Anthropic Settlement Unlikely to Spur Wave of AI Copyright Deals

Authors, news outlets, and artists suing OpenAI Inc. and other tech giants face significant hurdles to recreate the circumstances that pushed Anthropic PBC to settle copyright infringement claims this week.

Author plaintiffs notched several key wins against Anthropic that gave them critical leverage against the Claude chatbot-maker: their complaint included a piracy claim, the judge had already decided illegal downloads likely weren’t fair use, and he had signed off on a sprawling class certification with a trial date just months away.

Other plaintiffs have begun to emulate authors’ strategies against Anthropic. A group of music publishers also suing the company pushed to add a piracy claim to their complaint, saying they only recently discovered Anthropic downloaded books with song lyrics from pirated datasets. Proposed class plaintiffs in a consolidated suit against OpenAI are similarly trying to maintain a claim based on the company’s use of pirate sites, which the AI giant has sought to dismiss, and have yet to have their class certified.

Intellectual property attorneys say plaintiffs in those cases need to secure more building-block wins before the defendant companies would feel pressure to settle.

“I don’t think we can responsibly and very confidently say now this is going to create a domino effect” until the specific settlement terms are disclosed, intellectual property attorney Vivek Jayaram said.

The financial terms of the settlement could be a significant factor for companies considering a deal. Edward Lee, a Santa Clara Law professor, said Microsoft Corp. and Meta Platforms Inc. could “withstand practically anything” regarding damages, but would want to avoid a hefty payment. Jayaram said if the Anthropic settlement amount is lower than expected—such as hundreds of millions instead of billions—that could change the settlement calculus for others.

Some AI companies might be glad to “get out of this whole mess for a couple hundred million,” Jayaram said.

The Piracy Strategy

The authors and Anthropic on Tuesday notified the US District Court for the Northern District of California they reached a class-wide settlement. That agreement came after the AI company said the certified class, which included millions of pirated books and could’ve put the company on the hook for as much as $1 trillion in damages, created significant pressure to settle.

Music publishers’ case accusing Anthropic of copying protected song lyrics is distinct from the authors’ case, as it’s not a class action and has far fewer works at issue. But Anthropic might be willing to settle “just to make it go away, rather than still be on the hook for the maximum amount of statutory damages,” said Kevin Madigan, Senior Vice President of Policy and Government Affairs at the Copyright Alliance.

“If I was one of their lawyers, I would think I don’t want to now proceed to trial in this case given what we’ve seen other courts say about piracy,” he said.

Publishers on Aug. 11 sought permission to amend their complaint to add piracy claims. Anthropic on Monday opposed the request and called it a “bait and switch.” Anthropic said it tried to relate the two cases, but the music publishers relied specifically on the piracy allegations in the authors’ case to differentiate themselves and successfully oppose the effort. Now, Anthropic argued, they’re trying to “transform this case at the eleventh hour.”

The piracy claims “are very fraught right now” and “pose quite a bit of risk” for the AI companies, said Bloomberg Intelligence analyst Tamlin Bason. “Trying to limit the risk there is going to be essential for these firms.”

OpenAI and Microsoft didn’t return a request for comment. A lawyer for the author plaintiffs who sued Meta declined to comment.

OpenAI faces a much more complex situation in the US District Court for the Southern District of New York, where a dozen cases against it are consolidated for discovery. Claims from news outlets and creatives include copyright infringement, trademark dilution, and Digital Millennium Copyright Act violations. Only some of the cases are proposed class actions.

OpenAI is in “the hardest position to strike settlements,” Lee said.

Still, Anthropic’s settlement could prompt OpenAI’s lawyers to seriously consider cutting a deal, Madigan said, since it demonstrates Anthropic didn’t think it could win on the piracy issue that OpenAI also faces.

“There will probably be others who say, ‘Hey, we got all the money in the world and the best lawyers in the world and are going to litigate,’” he said.