US Appeals Court Rejects AI Training Fair Use Defense, Impacting Music Labels vs. Suno

A US appeals court has rejected a ‘fair use’ defense over AI training. What does it mean for the labels’ fight with Suno?

October 5, 2026 By Murray Stassen MBW Explains is a series in which we dig behind the headlines, via data and context, to improve your understanding of key stories. Only MBW+ subscribers have unlimited access to these articles. MBW Explains is supported by Reservoir . Continue to article...

A US federal appeals court has rejected a fair use defense over the use of copyrighted material to train an artificial intelligence model.

The US Court of Appeals for the Third Circuit ruled for Thomson Reuters and against AI legal research company ROSS Intelligence on September 29 , in an opinion filed under seal and made public the following day.

The case turned on Westlaw headnotes: the short editorial summaries of the points of law in a court ruling, written by Thomson Reuters attorney-editors and printed above the opinion itself. ROSS used them to build the training data for a rival legal search engine.

ROSS shut its platform down in 2021, citing the cost of the litigation.

MBW reported the Third Circuit decision here .

No music company was a party to the case, but the RIAA and the NMPA filed a joint amicus brief backing Thomson Reuters , and wrote it with the music industry’s own AI lawsuits in view.

The opinion and the 37 -page amicus brief can both be read in full here and here.

Here is what the ruling says, what it does not, and where it leaves Universal Music Group and Sony Music in their fight with Suno .

1. RIAA [630 articles]" href=https://www.musicbusinessworldwide.com/companies/riaa/ The RIAA and NMPA backed Thomson Reuters, and told the court the case would matter for music

The Recording Industry Association of America and the National Music Publishers’ Association filed jointly in support of Thomson Reuters in November 2025.

Their brief called the ROSS appeal “the first opportunity for a federal appellate court” to decide whether training a commercial AI model on copyrighted works is fair use when that model competes with the material it was trained on.

“[W]hile the factual contexts of AI legal research tools and AI-generated music may differ, the lower court’s holding establishes key precedent that training an AI model on copyrighted works to compete with and substitute for those copyrighted works can never be fair use,” the RIAA and NMPA wrote, referring to Judge Bibas ‘s decision below.

A footnote names the Suno , Udio and Anthropic cases as their members’ own AI litigations.

The brief also quotes Suno ‘s answer in the Boston case directly, citing its claim that copying is fair “as part of the process of developing a new technology” where “the ultimate outputs of that new technology are themselves non-infringing”.

2. ROSS made an argument Suno is also making, and lost it

ROSS argued that copying during training was an intermediate step toward a product that did not itself infringe, leaning on Sega , Connectix and Google v. Oracle .

The Third Circuit held that those cases turned on necessity, because copying was the only route to unprotected functional code.

ROSS had no such need, the court found, because it could have built its training memos from the underlying judicial opinions, which anyone is free to copy.

“Unlike necessity, ease is not a justification for copying,” wrote Judge Montgomery-Reeves .

That reasoning is also where Suno ‘s lawyers will try to break the comparison.

ROSS had a bank of roughly ten million uncopyrighted judicial opinions available to it, and the court found it reached for the headnotes because they were easier.

There is no equivalent free corpus of commercial sound recordings, so Suno can argue a necessity that ROSS could not.

The panel also found that ROSS and Thomson Reuters were putting the same material to the same end.

“ROSS’s use of the headnotes shares the same ultimate purpose as Thomson Reuters’s use, making ROSS’s use minimally transformative, at best,” the Third Circuit ‘s opinion reads.

3. A market for licensing training data counts even if the rights holder never licensed into it

On the fourth fair use factor, ROSS argued there was no derivative market in Westlaw headnotes for it to have harmed.

The Third Circuit disagreed.

“Here, the evidence shows that the market for licensing headnotes as text to train AI is rapidly developing,” the Third Circuit opinion states.

“That Thomson Reuters did not license its headnotes to others does not disprove that a market exists to do so.”

The RIAA and NMPA had pressed the same point using music deals, arguing that their emergence “portends a vital licensing market that AI defendants ignore in the courtroom while courting in the marketplace”.

4. Each headnote counted as a work of its own, which is where the damages live

Before it reached fair use, the Third Circuit had to decide whether Westlaw headnotes were original enough to carry a copyright at all.

It held that they were, rejecting ROSS ‘s arguments that protecting them would hand Thomson Reuters a monopoly over the law and that the merger doctrine applied. Judicial opinions themselves, the court noted, remain “free for publication to all”.

That question does not arise for recordings, which are plainly copyrightable. What follows from it does.

In footnote 10, the panel affirmed that each individual headnote is a copyrightable work in its own right.

“So for each headnote taken, ROSS copied an entire work,” the opinion states.

Statutory damages run per work infringed, and Universal and Sony ‘s second suit against Suno pleads 60,202 recordings. At the statutory maximum of USD $150,000 a work, that is a theoretical ceiling of just over $9 billion on the second suit alone.

5. How ROSS got the material counted against it

In footnote 9, the court set out what it called undisputed evidence that ROSS had at times acted in bad faith.

ROSS tried to reach Westlaw using law-firm investor credentials despite notice that doing so breached Westlaw’s terms of service, the opinion records. One employee asked about an account under the guise of a solo practitioner. Another used a student account while concealing that he worked for a competitor.

“So to the extent good faith remains relevant, that consideration weighs against fair use,” the court wrote, noting that the Supreme Court has expressed doubt about whether good faith still has any role in the analysis.

That is a hedge, not a holding. But acquisition conduct is becoming a fair use fact in its own right, and Universal and Sony ‘s second suit adds an anti-circumvention claim under Section 1201 , seeking up to $2,500 for each act of circumventing YouTube ‘s anti-downloading technology.

Suno admitted in a September 1 filing that it obtained YouTube audio using the tool YT-DLP .

6. Footnote 7 carves out generative AI

The decision contains its own limit, and the Third Circuit put it in footnote 7.

“Unlike the AI models in Bartz and In re: OpenAI , ROSS’s AI platform cannot generate original expression, and the evidence here supports the opposite conclusion about transformativeness,” the Third Circuit footnote reads.

The same footnote deals with a statement of interest the US Department of Justice filed in the OpenAI copyright litigation in New York on September 1 , arguing that training a large language model that can “generate original responses” is transformative.

The Third Circuit answered that the department “knows how to assert its interests, but the DOJ notably did not do so here”.

ROSS ‘s platform was not generative, and Suno ‘s models are.

7. It does not bind the court hearing the Suno case

The Third Circuit covers Delaware, New Jersey, Pennsylvania and the US Virgin Island s .

Universal Music Group and Sony Music are suing Suno in the US District Court for the District of Massachusetts , which sits in the First Circuit, so the ruling is persuasive there rather than binding.

That case was filed in June 2024 , and the fair use question is not expected to reach the judge on summary judgment until the second half of 2027 : Judge F. Dennis Saylor IV pushed the deadline for dispositive motions back to June 22, 2027 in a scheduling order on September 22.

Warner Music Group settled with Suno and signed a licensing deal in November 2025 , and BMG , Believe and TuneCore have since licensed the platform.

Universal and Sony sued Suno a second time on September 18 over its v6 models, arguing that v6 is “the fruit of the same poisoned tree”.

8. A court in Munich has already run this analysis on Suno, and reached the same place

No US court has yet ruled on whether training a generative music model is fair use. A German one has.

On July 31 , the Munich Regional Court I largely upheld GEMA ‘s claims against Suno over six works the court found reproducible in the platform’s v3.5 and v4 models, among them Forever Young , Mambo No. 5 and Rasputin .

The court granted an injunction, ordered Suno to disclose the revenues tied to the works, and declared it liable for damages still to be quantified. It rejected the EU text and data mining exception.

It also assessed the US fair use position on training carried out in the US , and rejected it, finding that the outputs served the same purpose as the originals rather than a new one, and that the use was commercial.

That is the same same-purpose reasoning the Third Circuit applied to ROSS , arrived at independently under German law.

The Munich judgment is not final. Suno has said it will appeal, and the platform remains available in Germany. GEMA won a related case against OpenAI over song lyrics in November 2025, which OpenAI is also appealing.

What else is in the opinion

The copying at issue covered 2,243 Westlaw headnotes, out of around 28 million Thomson Reuters holds.

LegalEase Solutions and its subcontractor Morae Global copied them into training memos, and the court found that ROSS “aspired to be a direct competitor”.

Three of the four statutory factors went against ROSS , with only the second, the nature of the copyrighted work, weighing slightly in its favor.

The appeal was argued on June 11 and decided by a panel of Judges Restrepo , Montgomery-Reeves and Bove .

It upholds a February 11, 2025 ruling by Judge Stephanos Bibas , a Third Circuit judge who sat in Delaware by designation.

This was an interlocutory appeal, so the case now returns to Delaware.

The Third Circuit framed the whole dispute as “no more than an ordinary copyright case”.

ROSS counsel Yar Chaikovsky of White & Case has said the company intends to seek US Supreme Court review, telling Courthouse News that the ruling leaves the application of copyright law to AI model training uncertain. No petition had been docketed at the time of writing.

Reservoir (Nasdaq: RSVR) is a publicly traded, global independent music company with operations across music publishing, recorded music, and artist management. Music Business Worldwide

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_Originally reported by [Music Business Worldwide](https://www.musicbusinessworldwide.com/a-us-appeals-court-has-rejected-a-fair-use-defense-over-ai-training-what-does-it-mean-for-the-labels-fight-with-suno/)._