A US Court of Appeal has just handed down a major ruling on the use of copyrighted material to train artificial intelligence (AI) models.

In the case of Thomson Reuters Enterprise Centre GMBH and West Publishing Corp v ROSS Intelligence Inc,¹ the US Court found that Thomson Reuters’ legal research headnotes were material that could be protected by copyright. Consequently, ROSS Intelligence’s (ROSS) use of those materials to train its AI-powered legal research platform did not constitute fair use.

What are the facts?

The dispute stemmed from ROSS’s use of legal research headnotes created by Thomson Reuters for its Westlaw platform. The headnotes, prepared by lawyers, summarised points of law extracted from various judicial decisions to assist Westlaw users with their legal research.

ROSS set out to develop a competing legal research platform powered by AI. In doing so, it copied the entire text from approximately 25,000 Westlaw headnotes used that material to train its AI system. As a result, Thomson Reuters commenced proceedings alleging copyright infringement.

The central issues before the Court were whether the headnotes were sufficiently original to attract copyright protection and, if so, whether ROSS’s use of those materials for AI training constituted fair use under US copyright law.

What did the Court decide?

Ultimately, the Court rejected ROSS’s argument and found in favour of Thomson Reuters. In doing so, it proceeded through the two core legal tests for a copyright infringement claim in the US:

1. Originality (can the work be protected at all?); and
2. Fair use (can an unauthorised use of a protected work be excused?).

Originality

The Court reaffirmed that originality remains a relatively low threshold under US copyright law, noting that a work need only be independently created and possess a ‘modicum of creativity’ or ‘creative spark’ to attract copyright protection.

Applying that principle, the Court found that for each headnote, Thomson Reuters’ editors had to make creative decisions about which points of law were important enough to include in a headnote and how exactly to word those points of law.

In that regard, Thomson Reuters’ materials were considered to possess a ‘creative spark’ and meet the minimum requisite for originality.

Fair use

Having found the headnotes copyrightable material, the Court turned to whether ROSS’s use could be permitted as fair use.

To determine whether a use is ‘fair’, US copyright law requires consideration of four statutory factors:

1. the purpose and character of the use;
2. the nature of the copyrighted work;
3. the amount and substantiality of the portion used; and
4. the effect of the use on the potential market for, or value of, the copyrighted work.

On the first factor, the Court found the character of ROSS’s use to be commercial by aspiring to compete with Westlaw at comparable prices. By using the headnotes for a highly similar purpose (being the improvement of legal research services), the use was ‘minimally transformative at best’. A commercial, non-transformative use weighed against fair use.

On the second factor, the Court found the headnotes to be factual in nature since they must accurately convey the law. Factual content of this kind favoured a finding of fair use.

On the third factor, the Court held that copying even a quantitatively ‘insubstantial portion’ of a work is not fair use if, qualitatively, an important part of the work has been copied. In this case, the Court found that using the entire text from the headnotes without justification was ‘more than necessary’.

On the fourth factor, the Court found that ROSS’s unauthorised use of the headnotes as training data deprived Thomson Reuters the opportunity to license its works for that purpose, causing market harm that weighed against a finding of fair use.

Although the factual nature of the headnotes weighed in favour of fair use, the remaining factors weighed against it. In light of these findings, the Court held that ROSS’s use was not fair.

Why this case matters

This case arises against a backdrop of increasing global scrutiny towards AI developers and the methods by which they obtain and use data to train their models. For copyright owners and creators, the central concern is that their works are being used to develop commercial AI products without consent, attribution or compensation.

Additionally, there is growing concern about the lack of transparency surrounding AI training practices. Currently, creators have limited insight as to whether, and to what extent, their works have been used.

On the opposite side of the debate, AI developers argue that access to large-scale datasets is necessary to drive innovation and maintain competitiveness in the global AI market.

Ultimately, governments around the world are grappling with how best to balance these competing interests.

How does Australia’s position compare to the US?

Unlike the US, Australia does not have a broad and flexible fair use exception under copyright law. Rather, Australian law prescribes limited circumstances where use of copyright material may be considered fair dealing. Specifically, this includes exceptions for research or study, criticism or review, parody or satire, reporting news and providing professional legal advice.

On 15 July 2026, the Albanese Government formally announced its intention to introduce laws that regulate the use of copyright material in AI systems.²

Importantly, the Government has confirmed that they have ruled out the introduction of a broad text and data mining exception for AI training.³

However, Attorney General Michelle Rowland has indicated that a final framework has not been determined and that a range of alternative policy options continue to be considered.⁴

Ongoing considerations in Australia

As part of its ongoing consultation process, the Government has identified several priority areas for examination:

1. encouraging fair, legal avenues for use of copyright material;
2. improving legal certainty; and
3. expanding affordable enforcement options.⁵

One option under consideration is an opt-out model, under which AI developers could use certain copyright material unless a creator expressly elects to exclude their works.

Furthermore, the Joint Standing Committee on Artificial Intelligence has recommended the government prioritise ensuring Australian creators retain control over their works, are paid for their use, and that AI systems reflect Australian values and culture.⁶

Ultimately, the Government has openly welcomed engagement in this topic by both creatives and the technology sector so that eventual reform may balance innovation in AI with stronger safeguards for rights holders.⁷

What does this all mean?

Ultimately, the Thomson Reuters decision is not binding on Australian courts. However, it is a useful indication of how a common law jurisdiction is approaching the question of fair use in the context of AI training.

While the Australian Government has made it clear that protecting the rights of creators will remain a central consideration in any future reform, the precise regulatory framework remains under development.

With consultations ongoing and a range of reform options under consideration, the intersection of AI and copyright remains an area to watch.

This article was written by Helen Kavadias, Partner, and Danielle Gatt, Law Graduate.

¹ Thomson Reuters Enterprise Centre GmbH v. ROSS Intelligence Inc., No. 25-2153 (3d Cir. Sept. 29, 2026).
² Department of the Prime Minister and Cabinet, ‘Getting it right: Building AI infrastructure that works for Australia‘, Consultation Paper (September 2026). <https://www.pmc.gov.au/sites/default/files/resource/download/ai-consultation-paper.pdf>.
³ The Hon Michelle Rowland MP, ‘Albanese Government to ensure Australia is prepared for future copyright challenges emerging from AI‘, Media Release (Webpage, 26 October 2025) <Albanese Government to ensure Australia is prepared for future copyright challenges emerging from AI | Our ministers – Attorney-General’s portfolio>.
⁴ Ibid.
⁵ Ibid.
⁶ Paul Karp, ‘Australian voters back AI copyright changes — if creators get paid‘, Politico (13 October 2026).
⁷ Attorney General’s Department, ‘Radio interview – ABC Radio National‘, Transcript (29 September 2026) <https://ministers.ag.gov.au/media-centre/transcripts/radio-interview-abc-radio-national-29-09-2026>.