Case 3:23-cv-03223-AMO Document 432 Filed 04/02/25 Page 1 of 5 1 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP A Limited Liability Partnership 2 Including Professional Corporations KHIRIN A. BUNKER, Cal. Bar No. 329314 3 350 South Grand Avenue, 40th Floor 4 Los Angeles, California 90071-3460 Telephone: 213.620.1780 5 Facsimile: 213.620.1398 Email kbunker@sheppardmullin.com 6 Attorneys for Non-Party Reuters News & Media, Inc. 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN FRANCISCO DIVISION 11 Master File No. 23-cv-3223-AMO IN RE OPENAI CHATGPT LITIGATION 12 NON-PARTY REUTERS NEWS & This document relates to: MEDIA, INC.’S OPPOSITION TO 13 PLAINTIFFS’ MOTION FOR RELIEF Case No. 3:23-cv-03416-AMO FROM NON-DISPOSITIVE PRETRIAL 14 Case No. 3:23-cv-04625-AMO ORDER OF MAGISTRATE JUDGE [ECF 15 No. 378] 16 17 18 19 20 21 22 23 24 25 26 27 28 SMRH:4919-8711-9151 Case 3:23-cv-03223-AMO Document 432 Filed 04/02/25 Page 2 of 5 1 Non-Party Reuters News & Media Inc. (“Reuters”) hereby opposes Plaintiffs’ Motion For 2 Relief From Non-Dispositive Pretrial Order of Magistrate Judge [ECF 378] (the “Motion”). 3 INTRODUCTION 4 Prior to Plaintiffs’ motion to compel being filed, Reuters confirmed to Plaintiffs’ counsel 5 that it had no agreements and/or other documents involving the copyrighted materials at issue in the 6 First Consolidated Amended Complaint, or otherwise involving Plaintiffs whatsoever. Ignoring 7 these facts, Plaintiffs continued to demand sweeping categories of Reuters’ confidential documents 8 and communications – spanning over ten years – on the grounds that any information regarding 9 licensing of “textual data” might be somehow relevant to OpenAI’s “anticipated” fair use defense or 10 damages. When Reuters refused to produce this information, Plaintiffs moved to compel. 11 As Judge Illman correctly found in denying Plaintiffs’ motion to compel, Plaintiffs are not 12 entitled to “undeniably confidential commercial information (if not trade secrets) from one non- 13 party, Reuters, about its relationship with another non-party” simply because they served a subpoena 14 and deemed the materials “relevant.” (ECF 378 at 4.) Rather, Rule 45 required that Plaintiffs make 15 a “concrete, not speculative” showing of “substantial need” for the requested materials. Id. 16 Plaintiffs wholly failed to meet this burden and their motion was denied. (Id. at 4-5 (“what 17 Plaintiffs have not done is to even mention (let alone convincingly establish) why the essence of this 18 information (i.e., its upshot or import, which is merely information about the existence of a market 19 for licensing copyrighted ‘textual data’ to train an AI model) cannot be either obtained from 20 OpenAI, or by expert witness testimony, or by any other means that would not involve prying into 21 the confidential commercial information of two non-parties”).) Hence, there was no “clear error” by 22 Judge Illman, Plaintiffs simply disagree with the outcome. 23 For these, and the reasons discussed below, Plaintiffs’ disagreement with Judge Illman’s 24 findings does not warrant relief under Rule 72 and their Motion should be denied. 25 LEGAL STANDARD 26 A magistrate judge’s non-dispositive pretrial order may only be reversed if it “is clearly 27 erroneous or is contrary to law.” 28 U.S.C. § 636(b)(1)(A); Fed. R. Civ. P. 72(a). “The standard for 28 review of magistrate judge’s non-dispositive ruling under Federal Rule of Civil Procedure 72(a) is -1- SMRH:4919-8711-9151 Case 3:23-cv-03223-AMO Document 432 Filed 04/02/25 Page 3 of 5 1 highly deferential.” Magana-Munoz v. W. Coast Berry Farms, LLC, No. 5:20-CV-02087-EJD, 2022 2 WL 6584545, at *2 (N.D. Cal. Sept. 29, 2022). “The reviewing court may not simply substitute its 3 judgment for that of the deciding court,” it must review the order for clear error. Grimes v. City & 4 Cnty. of San Francisco, 951 F.2d 236, 241 (9th Cir. 1991). “There is clear error only when the court 5 is ‘left with the definite and firm conviction that a mistake has been committed.'” Zepeda v. Paypal, 6 Inc., 2014 WL 4354386, at *3 (N.D. Cal. Sept. 2, 2014) (quoting Easley v. Cromartie, 532 U.S. 234, 7 242 (2001)). 8 ARGUMENT 9 A. Plaintiffs’ Rejections of Reuters’ Efforts To Compromise Do Not Support Reversal 10 As an initial matter, Plaintiffs misconstrue the scope of the dispute before Judge Illman by 11 asserting that Reuters “agreed” to produce certain materials and Plaintiffs’ motion to compel thus 12 involved only “additional material” sought by their Subpoena. (ECF 405 at 2.) This is untrue. 13 Reuters, through counsel, did seek to resolve its well-founded objections to the burdensome requests 14 in the Subpoena in an effort to avoid incurring the costs of motion practice. (See ECF 348-1, ¶¶4-5.) 15 Plaintiffs’ counsel rejected these efforts out of hand and no agreement was ever reached by the 16 parties. Nevertheless, Plaintiffs claim that “Judge Illman ignored the parties’ agreement and denied 17 the Motion in its entirety [. . .] rather than simply denying the Motion as to the additional material 18 Plaintiffs sought.” (ECF 405 at 2 (emphasis added).) But even setting aside Plaintiffs’ 19 mischaracterization of an “agreement”, they have not shown “clear error” as Judge Illman did 20 expressly consider Plaintiffs’ rejection of Reuters’ offer in ruling on their motion. (See ECF 378 at 21 p. 3 (discussing Reuters’ “offered compromise”).) Put simply, Plaintiffs’ refusal to compromise 22 before a ruling was reached does not support reversal of the Order and Reuters should not now be 23 penalized for attempting to negotiate a resolution (without waiver of its objections). 24 B. Judge Illman Correctly Found That Plaintiffs Did Not Establish “Substantial Need” 25 For The Requested Materials 26 Plaintiffs further continue to ignore that “[t]he ‘mere relevance standard [ ] does not apply to 27 nonparties’” and that “[a] party seeking to obtain discovery from a nonparty ‘must demonstrate that 28 its need for discovery outweighs the nonparty’s interest in nondisclosure.’” Vena v. Moore, -2- SMRH:4919-8711-9151 Case 3:23-cv-03223-AMO Document 432 Filed 04/02/25 Page 4 of 5 1 Schulman & Moore, APC, No. 22CV437-W(BLM), 2023 WL 6194315, at *3 (S.D. Cal. Mar. 24, 2 2023). Rather, in seeking Reuters’ confidential and trade secret material, Plaintiffs were required to 3 establish a “substantial need for the [. . .] material that cannot be otherwise met without undue 4 hardship.” Fed. R. Civ. Proc. 45(c)(3)(B). 5 As Judge Illman’s order correctly reflects, “[t]he determination of substantial need is 6 particularly important in the context of enforcing a subpoena when discovery of trade secret or 7 confidential commercial information is sought from non-parties.” See Gonzales v. Google, Inc., 234 8 F.R.D. 674, 685 (N.D. Cal. 2006) (citing Mattel Inc. v. Walking Mt. Prods., 353 F.3d 792, 814 (9th 9 Cir. 2003)). Thus, Plaintiffs were required to make a “concrete, not speculative” showing of 10 “substantial need” for the requested materials. (ECF 378 at 4-5.) 11 Here, as they did in their motion to compel, Plaintiffs broadly assert that Reuters’ documents 12 “are highly relevant to establishing the market for text data for use as LLM training data.” (ECF 13 405 at 4 (emphasis added).) However, as Judge Illman recognized, “[b]y using the broad phrase, 14 ‘textual data,’ Plaintiffs gloss over the difference between the news content which is the subject of 15 the Reuters/Meta agreement, and the non-news content that is the subject of this case.” (ECF 378 at 16 n.2.) 1 17 To be clear: Reuters does not have any responsive documents related to Plaintiffs and/or the 18 specific copyrighted materials at issue in this case. Nevertheless, Plaintiffs continue to maintain that 19 they are entitled to Reuters’ confidential and trade secret materials to establish the “broader market 20 for text training data.” (ECF No. 405 at 6.) But, as Judge Illman properly concluded, the fact that a 21 non-party (like Reuters) might enter into a licensing agreement with another non-party involving 22 copyrighted materials held by other non-parties has “marginal relevance” – if any – to this dispute. 23 (ECF No. 378 at 4-5.) And, in the context of Rule 45, Plaintiffs still “have not explained why 24 prying into Reuters’ commercial relationship with Meta is the only way to ‘establish the existence of 25 1 The fact that no class has been certified in this litigation is of no moment to Plaintiffs, who 26 continue to point to the definition of the class in their First Consolidated Amended Complaint. (ECF 314 at 6; ECF 405 at 3.) This seemingly boundless class of claimants certainly would 27 themselves be a better source for information on the market valuation Plaintiffs claim to be seeking 28 here than non-party Reuters. -3- SMRH:4919-8711-9151 Case 3:23-cv-03223-AMO Document 432 Filed 04/02/25 Page 5 of 5 1 a market for copyrighted work as training data for LLMs . . . [such as to] provide evidence of 2 benchmark licensing agreements and market demand . . . [so that Plaintiffs can] calculat[e] actual 3 damages and recovery of lost profits.’” (ECF No. 378 at 4-5 (quoting Plaintiffs’ motion to 4 compel).) 2 5 Moreover, none of the authority cited by Plaintiffs demonstrates a “substantial need” for 6 Reuters’ trade secret and confidential materials. To the contrary, the authority Plaintiffs cite 7 confirms that copyright actual damages and fair use market considerations can be determined 8 without “benchmark” valuations from unrelated third parties. For example, in Dr. Seuss 9 Enterprises, L.P. v. Penguin Books USA, Inc., the Ninth Circuit found that market harm could be 10 inferred because the use was non-transformative and admittedly commercial and affirmed the lack 11 of fair use without regard to any benchmark valuations or agreements. 109 F.3d 1394, 1403 (9th 12 Cir. 1997). Thus, as Judge Illman correctly found, “Plaintiffs have not demonstrated a substantial 13 need for the discovery they seek” and their Motion should be denied. (ECF No. 378 at 5 (emphasis 14 added).) 15 CONCLUSION 16 For the foregoing reasons, Non-Party Reuters requests that the Court deny Plaintiffs’ Motion 17 in its entirety. 18 19 Dated: April 2, 2025 SHEPPARD MULLIN RICHTER & HAMPTON LLP 20 By /s/ Khirin A. Bunker 21 Khirin A. Bunker 22 Attorneys for Non-Party 23 REUTERS NEWS & MEDIA, INC. 24 25 2 Notably, as Judge Illman seemingly recognized, Plaintiffs’ expansive definition of a “market for 26 high-quality text data used to train LLMs” purports to make every text-related licensing agreement in existence “relevant” to their claims without regard for inter alia the parties involved, nature 27 and/or types of underlying copyrighted materials at issue, geographic scope, particular LLM at 28 issue, or the relationships between the contracting parties and the copyright holders. -4- SMRH:4919-8711-9151