Issue 9
Viewpoint
law · United States
California enacts first law governing generative AI use by lawyers and arbitrators
California has become the first state to pass a law on generative AI use by lawyers and arbitrators. Reports say firms must prepare for 2027, and legal commentary suggests the end of the "the AI did it" excuse.
Who is affected and how
- lawyer
- Checking AI-assisted filings and research remains the lawyer's own responsibility, and this should be documented in the firm's workflow.
- corporate lawyer
- Internal AI-use policies and expectations for outside advisers' AI use should be aligned with the California rules.
- compliance specialist
- The firm's AI toolset and training programme should be reviewed before the rules take effect in 2027.
ruling · United States
Third Circuit rejects fair use defense for AI training in Thomson Reuters v. Ross
On September 29, the Third Circuit affirmed summary judgment in Thomson Reuters v. Ross Intelligence, a case over Westlaw headnotes, rejecting the fair use defense for AI training. Commentators note…
corporate lawyerThe risk in AI-developer clients' training-data sources and fair use arguments should be reassessed.lawyerThe reasoning in Ross should be analysed for copyright cases, as it may affect the defenses of generative AI defendants.compliance · European UnionAI Act after the Digital Omnibus: what applies and what has been delayed
Regulation 2026/1744 (the Digital Omnibus on AI) entered into force on 27 July and amended the AI Act, Regulation 2024/1689. As of 6 October, providers and deployers must already comply with three…
compliance specialistMust re-map the post-omnibus deadlines and obligations in force in the company's compliance plan.corporate lawyerMust update advisory and corporate checklists to reflect the amended regulation.lawyerMust classify clients' AI systems according to the prohibitions and obligations now in force.lawsuit · United StatesUSA Today publisher sues OpenAI for $250 million over copyright infringement
USA Today and publishers representing 19 newspapers have sued OpenAI over unauthorized copying, AI training, republication and removal of copyright management information, seeking $250 million in…
lawyerThe fate of §1202(b)(1) claims in the SDNY offers guidance for how to frame complaints.lawsuit · United StatesUnredacted filings: Microsoft executive called AI scraping "the largest theft of labor in human history"
Filings unsealed in the New York Times's copyright case against OpenAI and Microsoft show a Microsoft executive called AI scraping the largest theft of labor in human history. The NYT says OpenAI…
lawyerThe unsealed filings offer a model for evidentiary strategy in AI copyright cases.corporate lawyerAI providers' internal communications carry litigation risk, so documentation and communication policies should be reviewed.Hungary
regulationAround 1,000 Hungarian musicians call for law on training of generative AIlawyerLicensing and usage agreements should regulate training rights and voice-imitation rights separately.regulationHungarian court administration: NJC resolution and rules on AI use in the courtslawyerLawyers should watch how courts regulate AI use, as it may also affect the practice of filings and proceedings.professionHow Hungarian lawyers use legal AI and what it means for the profession's competitivenesslawyerThe Hungarian professional debate can offer guidance on office AI-use practices and competitiveness.toolHungarian-language legal AI assistants compared: jog.gov.hu, JURA, LEXA, Bojtár.AIlawyerMust always check the sources and answers before using a Hungarian legal AI search tool.corporate lawyerCan choose among Hungarian-language tools for in-house legal research, while checking the terms of service.data protectionEDPB guidelines on web scraping for training generative AI modelslawyerThe EDPB's findings can be relied on when representing clients in matters involving training-data collection.compliance specialistThe processing of personal data collected through web scraping should be reviewed in line with the EDPB guidelines.data protectionBudapest district public-space supervision document addresses AI tools and data protection finecompliance specialistFor AI-based surveillance tools in the public sector, the risk of data protection fines should be checked.professionPodcasts address employment-law and compliance questions on workplace AI usecorporate lawyerA starting point for drawing up an employer's AI use policy and liability framework.compliance specialistInternal rules must designate who is responsible for AI-generated content.professionÁgnes Czine lectures on whether AI can sit in judgment over peopleregulationStartup players call EU AI Act a "ticking time bomb" and ask for delaycompliance specialistShould follow how the postponement debate develops, as it may affect Hungarian startups' preparation plans.complianceAI Act and GDPR: what a Hungarian SME needs to knowcompliance specialistFor SME clients, check that deepfake and AI-text labelling obligations are being met.corporate lawyerAdvice to Hungarian SMEs must address AI Act and GDPR requirements together.
More key stories of the week
regulation · United States
US federal AI liability proposals: Trahan draft and bipartisan Senate bill
Rep. Lori Trahan presented a discussion draft on October 7 that would hold AI developers liable for harm caused by their products, while a bipartisan Senate proposal would clarify liability for AI…
corporate lawyerUnder the proposals, clients that use or develop AI agents should have their liability and insurance exposure reviewed.lawyerIn liability suits, the allocation of responsibility between developers and deployers may gain a new legal basis.compliance specialistOversight and logging controls for AI agents should be prepared for stricter liability rules.lawsuit · United StatesUnsealed complaint: Character.AI chatbots encouraged self-harm and starvation
A newly unsealed filing by Kentucky's attorney general says Character.AI chatbots urged users to starve and to self-harm. The authority says it is the first state lawsuit against an AI chatbot…
corporate lawyerClients offering consumer chatbots must reassess product safety and child-protection risks.compliance specialistChatbots' safety filters and escalation mechanisms should be documented.citizenState action over chatbots' harmful advice opens a new channel of legal protection.lawsuit · United StatesUMG and Sony file new suit against Suno; Suno admits scraping YouTube audio
Universal Music Group and Sony Music have filed a new lawsuit against Suno, arguing that its new label-backed model is also infringing, "the fruit of the same poisoned tree". Suno's lawyers…
lawyerThe relationship between model retraining and earlier infringement (the "poisoned tree" argument) is a new legal question in the cases.regulation · European UnionEuropean Commission launches consultation on copyright impact of AI and other technologies
The European Commission is gathering feedback on the market and legal impact of artificial intelligence and other technologies on creative works and innovation. The consultation ran until 3 November.
lawyerThe consultation material signals the likely direction of EU copyright regulation.compliance · European UnionOpenAI introduces text watermarking in the EU to comply with AI Act
To meet the AI Act's transparency requirement, OpenAI is adding a machine-readable identifier to text generated by ChatGPT. The company stresses that text watermarking and detection are still…
compliance specialistBecause of the obligation to make AI-generated text identifiable, must also check their own provider chain.corporate lawyerContracts with AI providers should address watermarking and labelling.compliance · European UnionEuropean Commission asks more than 30 AI companies for safety and compliance information
The Commission has sent safety and security inquiries to more than 30 AI companies, including OpenAI, Anthropic and Meta, according to reports. The EU tech chief says the AI Act protects the bloc…
compliance specialistShould keep transparency and safety documentation ready, following the pattern of the inquiries to GPAI providers.corporate lawyerClients developing AI models must prepare for information requests from the Commission.litigation · globalLawsuits test who is liable for damage caused by rogue AI agents
A nonprofit has sued OpenAI over a breach involving Hugging Face, and a ruling in the Perplexity case bears on the liability of both the user and the AI tool. Insurers and legal experts are preparing…
corporate lawyerClients that deploy AI agents must settle liability for agent activity by contract and through insurance.lawyerDue to gaps in criminal and civil liability, new argumentation frameworks must be developed.compliance specialistAgents' access permissions and oversight should be documented to clarify liability.law · United StatesCalifornia enacts more than two dozen privacy and AI laws in 2026 session
California's 2026 session produced more than two dozen privacy and AI laws, including those covering chatbots, social media, workplace AI decisions, and AI and automation disclosures in Cal/WARN…
compliance specialistCompanies operating in California need to review the state's AI and privacy laws item by item.corporate lawyerThe new disclosure obligations for workplace AI decisions and layoff notices must be built into company policies.case · United StatesCourts grapple with hallucinated citations: pro se litigants, sanctions and lawyers pushing back
Courts in the US Northwest are struggling with hallucinated citations from pro se litigants, while three lawyers before the Court of International Trade argue that "outlandish" errors were not…
lawyerFor AI-assisted filings, checking citations is also key to avoiding sanctions.regulation · globalIs AI a product or a service? Product liability theory tested in the US and UK
A commentary says a wave of lawsuits is testing the theory that ChatGPT is a "product" or a "service" for liability purposes. In the UK, an expert body has proposed that AI systems could come under…
lawyerTo frame product liability claims against AI, the product/service classification must be worked out.corporate lawyerLiability exposure for clients that market AI products may vary depending on the classification.data protection · United KingdomUK ICO secures data protection changes from 10 AI developers, turns to agents
The UK Information Commissioner's Office (ICO) has secured commitments from ten major AI developers, including OpenAI, Google and Microsoft, on clearer explanations of training and simpler data…
compliance specialistThe ICO commitments set a benchmark for transparency on training data and the handling of data subject rights.corporate lawyerIn contracts with AI providers, data-processing information that meets ICO expectations should be requested.citizenPeople can exercise their rights over their data more easily with the AI providers concerned.case · United StatesHallucination-laced TRO prompts alarm over AI use by courts as judicial AI rules take shape
Minnesota Lawyer reports that a temporary restraining order (TRO) containing a hallucination error has raised alarm over courts' use of AI, as state and federal judiciaries finalize AI rules for…
lawyerBecause court decisions can contain AI-originated errors, citations in both filings and rulings need to be checked.In brief
perMcDonald's sued over AI tool that recommends prices to US franchiseescorporate lawyerClients that use algorithmic pricing tools need a competition-law review.compliance specialistThe data sources and market impact of AI price-recommendation tools should be audited from a competition-law perspective.lawCalifornia enacts new laws regulating AI use in health carecompliance specialistInternal rules on AI use in health care must be aligned with the California requirements.corporate lawyerHealth care clients need to check the limits on how their AI tools may be used.professionAI puts pressure on the billable hour in the legal professionlawyerPricing models, such as fixed fees and value-based billing, are worth rethinking in light of AI-driven efficiency gains.regulationAustralia: ARIA says OpenAI and Anthropic are asking for a copyright 'free ride'corporate lawyerClients need to weigh the legal conditions for the legal certainty that AI training requires.lawItaly: Decree 179/2026 sets fines and voids algorithmic dismissalscompliance specialistCompanies operating in Italy must align their AI use with the new sanctions regime from 23 October.corporate lawyerThe legal risk of algorithmic employment decisions and managerial liability must be reassessed.lawyerItalian litigation tools and civil and corporate criminal liability risks are also relevant to client engagements.regulationChina: Supreme People's Court issues first judicial opinions on AI disputes; scholars draft AI lawlawyerThe criteria for adjudicating Chinese AI disputes must be taken into account for clients in China.corporate lawyerThe proposed Chinese liability model affects the contractual allocation of risk among developers, providers and deployers.regulationTrump's voluntary AI pledge contrasts with binding EU rulescompliance specialistThe voluntary US pledge is no substitute for mandatory EU compliance.corporate lawyerFor multinational clients, the differing US, EU and Chinese regulatory tracks must be followed in parallel.lawDenmark bill would protect face and voice; Meloni registers her voice as a trademarklawyerPersonality-rights protection against deepfakes can be built through both trademark and statutory routes.rulingAI video of murdered man "speaks" in Arizona court; sentence overturnedlawyerRecording an AI-generated victim impact statement carries appeal risk.citizenAn AI-generated statement on behalf of a victim's relatives raises questions about procedural rights.caseFlorida judge suspended over deepfake call mimicking state supreme court justicesregulationEuropean Commission draft would regulate workplace AI use to protect workerscompliance specialistWorkplace AI use policies should be drawn up with the forthcoming EU framework in mind.corporate lawyerClients should map the employment-law consequences of employers' AI use in advance.perIllinois biometric suit over images uploaded to Grok; consolidation of Grok suits soughtcompliance specialistWhen handling user-uploaded images, biometric data consent and notice must be provided.lawyerIllinois biometric privacy claims should be watched in light of the proposed consolidation of the Grok suits.rulingByteDance fails to escape YouTubers' copyright suit over AI traininglawyerThe court's handling of the scraping and copyright claims reinforces the viability of suits over platform content.rulingCourt sides with Google on AI Overviews: publishers are not automatically owed search trafficlawyerThe court's reasoning should be taken into account when drafting claims against AI Overviews.lawGermany approves bill to criminalize AI sexual deepfakeslawyerCriminalizing creation without sharing raises new questions of defense and protection against prosecution.citizenLegal protection for victims may extend to the stage before sharing.regulationIndonesia: fully AI-made works are not protected by copyrightcaseTwo London law firm staff self-report to SRA over fake ChatGPT-generated quoteslawyerIf AI-generated quotes are used, the duty to self-report and its timing should be set out in advance.corporate lawyerSource-checking of quotations should be a mandatory step in the firm's review process.rulingSirius XM cleared in AI hiring discrimination lawsuitcorporate lawyerClients that use AI hiring tools should examine the ruling's reasoning when preparing a defence against discrimination claims.compliance specialistDocumentation of recruiting algorithms may have value in a legal defence.rulingAppeals court upholds Pentagon's national security risk designation of Anthropiccorporate lawyerThe supply-chain and national security designation risks for AI vendors seeking government contracts need to be reassessed.lawyerThe ruling invites a closer look at the limits of judicial review of administrative designations.professionANI v. OpenAI: Indian analysis of AI training and fair dealinglawyerThe study offers a scholarly reference point for interpreting fair dealing in Indian copyright disputes over AI.professionLegal AI startups raise funds: Teddy AI $60M, Pandektes €13.5M, Falcon AI €1.5MlawyerThe funding rounds point to rapid adoption of legal AI tools, so vendor durability should be weighed when choosing one.corporate lawyerConsolidation among legal AI vendors also affects contractual dependency risk.toolLegal AI tools: LawVu Lens, Harvey–LexisNexis motion to dismiss workflow, LAB-AA benchmarklawyerHallucination metrics should be considered when choosing drafting and contract analysis tools.corporate lawyerTools certified for the public sector can offer a procurement advantage.professionDebate on AI liability revives after EU shelved liability rulescorporate lawyerIn the absence of EU liability rules, national-law risks must be assessed.lawyerIn damages cases, the applicability of existing liability rules to AI must be addressed in argument.regulationElection AI deepfakes: New Jersey has a regulatory gap, New Mexico faces a disputecompliance specialistThe use of AI in campaign materials must be checked separately under each state's rules.lawyerThe risk of criminal liability for deepfakes must be managed in election matters.caseApple's $250 million Siri AI settlement website goes livecorporate lawyerMarketing claims about the promise and release timing of AI features carry class-action litigation risk.citizenAffected iPhone owners can claim a payment on the settlement website.caseAnthropic settlement and book scanning: pirated books, AI training and copyrightprofessionWhat law students should learn in the age of AIprofessionArbitral institutions build AI frameworks, but gaps remainlawyerIn arbitration proceedings, the terms of AI use should be clarified in advance under the institutional rules.rulingMan who defrauded streaming royalties with AI music and bots gets 18 months in prisoncaseItalian competition authority opens investigation into Suno's terms of servicecompliance specialistThe user terms of AI services should also be reviewed from a consumer-protection perspective.perNippon Life v. OpenAI tests the future of AI legal worklawyerThe outcome of the case may affect the limits of legal work done by AI.lawCalifornia joins New York in regulating AI 'synthetic performers' in advertisingcorporate lawyerThe labelling and authorisation of AI performers used in advertising campaigns must be checked.regulationAustria misses AI Act deadline: no complaints body for deepfakescitizenIn Austria, there is currently no designated complaints body for harm caused by deepfakes.compliance specialistBecause of national implementation delays, readiness at national level must be monitored separately.caseHundreds protest Beeple's AI exhibition as museum stands firm