Stirling & Rose

Last week, Stirling & Rose partners Natasha Blycha and Schellie-Jayne Price presented at the Elevate Flexible Legal Resourcing event on The AI Factor - Reimagining Legal Careers. Highlights from the evening included a discussion on the new duties of a lawyer in an AI-driven world, the value of data in organisations and the importance of checking your terms & conditions when procuring and maintaining software in your enterprise. Terms & conditions are shifting rapidly as the demand for data access to train AI systems intensifies. Big thank you to Val Pitt and the broader Elevate team for helping organise a fantastic evening. The Ritz-Carlton Hotel Company, L.L.C. Bríd Heffernan

Our Stirling & Rose partners enjoying beautiful culture and colour on display at the Vietnamese Consulate General 79th national day celebrations. Australia and Vietnam have long standing trade relations and new opportunities based on a focus on emerging technologies. Thao Vu Lan Tran Bao-Van Du Schellie-Jayne Price Natasha Blycha

The Federal Court of Australia has ruled that Bit Trade Pty Ltd (‘Bit Trade’) has contravened s 994B(1) when read with s 994B(2) of the design and distribution obligations (‘DDO’) under the Corporations Act 2001 (Cth) (‘Corporations Act’) by failing to make a target market determination for its Product. Bit Trade’s Product (‘Product’) provides margin services, which allows Australian customers to receive a Margin Extension ‘in the form of digital assets or legal tender’ in order to ‘make spot purchases and sales of digital assets’ on its digital access exchange (‘Kraken Exchange’).   The DDOs require a person to make a target market determination for a financial product, with a financial product defined either under the Corporations Act or the ASIC Act 2001 (Cth) (‘ASIC Act’). It was common ground between ASIC and Bit Trade that the Product was not a financial product under the Corporations Act. The main point of contention was whether the Product fell within the financial product definition under the ASIC Act such that it was a credit facility.   Bit Trade contended that it could rely on the Corporations Regulations 2001 (Cth) which excluded certain credit facilities. However, this did not exempt a credit facility which involved credit of a kind that was either a deferral of payment of an owed debt, or a deferred debt being incurred.   Nicholas J considered that ‘debt’ had to refer to something that was a monetary obligation. In relation to the obligation to pay cryptocurrency, Nicholas J considered cryptocurrency to be not money and thus could not constitute a debt. Notably, Nicholas J acknowledged that cryptocurrency has been held to be property in the United Kingdom, although he did not settle the question in this case.   However, for the obligation to pay foreign currency, Nicholas J came to a different conclusion after scrutinising Bit Trade’s Terms of Service. If customers were required to terminate the Margin Extension, they had to transfer sufficient funds from their Kraken account to Bit Trade, and the funds were required to be the same asset type that was provided by way of Margin Extension. Thus, if the customer was ‘required to terminate a US dollar Margin Extension, then they must pay the US dollar amount to Bit Trade’. Nicholas J held this fell within the definition of ‘debt’ given it was ‘a conditional but unavoidable obligation to pay a sum of money at a future time’. Nicholas J agreed with ASIC that it did not matter that some customers would not utilise the Product to obtain a Margin Extension.   Nicholas J thus held that the Product was a credit facility and Bit Trade was required to comply with the DDOs. Both parties have seven days to agree on declarations and injunctions. This judgment is a strong reminder to the crypto-asset market that crypto-asset products may fall within the extended definition of financial product under DDOs.

Last Friday, The University of Sydney Business School held the finals for the University of Sydney Generative AI Case Competition: "Pioneering AI in Finance", with the Top 5 teams presenting exceptional applications of Generative AI in practice. Partner James Myint, together with Anthony Markham, Hugo Visscher and Trent Hagland judged the candidate teams. An astute, practical and well run event, thank you to Dr Doowon Lee, Dr Danilo Lopomo Beteto, Dr He Huang, Dr Jennifer Z. Sun and of course Dr Eliza Wu and all the candidates for an exceptional event, alongside Matthew Ko and all others who helped out. A key question is in the pursuit of investment alpha, how do we obtain data alpha so that organisations can have a data edge in AI? A question for which the Stirling & Rose's team, including Natasha Blycha and Schellie-Jayne Price have a few solutions up their sleeves.

An important AI copyright case to pay attention to if you are building AI models trained on data you didn't create or data you didn’t seek express consent to use. Deep dive - the trial for AI copyright case Thomson Reuters Enterprise Centre GMBH and West Publishing Corp. (Thomson Reuters) v Ross Intelligence Inc (Ross) set to begin on 23 August 2024 has been postponed to allow for summary judgment motions on copyrightability, validity, infringement and fair use. Unusually, Bibas J rescinded an earlier oral ruling where he appeared to find that Ross committed acts of infringement. This case may have significant implications for organisations that produce content that is incorporated (potentially in breach of copyright) into AI models, and AI companies that develop and train AI models. It will bring more clarity as to copyright law’s attitude towards protecting content from AI and whether fair use will be a strong defence to wield. Ultimately, it may have ramifications for the economic and legal viability of current approaches of extracting information for training AI models. Notably, many AI companies such as OpenAI and Stability AI are currently embroiled in copyright suits.   Thomson Reuters allege that Ross induced a third-party company to use its Westlaw account to copy Westlaw content unlawfully to Ross. Ross allegedly used the content to train its own ‘AI-driven...legal search engine’. The alleged copied content includes Westlaw’s Headnotes, key number organisation system and case summaries.     Given Thomson Reuters does not ‘own any of the underlying judicial opinions’ in its database, an important aspect of this copyright suit will be whether the content constitutes original works of authorship such that there is a ‘minimal degree of creativity’ (Feist Publications, Inc v Rural Telephone Service Company, Inc). Ross would have infringed copyright if Ross copied the parts that are original and thus protectable. For example, Ross could attempt to argue they copied the judicial opinions itself, rather than Westlaw’s content/derivation of the judicial opinions.    If it is held Ross did infringe copyright, it may be open to them to advance the fair use defence. This involves the court considering whether there has been transformative use, weighted against other factors such as whether it was for commercial use, the nature of the copyrighted work, the amount of the copyrighted work used, and the effect of the use on the market or value of Westlaw’s content. An interesting aspect to consider is whether the court will consider the usage of Westlaw’s content to train Ross’ AI tool is transformative. Dorothy Sam Indira Blycha James Myint Ty Haberland Schellie-Jayne Price Monique Francis

In a jazz themed presentation, our AI Partner, Schellie-Jayne Price, recently spoke about RAG (retrieval augmented generation), Copilot and data at CLOC (Corporate Legal Operations Consortium) APAC in Sydney. The musically themed presentation (with an AI generated theme song) canvassed opportunities, legal considerations of copyright, confidentiality & consent plus a real time demo of a legal operations chatbot SJ built especially for the CLOC presentation using system prompts.

On 5 September 2024, Stirling & Rose partners Natasha Blycha and Schellie-Jayne Price will be presenting at Elevate Flexible Legal Resourcing's event on 'The AI Factor: Reimagining Careers in Law.' The event will be hosted at the Ritz Carlton at 5:30pm with Stirling & Rose alumni Val Pitt. The evening is catered for legal professionals looking to exchange ideas, build connections and discuss the transformation of the legal industry. Tickets are limited: https://lnkd.in/geH_uiMK

Some of the work we are most proud of at Stirling & Rose is our work with schools as they consider how best to adopt generative artificial intelligence. WACSSO brought together hundreds of Australian primary and high schools today for their annual conference Schellie-Jayne Price Natasha Blycha Ty Haberland led the AI keynote and AI workshops.

The Criminal Code Amendment (Deepfake Sexual Material) Bill 2024 was passed by the Australian Parliament on 21 August 2024. It will now be a criminal offence to use a Carriage Service to transmit sexual material without consent against a person who is or appears to be above 18 years of age, regardless of whether the material is in ‘an unaltered form’ or ‘has been created, or altered in any way, using technology’. There is an additional aggravated offence if the person transmitting the material also created it without consent. Carriage service is defined broadly as a ‘service for carrying communications by means of guided and/or unguided electromagnetic energy’, which would include social media, mobile phone and email. Transmit is defined as to ‘make available, publish, distribute, advertise and promote’.   This amendment unequivocally places deepfake sexual material within the scope of the Criminal Code. It is noted that deepfake Child Sexual Abuse Material (CSAM) is already covered by the existing Criminal Code. In practice the following conduct would now be caught by the Code: if Person A posts a video that has sexually explicit content on social media of Person B who appears to be above 18 years of age, and Person A had knowledge there was no consent or was reckless as to whether there was consent to post this video, Person A is likely to have committed an offence and will face 6 years imprisonment. If Person A was also the same person who created the deepfake video, Person A also commits an aggravated offence and faces 7 year's imprisonment.   Earlier this year, the European Parliament and Council agreed to criminalise sexually explicit deepfake material, although a Bill has not yet been introduced. On July 2024, the Disrupt Explicit Forged Images and Non-Consensual Edits (DEFIANCE) Act that makes non-consensual sexually explicit deepfake material a civil offence, passed the Senate and is waiting to be voted upon. 

Stirling & Rose recently facilitated a Generative AI Workshop on navigating the regulatory, legal and ethical landscape as part of the #GenerativeAISummit at University of Technology Sydney. The energy in the room was incredible, with a variety of perspectives and experiences from a group of very clever participants. Natasha Blycha; James Myint Amina Crooks, PhD; Alisdair Daws; Clint Cunningham; Samir GHOUDRANI; Clive Hutcheon; Andrew Hynd; Helen Jolly; David Noga; Mel Teuma; Suzy Thomas