts of infringement and has a regular and established place of business” or the state of incorporation.^iv

B. Notable Cases in Trademark Litigation and Strategy Implications

a. Matal v. Tam, 137 S. Ct. 1744 (2017): The Supreme Court’s decision in this case held that the Lanham Act’s prohibition on disparaging trademarks^v violated the First Amendment and amounts to viewpoint discrimination. The First Amendment does not allow the government to prohibit the expression of an idea simply because it is offensive. The court also refused to accept the contention that trademarks are government speech, impacting the criteria for registering trademarks.^vi

Careful Selection of Marks: The Matal decision underscores the importance of choosing distinctive and non-disparaging marks.

b. Patent and Trademark Office v. Booking.com B. V., 140 S. Ct. 2298 (2020): The Supreme Court ruled that adding “.com” to a generic term can result in a protectable trademark.

Expanding Protection: Booking.com highlights the potential for obtaining trademark protection for domain names that include generic terms. However, in order to be capable of trademark protection, the use of the term as a brand name has to be distinctive enough that the consumer has to perceive the term as a source identifier.^vii

C. Notable Cases in Copyright Litigation and Strategy Implications

a. Google LLC v. Oracle Am., Inc., 141 S. Ct. 1183 (2021): The Supreme Court’s decision clarified the fair use^viii doctrine in the context of software code, impacting the boundaries of copyright protection. The court ruled that Defendant Google’s copying of a portion of Plaintiff Oracle’s Java SE computer program was fair use because Google’s use of the Java API was transformative, allowing the creation of new products and expanding use of Android-based smartphones, and had little market effect on Oracle.

Fair Use Considerations: Oracle provides guidance on the fair use analysis, emphasizing transformative use and the nature of the copyrighted work, especially in the area of software interface use and development.^ix

b. Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, 139 S. Ct. 881 (2019): This case clarified the registration requirement for filing copyright infringement lawsuits.^x Registration has been made when the Copyright Office has registered a copyright after examining a properly filed application. The Register’s action triggers a copyright owner’s entitlement to sue not upon submission of an application for registration.^xi

Timely Registration: Fourth Estate underscores the importance of promptly registering copyrights for litigation purposes because it affects the copyright owner’s leverage in threats to initiate immediate legal action for copyright infringements.^xii Without a properly and timely copyright registration, the copyright owner may be unable to seek a preliminary injunction. Furthermore, it will be further costly for small copyright owners if they need to use the expensive expedited process for copyright registration.^xiii

II. Key Litigation Strategies

A. Early Case Assessment

Conducting a detailed early case assessment allows parties to evaluate the merits of their claims or defenses, helping in the formulation of effective legal strategies. It also allows to measure potential costs, what tasks could be complete in-house, and how long the litigation make take.^xiv Considering the cost and expense of IP litigation, early case assessment also allows counsel and the client to consider out-of-court solutions such as mediation, negotiation, and/or settlement.

B. Effective Use of Experts

Engaging qualified experts is crucial in IP litigation to provide technical or industry-specific insights that can influence the court’s understanding of complex issues. The expert can simplify technical jargon and translate intricate scientific or technical processes for easier digestion by the court.^xv In the earlier part of the case, the expert’s advice can also assist counsel with whether there is a valid intellectual property claim.^xvi They can also help with negotiations and settlement considerations and give objective expert advice on finding a fair ground between the parties.^xvii

C. Enforcement of IP Rights Abroad

Globalization has increased the need for enforcing IP rights internationally, necessitating a strategic approach to cross-border litigation and coordination with foreign counsel. In case of infringement, the availability of litigation tools depends on the jurisdiction and the intentionality of the infringement.^xviii The enforcement process may involve cease and desist letters and/or various judicial proceedings to preserve evidence of the alleged IP infringement, seek injunction and eventually damages.^xix Because of the difficulty of enforcing IP rights globally, international bodies such as the World Trade Organization have established international agreements such as the Trade-related Aspects of Intellectual Property Rights (TRIPS) agreement to provide judicial measures to protect IP rights around the world.^xx

D. Post-Grant Proceedings

Utilizing post-grant proceedings for patents, such as Inter Partes Review (IPR), Post-Grant Reviews (PGRs), and Ex Parte Reexaminations can be an effective strategy to challenge the validity of asserted IP rights before the relevant administrative bodies. In choosing which post-grant proceeding to use, it is important to consider factors such as “the nature of the dispute, the availability of prior art, and desired level of involvement from the owner or challenger.”^xxi

IP litigation requires a multifaceted approach that considers legal, technical, and strategic aspects. Recent case law developments highlight the evolving nature of intellectual property disputes, necessitating a dynamic and well-informed strategy for both rights holders and accused infringers. Understanding the impact of recent decisions and integrating effective litigation strategies can significantly influence the outcome of IP disputes and safeguard the interests of the parties involved.

ⁱJames C. Yoon, IP Litigation in United States,Wilson Sonsini Goodrich & Rosati (Aug. 4, 2016),https://law.stanford.edu/wp-content/uploads/2016/07/Revised-Stanford-August-4-2016-Class-Presentation.pdf.

ⁱⁱ Julia Powles, Alice v. CLS Bank: United States Supreme Court Establishes General Patentability Test, WIPO Magazine (Aug. 2014),https://www.wipo.int/wipo_magazine/en/2014/04/article_0004.html.

ⁱⁱⁱ28 U.S.C. § 1400(b).

^ivId.; see also “TC Heartland:” The End of an Era in Patent Litigation, Dorsey & Whiney LLP (May 25, 2017), https://www.dorsey.com/newsresources/publications/client-alerts/2017/05/tc-heartland.

^v 15 U.S.C. § 1052.

^viMatal v Tam: Supreme Court Holds Disparaging Trademark Ban Violates First Amendment,Scarinci Hollenback, LLC (June 27, 2017),https://constitutionallawreporter.com/2017/06/27/matal-v-tam-2017/.

^viiBass, Berry & Sims PLC, Impact of Supreme Court Trademark Decision in Booking.com Case,JD Supra (July 13, 2020), https://www.jdsupra.com/legalnews/impact-of-supreme-court-trademark-91400/.

^viii17 U.S.C. § 107.

^ixJeffrey Robert Kaufman, What Google v. Oracle Means for Open Source, Opensource.com (May 5, 2021), https://opensource.com/article/21/5/google-v-oracle.

^x17 U.S.C. § 411(a).

^xiFourth Estate Pub. Benefit Corp. v. Wall-Street.com,LLC, 139 S. Ct. 881 (2019).

^xii Sylvia Zhang, A Guide to Fourth Estate v. Wall-Street.com, Harvard Law School (May 28, 2019), https://hls.harvard.edu/clinic-stories/legal-policy-work/a-guide-to-fourth-estate-v-wall-street-com/.

^xiiiId.

^xivPowles,supranote ii.

^xvImportance of Expert Witness Testimonies in Intellectual Property Litigation, LITILI Group (Sept. 12, 2023), https://litiligroup.com/expert-witness-testimonies-in-intellectual-property-litigation/.

^xviId.

^xviiId.

^xviiiSettling Disputes and Enforcing IP RightsWorld Intellectual Property Organization,https://www.wipo.int/sme/en/settle-ip-disputes.html#(last accessed on Feb. 21, 2024).

^xixId.

^xxEnforcement of intellectual property rights Enforcement of intellectual property rights, World Trade Organization,https://www.wto.org/english/tratop_e/trips_e/ipenforcement_e.htm(last access on Feb. 21, 2024).

^xxiHoward Suh, USPTO Post-Grant Proceedings: An Overview, Fox Rothschild LLP (June 23, 2023),https://www.foxrothschild.com/publications/uspto-post-grant-proceedings-an-overview

Protect Your Work with Copyright

Understanding Copyright Protection for Creative Works

In the world of creative expression, originality deserves protection. That’s where copyright comes in. This legal safeguard grants creators exclusive control over the use and distribution of their works. It applies to a wide range of creations, including books, music, artwork, plays, and films.¹ The moment you bring an original work into existence, protection begins automatically, typically lasting for your lifetime plus 70 years.²

Unveiling the Copyright Mystery

Think of copyright as a shield defending the unique way you express an idea. These rights give you the authority to decide how your work is reproduced, shared, displayed, performed, or even transformed into derivative works.³ While protection arises at the moment of creation, no formal registration is required.⁴ However, registering with the U.S. Copyright Office offers additional advantages:

Public Record of Ownership: Your claim is entered into the official database, serving as undeniable proof of authorship.
Access to Federal Court: Registration allows you to take legal action for infringement, and timely registration strengthens your claim in court.
Enhanced Remedies: Successful infringement claims with a registered work may entitle you to statutory damages and attorney’s fees.⁵

How to Secure Copyright Protection

There are two main ways to secure and reinforce your ownership:

Publish with a Copyright Notice: Include the © symbol, year of publication, and your name as the rights holder.
Register with the U.S. Copyright Office: This involves completing an application, paying the filing fee, and submitting a copy of the work being registered.⁶

What Copyright Does Not Protect

Certain things cannot be protected, such as facts, ideas, systems, methods of operation, titles, slogans, or short phrases.⁷ Additionally, materials like blank forms, government documents, or works already in the public domain are excluded.⁸

Duration of Protection

Generally, works created after January 1, 1978, are protected for the author’s lifetime plus 70 years.⁹ For anonymous, pseudonymous, or works made for hire, the term lasts 120 years from creation or 95 years from publication, whichever comes first.¹⁰

Benefits for Creators

Owning these rights allows you to control how your work is used. You can sell, license, or transfer your ownership.¹¹ Additionally, you have legal grounds to act against unauthorized use.¹²

Protecting Your Investment

If you suspect infringement, you can send a cease-and-desist letter. If the issue persists, filing a lawsuit is an option.

Tips to Strengthen Copyright Protection:

Keep documentation of your creative process—drafts, sketches, or correspondence.
Always display the © notice on published works.
Consider registration with the U.S. Copyright Office for added security.
Seek legal guidance from an attorney specializing in intellectual property.

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Please consult with an attorney for specific legal guidance.

¹Copyright.gov: Copyright in General,https://www.copyright.gov/help/faq/faq-general.html#:~:text=Copyright%2C%20a%20form%20of%20intellectual,%2C%20computer%20software%2C%20and%20architecture (last visited February 6, 2024).

² Copyright.gov: How Long Does Copyright Protection Last?,https://www.copyright.gov/help/faq/faq-duration.html#:~:text=As%20a%20general%20rule%2C%20for,plus%20an%20additional%2070%20years (last visited February 6, 2024).

³Congressional Research Service: Copyright Law: An Introduction and Issues for Congress, https://crsreports.congress.gov/product/pdf/IF/IF12339#:~:text=Exclusive%20Rights%20of%20Copyright%20Owners,%2C%20sequel%2C%20or%20dramatization (last visited February 6, 2024).

⁴Copyright in General,https://www.copyright.gov/help/faq/faq-general.html#:~:text=Copyright%2C%20a%20form%20of%20intellectual,%2C%20computer%20software%2C%20and%20architecture (last visited February 6, 2024).

⁵ Id.

⁶Id.

⁷Id.

⁸Id.

⁹: How Long Does Copyright Protection Last?, https://www.copyright.gov/help/faq/faq-duration.html#:~:text=As%20a%20general%20rule%2C%20for,plus%20an%20additional%2070%20years (last visited February 6, 2024).

¹⁰Id.

¹¹Copyright Law: An Introduction and Issues for Congress, https://crsreports.congress.gov/product/pdf/IF/IF12339#:~:text=Exclusive%20Rights%20of%20Copyright%20Owners,%2C%20sequel%2C%20or%20dramatization (last visited February 6, 2024).

¹² Id.

Understanding Litigation Hold Notices: A Crucial Element in Legal Proceedings

What is Litigation Hold Notice

Understanding Litigation Hold Notices: A Crucial Element in Legal Proceedings

Litigation plays a pivotal role in the legal world, especially when disputes are imminent or ongoing. One of the most critical tools in this process is the litigation hold notice. Also called a legal hold or preservation order, it is a formal communication that instructs organizations and custodians of records to preserve all relevant documents and data related to a legal case.

This proactive step is essential to ensure evidence remains intact. It prevents the destruction, loss, or alteration of crucial information that could affect the outcome of litigation.

What Is a Litigation Hold Notice?

A litigation hold notice is a written directive issued by legal counsel to individuals or organizations who possess potentially relevant records. It informs them of their obligation to preserve all evidence that may be needed for a current or future lawsuit.

This evidence can include:

Physical documents
Emails
Text messages
Photographs and videos
Voicemails
Calendars
Data stored on personal devices, collaboration platforms, cloud storage, or social media

Litigation hold notices are sometimes called “preservation letters” or “stop destruction requests.” Their purpose is to prevent spoliation of evidence—the intentional or accidental destruction of material relevant to the case.

The practice of issuing litigation hold notices gained traction after several New York federal court cases highlighted the need to preserve key records during the discovery phase of litigation.

Key Components of a Litigation Hold Notice

1. Identification of Relevant Information

The notice must clearly outline what information should be preserved. Legal teams work with clients to identify critical records and specify where they may exist. This could include email servers, mobile devices, file cabinets, or cloud accounts.

A well-written notice is simple, direct, and easy to follow, which helps avoid confusion or misinterpretation.

2. Communication to Key Personnel

The notice is usually distributed to essential staff, such as IT professionals, records managers, and department heads. Organizations must also track custodians who leave the company during the litigation hold period to ensure compliance.

3. Clear Instructions and Timelines

Strong litigation hold notices provide step-by-step instructions and timelines. They explain exactly what must be done and when. If a notice is not issued promptly, courts may treat the failure as negligence and assume the destroyed evidence was important to the case.

4. Documentation and Reporting

Organizations must document their compliance efforts. Detailed reports should track which evidence was preserved, how it was safeguarded, and any difficulties encountered. Proper documentation demonstrates good faith and helps avoid sanctions.

Why Litigation Holds Are Important

1. Preservation of Evidence

The primary purpose of a litigation hold is to ensure that potentially relevant evidence remains intact. This guarantees both sides of a case have equal access to the information.

2. Compliance with Legal Obligations

Ignoring a litigation hold can lead to severe consequences. Courts take spoliation of evidence very seriously, and non-compliance may result in sanctions, monetary penalties, or adverse rulings against the offending party.

3. Risk Mitigation

Issuing and enforcing litigation holds promptly helps organizations reduce the risk of legal penalties. It also shows the court that the organization is acting responsibly and in good faith.

Final Thoughts

In today’s complex legal environment, litigation hold notices are essential for preserving fairness and transparency in court proceedings. Organizations must act quickly, communicate clearly, and document their preservation efforts to comply with legal obligations and avoid penalties.

By taking litigation holds seriously, businesses and individuals contribute to a just and efficient resolution of disputes. Staying informed about their importance helps organizations navigate potential legal challenges with confidence.

ⁱStephanie F. Stacy, Litigation Holds: Ten Tips in Ten Minutes, United States District Court District of Nebraska (July 2010),https://www.ned.uscourts.gov/internetDocs/cle/2010-07/LitigationHoldTopTen.pdf.

ⁱⁱ Id.

ⁱⁱⁱSterling Miller, Litigation holds: What in-house counsel needs to know, Thomson Reuters (Sept. 19, 2022), https://legal.thomsonreuters.com/en/insights/articles/litigation-holds-what-in-house-counsel-need-to-know.

^ivTracee Davis, Constance M. Boland & Adam I. Cohen, Best Practices in E-Discovery in New York State and Federal Courts, E-Discovery Committee of the Commercial and Federal Litigation Section of the New York State Bar Association (Apr. 5, 2013), https://nysba.org/app/uploads/2020/02/Ediscovery_Final5.2013.pdf.

^v Zubulake v. UBS Warburgh LLC, 220 F.R.D. 212 (S.D.N.Y. 2003).

^viDavis, Boland & Cohen, supra note iv.

^viiMiller, supra note iii.

^viiiId.

^ixVoom HD Holdings LLC v. Echostar Satellite LLC, 93 A.D.3d 33 (1st Dept. 2012).

^xMiller, supra note iii.

^xiFed. R. Civ. P. 37(e).

^xii See Richard Reice, The Tyranny of the Litigation Hold, New York State Bar Association, 21 NYLitigator, no. 1, 2016, at 19; see also Ortega v. City of New York, 9 N.Y.3d 69, 76, 845 N.Y.S.2d 773, 776 (2007).

How ChatGPT and other generative AI may affect the legal industry

ChatGPT

A Brief Introduction to ChatGPT

“ChatGPT, or similar language models, has the potential to significantly impact the legal industry in various ways”, says ChatGPT when prompted, “how is ChatGPT going to affect the legal industry”. ChatGPT is a machine learning based technology created by OpenAI, an American artificial intelligence (“AI”) research lab aiming to make AI globally user-friendly and accessible.¹ Since OpenAI’s launching of ChatGPT in November 2022, ChatGPT has become one of the most accessible and user-friendly AI models available to the public. Reaching 100 million users in just over two months, ChatGPT may be the fastest-growing consumer app in internet history, and there is no doubt about its influence on various fields such as finance, government, technology, etc.²

The legal industry has access to ChatGPT and other generative AIs at their disposal as well. Seeing a potential for success in the legal field, OpenAI released its latest version of ChatGPT called GPT-4 in March 2023. GPT-4 currently powers CoCounsel, the very first AI legal assistant program now widely used by the legal industry.³ GPT-4 can perform tasks typically handled by lawyers, such as reviewing documents, preparing for a deposition, conducting legal research, and summarizing documents.⁴ As AI advances at an unprecedented speed, its potential impact on the legal profession, especially for lawyers and paralegals, can be evaluated.

ChatGPT’s impact on the Legal Profession

a. What ChatGPT can do

Put simply, generative AI like ChatGPT collects a colossal amount of information and data, breaks it down into small units, analyzes these small units, and puts them together.⁵ Taking advantage of the generative AI’s ability to access and quickly access vast amounts of information, ChatGPT-4 can perform advanced tasks such as drafting documents, legal research, predictive analysis, contract review analysis, and due diligence.⁶ In fact, a LexisNexis survey from March 2022 revealed that over half of the New York lawyers who participated in the survey expressed that they had already used generative AI at work or were planning on doing so.⁷ Currently, the services in the legal profession most likely impacted by AI are those that involve routine and repetitive tasks which are mostly handled by junior associates, leading to cost savings for law firms as AIs can perform those tasks faster.⁸ A study done in March 2023, by researchers at Princeton University, University of Pennsylvania, and New York University, predicted that the industry most vulnerable to the new AI was legal services. ⁹ Another research by Goldman Sachs also predicted that 44 percent of legal work could be automated.¹⁰

The rise of generative AI could also affect the demand for legal services due to its affordability and accessibility. The LexisNexis survey revealed that of around 2,000 consumers in the legal market, around 15% of them stated that they had already tried generative AI for legal advice or assistance.¹¹ As generative AIs become more and more advanced, the number of people turning to AIs for relatively simple legal services are likely to increase and attorneys will see a decrease in the number of potential clients for certain types of legal work.

b. What ChatGPT cannot do

Despite its enthusiastic reception and hype, ChatGPT as of now still remains more as a prospect, according to its inceptor; co-founder and CEO of OpenAI Sam Altman tweeted in December 2022 that ChatGPT is “incredibly limited but good enough at some things to create a misleading impression of greatness.”¹²

A perfect example of his comment comes from a lawyer who used ChatGPT to draft a brief. Most recently in May 2023, a New York lawyer used ChatGPT to draft a brief opposing a motion to dismiss filed against an in-flight personal injury case filed in the Southern District Court of New York.¹³ When the lawyer asked ChatGPT to search for relevant cases to include in his opposition, ChatGPT cited more than half a dozen cases involving flight injuries.¹⁴ The brief contained pinpoint citations from cases such as Martinez v. Delta Air Lines, Zicherman v. Korean Air Lines, and Varghese v. China Southern Airlines.¹⁵ However, it turned out that ChatGPT had invented those cases and the lawyer who did not think that ChatGPT could “make up” cases used them without confirming the validity of the cases. The lawyer was eventually penalized to pay $ 5,000 for sanctions under Federal Rule of Civil Procudure Rule 11 for submitting pleadings that contain arguments that have no evidentiary support.¹⁶

In addition to the aforementioned problem of ChatGPT “making up” facts, ChatGPT is also not up-to-date. ChatGPT does not update its database automatically and/or regularly. ¹⁷ The current version has only been tested with information up to 2021.¹⁸ Therefore, ChatGPT is not aware of and/or does not have any information after 2021, which means its collection of case law, statutes, local ordinances, legislature, news, etc. is outdated and may sometimes even be irrelevant. For example, ChatGPT does not have in its database most recent U.S. Supreme Court cases such as Dobbs v. Jackson Women’s Health Organization that overturned Roe v. Wade in June 2022 and Students for Fair Admissions, Inc. v. President and Fellows of Harvard College that struck down affirmative action in June 2023. Furthermore, because ChatGPT operates by processing potentially inaccurate information, it also produces inaccurate information, with OpenAI claiming a factual accuracy rate between 70-80%.¹⁹ In such a fast paced world where facts have become ever more important, outdatedness and inaccuracy can result in significant negative impact on users in various ways. This in turn means that it is still a little early for people to fully rely on the information and/or work product produced by generative AI assistance.

Legal Implications that Comes with the Increased Use of AI in the Legal Field

a. Privacy

Another concern with generative AI tools like ChatGPT is privacy. According to the OpenAI’s product and service privacy policy, “data ingested into the public ChatGPT model becomes part of the data repository and is not kept private,” and therefore the data could be breached and private information could be leaked.²⁰ Hence there is a potential violation of a duty of confidentiality in using public generative AI, and many firms either ban or only allow limited use of generative AI in fear of privacy violation.²¹ Similarly, private users should keep in mind that the data they put in the public AI could be exposed.

b. Copyright

As explained previously, generative AI such as ChatGPT creates text based on a vast amount of data that is already out, and a huge part of which is copyrighted. Courts’ ruling on whether ChatGPT’s use of such work constitutes an act of copying works that are protected by copyright is not clear because there has not been a case raising the issue. However, it is an implication that users, especially lawyers, need to keep in mind. On the other hand, whether work created by the generative AI can be copyrighted is another interesting question; there is not an abundance of cases regarding the issue. However, the U.S. Copyright Office in its formal guidance said that works created by AI may be copyrightable, provided that the work involves sufficient human authorship. ²²

Verdict?

Artificial intelligence has more heavily been integrated in people’s everyday lives than they may have realized. From customer service, education, content creation, and businesses, more people are turning to tax-filing softwares such as Turbotax to file their tax returns and more and more websites are using AI chat-systems to direct and help customers. The advancement and development of AI are likely not ending anytime soon. In February 2023, Google launched Bard, its experimental artificial intelligence²³ and Meta also introduced its own artificial intelligence, LLaMA (Large Language Model Meta AI).²⁴ The tech industry’s seemingly infinite possibilities fuel competition and investments, and nobody can predict how fast and far it can take us. According to UBS, the AI services market is expected to grow to $90 billion by 2025.²⁵ However, amidst the possibilities, the example of the New York lawyer who used ChatGPT to draft a brief with nonexistent cases reminds us that artificial intelligence is at its core “artificial.”

After a brief pause, ChatGPT added when asked “how is ChatGPT going to affect the legal industry”: “However, it’s important to note that while ChatGPT can be a useful tool, it should not be seen as a substitute for human legal expertise. Legal professionals will still play a crucial role in interpreting and applying the law, exercising judgment, and providing tailored advice to clients. Additionally, ethical considerations surrounding the use of AI in the legal industry, such as privacy, data security, and bias, need to be addressed to ensure responsible and fair deployment.”

¹OpenAI,https://openai.com/ (last visited July 18, 2023).

² Sawdah Bhaimiya, ChatGPT May Be the Fastest-Growing Consumer App in Internet History, Reaching 100 Million Users in Just Over 2 Months, UBS Report Says, Business Insider (Feb. 2, 2023), https://www.businessinsider.com/chatgpt-may-be-fastest-growing-app-in-history-ubs-study-2023-2.

³Casetext https://casetext.com/ (last visited July 18, 2023).

⁴ID.

⁵ Kevin Roose, How Does ChatGPT Really Work?, N.Y.Times (Mar. 28, 2023),https://www.nytimes.com/2023/03/28/technology/ai-chatbots-chatgpt-bing-bard-llm.html

⁶The Potential Impact of Generative AI on Law Firms, FairfaxAssociates.com (May 10, 2023), https://fairfaxassociates.com/insights/the-potential-impact-of-generative-ai-on-law-firms/

⁷Generative AI Captures Iagination of Lawyers, Law Students, Consumers Alike, LexisNexis.com (Mar. 20, 2023), https://www.lexisnexis.com/community/pressroom/b/news/posts/generative-ai-captures-imagination-of-lawyers-law-students-consumers-alike

⁸Id.

⁹Jan Hatzius, Joseph Briggs, Devesh Kodnani & Giovanni Pierdomenico, The Potentially Large Effects of Artificial Intelligence on Economic Growth, Goldman Sachs (Mar. 26, 2023), https://www.gspublishing.com/content/research/en/reports/2023/03/27/d64e052b-0f6e-45d7-967b-d7be35fabd16.html

¹⁰Ed Felton, Manav Raj & Robert Seamans, How will Language Modelers like ChatGPT Affect Occupations and Industries?, Social Science Research Network (Mar. 6, 2023), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4375268.

¹¹Id.

¹² Sam Altman (@sama), Twitter (Dec. 10, 2022 7:11 PM), https://twitter.com/sama/status/1601731295792414720?lang=en.

¹³Benjamin Weiser & Nate Schweber, The ChatGPT Lawyer Explains Himself, N.Y.Times (June 8. 2023), https://www.nytimes.com/2023/06/08/nyregion/lawyer-chatgpt-sanctions.html

¹⁴Id.

¹⁵ Benjamin Weiser, Here’s What Happens When Your Lawyer Uses ChatGPT, N.Y.Times (May 27, 2023),https://www.nytimes.com/2023/05/27/nyregion/avianca-airline-lawsuit-chatgpt.html.

¹⁶ Mata v. Avianca, Inc., No. 54 Civ. 1461 (S.D.N.Y. June 22, 2023), available at https://storage.courtlistener.com/recap/gov.uscourts.nysd.575368/gov.uscourts.nysd.575368.54.0_3.pdf; see also Debra Cassens Weiss, Lawyers Who ‘Doubled Down’ and Defended ChatGPT’s Fake Cases Must Pay $5K, Judge Says, ABA Journal (June 26, 2023), https://www.abajournal.com/web/article/lawyers-who-doubled-down-and-defended-chatgpts-fake-cases-must-pay-5k-judge-says.

¹⁷ OpenAI, What is ChatGPT?, https://help.openai.com/en/articles/6783457-what-is-chatgpt (last visited July 18, 2023).

¹⁸Id.

¹⁹OpenAI, GPT-4, https://openai.com/research/gpt-4 (last visited July 18, 2023).

²⁰Skye Witley, ChatGPT Tempts Big Law Despite AI Accuracy, Privacy Worries (2), Bloomberg Law (June 1, 2023), https://news.bloomberglaw.com/privacy-and-data-security/chatgpt-tempts-big-law-despite-ai-accuracy-data-privacy-worries.

²¹ Stephanie Pacheco, ANALYSIS: AI Has Entered the Chat- Is the Legal Industry Ready?, Bloomberg Law (May 10, 2023),https://news.bloomberglaw.com/bloomberg-law-analysis/analysis-ai-has-entered-the-chat-is-the-legal-industry-ready.

²²Copyright Registration Guidance: Works Containing Material Generated by Artificial Intelligence, 88 Fed. Reg. 16, 190 (Mar. 16, 2023) (to be codified at 37 C.F.R. § 202); see also Blake Brittain, AI-created Images Lose U.S. Copyrights in Test for New Technology, Reuters (Feb. 22, 2023), https://www.reuters.com/legal/ai-created-images-lose-us-copyrights-test-new-technology-2023-02-22/.

²³ Sundar Pichai, An Important Next Step on Our AI Journey, Google (Feb. 6, 2023), https://blog.google/technology/ai/bard-google-ai-search-updates/.

²⁴ Introducing LLaMA: A foundational, 65-billion-parameter large language model, MetaAI (Feb. 24, 2023),https://ai.facebook.com/blog/large-language-model-llama-meta-ai/.

²⁵UBS Editorial Team, Let’s Chat about ChatGPT, UBS (Feb. 23, 2023),https://www.ubs.com/global/en/wealth-management/our-approach/marketnews/article.1585717.html.

The Copyright Implications of AI-Generated Art

Today we are witnessing the rapid advancement of artificial intelligence (AI) technologies which are capable of generating human-like images, audio, and text.¹ While many people are excited by these AI technologies, these advancements have also rung the warning bell for many individuals in creative industries who believe that AI technologies are exploiting their work and harming their profession as a whole. This is especially a concern for the art industry

Recently, AI technologies which generate images have become increasingly sophisticated. These AI technologies are programmed to learn how to generate images from scraping publicly accessible data – in this case images – from the internet.² Consequently, artists are becoming concerned about how their artwork online is being exploited by large companies to train their AI to create new works, often for a profit.

Last year, artists around the world took to the internet and reposted images of a red prohibition circle over the letters “AI” in protest of image-generating AI. The first person to post this image appears to be an artist named Alexander Nanichtkov who stated in a tweet that “AI creates the ‘art’ you see on the backs of artists being exploited . . . AI ‘art’ is currently scraping the web for art and uses it in datasets. No artist gave consent to have their art used. We were not compensated.” ³ In the face of these concerns, many legal professionals are currently considering the extent to which intellectual property rights – particularly copyrights – serve to protect the work of artists.

AI Generated

A variation of the symbol posted in protest of AI generated art.⁴

Under the Copyright Act, copyright protection is only granted to “original works of authorship.” ⁵While there is no law or provision of the United States Constitution which defines who may be considered an “author,” the UnitedStates Copyright Office (USCO) tends to only recognize copyrights for works “created by a human being.” ⁶ Courts actually have a history of denying copyright protection to non-human authors. For instance, in Naruto v. Slater the Ninth Circuit Court of Appeals held that Naruto, a crested macaque, did not have legal standing to claim copyright infringement under the Copyright Act for pictures that Naruto took ⁷ himself. And for those wondering, Naruto’s claims were filed by the People for the Ethical Treatment of Animals (PETA).⁸

Beyond the context of copyright protection for animals, courts have also considered cases regarding copyright protection for AI systems.This past April, the Supreme Court declined to hear an appeal from a computer scientist named Stephen Thaler, who filed a suit to claim a copyright on behalf of hisAI system, known as Device for Autonomous Bootstrapping of Unified Sentience (DABUS).⁹ Although Thaler argued that DABUS created the works autonomously, the Court upheld the decision of the lower courts and the USCO, and declined his appeal “on the grounds that the AI couldn’t be considered the legal creator of those works.” While these decisions may seem promising to human artists since they deny copyright protection to non-human authors, the issue of AI generating images is far from settled.

The U.S. Patent and Trademark Office acknowledges when these AI technologies scrape data from the internet to generate images, this process “will almost by definition involve the reproduction of entire works or substantial portions thereof,”¹⁰ and as a result, copyright infringement seems quite plausible. In fact, a recent decision by the USCO has ruled that AI generated works – whether that is art, writing, or music – will not be granted copyright protection. ¹¹ This decision arose from a copyright application for a comic called Zarya of the Dawn, which used original writing alongside art generated by Midjourney, an AI program.¹² In their letter to Zarya creator Kristina Kashtanova, the USCO explained how “the office will not register works produced by a machine or mere mechanical intervention from a human author” and how the crucial question is “whether the ‘work’ is basically one of human authorship, with the computer . . .merely being an assisting instrument, or whether the traditional elements of authorship in the work . . . were actually conceived and executed not by man but by a machine.” ¹³

book

The cover page and second page of Zarya of the Dawn¹⁴

On the other hand, OpenAI, a company that uses AI generating tools, has argued that the works created by AI tools should be protected since they qualify as fair use since the process of scraping data from the internet is done to “create a useful generative AI system and the copies aren’t made available to the public.” ¹⁵ To provide another recent example, this past February Getty Images sued Stability AI alleging that it “copied at least 12 copyrighted images from Getty Images’websites” to train their Stable Diffusion AI program.¹⁶ While Stability AI responded with a fair use defense, Getty argues that this defense is inapplicable since Stability AI’s AIprogram undermines the market for Getty’s copyrighted material. At the same time, Stability AI is also facing a class action lawsuit from several artists alleging copyright infringement due to the use of their images to train their AI programs.

AI image-generating tools have also caused controversies since they can scrape data to mimic a particular artist’s style.This past January, DeviantArt – an online art website – was sued for copyright infringement after they began offering a new service in which users could pay a monthly subscription to access an AI art generator.¹⁷ This AI art generator was trained on the artwork of artists who uploaded their art to DeviantArt for free,and users could enter a text prompt to generate images.¹⁸ Furthermore, users of this AI tool could even input a specific artist’s name in order to create an image which replicated that exact artist’s style.¹⁹ The claim argues that this constitutes copying and consequently breaches copyright. ²⁰ While this may seem like a clearcase of copyright infringement, not everyone in the legal community agrees. For example, Andres Guadamuz, a legal school at the University of Sussex, believes that these AI tools are simply learning patterns from the original works, brushstrokes, and styles which are not covered by copyright law.²¹

To add another layer of complexity to this matter, the USCO has stated that an AI-generated work could be copyrightable if an individual can prove that “they themselves put a meaningful amount of creative effort into the final content.” ²² In other words, while a company that uses an AI system, which scrapes images from the internet to produce new content, may be found to have committed copyright infringement, if that company can prove they added ameaningful amount of creative effort to the final product, then the company could actually argue that they have a valid copyright in the new work.²³ This would overcome the previous problem that individuals have faced when they tried to make an AI system a copyright holder.

This does not mean however, that minimal contributions made to an AI-generated work would automatically qualify for copyright protection. The Director of the USCO Shira Perlmutter stated “If a work’s traditional elements of authorship were produced by a machine, the work lacks human authorship and theOffice will not register it.”²⁴ For example, if an AI system produced a work solely based on a human prompt then the “’traditional elements of authorship’ are determined and executed by the technology – not the human user.”²⁵ On the other hand, if an AI-system produced a work of art based on a human prompt,and then that finished work was then edited further using Photoshop, the USCO has stated that a copyright is more likely to be granted.²⁶

This new stance on the copyrightability of AI-generated works brings with it a wide array of new problems. For example,there is no definitive standard or test which could be used to determine whether a company or individual has made a meaningful enough contribution to an AI-generated work which would qualify it for copyright protection. As previously mentioned, the Director of the USCO Shira Perlmutter stated that if a meaningful human contribution is made to an AI-generated image, through Photoshop for example, then the AI-generated work could qualify for copyright protection.However, there would need to be further clarification or case law on how much Photoshop editing would be required to qualify as a meaningful contribution to the work. Companies could quickly make contributions to an AI-generated work on Photoshop and as a result they could defeat copyright infringement claims.This would be especially harmful to artists whose original works are used without their consent to train these AI systems which then create new works fora profit. Additionally, these new works created by AI systems could be sold at a far cheaper price since producing them is drastically quicker than the cost of human artists creating original works. This could lead to severe economic harms to human artists and could have even greater implications for theart industry as a whole.

Despite the bleakness of this situation, there may be a light at the end of the tunnel which could prevent generative-AI from gettingout of hand and inflicting severe harm on human creators. One popular method which has been discussed to control the rapid growth of generative-AI is theimplementation of some sort of licensing system.²⁷ This type of licensing system would require companies using generative-AI to pay copyright holders a fee forusing their works in training their AI systems. This licensing system could offset some of the harm caused by generative-AI since human artists could refuse to license their original works, or they could at least be compensated for allowing their work to be used to train an AI system. Unfortunately, this licensing systemmay not address the greater problem of unfair competition between generative-AI and human artists since companies could produce new works at a far quicker and cheaper rate than human artists creating original works.

Due to the recent advancement of AI technologies and their benefits, it is likely that generative-AI systems will continue to be used for the foreseeable future. Furthermore, since these AI technologies are very new, our laws and courts are not fully prepared to handle the quickevolution of these new technologies. As a result, the consequences and effects of generative-AI systems must be continually considered since they can pose substantial harm to human artists.

¹ Eric Revell, AI complicates copyright law, YAHOO! FINANCE (May 19, 2023), https://finance.yahoo.com/news/ai-complicates-copyright-law-131932670.html.

²Id.

³ Butlerian Jihad, ARTISTS MASS PROTEST AGAINST AI STEALING THEIR WORK BY SHARING ANTI-AI LOGO, THE_BYTE (Dec. 16, 2022),. https://futurism.com/the-byte/artists-protest-ai

⁴Verity Babbs, Digital Artists Are Pushing Back Against AI, HYPERALLERGIC (Mar. 6, 2023), https://hyperallergic.com/806026/digital-artists-are-pushing-back-against-ai/.

⁵ 17 U.S.C. § 102

⁶Revell, supra note 1.

⁷Naruto v. Slater, 888 F.3d 418, 426 (9th Cir. 2018).

⁸Revell, supra note 1.

⁹Id.

¹⁰Id.

¹¹ Sam Sachs, US Copyright Office Rules AI-generated artwork, content not legally protected, WFLA (Feb. 23, 2023, 2:30 PM),https://www.wfla.com/news/national/us-copyright-office-rules-ai-generated-artwork-content-not-legally-protected/.

¹²Id.

¹³Id.

¹⁴Richard Lawler, The US Copyright Office says you can’t copyright Midjourney AI-generated images, THE VERGE (Feb. 22, 2023, 9:06 PM),https://www.theverge.com/2023/2/22/23611278/midjourney-ai-copyright-office-kristina-kashtanova.

¹⁵Id.

¹⁶Id.

¹⁷ Darian Woods & Adrian Ma, AI-generated images breach copyright law, artists say, NPR (Feb. 7, 2023), https://www.npr.org/2023/02/07/1155185861/ai-generated-images-breach-copyright-law-artists-say.

¹⁸Id.

¹⁹Id.

²⁰Id.

²¹Id.

²²Katyanna Quach, AI-generated art can be copyrighted, say US officials – with a catch, THE REGISTER (Mar. 16, 2023), https://www.theregister.com/2023/03/16/ai_art_copyright_usco/.

²³Id.

²⁴Id.

²⁵Id.

²⁶Id.

²⁷Kai Nicol-Schwarz & Tim Smith, Why Harry Potter is the copyright timebomb under generative AI models, SIFTED (May 18, 2023), https://sifted.eu/articles/generative-ai-copyright.

Attorney-Client Privilege: Protections and Pitfalls

Attorney Client Privilege: Protection and Pitfalls

Inadvertent disclosure of privileged documents is an issue that periodically arises for lawyers and clients. Recently, Infowar host and founder, Alex Jones’ attorneys had to deal with an inadvertent disclosure to the opposing parties of cellphone records protected by attorney-client privilege during the Sandy Hook massacre defamation case proceeding against him.¹ Understanding how to deal with inadvertent disclosure and what remedies are available is an important aspect of legal practice because attorneys can find themselves (or their client) suffering from an inadvertent disclosure of protected information or, conversely, being presented with inadvertently disclosed documents.

Privilege? What is that? Do I Have It?

In order to understand the legal parameters of returning attorney-client privileged material, it needs to be understood by what is meant when referring to “attorney-client privilege”, “inadvertent disclosure of privileged material,” and “protective orders ordering return of inadvertently disclosed information.” Remember, the client is the holder of the privilege.

In today’s legal proceedings, New York courts almost exclusively rely upon the common law in their application of “attorney-client privilege.”¹ This is evidenced in the case, People v Belge, where the Onondaga County Court ordered the defendant to produce corporate records as per a subpoena duces tecum, but the appellant refused and claimed that these records were protected by attorney-client privilege. The Onondaga County Supreme Court held the defendant in contempt and sentenced to the Onondaga County Correctional Facility at Jamesville after defendant rejected the Court’s order of providing the records in camera.³Upon the defendant’s subsequent appeal, the Appellate Court stated that the appellant-defendant was not referring to Fifth Amendment privilege, but rather to the privilege of confidentiality in an attorney-client relationship.⁴The Court ruled that for information to be protected under “attorney-client privilege”, there must be an attorney-client relationship and “the information must have been given with the expectation of confidentiality and for the purpose of obtaining legal…advice.”⁵The Court affirmed the Court’s ruling that the appellant was contemptuous, but vacated the sentencing and remanded the case back to the Onondaga County Court to allow the appellant to make a disclosure of the records under oath.⁶

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Can I Lose My Privilege? What If I Send Accidentally Reveal Something?

Next, having established what constitutes “attorney-client privilege”, we move to the inadvertent disclosure of privileged material and reclaiming that material via protective order. Previously, some courts held that inadvertent disclosure of privilege documentation served as an automatic waiver of said privilege because the client and attorney possess sufficient means to preserve the secrecy of a communication, and because disclosure makes achievement of the benefits of the privilege impossible.⁷ Thankfully, this jurisprudence has been augmented to a more forgiving common law rule, which states that inadvertently disclosed material is still protected under attorney-client privilege, subject to the satisfaction of several factors.⁸ For privileged information to remain protected under “attorney-client privilege” when inadvertently disclosed, it needs to be shown that: (1) it was the client’s intention to retain the confidentiality of the privileged material; (2) the client took reasonable steps to prevent disclosure; (3) the client promptly objected to the disclosure; and, (4) the party claiming the waiver would not be prejudiced if a protective order is issued for said privileged materials.⁹ Furthermore, the burden of proving that the privilege applies is on the party asserting the privilege.¹⁰Next, if during a proceeding, a court concludes that inadvertent disclosure was not a waiver of “attorney-client privilege”, then that finding serves as grounds for returning the privileged documentation back to the party moving for the protective order, but this demand of return has to be expressed in the motion for the protective order.¹¹ Comment 4(2) of Rule 4.4 of the ABA Model Rules of Professional Conduct states the following regarding the return of inadvertent documentation: “Whether the lawyer is required to take additional steps, such as returning the document or electronically stored information, is a matter of law beyond the scope of these Rules, as is the question of whether the privileged status of a document or electronically stored information has been waived.”

In Manufacturers and Traders Trust Co. v. Servotronics, Inc., plaintiff, Manufacturers and Traders Trust Co., and Defendant, Servotronics Inc., executed two agreements, the Debt Modification Agreement and the Sinking Fund Agreement.¹² The defendant discovered that six documents were inadvertently disclosed to the plaintiff.¹³ The defendant moved for a protective order for the documents to be returned and for an injunction preventing the plaintiff from utilizing the six documents.¹⁴ Special Term denied the defendant’s motion.¹⁵The Appellate Court unanimously reversed and granted the protective order, thus returning the six documents.¹⁶ The Court first ruled that the six documents were protected by “attorney-client privilege” because Defendant satisfied the rule constructed in People v. Belge.¹⁷ The Court then ruled that the inadvertent disclosure of the six documents did not serve as a waiver of “attorney-client privilege.”¹⁸ Utilizing the four factors mentioned above, the Court reasoned that it was not the defendant’s intention to disclose the documents, as evidenced by the vice-president of the defendant bank stating that they did not intend to disclose.¹⁹ To satisfy the second factor, the Court stated that the defendant took reasonable steps to prevent disclosure, as evidenced by the screening of all the material by the defendant’s lawyers prior to handing over the materials to the plaintiff.²⁰ For the third factor, the Court stated it was sufficient that, after learning about the inadvertent disclosure, the defendant only took two days to initiate proceedings for a protective order.²¹ For the fourth and final factor, the Court concluded that a protective order would not prejudice the plaintiff because the defendant quickly began proceedings and didn’t exacerbate the error by testimony.²²

Regarding the last factor, which addresses prejudice towards the party claiming waiver of privilege, the party claiming waiver of attorney-client privilege is prejudiced when it relies on the contents of the inadvertently disclosed information and the information is relevant to the case in question.²³ In the case, AFA Protective Systems, Inc. v. City of New York, after a series of failed settlement discussions between the parties from December 1994 and November 1998, plaintiff AFA informed defendant City of New York via letter that they have in their possession a memorandum, dated February 17, 1994, written by one of the former defendant’s attorneys.²⁴ AFA stated their intention to file this memorandum with the Court in support of its summary judgment motion.²⁵ City of New York soon thereafter objected to AFA’s intended use of the memorandum claiming that the content of the memorandum is protected by attorney-client privilege.²⁶ Utilizing the four factors test established by Manufacturers and Traders Trust Co., the Appellate Court stated that the City of New York knew for four years that the memorandum was in AFA’s possession.²⁷ There is no evidence to suggest that the City of New York, after learning of AFA’s possession of the memo, demanded its return nor is there evidence of the City figuring out whether the memo was inadvertently or unlawfully disclosed.²⁸ Therefore, the Court held that granting a protective order would be prejudicial to AFA because the memo is relevant to this case and AFA relied on the contents of the memo in support of their summary judgment motion.²⁹ The Court reversed the lower court’s decision and denied the City of New York’s motion for a protective order.³⁰

Conversely, in federal court, when the inadvertently disclosed information is not vital to the arguments presented by the party claiming the waiver, then they wouldn’t be prejudiced if a protective order is issued. For instance, in Employers Ins. Co. of Wausau v. Skinner, in response to document requests, Plaintiff delivered 396 documents to Defendants Skinner.³¹ Amongst these documents was an email that the Plaintiff later claimed was inadvertently disclosed.³² Thus, Employers motioned for a protective order ordering Skinner to return or destroy the original and copies made of the email and to preclude Skinner from utilizing the email in any way.³³ Upon evaluation of the prejudice factor, the Court stated that although the contents of the email related to the present action, the contents of the email are not vital to Skinner’s arguments.³⁴ The Court reasoned that Skinner would still be capable of making their arguments even without the contents of the email.³⁵

Similarly, in Long Island Lighting Co. v. Allianz Underwriters Ins. Co., the Appellate Court stated that a protective order prohibiting the use of plaintiff LILCO’s December 1993 Report, an internal report marked “Privileged and Confidential Attorney Work Product Attorney-Client Communication”, would not be prejudicial towards the defendants because the defendants’ motion for summary judgment was supported by over 200 documents, other than the December 1993 Report.³⁶ The December 1993 Report was not vital enough to make granting a protective order prejudicial against the defendants.³⁷

Attorney Client Privilege

In conclusion, the arguments and precedent alluded to above signifies that inadvertently disclosed information protected by attorney-client privilege is not always protected. Rather, in certain scenarios, the claim of attorney-client privilege will not be sufficient enough to warrant a protective order, especially when there are factors that may be prejudicial to the other party. Relevance of the information to the matter at hand, and the actions of both the client and their counsel, are key factors that the Court considers prior to making a determination on whether certain information should remain in confidence. Thus, it is increasingly important for attorneys to monitor, undergo multiple reviews, and establish internal systems that ensure protection of all attorney-client privileged information before any inadvertent disclosure occurs, as there is no assurance that such mistakes will be rescindable.

¹See David L. Hudson Jr., Alex Jones case shows inadvertent disclosure of electronically stored information is a real risk, ABA Journal, Oct. 27, 2022, https://www.abajournal.com/web/article/alex-jones-case-shows-inadvertent-disclosure-of-electronically-stored-information-is-a-real-risk.

²See Spectrum Systems Intern. Corp. v. Chemical Bank, 78 N.Y.2d 371 (N.Y. 1991); People v. Belge, 59 A.D.2d 307 (4th Dep’t 1977); Forman v. Henkin, 93 N.E.3d 882, 887 (N.Y. 2018); BDO USA, LLP v. Franz, 208 A.D.3d 1088 (1st Dep’t 2022).

³People v. Belge, 399 59 A.D.2d 307, 308 (4th Dep’t 1977).

⁴See id.

⁵Id.

⁶Id. at 309.

⁷Manufacturers and Traders Trust Co. v. Servotronics, Inc., 132 A.D.2d 392, 398 (4th Dep’t 1987); Enterprise Architectural Sales, Inc. v. Magnetic Builders Group LLC, 193 A.D.3d 411 (1st Dep’t 2021); Delta Financial Corp. v. Morrison, 819 N.Y.S.2d 425, 429 (Sup Ct, Nassau County 2006).

⁸Manufacturers and Traders Trust Co., 522 N.Y.S.2d at 395.

⁹Id. at 398, 399.

¹⁰Id. at 398.

¹¹Campbell v. Aerospace Products Intern., 37 A.D.3d 1156, 1157 (4th Dep’t 2007).

¹²Manufacturers and Traders Trust Co., 522 N.Y.S.2d at 393.

¹³Id.

¹⁴Id.

¹⁵Id.

¹⁶Id. at 399.

¹⁷Id. at 395.

¹⁸Id. at 393.

¹⁹Id. at 398.

²⁰Id. at 399.

²¹Id.

²²Manufacturers and Traders Trust Co., 522 N.Y.S.2d at 399.

²³AFA Protective Systems, Inc. v. City of New York, 13 A.D.3d 564, 565 (2d Dep’t 2004).

²⁴Id.

²⁵Id.

²⁶Id.

²⁷Id. at 565.

²⁸Id.

²⁹Id.

³⁰Id.

³¹Employers Ins. Co, 2008 WL 4283346 at *1.

³²Id.

³³Id. at *10.

³⁴Id.

³⁵Id.

³⁶Long Island Lighting Co. v. Allianz Underwriters Ins. Co., 301 A.D.2d 23, 31 (1st Dep’t 2002).

³⁷Id.

Mechanical Doping: The Running War on Super Shoes

Ever since Pheidippides ran from Marathon to Athens, athletes of all levels have marveled at the pursuit of running a marathon.¹ 26.2 miles is an incredibly daunting task, and professionals to amateurs alike have learned to respect the distance – the race does not owe anyone anything. The allure of competitive racing is the act of accomplishing something that many others cannot, as well as breaking personal barriers and records. For years, feats in professional distance running saw few advances and many runners were reaching unbreakable plateaus using the same shoes they’ve been wearing for years (with very minor advances in shoe technology). However, in recent years, many big players in sportswear have begun to develop what are now being called “super shoes.”² Basically, this category of running footwear is inclusive of any shoe that is meant to be fast and lightweight with enough cushion and bounce to propel your next step to the finish.³ However, it is the implementation of a few more specific attributes that has garnered attention from runners, coaches, and sports journalists worldwide – carbon plates and engineered mesh upper.⁴ The addition of this plate, along with lightweight yet stable uppers, allows for a greater energy return during a runner’s stride and was marketed to have increased running economy by roughly over 4%, hence Nike’s naming of their shoe to be the “Vaporfly 4%.”⁵

Runners in Nike's Vaporfly & Alphafly | Best Corporate Law Firm in New York City

Runners in Nike’s Vaporfly & Alphafly

Super shoes are highly controversial by their very nature, and many consider them to be a form of “mechanical doping.”⁶ Mechanical doping has been at the subject of controversy in other endurance sports like swimming and cycling, as products in production have been banned for the unfair advantages that they offer the athletes who use them.⁷ Further, many regulations have needed to be put into place to prevent and monitor this form of “doping” by sports and rules federations around the globe.⁸ The advantages these super shoes offer to runners are no exception, as they seem highly unfair to runners who compete without them and almost appear illegal. In fact, Nike’s original Vaporfly model was banned from competition initially.⁹ Professional marathon runner and motivational athlete Eliud Kipchoge broke the all-time world record for his sub 2-hour marathon time in one of Nike’s super shoes, the Alphafly Next%¹⁰, and many athletes and critics were quick to discredit his time and overlook his race as a result almost entirely obtained because of his shoes.¹¹ The reasoning adopted by these critics, albeit flawed¹², does have roots in a serious issue regarding those shoes. The main reason for this argument was because, at the time, Nike was the only player in the sport making sneakers at this caliber and with this level of new technology.¹³ Their running shoe technology was groundbreaking, and non-Nike sponsored athletes were surely paying the price.¹⁴ Athletes at all levels that were not sponsored by Nike could not seem to catch a break, as, until recently, athletes at the podium were all sporting Nike running shoes alongside their medals and accolades. But now, seemingly every competing sportswear company that produces high-level running shoes is releasing models that can compete with Nike’s. Nike is still considered the mecca of running shoe producers to many, yet various athletes are breaking records and out-running Nike athletes in non-Nike shoes.¹⁵ Now, Nike is fighting back to remain at the top of the super shoe food chain.¹⁶

Super shoes | Runners in Nike's Vaporfly & Alphafly | Best Corporate Law Firm in New York City

Eliud Kipchoge with Alphafly Next%’s

To very little surprise, the most popular competitor for Nike in this running shoe arms race is Adidas. The Checks vs. Stripes feud seems to date back nearly as far as Nike’s inception itself.¹⁷ You can imagine Adidas’ frustration when a company decades younger has soared to the top of nearly every sports market.¹⁸ But Adidas has been able to rival Nike’s Vaporfly and Alphafly models with the introduction of the Adidas Adios Pro line.¹⁹ These Adidas shoes are made using Primeknit technology, while Nike’s are made using patented Flyknit technology, and this is where the issue lies.²⁰ Nike claims that Adidas has stolen their “game-changing” technology for various product designs, seeking injunctive relief as well as monetary damages.²¹ Before this complaint filed by Nike, Adidas lost in the U.S. Court of Appeals for the Federal Circuit to Nike after alleging that Nike violated two patents owned by Adidas.²² As part of their request for injunctive relief, Nike has further requested that the U.S International Trade Commission block all imports of various Adidas shoe models that allegedly infringe on Nike’s patented designs and technology.²³ These patents that Nike seeks to protect are some of the most crucial aspects to the Vaporfly and Alphafly designs, as they allow the shoe to be extremely lightweight and comfortable, which in turn increases running performance in users.²⁴ This technology is constantly being improved upon and changed, so it is uncertain whether these patent disputes are worth it for these companies in the long term, but for now they do not appear to be going away. Nike will attempt to protect their designs to stay on top, while Adidas will fight to remain as competitive as they can be as a late player to the game. While many other running brands, like Asics²⁵, have developed a more unique model of super shoe, it is notable that Nike and Adidas are seemingly the only players that wish to compete not only with the entire market, but with each other in a separate battle to the finish.

Runners in Nike's Vaporfly & Alphafly | Best Corporate Law Firm in New York City

Nike Alphafly Next% vs. Adidas Adios Pro

It is difficult to deny the extent and breadth of Nike’s impact on sportswear and the running world.²⁶ While their competitive edge remains prevalent, many new players in the game of elite super shoe production seem to be startling the industry leader. It will be very interesting to see how this case ultimately plays out, as it will set important precedents in running shoe technology advances as super shoes only seem to be getting better and better with each new model. Moreover, it will be just another landmark case in the ongoing battle between Nike and Adidas to see who truly reigns supreme as the top sportswear brand.²⁷

As this case continues, and as progressively more people pick up competitive racing as a result of the Covid-19 pandemic²⁸, it is likely for us to see many similar complaints and cases regarding running shoe technology begin to develop. And it makes sense – superpower companies will always try to protect technology and products that they believe to be proprietary and top-notch, and smaller corporations will always fight to remain competitive in a market dominated by only a fraction of the total players. As of July 2022, Adidas and Nike are both set to release brand new models of their super shoes, the Adizero Adios Pro 3 and the Alphafly Next% 3 respectively, before the Fall 2022 marathon season.²⁹ This will indeed make for a very interesting sneaker battle come time for the results of the fall circuit, and possibly the king of super shoes will be crowned once and for all.

¹See Dean Karnazes, The Real Pheidippides Story, Runner’s World (Dec. 6, 2016), https://www.runnersworld.com/runners-stories/a20836761/the-real-pheidippides-story/.

²Jonathon Taylor, Super shoes: Explaining athletics’ new technological arms race, The Conversation (Mar. 2, 2021, 7:47 AM), https://theconversation.com/super-shoes-explaining-athletics-new-technological-arms-race-156265.

³See Jonathon Taylor, Super shoes: Explaining athletics’ new technological arms race, The Conversation (Mar. 2, 2021, 7:47 AM), https://theconversation.com/super-shoes-explaining-athletics-new-technological-arms-race-156265; Bryce Dyer, Nike Vaporfly ban: why World Athletics had to act against the high-tech shoes, The Conversation (Feb. 6, 2020, 6:50 AM), https://theconversation.com/nike-vaporfly-ban-why-world-athletics-had-to-act-against-the-high-tech-shoes-131249.

⁴E.g. Jonathon Taylor, Super shoes: Explaining athletics’ new technological arms race, The Conversation (Mar. 2, 2021, 7:47 AM), https://theconversation.com/super-shoes-explaining-athletics-new-technological-arms-race-156265.

⁵Id.

⁶E.g. THE CURIOUS CASE OF MECHANICAL DOPING, Sneaker Speculation (May 7, 2020), https://sneakerspeculation.com/2020/05/07/the-curious-case-of-mechanical-doping/.

⁷See id.

⁸See id.

⁹E.g. Stuart Greenwood, Kicking up a storm – a breakdown of Nike’s ground-breaking and controversial range of running shoes, AA Thornton (Feb. 2020), https://www.aathornton.com/nike-vaporfly/; Wall Street Journal, The Controversy Behind Nike’s Vaporfly Running Shoe, Explained | WSJ, YouTube (Jan. 23, 2020), https://www.youtube.com/watch?v=wVXrIaPuP7c.

¹⁰Luis Torres, How Eliud Kipchoge and the Nike AlphaFly Made History, Nice Kicks (Oct. 14, 2019), https://www.nicekicks.com/how-eliud-kipchoge-and-the-nike-alphafly-made-history/.

¹¹See James Witts, Technological doping: The science of why Nike Alphaflys were banned from the Tokyo Olympics, Science Focus (Sept. 4, 2021, 4:00 PM), https://www.sciencefocus.com/the-human-body/nike-alphafly-banned-technological-doping/.

¹²See Brian Metzler, Banning Kipchoge’s Shoes Is the Dumbest Take in Running Right Now, Runner’s World (Oct. 21, 2019), https://www.runnersworld.com/gear/a29533576/ban-kipchoge-nike-shoes-vaporfly/.

¹³E.g. Running shoe tech: The Emperor’s clothes, and the issues for the integrity of running, The Science of Sport (Feb. 6, 2020), https://sportsscientists.com/2020/02/running-shoe-tech-the-emperors-clothes-and-the-issues-for-the-integrity-of-running/.

¹⁴THE CURIOUS CASE OF MECHANICAL DOPING, Sneaker Speculation (May 7, 2020), https://sneakerspeculation.com/2020/05/07/the-curious-case-of-mechanical-doping/.

¹⁵See Tony Owusu, Adidas Runs Into Nike FlyKnit Patent Lawsuit, TheStreet (Dec. 10, 2021, 9:18 AM), https://www.thestreet.com/investing/nike-sues-adidas-flyknit-patent.

¹⁶E.g. Rachel Bernardo, How Adidas Develops Adizero For World Record Performances, Believe In The Run (Apr. 21, 2022), https://www.believeintherun.com/adidas-adizero-roads-to-records/.

¹⁷NIKE VS ADIDAS: A CLASH OF GIANTS TO DOMINATE THE SNEAKER MARKET, AIO bot (Oct. 6, 2017), https://www.aiobot.com/nike-and-adidas-fight/.

¹⁸Id.

¹⁹See Brandon Law, Comparison: Nike Alphafly Next% vs Adidas Adizero Adios Pro, Running Shoes Guru (last visited July 6, 2022), https://www.runningshoesguru.com/comparison/nike-alphafly-next-vs-adidas-adizero-adios-pro/.

²⁰Id.

²¹Id.

²²See Blake Britian, Nike asks U.S. agency to block Adidas shoe imports, citing patents, Reuters (Dec. 9, 2021, 12:16 PM), https://www.reuters.com/legal/transactional/nike-asks-us-agency-block-adidas-shoe-imports-citing-patents-2021-12-09/; Brendan Pierson, IN BRIEF: Nike prevails in shoe patent dispute with Adidas, Reuters (June 25, 2020, 6:57 PM), https://www.reuters.com/article/ip-nike/in-brief-nike-prevails-in-shoe-patent-dispute-with-adidas-idUSL1N2E22SN.

²³Id.

²⁴Tony Owusu, Adidas Runs Into Nike FlyKnit Patent Lawsuit, TheStreet (Dec. 10, 2021, 9:18 AM), https://www.thestreet.com/investing/nike-sues-adidas-flyknit-patent.

²⁵Cory Smith, ASICS Challenges Nike Super Shoe With ‘MetaSpeed Sky’: Review, Gear Junkie (Mar. 29, 2021), https://gearjunkie.com/footwear/asics-metaspeed-sky-running-shoe-review.

²⁶E.g. id.

²⁷See Nike vs Adidas Case Study: Who Is Winning? All You Need To Know, 440 Industries (Sept. 23, 2021), https://440industries.com/nike-vs-adidas-case-study-who-is-winning-all-you-need-to-know/.

²⁸Wings for Life World Run, Running becoming increasingly popular, Red Bull (Jan 2, 2021), https://www.redbull.com/in-en/running-becoming-increasingly-popular.

²⁹See Taylor Willson, NIKE VS ADIDAS: BATTLE OF THE “SUPER SHOE”, Highsnobiety (June 15, 2022), https://www.highsnobiety.com/p/nike-alphafly-next-2-adios-pro-3-super-shoe-info/.

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