U.S. Copyright Office new Guidance about copyright in AI-generated works – Coinbase case

United States Copyright Office says that some works made by Artificial Intelligence may be copyrighted

New guidance to clarify whether artistic works created with the help of AI can be copyrighted has been prepared by the U.S. Copyright Office.

Based on a decision from last month in which copyright protection was denied to Zarya of the Dawn, a comic book created by Kristina Kashtanova with the help of image-generating AI system Midjourney (we commented this case on March, 8 2023), the Office establishes a distinction between AI contribution as being “the result of mechanical reproduction” or as reflecting the “mental conception” of the author.

According to the Office “the answer will depend on the circumstances, how the AI operates and how it was used to create the final work”, adding that copyright protection depends on the quantity of human creativity involved in the work. In this case, and knowing that the use of AI is increasing in all fields, this guidance seems to leave an open door to a new scenario where works created by AI could be registrable.

As stated by the U.S. Copyright Office, “based on our understanding of the generative AI technologies currently available, users do not exercise ultimate creative control over how much such systems interpret prompts and generate material”.

With this new guidance, an option to register some works made by AI is possible, as we said before, depending on the amount of human creativity involved. With AI we are in a new era and we have to adapt our systems. Let’s see how this topic develops in Europe.

Coinbase. Case T- 366/21

Coinbase, Inc. v. EUIPO and the other party to the proceedings before the Board of Appeal being bitFlyer Inc.

An interesting new case reached the General Court recently, in which Coinbase seeks the annulment of a decision of the Fourth Board of Appeal of the EUIPO.

On 03/02/2016, bitFlyer obtained an International Registration from WIPO, designating the EU, for the work mark “coinbase”. On 29/06/2018, Coinbase, owner of the earlier mark “coinbase”, filed a request for a declaration of invalidity against all the goods and services of the contested mark.

The grounds for invalidity relied on likelihood of confusion and bad faith. Bad faith consists in a “conduct which departs from accepted principles of ethical behaviour or honest commercial and business practices”. By making bad faith an absolute ground for invalidity, Article 59 (1) (b) EUTMR meets the general interest objective of preventing trade mark registrations that are abusive or contrary to honest commercial and business practices. The good faith of the EUTM applicant is presumed until proven otherwise. The EUIPO does not have the authority to assess bad faith ex officio. Therefore, it should be raised and proven by a third party.

In the application for declaration of invalidity, Coinbase argued that bitFlyer knew or should have known about the intensive prior use of the trade mark in the USA and also in Europe.

Regarding the likelihood of confusion, Coinbase alleged that such likelihood was indeed clear, as the contested mark was registered for identical or similar goods and services covered by their mark, giving the impression that those marks were identical.

With this scenario, the contested mark was declared invalid. However, the Cancellation Division rejected the application for a declaration of invalidity with regard to the goods and services which were dissimilar to the goods and services designated by Coinbase. So, bitFlyer’s mark remained valid in the European Union in respect of the dissimilar goods and services.

On 26/08/2020, Coinbase filed a notice of appeal with the EUIPO, against the decision of the Cancellation Division. As Coinbase could not invoke a likelihood of confusion for the dissimilar goods and services that were remaining, they focused their appeal on bad faith, alleging again that bitFlyer had filed its mark in bad faith and thus asking for it to be entirely invalidated on this ground. The Board of Appeal dismissed the appeal arguing that the appeal was unfounded and that bitFlyer did not act in bad faith, focusing their assessment of bad faith only on the dissimilar goods and services (since the mark had already been invalidated with regard to the similar ones). Coinbase therefore took the case to the General Court.

According to the General Court, the decision of the Board of Appeal is not correct.

In particular, relating to the fraudulent intent of bitFlyer and whether they knew about Coinbase’s intensive prior use of the mark, the assessment of bad faith of the Board of Appeal focused on the dissimilar goods and servicies only whereas it should have focused on all.

For the General Court, the BoA did not take into account the most important argument in favour of Coinbase according to which “where a finding of bad faith is made in respect of some goods or services […] the trade mark should be cancelled for all the goods and services in question”. This means both, similar and dissimilar goods and services (i.e. not just the ones covered by Coinbase’s earlier mark but also the other goods and services for which bitFlyer sought registration).

Accordingly, the Court annulled the Board of Appeal’s decision – the BoA will therefore have to rule again on the case.

This case was an interesting one insofar as it shows us how bad faith should be assessed in the context of invalidity proceedings. Assessed only with regard to dissimilar goods and services (the ones not covered by Coinbase’s earlier mark), it may not be found. Assessed with regard to all goods and services, it may be easier to prove and may then make a difference in the next ruling.