Briefing: May 19, 2023

Goldsmith v. Warhol, AI Implications, Taco Tuesday Takedown & More

This was a big week in Supreme Court decisions. The court handed down its much-anticipated take on Andy Warhol Foundation v. Goldsmith. The Justices were tasked with considering whether the first fair use factor – “the purpose & character of the use” – weighed in favor of AWF’s commercial licensing to Condé Nast of one of a series of images that Warhol created based on a Prince photo that Lynn Goldsmith took. Writing for the majority, Justice Sotomayor held that the factor doesn’t weigh in favor of AWF’s fair use defense to copyright infringement.

A few key takeaways from the majority’s (7-2) decision …

– “The first fair use factor focuses on whether an allegedly infringing use has a further purpose or different character” & that “difference must be weighed against other considerations, like commercialism.” Although new expression “may be relevant to whether a copying use has a sufficiently distinct purpose or character, it is not, without more, dispositive of the first factor.”

– “If an original work & a secondary use share the same or highly similar purposes & the secondary use is of a commercial nature, the first factor is likely to weigh against fair use, absent some other justification for copying.”

– “As portraits of Prince used to depict Prince in magazine stories about Prince, the original photograph & AWF’s use of it share substantially the same purpose.” And “even though [AWF’s] Orange Prince [image] adds new expression to Goldsmith’s original photo, in the context of the challenged use” – i.e., a commercial licensing deal for the AWF image – “the first fair use factor still favors Goldsmith.”

Note: The decision centers exclusively on Warhol’s Orange Prince work & even more specifically, the licensing of that work, making this a particularly narrow finding from the court. Also worth noting: SCOTUS did not focus on Warhol’s creation of Orange Prince but again, the licensing of that work, thereby, likely diminishing any broad impact of the decision for (unlicensed) appropriation-centric artworks as a whole.

The Broader View: One question (in my mind, at least) is whether/how such a decision will impact a big issue in © at the moment … Generative AI & its dependence on training data that is largely used without the authorization of the © holders. Google v. Oracle has been viewed as favorable for the likes of OpenAI, Stability AI, Midjourney & co., which collect data to train models that can create new works in response to user prompts, and which are facing various lawsuits (including on © infringement and DMCA grounds, among others) at the moment.

In 2021, SCOTUS held that Google’s use of a portion of the Oracle Java computer program in its Android operating system constituted fair use. Before that, Google successfully argued that in the Author’s Guild case that its mass-use of books’ text to make the digital copies available for library collections & for the public to search electronically was transformative.

Back to AWF v. Goldsmith, Justice Kagan called attention to the majority’s “indifference to purposes beyond the commercial,” which diverges from SCOTUS precedent, including the outcome in Google v. Oracle. In a footnote, the majority says the dissent gets it wrong here, as the court “did not hold that any secondary use that is innovative, in some sense … is thereby transformative. The Court instead emphasized that Google used Sun’s code in a ‘distinct and different’ context’ & ‘only insofar as needed’ or ‘necessary’ to achieve Google’s new purpose.” In other words, “The same concepts of use and justification that the Court relied on in Google are the ones that it applies today.

– Also in her dissent, Justice Kagan stated that “copyright’s core value – promoting creativity – sometimes demands a pass for copying,” and argued that the “doctrinal shift” in the decision will leave the fair use first-factor “in shambles.”

The AI Takeaway: While uncertainty in the context of generative AI still abounds, if commerciality & competition are ultimately name of the game when it comes to “purpose and character of the use,” the AWF decision could be significant for companies offering for-profit generative models.

As for what the decision might signal for the forthcoming decision in Bad Spaniels, Professor Lisa Ramsey has a great little thread here.

In separate SCOTUS stuff … The court sided with tech giants in two cases that centered on whether the internet companies should be shielded from responsibility for what their users post. “The decisions – a 9-0 ruling in Twitter v. Taamneh & an order remanding another case, Gonzalez v. Google, to a lower court – represent a significant but limited win for big tech companies in their battle to curb their liability for users’ actions on their platforms,” the WSJ’s Jan Wolfe writes.

In a quick TM tidbit … Taco Bell announced this week that it is angling to have the USPTO cancel a “Taco Tuesday” registration because … “when tacos win, we all win.”

The cancellation petition comes fresh on the heels of a quickly-resolved clash between Sweetgreen and Chipotle, the latter of which sued the salad chain for TM infringement over its since-renamed “Chipotle Chicken Burrito Bowl.”

A Few Litigation Updates …

– Byars v. Sephora: LVMH-owned Sephora is the latest company to land on the receiving end of a chatbot-centric wiretapping case. (Complaint here.)

– Slaten v. Dior: An N.D. Cal. judge has refused to toss out the bulk of a false advertising case waged against Dior over its 24-hour sunscreen ads, finding that Slaten “plausibly alleges the product labels are false or misleading & reasonable consumers are likely to be misled.”

– Alario v. Knudsen: That was quick! The first lawsuit challenging Montana’s TikTok ban as an unconstitutional prior restraint on speech is here. (Complaint here.)

In some deal-making news in the fashion/retail, tech & web3 segments …

– Shein raised $2B in a recent round that values the Chinese fast fashion giant at $66B. That’s about a third less than the $100B valuation the company boasted in Apr. 2022.

– British retail entity Frasers Group has boosted its stake in ASOS to 7.4% up from its previously holding of more than 5%.

– eBay and Certilogo announced the internet marketplace will acquire the provider of AI-powered apparel/fashion goods digital IDs & authentication.

– Web3 music startup Anotherblock has raised €4M in seed funding. The co. says it’s angling to “reach a wider audience particularly outside of the crypto space, enabling even more creators to get involved.”

And in a new AI-specific rounds/deals …

–, a Singapore-based provider of a platform that converts graphic designs into working code with AI, raised $4.25M in a Seed II round.

– ServiceNow will acquire AI-powered platform G2K, which it will add to its Now Platform to “enable businesses to intelligently action digital & in-store data with enterprise-grade workflows.”

– Everseen raised €65M in a Series A follow-on round, with its CEO saying that it is “experiencing significant demand for our tech from retailers grappling with the dual impact of declining customer spending & rising operational losses.”