The Implications of Oracle v. Rimini for Generative AI
The U.S. Court of Appeals for the Ninth Circuit just issued a decision that on its surface appears to be a straightforward interpretation of the Copyright Act in a dispute relating to software, but likely will have far-reaching implications for generative artificial intelligence (GAI) systems.
In some of the ongoing copyright infringement cases concerning GAI, some rightsholders are claiming (among other things) that the outputs of GAI systems infringe their exclusive right to make “derivative works” simply because the GAI systems are trained using content they created. Adding further confusion, rightsholder complaints are stemming from outputs that are completely different from any rightsholder content used in training the AI systems. Their argument flows from an extremely broad interpretation of the derivative work right in the Copyright Act, which they claim should cover everything and anything new which is in any way “based upon” the content the rightsholder owns.
The Ninth Circuit in Oracle v. Rimini, however, just rejected exactly that broad interpretation. The court’s interpretation is fatal to rightsholders’ derivative works argument in GAI cases. The decision is the latest development in the decade-long litigation between Oracle and Rimini. Rimini provides support services to customers of Oracle’s PeopleSoft software. When providing these services, Rimini uses Oracle’s products and creates files that can only work with Oracle’s software. In this phase of the long-running litigation, Oracle claimed that Rimini’s software infringed Oracle’s right to prepare derivative works because the Rimini software is only usable with the Oracle software. The district court agreed with Oracle, and found that Rimini infringed Oracle’s right to prepare derivative works by writing files that could only interact and are usable with Oracle software, even if the Rimini files did not actually contain any Oracle expression. Rimini appealed this holding (among others), and the Ninth Circuit has now reversed that decision.
The Copyright Act defines derivative work as “a work based upon one or more preexisting works….” The district court found that the Rimini software was “based upon” the Oracle software simply because it was designed to operate with that software. The Ninth Circuit ruled that this interpretation of the phrase “based upon” was “hopelessly overbroad.” The Ninth Circuit observed that “almost every work borrows and must necessarily borrow from other works and uses what was well known and used before.” Thus, under the district court’s interpretation, almost every work would infringe someone’s right to prepare derivative works.
The Ninth Circuit noted that, in the Copyright Act’s definition of derivative work, Congress included examples such as a translation and movie adaptation. These examples all incorporated elements of the underlying work. The Ninth Circuit concluded that “Congress’s list of examples suggests that a ‘derivative work’ must be in the subset of works substantially incorporating the preexisting work.” Whether a work is “interoperable with another work doesn’t tell us if it substantially incorporates the other work.” Without the substantial incorporation of the preexisting work, there is no infringement of the right to prepare derivative works.
This reasoning applies in the GAI context. The mere fact that a work is the output of a GAI system doesn’t tell us if it substantially incorporates the training data. To prove that the output infringed the right to prepare a derivative work, a rightsholder will have to show that a specific output substantially incorporated a specific work included in the training database. In the vast majority of cases, rightsholders will not be able to meet this burden. Unless the output is substantially similar to protected expression in a work in the training database, the output does not infringe the derivative work right.
At least one district court has already reached this conclusion in a GAI case. The Rimini decision is significant because it indicates appellate courts will as well. To be sure, Rimini doesn’t address rightsholders’ claims that the ingestion of their content by GAI systems infringes their copyright. Courts will consider that issue in due course. But the Rimini decision slams the door on rightsholders’ claim that GAI system outputs categorically infringe their right to prepare derivative works.
