Contracts

Anthropic has asked a California federal judge to rule that its use of copyrighted materials to train Claude qualifies as transformative fair use, comparing the AI's training process to how humans learn by reading and absorbing themes. The filing stands apart from the $1.5 billion class-action settlement in Bartz v. Anthropic, where the claims deadline passed on March 30, 2026, and a fairness hearing is scheduled for May 14, 2026, in San Francisco federal court.

Greg Brockman's personal diary emerged this week as central evidence in Elon Musk's lawsuit against OpenAI, with the co-founder and president testifying about his internal deliberations over converting the organization from nonprofit to for-profit status. The diary directly addresses Musk's core claim that OpenAI deceived him by abandoning its original mission to develop artificial intelligence for humanity's benefit. Testimony also revealed inflammatory communications: text messages in which Musk threatened to make Brockman and CEO Sam Altman "the most hated men in America" if no settlement was reached, and a 2017 meeting where Musk tore a painting from the wall after cofounders rejected his demand for majority equity.

The Federal Circuit reversed a jury verdict in International Medical Devices, Inc. v. Cornell, holding that cosmetic penile implant designs alleged as trade secrets were not protectable under California law because they had been disclosed in publicly available patents. The court found the designs "generally known" and therefore ineligible for trade secret status. A fourth alleged secret—a list of surgical instruments sent via email without confidentiality markings—also failed protection due to insufficient secrecy measures. The panel reversed findings of trade secret misappropriation, breach of contract under the parties' nondisclosure agreement, and improper inventorship claims related to two Penuma patents. The court affirmed $1 million in statutory damages for trademark counterfeiting.

Jury selection began April 28 in Elon Musk's lawsuit against OpenAI, Sam Altman, Greg Brockman, and Microsoft in U.S. District Court for the Northern District of California in Oakland. Opening statements occurred April 29. Musk alleges OpenAI breached its 2015 nonprofit founding agreement by converting to a for-profit model in 2019 with Microsoft backing, abandoning its stated mission to develop AI for humanity's benefit. He invested $38–45 million in the company. Musk seeks OpenAI's return to nonprofit status, removal of Altman and Brockman from leadership, and $134–150 billion in damages to be redirected to OpenAI's charitable arm.

Elon Musk testified April 28 in a California courtroom that OpenAI breached a foundational promise by converting from nonprofit to for-profit status. Now valued at $852 billion, OpenAI made the shift despite Musk's 2017 warning that the company should either remain nonprofit or operate independently. "It is not OK to steal a charity," Musk told the court, referencing email exchanges with Sam Altman in which Altman expressed support for the nonprofit model but acknowledged no legal obligation bound the company to it permanently.

Organizations across all sectors are facing a wave of litigation over their data practices and AI systems. According to a Baker Donelson report, these legal challenges now extend well beyond technology companies and data brokers to affect organizations of every size that rely on data for operations, network security, regulatory compliance, and contractual obligations. The disputes involve civil liberties groups, workers' advocates, and privacy organizations pursuing claims centered on data privacy violations, algorithmic bias, unauthorized data use, AI system liability, and worker surveillance.

A federal judge in Manhattan has ruled that a financial services executive waived attorney-client privilege and work product protection by using Anthropic's Claude AI tool without his lawyers' involvement. In United States v. Heppner, Judge Jed S. Rakoff ordered disclosure of 31 strategy documents the defendant generated after inputting case details derived from attorney communications. The court found that Claude, as a non-attorney third party, lacks fiduciary duties, and that Anthropic's privacy policy—which permits data use for training and third-party sharing—destroyed any reasonable expectation of confidentiality. This marks the first federal decision of its kind, rejecting the defendant's argument that later sharing the materials with counsel could retroactively restore privilege protection.

Supply chain disputes are escalating into courtroom battles as manufacturers in beauty, fashion, and automotive sectors clash with suppliers over pricing, delivery failures, and contract breaches. Courts are tightening defenses for performance failures, and litigation risk is climbing as capacity remains tight, freight costs stay volatile, and force majeure clauses have been narrowed. A December 2025 trademark case—Palas v. Le Domaine (Case No. 2:25-cv-11953, C.D. Cal.)—exemplifies the broader trend, pitting skincare founder Brandon Palas's "Beau D." brand against Brad Pitt's French luxury line over cosmetics trademark infringement.

Palantir CEO Alex Karp has publicly attacked low-quality AI outputs as "slop," positioning the company's AI Platform (AIP) as a secure, enterprise-grade alternative built on its Foundry data infrastructure. The criticism comes as Palantir faces investor concerns that it may lose market share to cheaper, faster standalone large language models from OpenAI and Anthropic—competitors that don't require Palantir's ontology-based data backbone.

On February 17, 2026, Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York ruled in United States v. Heppner that a criminal defendant's communications with Anthropic's Claude AI platform were not protected by attorney-client privilege or work product doctrine. The defendant had used the public chatbot to create analysis documents after receiving a grand jury subpoena, then claimed privilege when sharing them with counsel. The court ordered disclosure to the government.

The Federal Circuit reversed a Delaware district court's grant of equitable estoppel in Fraunhofer-Gesellschaft v. Sirius XM Radio Inc. (Fed. Cir. No. 23-2267, June 9, 2025), reviving Fraunhofer's patent infringement claims on four expired patents covering multicarrier modulation technology for satellite radio. The appellate panel found that while Fraunhofer's five-year silence (2010-2015) about SXM's use of the patents constituted misleading conduct, SXM failed to prove it actually relied on that silence when migrating to its accused high-band system. The court determined that market penetration, not Fraunhofer's inaction, drove SXM's technology choices, and remanded for further proceedings.

The Eastern District of Virginia has denied Alarm.com's motion to dismiss a trade secrets lawsuit brought by former partner SkyBell Technologies. SkyBell accused Alarm.com of misappropriating video doorbell technology and poaching employees after the companies' partnership ended in late 2022. Alarm.com had argued the three-year statute of limitations under the Defend Trade Secrets Act and Virginia Uniform Trade Secrets Act barred SkyBell's July 2025 complaint. Judge Rossie D. Alston Jr. rejected that defense, holding that SkyBell could not have discovered the alleged misappropriation earlier because a 2015 Development and Integration Agreement between the parties explicitly prohibited reverse engineering and required confidentiality—contractual restrictions that remained in force until the agreement terminated in November 2022.