Third Circuit Rejects Fair Use for AI Trained on Westlaw Headnotes

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Published: 2026-10-10T20:50:33.937Z • Permanent link

A recent decision by the Third Circuit Court of Appeals has significant implications for the use of artificial intelligence (AI) in the financial industry. The court's ruling, issued on July 14, 2022, rejected the fair use argument made by Meta Platforms, Inc., the parent company of Facebook, in its defense against a lawsuit related to an AI trained on Westlaw headnotes. The lawsuit, filed by the American Association of Law Libraries (AALL), alleged that Meta's AI, which was trained on millions of headnotes from Westlaw, a leading provider of legal research data, infringed on the copyrights of Westlaw's clients.

The court's decision was a major blow to Meta's efforts to use AI to improve its services. Meta's AI, which was designed to analyze large amounts of data, including financial news articles and regulatory filings, was trained on a dataset that included millions of headnotes from Westlaw. The headnotes, which are summaries of court decisions, were obtained through a subscription-based service that allowed Meta to access Westlaw's vast library of legal information. The AALL lawsuit claimed that Meta's use of the headnotes constituted copyright infringement, and that the company had not obtained the necessary permissions from Westlaw's clients.

The court's decision was based on the fact that Meta's AI was not using the headnotes in a transformative way, meaning that it was not using the data in a way that was significantly different from how Westlaw's clients were using it. The court ruled that Meta's use of the headnotes constituted copyright infringement, and that the company must pay damages to Westlaw's clients.

The court's decision has significant implications for the use of AI in the financial industry. Meta, which is one of the largest technology companies in the world, has been at the forefront of AI research and development. The company's use of AI has been instrumental in improving its services, including its search engine and advertising platforms. However, the court's decision raises questions about the limits of fair use in the context of AI and intellectual property law.

The decision also has implications for other companies that use AI to analyze large amounts of data. Companies like Google, Amazon, and Microsoft, which also use AI to improve their services, may be vulnerable to similar lawsuits. The court's decision highlights the need for companies to carefully consider the implications of their use of AI on intellectual property law. Companies must ensure that their use of AI is transformative, meaning that it is using the data in a way that is significantly different from how the original creators used it.

The court's decision also has implications for the research community. Researchers who use AI to analyze large amounts of data must be aware of the implications of their work. Researchers must ensure that their use of AI is transformative, and that they have obtained the necessary permissions from the original creators of the data. The court's decision highlights the need for researchers to carefully consider the implications of their work on intellectual property law.