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Am Law 100 firm with practices in Business, Digital Assets and Data Management, Intellectual Property, Labor & Employment, Litigation and Tax.

Home | BakerHostetler

Casie Collignon, Aleksandra Vold Moderate Panels at NetDiligence Cyber Risk Summit

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James Sherer Takes Part in Webinar for Red Clover Advisors

Lynn Sessions Takes Part in State of Cyber Defense Webinar

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<a href="#Sarah">Sarah Silverman Sues OpenAI</a>

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<a href="#FTC">The FTC Is Not Concerned About Your Unpaid E-commerce Balance</a>

<a href="#Scammers">Scammers Find New Ways to Take Over Your Phone</a>

<a href="#Cranky">Cranky Audio Enthusiasts Actually Settle</a>

<a href="#Register">Register for Our Upcoming Webinar</a>

<a href="#Check">Check Out Our Latest Blog Posts</a>

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Claims that GPT was trained on urine-themed autobiography

It’s hard to keep up with the ferment of controversy bubbling around OpenAI and its compatriots in the generative AI business. <a href="https://fortune.com/2023/06/28/openai-chatgpt-sued-private-data/">Lawsuits</a>, <a href="https://www.theregister.com/2023/07/01/microsoft_github_copilot/">lawsuits</a>, <a href="https://www.thefashionlaw.com/openai-named-in-copyright-lawsuit-by-authors-over-use-of-books-as-training-data/">lawsuits</a>. <a href="https://www.washingtonpost.com/technology/2023/07/13/ftc-openai-chatgpt-sam-altman-lina-khan/">Regulatory probes</a>. <a href="https://qz.com/italy-has-banned-chatgpt-but-will-its-clampdown-work-1850293913">Outright bans by sovereign nations</a>. But when, <a href="https://qz.com/experts-in-ai-are-warning-it-poses-a-risk-of-extinctio-1850486661">by your own admission</a>, the technology you’ve created threatens the human race with extinction, there’s bound to be a backlash.

The latest iteration of lawsuits possesses a common denominator: copyright law. You heard it here—when implacable, super intelligent machines threaten humanity with extinction, our saviors will be IP lawyers.

We don’t see a role for comedian and provocateur Sarah Silverman in our sci-fi legal romance thriller—but she’s taking up the fight in real life. Silverman, along with two other authors, is <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/07/silv-comp.pdf">suing</a> OpenAI and various of its sub-entities in a class action in the Northern District of California. They’re alleging copyright infringement, violations of the Digital Millennium Copyright Act, unfair competition, negligence, and unjust enrichment.

Yes, we said authors—not comedians. OpenAI does not stand accused of stealing Silverman’s jokes so that ChatGPT can perform a tight 10 at the Laugh Factory. Turns out that Silverman penned a book, The Bedwetter, back in 2010; she and her fellow plaintiffs are accusing OpenAI of training the algorithm underlying ChatGPT on Bedwetter and other copyrighted works.

Aside from the actual legal arguments—similar in form to those of many other lawsuits regarding text-generative AI like GPT and image-generative AI like Dall-E—the complaint is of interest for the detective work Silverman and company engaged in to narrow down the possible catalogs of books that GPT might have been trained on. The suit arrives at a total figure of something north of 360,000 books in the GPT training sets, which is astounding.

The heart of the case, of course, is copyright, and it offers a now-familiar argument that’s echoing across the legalsphere: “Plaintiffs never authorized OpenAI to make copies of their books, make derivative works, publicly display copies (or derivative works), or distribute copies (or derivative works).” The plaintiffs go on to claim, “All those rights belong exclusively to Plaintiffs under copyright law …. [T]o train the OpenAI Language Models, OpenAI relied on harvesting mass quantities of textual material from the public internet, including Plaintiffs’ books, which are available in digital formats.”

The deluge of cases taking similar aim at OpenAI and its peers/competition is just beginning to gather force; how the defendants will respond and the ultimate legal theories that arise from these conflicts are yet to be determined.

The Fashion Law, a blog we heartily recommend, provides a <a href="https://www.thefashionlaw.com/from-chatgpt-to-deepfake-creating-apps-a-running-list-of-key-ai-lawsuits/">helpful running list of AI lawsuits</a> and also <a href="https://www.thefashionlaw.com/sarah-silverman-among-authors-suing-meta-openai-for-copyright-infringement/">delves a bit</a> into one of the responses AI companies may pursue against copyright cases that attack training sets: fair use. It’s a matter of competition—how does the use of training data, copyrighted or otherwise, threaten the market for plaintiffs’ intellectual property?

TFL cites authorities on both sides of the question, including the Congressional Research Service, which argues, “Some generative AI applications have raised concern that training AI programs on copyrighted works allows them to generate works that compete with the original works.” The specific example CRS offers is the Weeknd/Drake AI-knockoff single “Heart on My Sleeve,” which attracted millions of listeners. This example stands in contrast to Silverman’s suit, which doesn’t accuse OpenAI of replicating her book, or even creating a book that has her unique sensibility, and therefore doesn’t seem to create a competitive product.

In fact, Silverman’s suit may be flawed in a more fundamental way. The proof she advances that GPT was trained on her book specifically is that “ChatGPT can accurately summarize a certain copyrighted book … because that book was copied by OpenAI and ingested by the underlying OpenAI Language Model.” Is the production of an accurate summary enough to indicate copyright violation? Perhaps GPT was trained on book reviews, for instance.

We asked ChatGPT to generate a new script about copyright lawyers taking on the forces of AI, requesting a comedy that would be a natural fit for Silverman, and the results are weird. The best part, however, is a disclaimer that ChatGPT felt compelled to include:

Note: The script provided here is a brief outline to give you an idea of the story. For a complete movie script, additional details, dialogue, and scene descriptions would be required. Additionally, the character "Alice" is designed as a perfect vehicle for Sarah Silverman's talents, emphasizing humor, wit, and charm.

Pretty generous, given the lawsuit, don't you think?

The FTC Is Not Concerned About Your Unpaid E-commerce Balance

Scammers are impersonating Commission personnel, threatening jail

“The FTC won’t demand money, threaten you, or promise you a prize.”

No, the Federal Trade Commission hasn’t just revamped its dating profile—it’s <a href="https://consumer.ftc.gov/consumer-alerts/2023/07/ftc-wont-demand-money-threaten-you-or-promise-you-prize">putting the public on notice</a> that bad actors are calling citizens, posing as FTC personnel, and attempting to part said citizens from their hard-earned cash.

“They might say you won a prize (you didn’t) and must pay to collect it (you don’t),” the Commission writes. “Or that there’s a virus on your computer or an issue with one of your accounts (there isn’t).”

It strikes us as odd that anyone would choose to impersonate a Commission employee—how many people are familiar enough with the FTC to be concerned about a call from the agency? But perhaps that’s the trick of it; “I’m from the Federal Trade Commission” sounds official enough to frighten people who don’t know that the Commission usually focuses on bigger fish.

Surprising or not—effective or not, for that matter—these scams are nothing new. In fact, about a year ago one enterprising scammer had enough chutzpah to <a href="https://consumer.ftc.gov/consumer-alerts/2022/04/warning-callers-are-impersonating-ftc-commissioner-noah-phillips">impersonate then-Commissioner Noah Phillips</a>, a Trump appointee who has since resigned. The crook in that case told victims that they needed to “settle up an unpaid ecommerce balance,” a remarkable errand for an FTC Commissioner, no?

That incident may be why the Commission was on a bit of an anti-impersonation jag in the fall of last year, <a href="https://www.ftc.gov/news-events/news/press-releases/2022/09/ftc-proposes-new-rule-combat-government-business-impersonation-scams">putting together</a> a new rule to “codify the well-understood principle that impersonation scams violate the FTC Act, as do those who provide impersonators with the means to harm consumers. The proposed rule would allow the Commission to recover money from, or seek civil penalties against, scammers who harm consumers in violation of the rule.”

The <a href="https://www.federalregister.gov/documents/2023/03/30/2023-06537/trade-regulation-rule-on-impersonation-of-government-and-businesses">latest news</a>? As far as we can tell, there was an informal meeting held by the agency in early May of this year, following the closing of the comment period for the proposed rule, which was framed as a response to the Supreme Court’s ruling in AMG Capital Management LLC v. FTC.

We’ll keep you up to date about a final decision.

Scammers Find New Ways to Take Over Your Phone

But the cavalry is coming, thanks to the FCC

We generally like to bring you good news.

Our world is awash in scams. Loan forgiveness scams. Verification code scams. Two-factor authentication code scams. Scams where people pose as IRS officers, USCIS officials, and, for heaven’s sake, one where, as noted above, a scammer <a href="https://consumer.ftc.gov/consumer-alerts/2022/04/warning-callers-are-impersonating-ftc-commissioner-noah-phillips">pretended to be Federal Trade Commissioner Noah Phillips</a>.

But today, we’re going to make everything worse by telling you about two entirely new scams. And they’re gross.

The first scam, known as “SIM swapping,” actually requires IRL crime: Scammers steal the physical SIM card from your phone, install it in their own device, and then use the phone to reset access codes to various services, drain accounts, and so on. Recent developments in SIM card technology have hard wired the chips directly into smartphones, so this type of scam is getting harder to perpetrate.

But don’t let that comfort you. The second scam is the prosaically named “port-out” scam. No, it’s not nautically themed. It’s the virtual version of the first scam.

When you switch between phone services, your number is “ported” from one to the other. But if a criminal gets ahold of your personal information, they can convince your carrier to switch your phone line to a device they control. From there, it’s off to the races.

You can read more about the scams <a href="https://www.fcc.gov/consumers/guides/cell-phone-fraud">here</a> and <a href="https://www.fcc.gov/port-out-fraud-targets-your-private-accounts">here</a>.

The scams, as basic as they seem, are now prevalent enough that they’re getting <a href="https://docs.fcc.gov/public/attachments/DOC-395019A1.pdf">serious attention from folks in high places</a>—namely Federal Communications Commission Chairwoman Jessica Rosenworcel. In a release dated from mid-July, the Chairman announced new proposed regulations to “help protect consumers from ugly new frauds while maintaining their well-established freedom to pick their preferred device and provider.”

The regulations—enacted under the auspices of the Rosenworcel-created Privacy and Data Protection Task Force—would require carriers to securely authenticate users before port swaps are allowed. And when they do occur, the carriers will be required to notify customers immediately. Further proposals will include a request for comment on “additional steps the Commission can take to harmonize government efforts to address SIM swap and port-out fraud.”

New scams, new responses to scams, and another likely set of tech changes for carriers to adopt.

All-analog recording company accused of digitizing

You Listen, Sure, But Do You Hear?

Vinyl enthusiasts. As far as we’re concerned, they’re right up there with <a href="https://www.welovecycling.com/wide/2019/01/08/cycling-and-snobbery-why-arent-more-people-joining-the-sport/">cycling hobbyists</a>, <a href="https://brewyorknewyork.com/post/100105912653/the-seven-habits-of-highly-offensive-beer-snobs">craft-beer e</a>litists, <a href="https://gothamist.com/food/mayonnaise-store-finally-opens-in-brooklyn">mayonnaise artisans</a>,* and cannabis aficionados.

For the (unofficial) record, we’ve enjoyed an unspecified number of the aforementioned hobbies, and there are plenty of people who get deep into interests like these without looking down their nose at anyone else. But there are plenty who do.

And when we talk about vinyl enthusiasts, we’re not talking about anything kinky, mind you. Rather, we’re focusing on a subset of the audiophile community. Still mystified? An audiophile can be defined as “a person who has a great interest in high-fidelity sound reproduction,” although we guarantee that there’s an audiophile out there right now who will take exception to this rather bland definition and post a lengthy takedown on one of the countless audiophile internet forums.

Vinyl enthusiasts are audiophiles who are bonkers over old-school LPs and other formats pressed into vinyl—namely, the way music was enjoyed in the home for the greater part of the 20th century. For them, the sound quality afforded by purely analog recording processes, memorialized for the consumer on vinyl, is superior to digital reproduction (CDs, MP3s, streaming services, etc.)

The most tiresome form of vinyl enthusiast will play digital and analog versions of the same recording for you, back to back, until you swear you hear the difference, even though you don’t hear it at all and just want to get back to the party.

Wherever there’s a community of finicky experts, there are vendors catering to their tastes, hoping to make scratch off of connoisseurs.

And vinyl—once thought of as passe in the wake of compact discs—has made quite a comeback. Hawkers ranging from edgy websites to major retailers have stocked shelves with old-fashioned vinyl recordings that cost a pretty penny. Re-recordings too; the analog reissue of classic albums on vinyl is a significant part of this old-school revival. In fact, the greatest rock band of all time** has <a href="https://store.ledzeppelin.com/browse/led-zeppelin-us/products/led-zeppelin-iv-remastered-original-vinyl">reissued its catalog on vinyl</a>.

But where there’s a product that depends on purity for its value, a lawsuit is not too far behind.

Consider the case of Audiophile Music Direct, self-described “world’s largest online retailer of high-end audio, audiophile music, and accessories.” Check out their catalog <a href="https://www.musicdirect.com/music/vinyl/">here</a>.

The company was <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/07/vin-comp.pdf">sued</a> last year by Stephen Tuttle and Dustin Collman, denizens of the Pacific Northwest, in the Western District of Washington. “A certain subset of audiophiles favor analog recordings over the more modern digital records due to a wide range of objective and subjective criteria,” their complaint reads. “In general, however, there is a belief that analog recordings preserve the entire dynamic range of the sound that has been recorded, whereas digital recording limits or compresses the signal in a way that limits the dynamic range.”

More to the point, perhaps, is this admission: “Also, there is a certain emotional and tactile response to the handling and playing of vinyl records.”

In any case, they contend that AMD created, through its subsidiaries, vinyl records guaranteed to be all-analog—in other words, recordings that were made and produced from the original performance on analog equipment without digital transference or compression. But the guarantee, and other representations, was false. The premium price consumers paid for the vinyl was charged in bad faith.

The plaintiffs, who probably only buy <a href="https://saddlebackleather.com/">full-grain leather products</a> and <a href="https://www.xidax.com/">build their own bespoke computers</a>, didn’t have to do much work to produce the complaint, as the controversy over the digital infringement in certain AMD recordings had already spread on the interwebs; AMD’s president even issued an apology in July of last year. Right before Tuttle and Collman’s class action was filed.

The case spun right round for about a year, when, unsurprisingly, it settled.

The proposed agreement received <a href="https://admin.bakerlaw.com/wp-content/uploads/2023/07/vin-ord.pdf" target="_blank" rel="noreferrer noopener">preliminary approval</a> from the court in July. AMD refused to admit any wrongdoing, even after the 2022 apology. But purchasers of the recordings can return the products for a full refund of their retail price or opt to keep the records and receive a 5% refund of the purchase price or a coupon worth 10% of the price to be used on the AMD online store.

According to the order, Tuttle and Collman are the first plaintiffs to sue AMD, but not the last—the court lists four other cases filed in its wake. Will AMD hit repeat and settle for each action? If not, how will holdout plaintiffs fare? We’ll keep you up to date on how it all spins out.

But until then, we’re going to pack up some vino and <a href="https://www.businessinsider.com/americans-are-becoming-cheese-snobs-2016-3">artisanal cheese</a>, hop in our restored vintage Italian sports car, and visit our luthier.

That’s right, luthier. We’re not going to even bother telling you what it means.

* A real thing, at least once, and inevitably in Brooklyn.

** This is a strictly objective judgment and not open to debate.

Register for Our Upcoming Webinar

<a href="https://bakerlaw.zoom.us/webinar/register/WN_cGPq1gdXTYe7GCcwczRTyw#/registration">Session 8: Let’s Get Ethical: Advertising Law Ethics 101</a>

Ethical advertising goes so much further than just ensuring the claims you are making are not deceptive. Learn how to navigate the complex legal and ethical minefield that is advertising in 2023. This program is approved for ethics credit.

Check Out Our Latest Blog Posts

<a href="https://www.adventures-in-law.com/coppa/an-interesting-new-proposal-on-obtaining-coppa-verified-parental-consent/">An Interesting New Proposal on Obtaining COPPA Verified Parental Consent</a>

Whether your focus is privacy, advertising or both, there is a good chance that you have bumped into some thorny issues involving the Children’s Online Privacy Protection Act (COPPA). In general, COPPA prohibits websites or apps from collecting “personal information” from children under the age of 13 without first obtaining verified parental consent (VPC). Through rulemaking, the Federal Trade Commission (FTC) has modified the definition of personal information over the years to include a wide array of information, including precise geographical information and persistent identifiers that are used for, among other things, behavioral advertising.

<a href="https://www.adventures-in-law.com/fda/judge-confirms-what-we-all-already-knew-about-fda-serving-sizes/">Judge Confirms What We All Already Knew About FDA Serving Sizes</a>

A potato-chip brand once famously boasted, “No one can eat just one.” And of course, no one can. But according to the Food and Drug Administration (FDA), you aren’t going to eat more than 16 (or 28 grams), because that is the “serving size” on the nutrition facts label. But seriously, who stops at 16 unless the bag runs out? And haven’t you sometimes looked at the two-thirds cup serving size on a container of ice cream and wondered who is doing that? Is the FDA’s serving size guidance something that actually reflects how people eat? Well, a federal judge just validated our collective feelings and scored a win for Starbucks in dismissing a class action lawsuit.

<a href="https://www.adventures-in-law.com/advertising/consumers-know-it-really-is-a-barbie-world/">Consumers Know It Really Is a Barbie World</a>

I’m a Skipper in a Barbie world. Even if the brunette little sister doesn’t make an appearance, I can’t wait to see the Barbie movie this weekend. Warner Bros. is rolling out the red carpet for Mattel’s leading lady in advance of the debut of this summer’s nostalgic blockbuster. The promotional tie-ins are everywhere, and I’ve spotted creative integrated brand promotions and licensed product collaborations in some unexpected spaces. I’m sure you have too.

<a href="https://www.adventures-in-law.com/advertising/allow-me-to-introduce-myself-2/">Allow Me to Introduce Myself</a>

Hello from the other side! For the past 15 years, I’ve been a member of an elite squad: in-house ad law counsel. In-house counsel do it all – from negotiating multimillion-dollar media deals to rush redlining nondisclosure agreements. And they often do it wearing old band tee shirts and using pens from home. Time and resources are tight, and the best legal teams know how to support their businesses: commercial know-how and sharp insight without the ivory tower. Now, I’m building on that experience to work with a broader client base in our media and ad law community.

<a href="https://www.adventures-in-law.com/ftc/that-house-ftc-oversight-hearing-sure-was-something/">That House FTC Oversight Hearing Sure Was Something</a>

Last week, the House Judiciary Committee held an oversight hearing regarding the Federal Trade Commission (FTC or the Commission). FTC Chair Lina Khan was the sole witness appearing at the hearing. The FTC’s written testimony was typical – a detailed description of everything the FTC has been up to for the past year or so, including both competition and consumer protection developments. The hearing, however, was anything but typical, and you can read about some of the somewhat explosive details here and here. It got ugly.

AD-ttorneys@law – July 27, 2023

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