AI Training and Fair Use: The Third Circuit Draws the Line

The 29 September 2026 ruling

On 29 September 2026 the United States Court of Appeals for the Third Circuit filed its opinion in Thomson Reuters Enterprise Centre GmbH and West Publishing Corp v ROSS Intelligence Inc, No. 25-2153.

The court affirms the District of Delaware order that had granted Thomson Reuters's claims in part. Oral argument was held on 11 June 2026.

The panel was composed of Judges Restrepo, Montgomery-Reeves and Bove. Judge Montgomery-Reeves wrote the opinion. The first-instance proceeding, case 1:20-cv-00613, was handled by Judge Stephanos Bibas, sitting by designation under 28 U.S.C. § 291(b).

Two holdings carry the decision. Thomson Reuters's editorial materials meet the requirements for copyright protection, and ROSS's use of them falls outside fair use. The full text, filed on 29 September 2026, is available on CourtListener^[1].

Why Westlaw's material is protected

Westlaw collects, organises, annotates and publishes judicial texts. The key number and topic system indexes rulings according to the legal issues they address.

The court writes that those materials have a «creative spark». That alone suffices for protection.

The proof of that creativity lies in the editorial work. Choosing which passage to isolate, how to rewrite it and under which heading to place it requires human judgment. The result goes beyond a copy of the judge's text.

The Third Circuit cites one of its own precedents from 1986, Whelan Associates v Jaslow Dental Laboratory, 797 F.2d 1222. Faced with a new technology, the court applies the principles that have always governed copyright. The method matters as much as the outcome: technology remains a fact, the rule remains the one set by the Copyright Act of 1976.

Similar purpose and a substituted market

Fair use is a statutory exception codified at 17 U.S.C. § 107. Four factors govern it: the purpose and character of the use, the nature of the work, the amount taken, the effect on the market for the work.

The weight falls on the first factor and the fourth.

ROSS used Westlaw's materials to train its own legal research platform. The court identifies an undisputed fact: ROSS aimed to become a direct competitor, with a purpose highly similar to that of the rights holder.

Here lies the pivot. A use that serves the same market function as the copied work loses its transformative character and harms the owner's market. Courthouse News Service reported the decision as a federal appellate answer on AI training and fair use (courthousenews.com^[2]).

The practical consequence runs straight. The question changes its object: from the abstract lawfulness of training to the commercial substitutability between the trained product and the source of the data.

What changes compared with the first instance

Before 29 September 2026 the American picture rested on first-instance decisions. Each district read the four factors with an accent of its own.

The appeal was interlocutory: the merits proceeding continued. Affirmance of the partial summary judgment settles the question of law and sends the rest back to the District of Delaware.

The geographic perimeter deserves a statement. The ruling binds the federal courts of Delaware, New Jersey, Pennsylvania and the US Virgin Islands. In other circuits it serves as a persuasive argument, with the weight that comes from the level of court issuing it.

A compliance control calibrated solely on model governance now sits poorly tuned for the new context. The audit remains due; its object changes, and becomes the dataset.

The governance signal: the dataset enters the audit

The governance signal is this: the provenance of training data becomes a line item of legal risk.

The economic value of the dataset and its exposure travel together. A corpus rich in protected editorial material raises the quality of the product and raises the probability of a lawsuit.

Three documentary elements carry the defence in court: the inventory of sources, the title under which each entered the corpus, the date of entry. Many organisations hold the first element and lack the other two.

The point applies to buyers as well. A vendor delivering a trained model transfers to the customer a risk the contract rarely names. Indemnity clauses cover copyright infringement with caps and with exclusions that the customer reads line by line.

Three decisions for the board

The board of directors faces three concrete decisions.

1. Who answers, by name and in writing, for the provenance of training data before release?
2. Which assessment measures the commercial substitutability between our AI products and the sources used to train them?
3. What copyright risk reporting reaches the audit committee, at what cadence and with which numbers?

The first decision names a role. A control lacking an accountable name before deployment produces documentation, in place of governance.

The second decision builds the evidence. The assessment compares the function, audience and sales channel of the product with those of the source. The comparison belongs before the lawsuit, while product choices remain open.

The third decision concerns the financial statements. A contingent liability from copyright litigation enters closing assessments once it becomes probable and estimable. The Third Circuit ruling advances both judgments for anyone who trained on third-party editorial content.

The General Counsel holds a fourth question to put to the vendor: which provenance documentation it agrees to produce during an audit.

What the decision leaves open

The broad reading treats the answer as a general ban on training with protected material.

The narrow reading looks at the facts. ROSS copied original editorial material to build a tool that served the same market as the rights holder. A generative system with a different audience remains a case still to be decided.

Both readings circulate among practitioners. The text of the ruling speaks of a highly similar purpose and of direct competition: two factual elements, to be proven case by case.

ROSS had built its defence on the future of legal technology. The court answers that the case is an ordinary copyright dispute. That sentence weighs more than an entire market analysis: the American judge treats AI as a means, and applies the existing categories.

Regulatory horizon

The ruling takes effect from filing, on 29 September 2026, within the Third Circuit.

The merits proceeding continues before the District of Delaware. A petition for review to the Supreme Court remains a possible development, and that court's calendar is measured in years.

In Europe the framework runs on a different track. Regulation 2024/1689 obliges providers of general-purpose models to publish a summary of the content used for training, effective 2 August 2025 (Article 53). Directive 2019/790 governs text and data mining and the rights reservation mechanism available to the rights holder (Article 4).

The two jurisdictions ask for two distinct things: Brussels asks for transparency on the dataset, Washington asks for a title for every source. An organisation that prepares its inventory of sources now answers both with the same document.