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Musk vs Altlman & Taylor Swift Trademarks · Bloomberg Law

0:02
Speaker 1: This is Bloomberg Law with June Brossel from Bloomberg Radio.
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Speaker 2: Elon Musk is facing off against Sam Altman at a
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Speaker 2: high stakes trial that could determine the future of open Ai.
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Speaker 2: The California trial is the culmination of years of animosity
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Speaker 2: in public feuding over the startup. They found it together
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Speaker 2: more than a decade ago, before their relationships soured. Musk
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Speaker 2: claims that Altman and other leaders at OpenAI enriched themselves
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Speaker 2: by abandoning its altruistic principles and converting it from a
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Speaker 2: full nonprofit research organization to a for profit company. While
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Speaker 2: Altman and open Ai are accusing Musk of harassment and
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Speaker 2: say the real goal of his lawsuit is to undercut
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Speaker 2: competition with his own startup, XAI. The first witness was
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Speaker 2: Musk himself. He tried to portray the steaks in the
1:01
Speaker 2: case as existential, saying he wanted to prevent a terminator
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Speaker 2: like situation and basically repeating a warning he gave years ago.
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Speaker 2: There's some chance that is above zero that AI will
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Speaker 2: kill us.
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Speaker 1: Well, I think it's low.
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Speaker 2: But at some chance. The stakes in the trial are
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Speaker 2: incredibly high and maybe even existential for open AI because
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Speaker 2: Musk is asking the court to unwind its for profit
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Speaker 2: conversion that was just completed in October. Joining me is
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Speaker 2: Bloomberg legal reporter Madelin Meckelberg, who's covering the trial, So Madlin.
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Speaker 2: Even before the opening statements in the trial, the judge
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Speaker 2: took Musk and Altman to task for some social media posts.
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Speaker 3: So just ahead of trial, if you were online on
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Speaker 3: x you saw a lot of posts coming from Musk
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Speaker 3: in his account talking about quote scam Altman, his nickname
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Speaker 3: that he has for Sam Altman, and seemingly promoting social
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Speaker 3: media posts that included a New Yorker article about Sam
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Speaker 3: Altman and his conduct on the board of open Ai.
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Speaker 3: And open Ai also was posting things on social media.
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Speaker 3: They have a running blog post where they kind of
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Speaker 3: provide updates on the status of the Elon Musk situation,
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Speaker 3: I think is what they call it. And when they
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Speaker 3: got to court first thing on Monday, before they talked
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Speaker 3: about anything else with the trial, the judge basically reprimanded
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Speaker 3: both sides and said you need to I think she
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Speaker 3: said the words control your propensity to use social media,
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Speaker 3: and she warned them that it may be making things
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Speaker 3: worse outside the courtroom, and she had Elon Musk come
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Speaker 3: up and stand in front of her as she gave
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Speaker 3: this warning, and he agreed that he would not post
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Speaker 3: anything or at least limit his posting about the case.
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Speaker 2: The opening statements are the first chance for the parties
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Speaker 2: to tell their story to the jury give us the
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Speaker 2: high points of the openings.
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Speaker 3: So we heard opening statements from the three main parties
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Speaker 3: in this case, being Elon Musk, Open Ai, and then Microsoft.
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Speaker 3: Elon Musk, I think we've heard his argument by now,
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Speaker 3: but basically he's alleging that Sam Altman and Greg Brockman. Essentially,
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Speaker 3: he keeps saying the words stole a charity. He says
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Speaker 3: that they enriched themselves by converting this nonprofit entity into
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Speaker 3: a for profit company, and in doing so, abandoned the
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Speaker 3: mission that they had at the beginning, which was creating
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Speaker 3: AI for good. And during opening statements we heard a
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Speaker 3: lot from them about Sam Altman and Greg Brockman's removal
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Speaker 3: from open AI's board and kind of the twenty twenty
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Speaker 3: two to twenty three era, and about how there was
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Speaker 3: a lack of trust from them from people at open Ai.
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Speaker 3: We saw some email exchanges talking about how much money
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Speaker 3: Elon Musk contributed to the foundation, kind of showing that
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Speaker 3: he was a major party in starting this from the beginning.
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Speaker 3: And then open AI's attorneys got up and they tried
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Speaker 3: to paint a different picture, of course, of the situation.
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Speaker 3: They showed emails where Elon Musk was trying to get
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Speaker 3: control of open ai when they were discussing forming a
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Speaker 3: for profit entity back in the day when he was
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Speaker 3: still affiliated with the organization, and their attorney basically was
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Speaker 3: trying to paint this case as a really simple one
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Speaker 3: where Musk was a disgruntled former employee of open ai
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Speaker 3: who was upset that they didn't want to go with
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Speaker 3: his vision of the company. He left formed a competitor,
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Speaker 3: and now he's turning around trying to undercut open ai
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Speaker 3: and harm one of his competitors in the AI space
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Speaker 3: and his former company that he helped found. And then
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Speaker 3: of course there's also the Microsoft element of this. They
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Speaker 3: tend to come in after the fact that they are
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Speaker 3: a key player in the lawsuit, and that's because Musk
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Speaker 3: has accused them of essentially aiding and abedding this theft
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Speaker 3: that he describes of a charity. And so we heard
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Speaker 3: from Microsoft talking about that they made an open AI,
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Speaker 3: why they decided to make those investments, and everything we're
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Speaker 3: hearing from them over and over is pretty consistent, so
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Speaker 3: that their actions were above board. They had no part
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Speaker 3: in anything that they say may or may not have
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Speaker 3: been happening.
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Speaker 2: And Musk was the first witness.
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Speaker 3: Yes, Musk was the first witness called to the stand,
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Speaker 3: and he spent about three days testifying, answering questions from
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Speaker 3: his own attorneys and then a little more heated questions
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Speaker 3: from open AI's attorneys.
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Speaker 2: So let's talk about the direct testimony first, the easy
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Speaker 2: testimony when you're a lawyer, quess you what was the
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Speaker 2: main point he was trying to get across on direct.
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Speaker 3: So I think the main point that Elon Musk was
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Speaker 3: trying to make is, and I keep saying this because
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Speaker 3: he kept saying it on the stand, is it's not
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Speaker 3: okay to steal a charity. We heard him say that
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Speaker 3: over and over again in response to many questions. And
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Speaker 3: it's really interesting across all of the testimony that we've
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Speaker 3: heard so far, everyone kind of describes these early days
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Speaker 3: when Musk was still at open AI really similarly, and
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Speaker 3: they all kind of agreed that there was discussion about
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Speaker 3: the need for more funding to support their research and
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Speaker 3: the need to maybe pursue some kind of for profit component,
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Speaker 3: and Musk said during his testimony that he had no
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Speaker 3: problem with creating a for profit company to support a nonprofit,
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Speaker 3: but he felt things crossed the line when they decided
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Speaker 3: to convert the nonprofit to a for profit. And he
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Speaker 3: described this situation as three phases of disillusionment with open AI,
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Speaker 3: and it kind of started with him being happy, pleased
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Speaker 3: with the mission. Then he started to get concerned that
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Speaker 3: they were moving in the direction that he didn't agree with.
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Speaker 3: This was around twenty seventeen twenty eighteen when he did
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Speaker 3: ultimately leave the board. And then he said Phase three
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Speaker 3: kind of started in around twenty two when he was
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Speaker 3: convinced that they did in fact steal a charity. And
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Speaker 3: so we heard from him a lot about that. About
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Speaker 3: his support of open AI, he says it wouldn't have
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Speaker 3: existed without him, And in the beginning he came up
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Speaker 3: with the name, he brought his guidance, his leaders, his vision,
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Speaker 3: and most importantly, his money.
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Speaker 2: He was trying to portray the stakes of the case
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Speaker 2: as existential, saying several times that AI could quote kill
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Speaker 2: us all if it's not developed safely, and the judge
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Speaker 2: eventually told him to stop repeating that phrase.
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Speaker 3: That's right. So this idea of AI safety is a
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Speaker 3: big one. That's another part of Musk's case and his
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Speaker 3: argument for why he's so concerned about this decision to
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Speaker 3: turn open Ai into a for profit company. And he
7:30
Speaker 3: said that we need somebody responsible leading AI. There's all
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Speaker 3: these private companies whose interests are motivated by profit and investors,
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Speaker 3: and that's why he wanted a nonprofit in this space.
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Speaker 3: And they had an expert that they called to testify
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Speaker 3: four Musk's case who was going to talk about the
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Speaker 3: threats of AI, and that includes this existential threat that
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Speaker 3: Musks describes of AI someday being smarter than humans and
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Speaker 3: leading to our demise essential and the judge did reprimand
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Speaker 3: them and say, you know, this case is not about
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Speaker 3: AI safety. I don't want to hear about this anymore.
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Speaker 3: Because Musk kept saying he was trying to prevent a
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Speaker 3: terminator situation talking about the movie franchise. She said, that's
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Speaker 3: not what this case is about. It's not about AI safety,
8:18
Speaker 3: and so that expert's testimony was cut quite short, I
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Speaker 3: think as a result of that, and we have not
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Speaker 3: heard that line from us since then.
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Speaker 2: If Mosk testified to being so concerned about for profit
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Speaker 2: AI companies, was he questioned about starting his own AI company,
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Speaker 2: AIX where there have been many complaints about it's grock
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Speaker 2: chat box for having harmful and sexualized images.
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Speaker 3: That was a big subject of his cross examination. And
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Speaker 3: that's okay, If you were so worried about this, why
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Speaker 3: did you start another for profit? Why didn't you start
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Speaker 3: a nonprofit when you decided to start XAI. And I
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Speaker 3: don't think we got a super clear answer from us
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Speaker 3: on that decision. He kept saying, you know, as I've said,
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Speaker 3: I have no problem with a for profit. The problem
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Speaker 3: is if you have a nonprofit and turn it into
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Speaker 3: a for profit. But you know, that's of course getting
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Speaker 3: at the details of this case, but not entirely answering
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Speaker 3: this question of why he decided to do that versus
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Speaker 3: starting a nonprofit. And I think at one point he said,
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Speaker 3: why would I do that? I already started a nonprofit
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Speaker 3: and it was open ai and they stole it. And
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Speaker 3: so I think Musk's own company is a really key
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Speaker 3: part of the open AI case because exactly as you said.
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Speaker 3: He's still a player in this space. He's pursuing something
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Speaker 3: that he said and acknowledged during testimony that it is
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Speaker 3: a safety risk, but it also puts him at a
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Speaker 3: competitor level with open AI, and so it adds this
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Speaker 3: whole other component to the case.
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Speaker 2: Musk has testified many times, but on cross it seems
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Speaker 2: like he's not following the basic rules of being cross examined,
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Speaker 2: that he's always trying to take over and one up
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Speaker 2: the lawyer who's questioned him. For example here, so he's
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Speaker 2: on the stand and he accused open AI's attorney of
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Speaker 2: asking a leading question, and the judge asked Musk to
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Speaker 2: repeat four words after her, I'm not a lawyer.
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Speaker 3: That's right, and that exchange actually went on. She said
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Speaker 3: you're not a lawyer, are you? And he says, no,
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Speaker 3: I'm not a lawyer. And she says, you didn't take
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Speaker 3: any classes on evident Harry law, did you? And he said, well,
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Speaker 3: actually I took law one oh one and she said, okay, well, still, okay, you're.
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Speaker 2: Not a lawyer.
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Speaker 3: Stop. Definitely fair to characterize him that way. I think
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Speaker 3: obviously on direct exam he has a lot more freedom
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Speaker 3: to tell his side of the story, but on cross
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Speaker 3: he became visibly irritated with the attorney for Open AI.
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Speaker 3: He kept telling him his questions weren't fair. And you know,
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Speaker 3: lawyers love to say answer the question that I'm asking you.
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Speaker 3: You're not answering my question. It's yes or no. It's
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Speaker 3: a simple question. And Musk reply it often that you know,
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Speaker 3: your questions aren't simple. They need context, they need explanation.
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Speaker 3: And so it was a pretty interesting cross exam where
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Speaker 3: you know, you have this lawyer trying to get something
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Speaker 3: out of him, and Musk is resisting kind of at
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Speaker 3: every turn.
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Speaker 2: Talk about being a lawyer. At one point he said,
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Speaker 2: this case will become case law and become precedent to
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Speaker 2: looting every charity in America. Okay, stay with me, Madeline.
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Speaker 2: Coming up next on the Bloomberg Law Show, we'll continue
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Speaker 2: this conversation about the Open AI trial. There was one
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Speaker 2: question that seemed easy to give a yes or no
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Speaker 2: answer to, but Musk resisted. Did he invest one billion
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Speaker 2: dollars in Open AI. I'm June Grosso and you're listening
11:35
Speaker 2: to Bloomberg. The high stakes trial in California that could
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Speaker 2: determine the future of open Ai isn't its second week.
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Speaker 2: Elon Musk is facing off against Sam Altman, claiming that
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Speaker 2: open Ai betrayed its altruistic mission in pursuit of profit.
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Speaker 2: The highlight of the testimony so far was the three
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Speaker 2: days Musk was on the stand on cross examining. Musk
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Speaker 2: had several heated exchanges with William Savat, the attorney who
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Speaker 2: represents open Ai, and became visibly irritated as Savat questioned
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Speaker 2: whether he had backed off his financial commitment to the
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Speaker 2: startup in the early years. I've been talking to Bloomberg
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Speaker 2: legal reporter Madlin Mecklberg. So as we discussed Madlin, Musk
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Speaker 2: resisted answering yes or no to questions, and at one
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Speaker 2: point Savat questioned him, quote, at the end of it,
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Speaker 2: you didn't contribute a billion dollars to open Ai, did you.
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Speaker 2: Savath wanted a yes or no answer, which Musk would
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Speaker 2: not give until the judge intervened and Tolmusk to answer
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Speaker 2: the question, which he still didn't give a yes or
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Speaker 2: no answer to explain the importance of this point.
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Speaker 3: Right, So, his financial commitments to open Ai are a
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Speaker 3: big part of this case because obviously he's trying to
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Speaker 3: say that he donated this money under certain circumstances and
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Speaker 3: they've now violated that mission that he thought this money
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Speaker 3: was going to fund. But yes, we saw during the
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Speaker 3: course of trial a few different statements that Musk has
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Speaker 3: made publicly about how much money he's given to open Ai.
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Speaker 3: When they first launched in twenty fifteen, they did so
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Speaker 3: with a commitment from him that he would eventually donate
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Speaker 3: as much as a billion dollars, and then he left
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Speaker 3: the board in twenty eighteen, and then later we saw
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Speaker 3: a post from him on x in twenty twenty three
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Speaker 3: where he said that he donated one hundred million dollars
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Speaker 3: to open Ai, which is obviously a big drop down
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Speaker 3: from one billion, But through questioning from the attorney, he
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Speaker 3: revealed that he had given thirty eight million dollars in
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Speaker 3: total to open ai before he departed, and so an
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Speaker 3: even bigger dropped down from the one billion dollars that
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Speaker 3: he had pledged to commit in the early days, and
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Speaker 3: that money was through quarterly donations that he was making,
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Speaker 3: but also rent that he was paying on an office
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Speaker 3: building for open Ai. And this is, you know, this
13:57
Speaker 3: is an important issue because it gets at this question
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Speaker 3: of how much Musk was really involved in open AI,
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Speaker 3: how much stake he had in this, and then of
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Speaker 3: course there's this attempt to impeach a witness and show
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Speaker 3: that you know, he's sometimes says things that don't turn
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Speaker 3: out to be true.
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Speaker 2: On the whole, how do you think his testimony went,
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Speaker 2: how'd he come across?
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Speaker 3: He's an interesting character, and you know, there were a
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Speaker 3: lot of fireworks, like we're saying, But at the end
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Speaker 3: of the day, I think the person we saw in
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Speaker 3: the stand was Elon Musk. Like there weren't necessarily any
14:29
Speaker 3: surprises in how he was presenting himself. As you say,
14:32
Speaker 3: he's testified before, he speaks publicly a lot. We kind
14:36
Speaker 3: of get a stream of consciousness from him on his
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Speaker 3: social media, so I don't think there's anything. You know,
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Speaker 3: it wasn't like, oh my gosh, I can't believe he
14:43
Speaker 3: said that. But I will say they definitely really were
14:48
Speaker 3: grilling him on cross exam, and I don't know that
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Speaker 3: he totally helped his case. I think it's really early
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Speaker 3: to tell, but I think he made a few key concessions,
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Speaker 3: including talking about the difference in find commitments that he made.
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Speaker 3: He said at one point that there was no paperwork
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Speaker 3: that he signed outlining the terms and conditions of his
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Speaker 3: donation to open AI. I think that was an important point,
15:11
Speaker 3: and so I think it maybe didn't go as smoothly
15:14
Speaker 3: as he would have wanted it to go. But that
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Speaker 3: being said, at the same time, he also had plenty
15:20
Speaker 3: of time to make his own case, and I think
15:22
Speaker 3: jurors definitely understood kind of where he was coming from
15:25
Speaker 3: this too.
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Speaker 2: So I know during jury selection his connection to Trump
15:30
Speaker 2: and his position at DOGE came up, which some people
15:34
Speaker 2: held against him. Did any of that come up during
15:37
Speaker 2: his testimony.
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Speaker 3: No, So they tried, but the judge said, we're not
15:41
Speaker 3: going to go there if there's some kind of pre
15:43
Speaker 3: trial agreement limiting certain subjects that could be asked, because
15:47
Speaker 3: obviously this case has such huge characters and such hop
15:50
Speaker 3: on issues that there's so much they ground they could
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Speaker 3: really cover, and she's trying to keep it very narrow
15:55
Speaker 3: to the issues at hand. And at one point Musk
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Speaker 3: was testifying about meeting that he had with President Obama
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Speaker 3: when he was still in office about AI safety, and
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Speaker 3: so the lawyers for Open AI were saying, okay, like
16:07
Speaker 3: he's opened the door to like talking about his government advocacy.
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Speaker 3: We want to ask him about his relationship with the
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Speaker 3: Trump administration, and the judge said that was a no go,
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Speaker 3: So we didn't get into that on the stand.
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Speaker 2: An experienced judge, and she seems to really be keeping
16:23
Speaker 2: control of her courtroom and she's not letting anything slide.
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Speaker 3: That's honestly kind of an understatement. She runs a tight ship,
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Speaker 3: and that means that sometimes when the jury's not in
16:35
Speaker 3: the room, the lawyers are getting a little snappyness from her.
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Speaker 3: She really has no patience for nonsense, I think, and
16:44
Speaker 3: we'll cut people off and just say I'm not interested
16:46
Speaker 3: in hearing about that argument, Like, let's move on to
16:49
Speaker 3: something else. And I think she's got a really packed calendar,
16:53
Speaker 3: and we hear that from her a lot in some
16:55
Speaker 3: of the pre trial hearings, and so I think it's
16:57
Speaker 3: really important to her that this case stick on schedule,
17:00
Speaker 3: will and get done. And I think, kind of like
17:02
Speaker 3: I was saying, there's a lot of potential pitfalls here
17:05
Speaker 3: and a lot of avenues where this case could turn
17:07
Speaker 3: and become about something else, And so we're really seeing
17:10
Speaker 3: her working hard to kind of keep them on track,
17:13
Speaker 3: keep them focused on this issue, and she's a really
17:15
Speaker 3: important part of this case. Because we talked about last
17:19
Speaker 3: time I was on here with you that the jury
17:21
Speaker 3: decision is going to be advisory, and so the end
17:24
Speaker 3: of the day, Yvonne Gonzalez Rogers, who's the judge, She's
17:28
Speaker 3: going to get the final say on who wins and
17:30
Speaker 3: what the damages should be. So it's really important for
17:33
Speaker 3: her to get what she needs out of the testimony
17:36
Speaker 3: as well.
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Speaker 2: It's been said that this trial is an existential threat
17:40
Speaker 2: to the company. Explain why what Musk is asking for.
17:44
Speaker 3: If he wins a lot, he's asking for as much
17:48
Speaker 3: as one hundred and thirty four billion dollars, And we
17:50
Speaker 3: say that because his request is based on kind of
17:52
Speaker 3: open Ay's valuation right now, which is always fluctuating, but
17:56
Speaker 3: he's pledged to not keep that money. He wants to
17:59
Speaker 3: donate that much back to the open Ai Foundation, which
18:02
Speaker 3: is the nonprofit arm of open Ai that still exists today.
18:05
Speaker 3: And then in addition to that, he's asking for Sam
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Speaker 3: Altman and Greg Brockman should be removed from their leadership
18:11
Speaker 3: positions at the company, and he wants a coret order
18:14
Speaker 3: unwinding this for profit conversion that open AYE kind of
18:18
Speaker 3: spent the last year working towards and so these are
18:21
Speaker 3: huge things that any one of them being allowed to
18:25
Speaker 3: happen could totally shake open AIE and kind of put
18:28
Speaker 3: them on a path to an uncertain future at this point,
18:31
Speaker 3: but it really remains to be seen how seriously the
18:34
Speaker 3: judge is considering all of those options. She's bifurcated this trial,
18:38
Speaker 3: so the jury is just hearing arguments on liability, and
18:41
Speaker 3: then once they go to deliberate on that, the judge
18:44
Speaker 3: is going to hear arguments from the lawyers on these damages.
18:48
Speaker 3: So if she decides to rule in musks favor, then
18:51
Speaker 3: she's going to have to decide what is the appropriate
18:54
Speaker 3: remedy here because some of these are pretty extreme.
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Speaker 2: Very extreme, and is looking to go public this year.
19:02
Speaker 3: Open AI is definitely eyeing a public offering at this point,
19:07
Speaker 3: and it could be one of the largest in history.
19:09
Speaker 3: I think the last valuation we have for them is
19:12
Speaker 3: eight hundred and fifty two billion dollars, which is, you know,
19:16
Speaker 3: a mind boggling number. So that also is adding to
19:19
Speaker 3: the pressure here and the stakes making him so much higher.
19:23
Speaker 2: Open AI's Greg Brockman was the next big witness to
19:27
Speaker 2: testify tell us what he said.
19:29
Speaker 3: That's right, Greg Brockman, who is the president of open
19:32
Speaker 3: ai currently and was one of these original co founders
19:36
Speaker 3: with Elon Musk. His testimony covered a lot of ground,
19:39
Speaker 3: a lot of similar ground to Elon's Musk's testimony, of course,
19:43
Speaker 3: where we heard him talk about these early days at
19:45
Speaker 3: the startup and kind of the dissolution of their relationship essentially.
19:50
Speaker 3: I think one thing that we heard from him yesterday
19:52
Speaker 3: that was very interesting was him talking about kind of
19:56
Speaker 3: early concerns that he Sam Altman and Ilia Setskivier had
20:01
Speaker 3: with Musk. Setskeger being one of the engineers at open
20:04
Speaker 3: ai and one of the founders as well, and he
20:07
Speaker 3: told this anecdote about how Musk was shown a really
20:11
Speaker 3: early model of chat GPT, or the language model that
20:15
Speaker 3: would become chat GPT, and he said Musk was very
20:18
Speaker 3: dismissive of it. He called it stupid and said something
20:21
Speaker 3: kids on the internet could do a better job making.
20:24
Speaker 3: And to Greg Bruckman, he said that made him feel
20:27
Speaker 3: like someone like Musk shouldn't be in charge of this
20:29
Speaker 3: endeavor because he lacks the ability to dream a little
20:32
Speaker 3: and see kind of the potential of this technology, which
20:35
Speaker 3: at that stage in the twenty fifteen twenty sixteen time
20:39
Speaker 3: is really essential. And so he had a kind of
20:41
Speaker 3: a zinger and court he was saying, you know, he
20:44
Speaker 3: knows rockets, he knows electric cars. He did not, and
20:47
Speaker 3: I believe does not know AI and that was a
20:50
Speaker 3: major concern. So we heard him really go hard on Musk,
20:54
Speaker 3: as we expected him to.
20:56
Speaker 2: But how did he hold up on cross did Musk's
20:59
Speaker 2: attorney school or any points.
21:01
Speaker 3: One of the things that they really were focusing on
21:04
Speaker 3: was the amount of money that he has made from
21:07
Speaker 3: his involvement with open Ai, because we heard that he
21:10
Speaker 3: invested zero dollars in creating the for profit company. He
21:16
Speaker 3: did not donate anything to open ai in the early days,
21:19
Speaker 3: and now his stake in the startup is worth almost
21:21
Speaker 3: thirty billion dollars. He testified. I think that was new
21:24
Speaker 3: information to us on the stand, and so he had
21:27
Speaker 3: an interesting back and forth with Elon Musk's attorney about
21:31
Speaker 3: how he had made so much money given that he
21:34
Speaker 3: had not put anything in. And there's a key journal
21:37
Speaker 3: entry that we heard from Brockman from a journal that
21:40
Speaker 3: he has maintained about his professional and personal life, and
21:44
Speaker 3: there's one entry in twenty seventeen where he was kind
21:47
Speaker 3: of considering what steps open AI should take, and he
21:50
Speaker 3: wrote in his entry, financially, what will take me to
21:53
Speaker 3: one billion dollars? And that's a line that Musk's attorneys
21:57
Speaker 3: have really seized on because their whole case is arguing
22:00
Speaker 3: that these guys sought to enrich themselves by turning this
22:03
Speaker 3: nonprofit into a for profit company, and they're saying this
22:06
Speaker 3: line shows that that's what he was focused on. His
22:09
Speaker 3: motivations were personal finance and enrichment, and so they were
22:14
Speaker 3: asking him about that line, and Brockman told them that,
22:17
Speaker 3: you know, I was feeling like we were in a
22:19
Speaker 3: fork in the road. It wasn't about making myself richer.
22:22
Speaker 3: I was trying to decide if we should go with
22:24
Speaker 3: this vision Elon Musk had presented, or this other vision
22:27
Speaker 3: that we had been considering. And my thought was, if
22:30
Speaker 3: I can reach a billion dollars, I'll feel like I'm good.
22:32
Speaker 3: It's not going to matter which path I'm choosing. And
22:35
Speaker 3: so of course Elon Musk's attorneys really seized on that response,
22:39
Speaker 3: and he said, you know, over and over, so you're
22:41
Speaker 3: good with a billion dollars. Why didn't you take the
22:44
Speaker 3: twenty nine billion dollars that you have now over that
22:48
Speaker 3: and donate it back to the nonprofit if you're so
22:50
Speaker 3: good with a billion dollars. And so there was a
22:53
Speaker 3: lot of back and forth fighting about this amount and
22:56
Speaker 3: whether he should have, you know, not have such a
22:58
Speaker 3: big stake in this fore propum but now and kind
23:01
Speaker 3: of this one billion dollar goal that he had for himself.
23:03
Speaker 3: So I don't know that that went great for Brockman
23:07
Speaker 3: while he was on the stand. Definitely a lot of
23:09
Speaker 3: interesting new details. I think another new detail that he
23:13
Speaker 3: revealed while he was testifying is that OpenAI plans to
23:17
Speaker 3: spend fifty billion dollars on compute needs this year, which
23:22
Speaker 3: is a huge jump up from where they were in
23:24
Speaker 3: twenty seventeen when they were spending about thirty billion dollars
23:28
Speaker 3: on computing needs. So we also got insights from him
23:30
Speaker 3: about kind of this scale and how much this enterprise
23:33
Speaker 3: has really grown since those early days.
23:35
Speaker 2: I was going to ask you if there were any
23:37
Speaker 2: very incriminating, kind of mic drop pieces of evidence, but
23:41
Speaker 2: that certainly seems like one. Thanks Madlin. We'll check back
23:45
Speaker 2: with you to see how the trial's progressing. That's Bloomberg
23:48
Speaker 2: Legal reporter Madlin Mecklberg coming up next on the Bloomberg
23:52
Speaker 2: Law Show. Taylor Swift makes a rather novel legal move
23:56
Speaker 2: to protect her voice and image. I'm June Grosso and
23:59
Speaker 2: you're listening to Bloomberg.
24:03
Speaker 3: Heyday Day, Hey sage Shag.
24:17
Speaker 2: Popstar Taylor Swift's image and voice have been used in
24:21
Speaker 2: many AI generated images and deep fakes, including a twenty
24:25
Speaker 2: twenty four post by then candidate Donald Trump that falsely
24:29
Speaker 2: showed Swift endorsing him for the presidency. In a new
24:33
Speaker 2: legal move, Swift seems to be stepping up her fight
24:37
Speaker 2: against AI copycats and deep fakes. She's filed trademark applications
24:42
Speaker 2: for these two audio clips.
24:45
Speaker 1: Hey it's Taylor. My brand new album, The Life of
24:48
Speaker 1: a Showgirl is out on October third, and you can
24:50
Speaker 1: click to pre save it so you can listen to
24:52
Speaker 1: it on Spotify. Hey it's Taylor Swift, and you can
24:54
Speaker 1: listen to my new album The Life of a Showgirl
24:57
Speaker 1: on demand on Amazon Music unlimited.
24:59
Speaker 2: Swift also filed an application to trademark and image of
25:03
Speaker 2: her on stage in a sequent outfit pink guitar in hand. Historically,
25:08
Speaker 2: trademarks aren't designed to protect a person's general likeness, voice
25:13
Speaker 2: or persona. But at least one Hollywood star, Matthew McConaughey,
25:18
Speaker 2: has successfully trademarked his iconic line from the nineteen ninety
25:22
Speaker 2: three film Dazed and Confused. All right, all right, all right,
25:28
Speaker 2: These kinds of voice trademarks have never been tested in court.
25:32
Speaker 2: My guest is Cynthia Katz, a music partner at Fox Rothschild.
25:37
Speaker 2: Trademarks aren't usually used for this purpose, are they?
25:41
Speaker 4: Sound as a potential source indicator ken be used as
25:46
Speaker 4: a trademark, and has been done in the past in
25:48
Speaker 4: some celebrity situations, but it is not the primary form
25:53
Speaker 4: of protection for voice that is typically used, you know,
25:57
Speaker 4: in the music business. And trademark really, its function at
26:01
Speaker 4: its core is not to protect the owner of the mark,
26:05
Speaker 4: rather than to look at preventing consumer confusion in the
26:09
Speaker 4: marketplace and looking to preserve the consumer so that you know,
26:13
Speaker 4: the consumer has a good source indicator, you know. So
26:17
Speaker 4: mostly that turns into you know, I'm going to the
26:18
Speaker 4: grocery store and I would see a logo, I want
26:21
Speaker 4: to know that I can count on the quality behind
26:23
Speaker 4: that product. Because that logo tells me something and it's
26:27
Speaker 4: based on actual use, so that you know, people really
26:30
Speaker 4: know that this means that I know who's making this product.
26:33
Speaker 4: There have been some sort of iconic sounds, you know,
26:36
Speaker 4: over the years that that have served as source indicators
26:39
Speaker 4: that have been trademarked, and then celebrities in particular where
26:43
Speaker 4: they have a very unique catchphrase, for example, which obviously
26:47
Speaker 4: ties to the Matthew McConaughey all right, all right, you
26:50
Speaker 4: know that's so iconic, and there are so many brands
26:55
Speaker 4: that you know, would like to have that exact sound,
26:58
Speaker 4: you know, maybe indicating a an endorsement. So you know,
27:01
Speaker 4: in those sort of limited situations, it has been done before,
27:05
Speaker 4: but it's certainly not the standard bearer for you know,
27:09
Speaker 4: musicians in terms of protecting their voice.
27:12
Speaker 2: Would this even qualify to be trademarked? In the case
27:16
Speaker 2: of Matthew McConaughey, that's a phrase he's widely associated with.
27:21
Speaker 2: You could almost hear his drawl saying it. But these
27:24
Speaker 2: phrases from Taylor Swift don't stand out in any way.
27:28
Speaker 2: I mean, is this even going to get a trademark?
27:31
Speaker 5: I mean, I don't know.
27:32
Speaker 4: Obviously, we'll have to see. But trademark is not a given.
27:36
Speaker 4: You know, you have to show actual use in the
27:39
Speaker 4: class that you are trying to register, and so you
27:43
Speaker 4: have to show that you've used that exact phrase to
27:48
Speaker 4: market or sell a product or service and you know
27:51
Speaker 4: that you are using it as a source indicator. So,
27:54
Speaker 4: I mean, Taylor Swift has a massive amount of product.
27:58
Speaker 4: You go to, say like a target, and I don't know,
28:00
Speaker 4: there might be a doll out there that looks like
28:02
Speaker 4: a little girl with a microphone that goes, I'm Taylor Sweat.
28:06
Speaker 4: You know, like if she does have products and services
28:09
Speaker 4: out there where she can show that that phrase has
28:12
Speaker 4: been used by her or her company as a you know,
28:17
Speaker 4: mark origination from her, It's possible, but I think it's
28:22
Speaker 4: a little bit, you know, might be a trickier hurdle.
28:25
Speaker 4: Like often you see it's the tag on a clothing,
28:29
Speaker 4: you know, back of a T shirt that shows this
28:31
Speaker 4: is where this came from, or it is the branding
28:35
Speaker 4: on a website that describes a particular type of service,
28:39
Speaker 4: you know, the evidence to show people that this is
28:42
Speaker 4: out there in the marketplace as a source indicator. I
28:46
Speaker 4: am not familiar with a product that Taylor has put
28:50
Speaker 4: out using those particular catch phrases. But I don't know
28:54
Speaker 4: her full suite, you know, I do know more so
28:57
Speaker 4: than the traditional artist's she's.
28:59
Speaker 5: A in the sense of she's got.
29:02
Speaker 4: A lot of branded goods out there, so if she
29:05
Speaker 4: can show it, it's possible, and I don't know also
29:08
Speaker 4: for sure how you know, there's some such subjectivity into
29:12
Speaker 4: all of this. You're going to have an examiner who's
29:13
Speaker 4: a person at the end of the day sitting in
29:16
Speaker 4: the trademark office, and they are going to probably understand
29:21
Speaker 4: who Taylor Swift is and what she's trying to do,
29:24
Speaker 4: and it's possible that they may give her more deference
29:26
Speaker 4: than they perhaps would to somebody else just trying to
29:30
Speaker 4: trademark their voice, because you know, if she's trying to
29:33
Speaker 4: protect my understanding is against deep fakes, you know, and
29:36
Speaker 4: the like, and.
29:36
Speaker 5: They may they may give her some more deference there.
29:39
Speaker 5: I don't know.
29:40
Speaker 2: So suppose she does get it trademarked and she wants
29:43
Speaker 2: to go against a deep fake, can she only go
29:46
Speaker 2: against one where these particular words are spoken.
29:50
Speaker 4: Yes, So that is exactly you know, She's going to
29:53
Speaker 4: get only the very specific marks there's some like expanded
29:58
Speaker 4: so you only registers Pacific class of goods. But if
30:02
Speaker 4: it's sort of within the realm of a likely extension
30:05
Speaker 4: of that, there's a little bit of leeway there, a
30:07
Speaker 4: little bit of access, you know, if this is something
30:09
Speaker 4: that naturally would be expanded upon. But it's going to
30:12
Speaker 4: be limited to the mark, to the specific phrase that
30:14
Speaker 4: she is registering.
30:15
Speaker 5: It's not just generally my voice.
30:18
Speaker 2: So then how far does that get her? If you know,
30:21
Speaker 2: everyone is anticipating this is going to be used to
30:24
Speaker 2: fight some of the deep fake AI. So if it's
30:27
Speaker 2: just those two phrases, how far does that get her?
30:31
Speaker 2: Not very far, not that far.
30:33
Speaker 4: I mean, I don't know what's out there. Perhaps you know,
30:36
Speaker 4: there have been some attempts already that she might be
30:41
Speaker 4: aware of. Yeah, and she's doing what she can as well.
30:44
Speaker 4: I would say, you know, look, right of publicity. Unfortunately
30:47
Speaker 4: we don't have a federal right of publicity. You know,
30:50
Speaker 4: it's a patchwork of states. It's not the best, you know,
30:54
Speaker 4: adding more.
30:55
Speaker 5: To your potential arsenal.
30:57
Speaker 4: You know, it's not that cost at all, relatively speaking,
31:01
Speaker 4: to file a trademark application and go through the process.
31:05
Speaker 4: I mean, if I were her, I would do everything
31:07
Speaker 4: I could to add to my potential arsenal of things
31:11
Speaker 4: that I could use to go against people, So why not.
31:14
Speaker 4: I think it also helps just to put it out there.
31:17
Speaker 4: The pr and the press of the hey, I'm not
31:20
Speaker 4: going to stand for this. Look at what I'm doing
31:22
Speaker 4: should kind of put the world on notice as well
31:24
Speaker 4: that you know, you might want to think twice before
31:27
Speaker 4: you do a deep fake with Taylor Swift because she's she's.
31:30
Speaker 5: Not into it, so you know, that helps.
31:32
Speaker 4: And then there's also you know, the likeness aspect of
31:35
Speaker 4: it as well. I don't know, but it seems like
31:38
Speaker 4: some people might have tried to put images of her,
31:41
Speaker 4: you know, saying these phrases, looking a certain way and
31:44
Speaker 4: manipulating them, and you know, there probably was something out
31:47
Speaker 4: there that they found that this might be you know,
31:50
Speaker 4: reactionary too. So usually something happens and she's upset and
31:55
Speaker 4: she calls her lwords is what can we do?
31:57
Speaker 5: And they say, okay, here's some ideas.
31:59
Speaker 4: So it's certainly not going to be one hundred percent
32:02
Speaker 4: fool proof, but can only help. And I think there
32:05
Speaker 4: is a big thing to it it being out there,
32:07
Speaker 4: as you can see in the press, picking it up
32:09
Speaker 4: and putting the world on notice. You know that she's
32:12
Speaker 4: ready to fight, so that might be part of the
32:14
Speaker 4: strategy as well.
32:15
Speaker 2: She has filed more than three hundred trademark applications in
32:19
Speaker 2: the US alone, so I think this is not unusual
32:22
Speaker 2: for her. She's also trademarking a photo holding a pink
32:26
Speaker 2: guitar with a black strap and wearing a multicolored irridescent
32:30
Speaker 2: body suit with silver boots from one of her concerts,
32:34
Speaker 2: So then again, it would only be that particular image
32:39
Speaker 2: that would be trademarked, correct.
32:41
Speaker 5: I mean with some leeway, you know, a little bit.
32:44
Speaker 4: I think if you change the color of the boots slightly,
32:46
Speaker 4: you know it's still going to get picked up. But
32:49
Speaker 4: it's a specific image. Then you have to look at
32:51
Speaker 4: the exact application and how she files it, you know,
32:55
Speaker 4: where you make references to is she trying to get you.
32:58
Speaker 5: Know, all of the colors or some of the color.
33:00
Speaker 4: You have to describe the lines and then the depiction
33:02
Speaker 4: in a certain way. And like there is some leeway
33:05
Speaker 4: for things that are confusingly similar in nature, but it's
33:09
Speaker 4: not a broad Anything that resembles Taylor Swift kind of thing.
33:13
Speaker 4: You know, whoever creates the photos or the drawings, you know, photographers,
33:17
Speaker 4: the copyright would best in them generally, but she's got
33:20
Speaker 4: other avenues of protection. If people are using copyrighted photos
33:24
Speaker 4: to make deep fakes and things like that.
33:27
Speaker 2: What generally happens is her lawyers will send a cease
33:30
Speaker 2: and desist letter, and I guess they can put in
33:32
Speaker 2: it this is a trademarked image or trademarked voice.
33:37
Speaker 4: It just adds to the potential claims and the potential
33:40
Speaker 4: damages you know, that they can ask for in the
33:42
Speaker 4: cease and desist, and you know, gives them more ammunition
33:45
Speaker 4: of you violated this law and that law and this
33:48
Speaker 4: and you know, and the penalties and the remedies under
33:50
Speaker 4: the Landman Act federal are going to be you know,
33:52
Speaker 4: some more substantial damages than just some of the patchwork,
33:56
Speaker 4: depending what state we're in, of the right of publicity claims.
33:59
Speaker 4: So yeah, that can be much more scary as well
34:01
Speaker 4: to a potential recipient when you see large numbers and
34:05
Speaker 4: potential consequences that you might just take it down. I
34:10
Speaker 4: would be hard pressed that anybody if I got to
34:13
Speaker 4: cease and desist from Taylor Swift's team that I wouldn't
34:16
Speaker 4: just take it down.
34:17
Speaker 2: So yeah, I mean, I don't know how much more
34:21
Speaker 2: they need in their legal arsenal, but every bit counts,
34:25
Speaker 2: I guess.
34:26
Speaker 3: Yeah.
34:26
Speaker 4: Although I will say this is I mean, I've seen
34:29
Speaker 4: this on every news network, so everybody's covering it. I
34:33
Speaker 4: think it's also helpful in general for and maybe this
34:36
Speaker 4: might be part of her thought process for all celebrities
34:40
Speaker 4: and all artists, because not everybody is in a position
34:43
Speaker 4: to be Taylor Swift, and so if she starts to
34:46
Speaker 4: set a precedent that other people can follow suit with,
34:50
Speaker 4: it further strengthens the position of all celebrities to say,
34:55
Speaker 4: you know, we're looking for avenues. And perhaps it starts
34:58
Speaker 4: to impact those in in the lawmaking capacity as well.
35:01
Speaker 4: You know, we've been we've been looking for some more
35:03
Speaker 4: protections at AI develops to say, you know, we need
35:08
Speaker 4: some strength that you know, we need to have some
35:10
Speaker 4: precedent created, and whether that comes through the courts or
35:12
Speaker 4: whether that comes through the legislatures for essentially famous people
35:17
Speaker 4: not to have AI use their name, image, likeness, voice,
35:22
Speaker 4: what not to imply endorsement of things that they don't endorse,
35:26
Speaker 4: or you know, I think there's some pornographic things that
35:29
Speaker 4: happen as.
35:29
Speaker 5: Well, and all of that.
35:31
Speaker 4: Her kind of getting out in front of this I
35:33
Speaker 4: think helps everybody else who's in.
35:35
Speaker 5: A similar book.
35:36
Speaker 4: Granted it's only going to help celebrities who probably you know,
35:41
Speaker 4: but there are different tiers of celebrities. I will say,
35:43
Speaker 4: you know, kudos for to her and getting getting ahead
35:46
Speaker 4: of it. And ultimately the goal of trademarkt all that
35:50
Speaker 4: you know, is to prevent confusion in the marketplace from
35:54
Speaker 4: from consumers not knowing if Taylor is really endorsing something
35:57
Speaker 4: or not.
35:58
Speaker 5: So it's a good sty if it's not enough, you know, it.
36:02
Speaker 2: Helps adding some more ammunition to those ceasyn desist letters.
36:06
Speaker 2: Thanks so much, Cynthia. That's Cynthia Katz of Fox Rothschild
36:11
Speaker 2: and that's it for this edition of The Bloomberg Law Show.
36:13
Speaker 2: Remember you can always get the latest legal news on
36:16
Speaker 2: our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify,
36:20
Speaker 2: and at www dot Bloomberg dot com, slash podcast Slash Law,
36:26
Speaker 2: and remember to tune into The Bloomberg Law Show every
36:28
Speaker 2: weeknight at ten pm Wall Street Time. I'm June Grosso
36:32
Speaker 2: and you're listening to Bloomberg