Anthropic AI Copyright Settlement Must Clear Logistical Hurdles

The authors and publishers who landed a $1.5 billion settlement with Anthropic PBC over its AI training process now must decide out how to split the pot while satisfying a judge who could still send the case to trial.

The settlement covers some 465,000 books that Anthropic downloaded from pirate libraries while acquiring content to train its Claude AI model, an unprecedented volume of works in a copyright settlement. With authors and publishers both claiming rights in these books, determining who gets what share of the roughly $3,000-per-book payout is going to be “contentious or problematic,” said Bill Rosenblatt, a copyright and technology consultant to entities including the Association of American Publishers, Microsoft Corp. and Walt Disney Co.

The fight will boil down to the details in publishing contracts, he said.

The minutiae of those deals—who owns what, how money gets split if an author can’t be located, whether divisions between writers and publishers will require examining individual contracts—prompted Judge William Alsup to postpone his approval of the deal on Sept. 8. He set 34 specific questions and scenarios across two filings for the attorneys to answer before their next hearing on Sept. 25 in the US District Court for the Northern District of California.

Stakes are high. If parties fail to secure Alsup’s approval, the case will go to a jury trial in December when Anthropic could face up to $1 trillion in damages. The judge is “putting their feet to the fire to make them figure this out,” said Santa Clara Law Professor Edward Lee.

The Deal

Every contract is customized and individualized for each of the thousands of authors in this case, creating the core challenge in dividing the settlement money.

The Sept. 5 proposal revealed Anthropic agreed to pay roughly $3,000 for each of the 465,000 books rather than risk paying as much as $150,000 per book in statutory damages at trial.

The parties completed Alsup’s first request on Sept. 15, submitting finalized lists of all books to be covered by the deal along with their copyright owners. The lists were filed under seal to protect rights owners’ personal information and avoid “providing a roadmap for non-class members to submit fraudulent claims,” according to the filing.

Publishing contracts sometimes include provisions governing how publishers and authors divide the pursuit of infringement claims and how any proceeds will be split. That raises a major logistical question in this case: Must authors and publishers comb through each individual contract for the nearly 500,000 works in the list?

Alsup seems to think so. At the Sept. 8 settlement hearing, he suggested claims would be submitted work-by-work. “The ABC Publishing Company of New York City would not file a claim for 100 works,” he said. “The author would have to be on each one.”

The judge also insisted that all publishers and authors of a work should have to jointly sign off on including it in the deal and attest that they own 100% of the copyright. He said that approach would prevent other parties from “coming out of the woodwork” later to sue Anthropic over the same books.

Industry Pushback

Trade groups representing key stakeholders disagree with the individual contract approach to distributing settlement proceeds.

Mary Rasenberger, the CEO of the Authors Guild, called examining every contract “cumbersome,” arguing the use of default splits would be easier to manage.

Maria Pallante, CEO of the Association of American Publishers, agreed. “Rather than look at 500,000 contracts which no longer exist or are silent on these issues, we should look at proxies,” she said.

Alsup picked up on this tension, telling the parties on Sept. 16 he suspected the trade groups wanted a “global allocation,” such as a 50-50 split of all proceeds between authors and publishers.

“Would it be right and fair to do so with respect to an author whose paperwork clearly shows the author is entitled to all proceeds?” he wrote while asking the Guild and the AAP to detail their roles in the settlement. “If a global settlement within a class settlement is what class counsel have in mind, then the district judge will have concern.”

Alsup also voiced concerns that authors’ counsel and publishers were crafting a deal behind the scenes they “want to force down the throat of authors” and pressure them to take a smaller percent of the $3,000 award than they’re entitled to, according to the hearing transcript.

The trade groups became involved at plaintiffs’ counsel’s request for stakeholder input on settlement details. The Guild and AAP previously went through a similar process more than a decade ago during settlement talks in a class action lawsuit over Google’s scanning of books to create an online, searchable database. That deal, however, was focused on future exploitation of authors’ books, and a judge in 2011 denied the settlement as unfair.

Jeffrey Cunard, a lawyer who represented publishers in that case maintained that some form of categorization is needed for the Anthropic deal since examining every contract isn’t feasible.

The case is Bartz v. Anthropic PBC, N.D. Cal., No. 24-cv-05417.