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On Aug. 12, U.S. District Judge William H. Orrick of the U.S. District Court for the Northern District of California issued an order granting in part and denying in part the defendants’ motions to dismiss various claims in Sarah Andersen v. Stability AI Ltd., a putative class action brought by artists alleging that their works were used by the defendants without permission, including to train the Stable Diffusion text-to-image AI software tool. 

This is the second motion to dismiss decision in this case and concerns the plaintiffs’ first amended complaint. The court’s analysis provides some important insights into how courts are approaching training data cases. 

Background 

In early 2023, the plaintiffs filed suit against certain developers that have allegedly either contributed to the development of, or built products that leverage, Stable Diffusion, an AI tool that generates images in response to user text prompts. 

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WRITTEN BY

For further information, please contact:

Stuart D. Levi – Skadden,
stuart.levi@skadden.com

Stuart D. Levi serves as co-head of the firm’s Web3 and Digital Assets Group, in addition to coordinating the firm’s outsourcing and privacy practices.

Bio

Mr. Levi has a broad and diverse practice that includes advising on matters involving Web3 and digital assets (including NFTs), fintech, technology transactions, outsourcing transactions, intellectual property licensing, privacy and cybersecurity, and branding and distribution agreements. Utilizing his background in computer science and the information technology industry, Mr. Levi has extensive understanding of the technology and business drivers underlying agreements and transactions in these areas.

Mr. Levi has been a recognized leader in the technology transaction field for over 30 years and has been named a National Law Journal Trailblazer in cryptocurrency, blockchain and fintech. He also has been named to Chambers Global, Chambers USA and Chambers FinTech, as well as a Thought Leader by Who’s Who Legal: Fintech & Blockchain and an IP Star by Managing IP. Additionally, he has been named to Intellectual Asset Management’s IAM Patent 1000, where he is described as a “master at … formulating strategies, structuring deals and successfully negotiating them.”

Mr. Levi’s representations have included advising: 

Blockchain/Digital Assets/NFTs

  • numerous rights holders across multiple industries, including entertainment, sports, gaming and art, in the minting and marketing of NFTs;
  • providers of NFT platforms and service providers in structuring their platforms, contracting with rights holders and regarding ongoing compliance issues.
  • a leading global auction house in NFT-related matters;
  • a consortium developing a new blockchain and stablecoin;
  • a leading DeFi protocol in connection with a number of technology transactions, intellectual property issues and regulatory matters;
  • the development team building a new blockchain system and a related cryptocurrency;
  • various companies in connection with cryptocurrency and digital asset advertising policies;
  • a fund in connection with investments in cryptocurrencies;
  • various companies on issues relating to the acceptance of cryptocurrency as a means of payment;
  • a service provider that allows digital wallets to interact with exchanges;
  • companies in connection with M&A and capital markets activity in the blockchain and digital asset space;

Cybersecurity and Privacy

  • companies on all matters relating to the collection and use of personal data, including biometric data;
  • numerous companies in connection with data breaches and security audits, including companies in the financial services, insurance, manufacturing, health care and publishing industries;
  • numerous companies in complying with U.S. and foreign privacy and cybersecurity laws, including GDPR, GLB, HIPAA, COPPA, and other federal and state requirements;
  • companies on transborder data flow issues, including assisting companies with U.S.-EU and U.S.-Switzerland Privacy Shield certifications;

Outsourcing

  • S&P in the outsourcing of certain IT functions and services, finance and accounting services, and human resources services;
  • Citigroup Inc. in the outsourcing of various business processes and information technology and application development services;
  • American Express Company in the outsourcing of certain global printing operations;
  • Barclays Capital in the outsourcing of payroll services;
  • Hexaware in connection with the provision of information technology and business process outsourcing services to various entities;

Strategic Technology Ventures

  • LinkUK in connection with the development and installation of Wi-Fi kiosks in the U.K.;
  • Walmart in connection with various technology matters;
  • Airfox in connection with providing a mobile payment service for Via Varejo in Brazil;
  • A&E Television Networks, LLC in its joint venture with Vice Media Inc. to launch Viceland, a cable channel;
  • JP Morgan Chase in a co-branded global payment solution venture with AirPlus;

Stadium Naming Licenses

  • MetLife, Inc. in the acquisition of the naming rights for MetLife Stadium (home of the N.Y. Jets and N.Y. Giants);
  • FirstEnergy Corporation in acquiring the naming rights for FirstEnergy Stadium (home of the Cleveland Browns);

Mergers and Acquisitions

  • Viagogo Entertainment in its pending $4 billion acquisition of StubHub from eBay;
  • Spotify in connection with various acquisitions;
  • Social Capital Hedosophia in its $1.5 billion merger with Virgin Galactic;
  • The Walt Disney Company in its $4 billion acquisition of Lucasfilm Ltd.; and
  • Amadeus IT Group in its acquisition of Navitaire;

Prior to joining Skadden, Mr. Levi was director of intellectual property for Reuters America Inc. and a vice president of Reuters NewMedia Inc. In these roles, he was responsible for all of Reuters’ technology and intellectual property matters.

Mr. Levi has written and spoken on numerous outsourcing, privacy, technology and intellectual property issues, and each year he co-chairs the Practising Law Institute’s Open Source Institute. He received a 2019 Burton Award for Distinguished Legal Writing. Mr. Levi has been named by Chambers USA as one of America’s Leading Lawyers for Business since 2004 and by Chambers Global as one of the World’s Leading Lawyers for Business in technology transactions each year since 2002, in addition to being named to Chambers FinTech 2021. He also was previously selected by Crain’s New York Business for its list of Forty Under Forty — New York’s Rising Stars, where he was cited for his work in internet law. In addition, Mr. Levi repeatedly has been selected for inclusion in The Best Lawyers in America for information technology law.

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Credentials

Education

  • J.D., Harvard Law School, 1986 (cum laude)
  • B.A., Computer Science and Political Science, Columbia University, Columbia College, 1983 (magna cum laude)

Admissions

  • New York

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