Introduction
The U.S. Supreme Court's opinion in the consolidated cases Loper Bright Enterprises v. Raimondo and Relentless, Inc. v. Department of Commerce ("Loper Bright"), as expected, limited the power of federal agencies by eliminating the highest level of deference previously afforded by courts to the agencies' practices and legal interpretations. This Perspective discusses how the U.S. Copyright Office is poised to offer guidance on novel questions of law concerning artificial intelligence ("AI") and copyright, and how Loper Bright injects uncertainty in determining how courts may interpret such guidance.
By overturning the 1984 decision in Chevron v. Natural Resources Defense Council, the Court eliminated the doctrine of Chevron deference, which had required courts to defer to agencies' reasonable interpretations of ambiguous language in federal laws.
Given that the Copyright Office is poised to issue guidance regarding several issues involving copyright and generative AI—novel areas of law requiring interpretation—what impact will Loper Bright have on the Copyright Office's decisions?
Courts must now decide which level of deference, if any, to afford the Copyright Office's practices and interpretations regarding AI and copyright. With courts required to "decide legal questions by applying their own judgment" instead of deferring to the Copyright Office's expertise, courts may reach inconsistent and varied decisions on the same legal interpretations. Additionally, Loper Bright could frustrate Congress's reliance on federal agencies to interpret legal ambiguities, which could chill legislative activity by increasing the burden on Congress to consider and preemptively address a fuller spectrum of factual, technical, and legal possibilities.
Background: Loper Bright and Relentless Overrule Chevron
Loper Bright arose out of a dispute under the Magnuson-Stevens Fishery Conservation and Management Act ("FCMA"), the primary law governing marine fisheries management in U.S. federal waters. A group of fisheries challenged a rule issued by the federal agency that administers the FCMA, claiming that the agency had exceeded its authority when issuing a rule creating industry-funding monitoring requirements for vessels.
In reviewing the agency's rule, both the U.S. District Court for the District of Columbia and the U.S. Court of Appeals for the District of Columbia Circuit relied on the Supreme Court's 1984 decision in Chevron v. Natural Resources Defense Council and gave deference to the agency's interpretation of the FCMA to allow industry-funded monitoring. At the time of those decisions, the Chevron doctrine compelled courts to defer to a federal agency's interpretation of an ambiguous or unclear statute that Congress had delegated to the agency to administer.
Under Chevron, a court reviewed the agency's statutory interpretation through a two-step framework. First, the court determined whether Congress had directly spoken on the issue in question and, if so, "that [was] the end of the matter." If the statute was silent or ambiguous on the issue, however, the court moved to Chevron's second step and deferred to the agency's interpretation if it was "based on a permissible construction of the statute."
In the intermediate appellate decision in Loper Bright, the D.C. Circuit also found that the agency's rule did not violate the Administrative Procedure Act ("APA"), which sets out the procedures that federal agencies must follow when issuing regulations, as well as instructions for courts to review agency actions. The APA provides for judicial review of any "final agency action for which there is no other adequate remedy in a court," and instructs a reviewing court to set aside agency action found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." In Loper Bright, the D.C. Circuit determined that the agency's "decision to proceed with an industry-funded monitoring requirement after extensive deliberations on the question of cost was not arbitrary or capricious."
Subsequently, the fisheries filed a petition for certiorari, which the Supreme Court granted on the specific question as to whether Chevron should be overruled or clarified. The Supreme Court added Relentless, Inc. v. Department of Commerce, a second challenge to the same rule, to its docket and fast-tracked the case so that it could be argued on the same day as Loper Bright.
On June 28, 2024, the Supreme Court issued an opinion, with a 6-2 majority in Loper Bright and a 6-3 majority in Relentless, overturning its landmark Chevron decision. (There is one written opinion. Justice Jackson recused herself from Loper Bright, likely because she had heard oral argument in the case below while serving on the D.C. Circuit.)
Specifically, the Court held in Loper Bright that Chevron deference is inconsistent with the APA, which directs courts to "decide legal questions by applying their own judgment" and thus "makes clear that agency interpretations of statutes—like agency interpretations of the Constitution—are not entitled to deference." Under the APA, the Court maintained, "it thus remains the responsibility of the court to decide whether the law means what the agency says."
In addition, the Court rejected any suggestion that agencies, rather than courts, are better suited to interpret ambiguities in federal law. Even when those ambiguities involve technical questions that fall within an agency's area of expertise, the Court emphasized that "Congress expects courts to handle technical statutory questions, and courts did so without issue in agency cases before Chevron."
The Court did, however, cite its decision in Skidmore v. Swift with approval in Loper Bright, suggesting that the lower standard of Skidmore deference remains intact. Skidmore "deference" provides that while an agency's interpretations and opinions may provide guidance, they are not controlling on courts.
In Skidmore, the Supreme Court stated that "interpretations and opinions" of the relevant agency, "made in pursuance of official duty" and "based upon . . . specialized experience," "constitute[d] a body of experience and informed judgment to which courts and litigants [could] properly resort for guidance," even on legal questions. "The weight of such a judgment in a particular case," the Court observed, would "depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control."
Loper Bright Appears in Tension With Congress's Intent That the Copyright Office Provide Expert Guidance to Courts
Under the Copyright Act, the Copyright Office is tasked with various legal and policy functions, including providing "expert subject matter assistance to Congress on copyright policy and interpretation of the copyright law." 17 U.S.C. § 701. And the Copyright Act grants the Copyright Office broad regulatory authority "to establish regulations not inconsistent with law for the administration of the functions and duties made the responsibility of the Register." 17 U.S.C. § 702.
While Loper Bright rejects the notion that agencies, rather than courts, are better suited to interpret ambiguities in federal law, Congress appears to have expressed an intent for the Copyright Office to provide guidance to courts given its expert knowledge and ability to address novel questions of copyright law.
For example, under 17 U.S.C. § 411(b), if a party to litigation alleges that a certificate of registration issued by the Copyright Office contains inaccurate information that was knowingly included in the application, "the court shall request the Register of Copyrights to advise the court whether the inaccurate information, if known, would have caused the Register of Copyrights to refuse registration."
Similarly, the Copyright Act provides multiple ways for the Copyright Office to provide expert guidance to the Copyright Royalty Board ("CRB"), which consists of three judges who determine rates and terms for copyright statutory licenses and make determinations on distribution of statutory license royalties. If a novel area of law "concerning an interpretation" of the Copyright Act arises in a CRB proceeding, the judges "shall" request that the Copyright Office "resolve such novel question." 17 U.S.C. § 802(f)(1)(B)(i).
The CRB can also refer requests to the Copyright Office "to interpret other material questions of substantive law" in the course of a proceeding (17 U.S.C. § 802(f)(1)(A)(ii)), and the Copyright Office may review a CRB final determination for legal error and issue a written decision correcting such legal error for the record. 17 U.S.C. § 802(f)(1)(D).
The Copyright Office is Poised to Offer Guidance on Novel Questions of Law Concerning AI and Copyright
In March 2023, the Copyright Office launched an initiative to examine copyright issues raised by AI, including the scope of copyright in works generated using AI tools and the use of copyrighted materials in AI training. Regarding the registration of works containing AI-generated material, the Copyright Office issued initial guidance to clarify its practices and reasserted its longstanding requirement that copyrighted works must be the product of human authorship.
The Copyright Office also convened multiple public listening sessions and received more than 10,000 written comments in response to its notice seeking public feedback on a variety of issues concerning AI and copyright.
By the end of 2024, the Copyright Office plans to issue a policy report regarding multiple novel areas of law involving AI and copyright, to be issued in sections. The first section focuses on the use of AI to digitally replicate individuals' appearances, voices, or other aspects of their personalities. The second section will address the copyrightability of works incorporating AI-generated material and supplement its initial guidance.
Later sections will turn to the legal implications of training AI models on copyrighted works as well as the allocation of potential liability for AI-generated outputs that may infringe.
Loper Bright Injects Uncertainty in Determining How Courts May Interpret the Copyright Office's Guidance on Novel Questions of Law Concerning AI and Copyright
The Supreme Court's overruling of Chevron has opened discussion about whether and how much deference a court should afford to the Copyright Office's practices and legal interpretations. Historically, courts have given varying levels of deference to the Copyright Office. For example, the Second Circuit gave Chevron deference in upholding the Copyright Office's interpretation that under the section 111 cable statutory license, "Internet retransmission services do not constitute cable systems" and are thus not covered by the license. See WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 278–85 (2d Cir. 2012).
By contrast, the Ninth Circuit rejected Chevron deference for the Copyright Office's Compendium, its administrative manual for registration and recordation, but held that Skidmore deference was appropriate. See Inhale, Inc. v. Starbuzz Tobacco, Inc., 755 F.3d 1038, 1041–42 & n.2 (9th Cir. 2014). Similarly, the Sixth Circuit in Varsity Brands, Inc. v. Star Athletica, LLC held that "the Copyright Office's determination that a design is protectable under the Copyright Act is entitled to Skidmore deference." 799 F.3d 468, 479 (6th Cir. 2015), aff'd sub nom. Star Athletica, L.L.C. v. Varsity Brands, Inc., 580 U.S. 405 (2017).
The Eleventh Circuit has held that "some deference" should be given to the Copyright Office's decisions to deny registration because of its "considerable expertise" (see Norris Indus., Inc. v. Int'l Tel. & Telegraph Corp., 696 F.2d 918, 922 (11th Cir. 1983)), and the Third Circuit has held that the Copyright Office's longstanding practice of denying registration to a category of works merits deference but declined to label that deference "Skidmore deference" (see Southco, Inc. v. Kanebridge Corp., 390 F.3d 276, 286 & n.5 (3d Cir. 2004) (en banc) (Alito, J.)).
In the aftermath of Loper Bright, although courts that have historically applied the less deferential Skidmore framework to the Copyright Office's positions may not be impacted, courts that previously accorded Chevron deference must now decide how much, if at all, to defer to the Office.
In practice, courts may reach similar outcomes as they had before Loper Bright. Indeed, the Ninth Circuit has previously noted that while a court split existed as to whether Chevron or Skidmore deference should apply to the Copyright Office's interpretations, "each of the courts applying Skidmore had no trouble accepting the Office's position when all was said and done." Fox Television Stations, Inc. v. Aereokiller, LLC, 851 F.3d 1002, 1006–15 (9th Cir. 2017).
The ambiguity introduced by Loper Bright, however, may create an opportunity for stakeholders to challenge the Copyright Office's practices and legal interpretations where they might not have previously. In addition, with courts now required to "decide legal questions by applying their own judgment" instead of deferring to the Copyright Office's expertise, courts may reach inconsistent and varied decisions on the same question of legal interpretation.
Loper Bright could also frustrate Congress's practice of enacting legislation with the assumption that the federal agencies administering the law will have the freedom to interpret ambiguities.
For example, when the Music Modernization Act ("MMA") was enacted in 2018, Congress specifically acknowledged that the legislation may not contemplate every scenario that may arise and that the Copyright Office would need to use its expertise to address unanticipated issues. Legislative reports on the MMA from the Committee on the Judiciary in the U.S. House of Representatives and U.S. Senate noted both the Copyright Office's "expertise" and that the Copyright Office would need to address "situations . . . not contemplated by the legislation."
Indeed, the reliance of Congress on federal agencies to interpret legal ambiguities was front-and-center during oral arguments in Relentless. Justice Kagan maintained that "Congress knows that there are going to be gaps" in legislation for federal agencies to fill, and specifically referenced legislation concerning AI as "the next big piece of legislation on the horizon." See Relentless Tr. at 43-44 (cleaned up).
In the meantime, AI is not waiting for legislation, and the Copyright Office is already required to tackle novel issues impacting copyright. In a recent case, Thaler v. Perlmutter, an applicant seeking to register an AI-generated image challenged the Copyright Office's refusal of registration because the work lacked human authorship. The applicant claimed the decision violated the APA because it was arbitrary and capricious and in excess of the Copyright Office's authority.
The district court in Thaler determined that the only question properly presented was whether the Copyright Office, in reaching its decision, had acted arbitrarily or capriciously or otherwise in violation of the APA. The district court held that the Copyright Office had not, as U.S. copyright law protects only works of human creation, and granted the Copyright Office's motion for summary judgment.
Now on appeal to the D.C. Circuit, the applicant-appellant in Thaler presents the following issue: whether the district court erred by granting the Copyright Office's summary judgment motion and denying his summary judgment motion based on its determination that works created by an AI system are not copyrightable.
In his opening brief, filed prior to Loper Bright, the applicant asserted that the Copyright Office's interpretation was not entitled to Chevron deference because the statute is not ambiguous and, even if it were, the Copyright Office's interpretation does not fall "within the bounds of reasonable interpretation." It seems only a matter of time before the applicant raises the intervening change in law presented by Loper Bright.
Conclusion
The Supreme Court's decision in Loper Bright marks a significant shift in judicial review of federal agencies' interpretations. As AI continues to impact issues involving copyright, the interplay between the Copyright Office's expertise and courts' decisions whether to adopt such guidance will be crucial in shaping this novel area of law.
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