This case revisits the venerable topic of if, and when, cloning-and-revising a legal document can be copyright infringement. The plaintiff gets an expensive lesson in the law of derivative works.
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UIRC offers bonds using a private placement memorandum (PPM) and an indenture of trust. UIRC initially manufactured those documents by cloning-and-revising documents prepared by the Idaho Housing and Finance Association. UIRC obtained copyright registrations for two versions of its documents.
UIRC retained William Blair to help promote its bonds. Later, a third party retained William Blair to promote similar bonds, and William Blair cloned-and-revised the UIRC versions to prepare new documents for the third party. (There was no question about the copying–the revised William Blair documents sloppily retained references to UIRC). UIRC sued William Blair for copyright infringement.
Despite UIRC’s copyright registrations, the court says the UIRC’s edits aren’t copyrightable:
UIRC did not independently create most of the language in the documents at issue. Instead, it copied much of the language from the Idaho materials. We agree with the district court that the language UIRC did draft lacks the creative expression required for copyright protection. It is either facts, fragmented phrases, or language dictated solely by functional considerations.
The court provides details about UIRC’s minor edits to the Idaho precedent:
The only differences (besides formatting) between Section 5.01 in Idaho’s indenture of trust and that same section in UIRC’s document are nine substitutions of “Project” for “Properties”; a change from “Borrower” to “Issuer”; and a new clause reading, “and initial funding of reserves for the Bonds.”…
in the final PPM for its fourth offering,…UIRC made only one change to Idaho’s version: it ended section 5 with a period, and Idaho used a semicolon…
The trivial variations persist in the version of the Application of Revenues section in the PPM for UIRC’s first transaction. In one paragraph, UIRC deletes one deadline; switches out “following” for “after” and “with” for “in”; and swaps a second deadline with its own. In another paragraph, it simply replaces “Expense Fund” with “Administrative Expense Fund” and “S&P” with “NAIC.”
UIRC added new material to the Application of Revenues section, but the court describes that material as “a mixture of fragmented phrases, facts, and language dictated solely by functional considerations”:
For example, it replaced some of Idaho’s language with “Mortgage,” “Assignment of Lease,” and “Collateral Assignment of Rents” in a list of legal documents in the opening paragraph of the section. Elsewhere, it added the phrase “the Loan Agreement obligates the Borrower to (and the Issuer shall cause the Borrower to)” to Idaho’s language in the first paragraph of the section. Other contributions are more substantial. For example, although UIRC used some of Idaho’s language for the payment order section discussed above, UIRC re-sequenced the paragraphs, creating a different order.
These contributions don’t qualify as copyrightable materials:
Fragmented phrases and facts are not copyrightable. Language dictated solely by function is not copyrightable either….wherever UIRC made substantive additions, it was not creative expression. Rather, UIRC was responding to the demands of function…
UIRC included no expressive elaborations, choosing instead to present its idea to potential investors with the formal technicality common to bond documents. Bond documents are, at their foundation, barebones descriptions of the offering and terms and conditions. Without any elevating creativity, the documents consist of little more than an uncopyrightable “method of operation” or “process.”…
Even though there were other ways UIRC could explain the payment of order flows provision, it wrote the provision exactly as it did to assure bondholders that their security would be safe.
The court also affirms the discretionary copyright attorneys’ fee shift, to the tune of over $1.5M and maybe more for attorneys’ fees for the appeal.
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“Standing on the Shoulder of Giants.” So…awkward question…but did UIRC obtain copyright permissions from the Idaho agency to clone-and-revise its materials? If not, UIRC’s legal positions, if successful, would have highlighted its non-trivial exposure to the Idaho agency. Maybe UIRC was playing 4D chess I don’t understand, but to me, UIRC’s desired outcome in this case would have inevitably backfired on UIRC.
In other words, even though UIRC got the benefit of building on someone else’s precedent, it nevertheless sought to then close the door so other follow-on creators couldn’t get the same benefit. In that respect, I see parallels between UIRC’s arguments and the arguments against generative AI indexing creative content to prevent the follow-on creativity enabled by the AI model, even though the indexed creators produced their works only by standing on other people’s shoulders themselves.
(Given that UIRC “borrowed” a lot from the precedent documents, I wonder how the lawsuit would have looked if the Idaho agency had sued UIRC for copyright infringement?)
Copyright Protection for Legal Documents. This case expands the canon of copyright protection for lawyer-drafted documents such as legal briefs and contracts. The court correctly divides UIRC’s output into copied material, non-expressive revisions, and new expressive material, Only the latter is eligible for potential enforcement.
It doesn’t definitively resolve the issue, but the opinion establishes a high burden for copyright protection of legal documents, and in particular disclosure documents. Disclosures are routinely cloned-and-revised, especially when the language has been tested in court, and often any new material in the disclosure is driven by legal dictates rather than creative expression (e.g., various places where the disclosure must use magic words to be legally effective). More often than not, a cloned-and-revised document is going to have, at most, thin copyright protection.
This opinion doesn’t address the situation when an entire legal document is copied verbatim, such as when the filings are indexed in electronic databases like Westlaw or Lexis. (The government routinely makes legal filings available in electronic form, e.g., PACER and EDGAR). Even if the verbatim copying qualifies as putative infringement, many republications are likely to be covered by fair use. See, e.g., White v. West Publishing (not cited by this court). (See also Prof. Volokh’s pre-decision musings on that case).
For now, this opinion demonstrates that suing over the copying or subsequent cloning-and-revising of legal documents is an inherently risky business. The drafter claiming copyright rarely writes the document from scratch, and an overreaching copyright claim in that document could lead to an expensive fee shift.
Case citation: UIRC-GSA Holdings, LLC v. William Blair & Co., Nos. 23-1527 & 23-2566 (7th Cir. Jan. 12, 2024)
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