Insights

Last week, artificial intelligence companies won two significant copyright infringement lawsuits brought by copyright holders, marking an important milestone in the development of the law around AI. These decisions – Bartz v. Anthropic and Kadrey v. Meta (decided on June 23 and 25, 2025, respectively), along with a February 2025 decision in Thomson Reuters v. ROSS Intelligence – suggest that AI companies have plausible defenses to the intellectual property claims that have dogged them since generative AI technologies became widely available several years ago. Whether AI companies can, in all cases, successfully assert that their use of copyrighted content is “fair” will depend on their circumstances and further development of the law by the courts and Congress.

Crowell attorneys have closely monitored developments related to the California Invasion of Privacy Act (“CIPA”). In particular, we have watched plaintiffs attempt to extend this wiretapping law to encompass website chatbot communications that are managed by third parties.

On June 6, 2025, Judge Claudia Wilken issued final judgment in the In re College Athlete NIL Litigation, No. 4:20-cv-03919 (N.D. Cal.), approving the Fourth Amended Settlement Agreement commonly known as the “House Settlement.” The House Settlement drastically changes how Division I athletes are compensated, and will likely have far-reaching implications for higher education NCAA-member institutions and student-athletes.

The Departments of Labor (“DOL”), Health and Human Services (“HHS”), and Treasury (the “Tri-Agencies”) have signaled that changes may be coming to the Mental Health Parity and Addiction Equity Act (“MHPAEA”) Final Rule issued on September 8, 2024. On May 9, 2025, the Tri-Agencies filed a Motion for Abeyance in a lawsuit brought by the ERISA Industry Committee (“ERIC”) challenging the 2024 final MHPAEA regulations in the United States District Court for the District of Columbia.[1] The Motion, which was granted by the Court, indicated that the Tri-Agencies intend to “reconsider” the Final Rule, including “whether to issue a notice of proposed rulemaking rescinding or modifying the Final Rule.” Yesterday, on May 15, 2025, the Tri-Agencies issued a notice of non-enforcement stating that they “will not enforce the 2024 Final Rule or otherwise pursue enforcement actions, based on a failure to comply that occurs prior to a final decision in the litigation, plus an additional 18 months.”

On April 23, 2025, President Trump signed an executive order, Restoring Equality of Opportunity and Meritocracy, declaring it the policy of the United States “to eliminate the use of disparate-impact liability in all contexts to the maximum degree possible to avoid violating the constitution, Federal civil rights laws, and basic American ideals.” The order reasons that “disparate impact liability all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability.”

On April 21, 2025, the FTC filed an enforcement action against Uber alleging that Uber enrolled consumers in Uber One without proper consent, created substantial barriers to cancellation, and misrepresented the financial benefits of the subscription. The claims include violations of the FTC Act—which prohibits unfair and deceptive acts in commerce—and the Restore Online Shoppers’ Confidence Act (“ROSCA”)—which prohibits charging consumers for goods and services sold on the internet through a negative option (i.e., failing to cancel a subscription, unless the seller clearly discloses all material terms of the transaction before obtaining the consumer’s information and obtains the consumer’s expressed informed consent for the charges and provides simple mechanisms for the consumer to stop the recurring charges).

Looking back at 2024, manufacturers were extremely busy navigating a high number of recalled products and corresponding litigation. A number of these 2024 litigation and class action trends appear to be carrying over into 2025.

On April 14, 2025, ClassPass, a web-based company offering subscription services to third-party fitness classes, petitioned for rehearing en banc of the Ninth Circuit’s Chabolla v. ClassPass decision, which held that ClassPass’ users were not bound by the terms of ClassPass’ “sign-in wrap” agreement. The ruling has significant consequences for online companies using sign-in wrap agreements and for online contract formation and enforcement more generally. A sign-in wrap is a type of online agreement in which the agreement is hyperlinked on the website, but the user is not required to access, review, confirm an understanding, or otherwise affirmatively “assent” to be bound. If the Ninth Circuit does not grant ClassPass’ request and issue a new ruling in Chabolla, this case may signal the death knell for sign-in wraps, resulting in significant disruption, friction, and ultimately lower conversion for online companies who will be forced to redesign their sign-up flows to be click-wrap agreements (online agreements that require the user to affirmatively accept a company’s terms of use by clicking an assent box or button). Short of that, this decision increases business risk given that there are now conflicting opinions both within the Ninth Circuit and between the various Circuits.

On April 3, 2025, the United States Department of Justice’ Antitrust Division hosted a forum on “Big-Tech Censorship” in which key Trump Administration Officials announced their desire to reform, or entirely overhaul, Section 230 of the Communications Decency Act. In March 2025, we wrote about the Federal Trade Commission’s (FTC) inquiry into “tech censorship” and its associated request for public comments from those who “may have been harmed by technology platforms that limited their ability to share ideas or affiliations freely and openly.” That RFI remains open, and its deadline is May 21, 2025.

The settlement approval hearing in In re College Athlete NIL Litigation, No. 4:20-cv-03919 (N.D. Cal.) is set for April 7, 2025. Commonly known as the “House Settlement,” the pending resolution between plaintiffs and the NCAA, if approved by Judge Claudia Wilken, could have far-reaching implications for higher education NCAA-member institutions and student-athletes.

In a unanimous opinion issued by the D.C. Circuit on March 18, 2025, the Court of Appeals affirmed denial of Dr. Stephen Thaler’s application to register a copyright protection for a work created by his generative artificial intelligence system, holding that the Copyright Act requires human authorship.

On March 20, 2025, President Trump signed an Executive Order titled “Improving Education Outcomes by Empowering Parents, States, and Communities”.

In what may be the first lawsuit of its kind, a student has sued Yale University alleging that he has been falsely accused of using artificial intelligence on a final exam. The complaint, filed in February, could have far-reaching implications for both the use of AI by students and issues related to academic honesty.

On February 20, 2025, the Federal Trade Commission launched an “inquiry” into “tech censorship” by calling for public comments from those who “may have been harmed by technology platforms that limited their ability to share ideas or affiliations freely and openly.” The deadline for comments is May 21, 2025.

Significant shifts in U.S. technology policy are taking shape at the start of the new administration. This is especially true in the field of artificial intelligence (AI), where President Trump revoked President Biden’s Executive Order 14110, titled “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” as part of his flurry of Day One executive actions. The administration is now moving quickly to put its own stamp on this area in an effort to strengthen U.S. AI leadership and competitiveness and outpace other nations, particularly the People’s Republic of China.

On February 4, 2025, California Assemblywoman Rebecca Bauer-Kahan introduced AB 412, titled the AI Copyright Transparency Act (the “Act”), which is aimed at increasing greater transparency when copyrighted materials are used as training data for Generative AI (“GenAI”) models and systems. If passed, the Act would require developers who use copyrighted materials as part of their training dataset to disclose this use to the copyright owners.

President Trump has issued several executive orders relevant to institutions of higher education. Below we detail key provisions of these executive orders to help colleges and universities stay abreast of the everchanging policy landscape, and to provide takeaways to consider while awaiting further federal guidance. 

Artificial intelligence is now a mainstay in our daily lives. It’s in our phones and computers. It helps us draft emails and learn math. It recommends purchases and guides our online searches. It’s everywhere—and every sign suggests that it’s here to stay.

On December 17, 2024, the Federal Trade Commission (“FTC”) and the Illinois Attorney General (“AG”) announced a $140 million settlement with Grubhub to resolve charges involving an array of allegedly unlawful and deceptive business practices. Even though the FTC’s proposed final rule on junk fees (also announced on December 17, 2024) is limited to hotels, live events, and short-term rentals, this settlement demonstrates that the FTC will use its broad enforcement powers to pursue companies imposing junk fees online, and that both federal and state consumer protection regulators will formulate 2025 enforcement priorities with junk fees and click-to-cancel in mind. Indeed, this $140 million settlement, of which Grubhub will pay $25 million based on its demonstrated inability to pay the full amount, is the first of its kind in that it is a joint action by the FTC and state regulators to pursue both junk fees and click-to-cancel violations.

On Wednesday, October 16, 2024, New York’s Department of Financial Services (DFS) announced new guidance aimed at identifying and providing a blueprint for protecting against AI-specific cybersecurity risks.  Motivated primarily by advancements in AI that substantially impact cybersecurity—including facilitating new ways to commit cybercrime—DFS’s guidance aims to specifically protect New York businesses but applies to all companies concerned with increasing their cybersecurity and managing risks posed by emerging technologies. The guidance addresses “most significant” AI-related threats to cybersecurity that organizations should consider when they are developing a cybersecurity program, internal protocols, or implementing cybersecurity controls—as well as recommendations for those cybersecurity programs.