Scanning books to create a searchable database of books constitutes fair use. Scanning books to create eBooks does not. Will scanning images (or other copyright-protected content) to create a generative AI model for use in creating images be deemed fair use?
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Corporate & Commercial
Negative Option Practices Under Increased Scrutiny in the US
Retailers and service providers with US business operations should take note: the Federal Trade Commission (FTC) is increasing its scrutiny of negative option marketing activity to combat unfair or deceptive practices related to subscriptions, memberships and other recurring-payment programs. The FTC just issued a notice of proposed rulemaking as part of its ongoing review of its 1973 Negative Option Rule—one of the primary guides for the FTC’s enforcement focus.
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Copyright Office Artificial Intelligence Initiative and Resource Guide
On March 16, 2023, the U. S. Copyright Office (USCO) launched a new AI Initiative to examine the copyright law and policy issues raised by artificial intelligence (AI), including the scope of copyright in works generated using AI tools and using copyrighted materials in AI training. According to the USCO: “This initiative is in direct response to the recent striking advances in generative AI technologies and their rapidly growing use by individuals and businesses.” It is also a response to requests from Congress and the public.
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DOJ Loses Third Consecutive Antitrust Labor Trial
The Department of Justice (DOJ) lost its third jury trial in its mission to secure criminal convictions against companies and executives accused of labor-side antitrust violations on March 22, 2023, when a jury in Maine acquitted four home healthcare staffing executives of violating Section 1 of the Sherman Act. In United States v. Manahe, the DOJ charged Faysal Kalayaf Manahe, Yaser Aali, Ammar Alkinani, and Quasim Saesah with entering into an approximately two-month conspiracy between April and May 2020 not to hire each other’s caretakers and to fix caretaker wages.[1] After the district court declined to dismiss the indictment,…
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California’s Toxic-Free Cosmetics Act Bans 24 Ingredients From Cosmetic Products
Effective January 1, 2025, a new California law will prohibit 24 ingredients from use in cosmetic products. California’s Toxic-Free Cosmetics Act [Assembly Bill (“AB”) 2762] was signed into law by Governor Gavin Newsom on September 30, 2020, amidst continued public health concerns about chemicals in consumer products. The law makes California the first state to effectuate a state-wide ban of these ingredients, all of which are already banned by the European Union.
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Non-Compete and No-Poach Agreements: Towards Convergence of the US and EU Approaches?
Following up on an earlier blog post outlining the United States Federal Trade Commission’s (“FTC”) increased regulatory action against non-compete agreements in employment contracts,[1] a view across the pond reveals that European competition authorities follow these developments with interest – the prospect of groundbreaking new developments is more limited, though.
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FTC Seeks to Block Deal Between Top Mortgage Loan Technology Providers
On March 9, the FTC unanimously voted to block the proposed merger between the nation’s largest provider of home mortgage loan origination systems (LOS) and other key lender software tools, and its top competitor that offers the same services. In its complaint, the FTC alleged that one company owns the country’s dominant LOS platform, while the other company owns and operates the second-largest platform. In a press release announcing the administrative complaint, the FTC stated that the deal “would drive up costs, reduce innovation, and reduce lenders’ choices for tools necessary to generate and service mortgages.”…
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Buying or Selling a Small Business Government Contractor? Draft the Letter of Intent Carefully to Avoid Immediate Affiliation
Buying a small business government contractor may not be as simple as a standard acquisition. This is particularly true if the small business wants to continue to qualify for federal small business set-aside and sole-source awards during negotiations. The U.S. Small Business Administration (“SBA”) treats stock options, convertible securities, and agreements to merge (including agreements in principle), as having a “present effect” on the power to control a concern. So if a letter of intent is sufficiently firm to be considered an agreement in principle, the SBA’s regulations require such agreements be given “present effect” on the power to control…
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Copyright Office Guidance on AI
The U.S. Copyright Office (“Office”) has published guidance on its policy and practices for examining and registering works that contain material generated by the use of artificial intelligence technology. Some of the key points include the following:…
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“Sanctions Are The New FCPA”: DOJ Increases Focus on Sanctions and Export Control Enforcement
On March 2, 2023, Deputy Attorney General Lisa Monaco delivered remarks to the ABA’s National Institute on White Collar Crime. Unsurprisingly, her remarks focused heavily on inspiring a culture of compliance – including highlighting the DOJ’s new policy to incentivize companies to self-report criminal activity (which our Organizational Integrity Group discusses here). But, her remarks also emphasized an emerging priority for DOJ enforcement: the intersection of corporate crime and national security.
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Summary of Actions Taken by US Government on Sunday, March 12 in Response to SVB Failure and Related Fallout
Following the FDIC’s actions on Friday to place Silicon Valley Bank (“SVB”) in receivership, the Department of the Treasury, the FDIC, and the Federal Reserve announced several measures on Sunday, March 12, 2023 aimed at avoiding contagion in the banking sector and protecting depositors.
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China to Establish National Bureau of Data
According to the State Council’s Institutional Reform Plan released on March 7, 2023, the State Council will establish a National Bureau of Data (“NBD”), and it will be administrated by the National Development and Reform Commission (“NDRC”). Pursuant to the announced responsibilities, the NBD will be in charge of “coordinating the construction of data infrastructure, integrating and sharing data resources, and promoting the planning and development of digital China, digital economy, and digital society.”…
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U.S. Outbound Investment Restrictions Are Becoming a Reality
Key Takeaways:
- Outbound investment rules may require notification, but there is less risk of transactions being blocked by regulators.
- Investments in advanced semiconductors in China may still be subject to being blocked.
- The required notification, review, and possible restriction still represents a massive increase (from almost nothing) in regulation on outbound investments.
- Increases in the scope and powers of the reviewers may follow in future regulations or legislation.
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Takeaways from the Hermès Litigation over MetaBirkins NFTs
The highly anticipated jury verdict in the Hermès litigation over MetaBirkins NFTs has some important takeaways for both artists and sellers of NFTs as well as brand owners.
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How Generative AI Generates Legal Issues in the Games Industry
Roblox recently announced that it is working on generative artificial intelligence (AI) tools that will help developers who build experiences on Roblox, to more easily create games and assets. The first two test tools create generative AI content from a text prompt and enable generative AI to complete computer code. This is just the tip of the iceberg on how generative AI will be used in games and a variety of other creative industries. Music, film, art, comic books, and literary works are some other uses. AI tools are powerful and their use will no doubt be far reaching. In…
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You Don’t Need a Machine to Predict What the FTC Might Do About Unsupported AI Claims
The rapid rise of AI used with advertising, marketing and other consumer facing applications has caused the FTC to continue to take notice and issues guidance. For example, the FTC is concerned about false or unsubstantiated claims about an AI product’s efficacy. It has issued AI-related guidance in the past. The following is some recent FTC guidance to consider when referencing AI in your advertising. This guidance is not necessarily new, but the fact that it is being reiterated should be a signal that the FTC continues to focus on this area and that actions may be forthcoming. In fact,…
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