Anthropic’s AI Lawsuit Settlement May Not Go Through, But It Exposes A Truth About Copyright

from the copyright-is-a-mess dept

The latest generation of AI systems, based on large language models (LLMs), is perceived as the biggest threat in decades to the established copyright order. The scale of that threat can be gauged by the flurry of AI lawsuits that publishers and others have launched against generative AI companies. Since the first of these, reported here on Walled Culture back in January 2023, there have been dozens of others, catalogued on Wikipedia, and represented visually on the Chat GPT is Eating the World site. One is against Anthropic. Three authors alleged in a class-action lawsuit that the company had used unauthorized copies of their works to train its AI-powered chatbot, Claude:

Anthropic has built a multibillion-dollar business by stealing hundreds of thousands of copyrighted books. Rather than obtaining permission and paying a fair price for the creations it exploits, Anthropic pirated them.

In June of this year, Anthropic won a partial victory. The federal judge considering the case ruled that the training of the company’s system on legally purchased copies of books was fair use, and did not need the authors’ permission. However, Judge Alsup also ruled that Anthropic should face trial for downloading millions of books from sites such as Library Genesis (LibGen) and the Pirate Library Mirror (PiLiMi), both of which held unauthorized copies of works. The potential penalty was huge. Under US law, the company might have to pay damages of up to $150,000 per work. With millions of books allegedly downloaded from the online sites, that could amount to many billions of dollars, even a trillion dollars. Faced with certain ruin if such a penalty were handed down, Anthropic had a strong incentive to settle out of court. On 5 September, the parties proposed just such a settlement. The New York Times had the following summary:

In a landmark settlement, Anthropic, a leading artificial intelligence company, has agreed to pay $1.5 billion to a group of authors and publishers after a judge ruled it had illegally downloaded and stored millions of copyrighted books.

The settlement is the largest payout in the history of U.S. copyright cases. Anthropic will pay $3,000 per work to 500,000 authors.

The agreement is a turning point in a continuing battle between A.I. companies and copyright holders that spans more than 40 lawsuits across the country. Experts say the agreement could pave the way for more tech companies to pay rights holders through court decisions and settlements or through licensing fees.

Some saw the $3,000 per work figure as setting a benchmark for future deals that other AI companies would need to follow in order to settle similar lawsuits (although a settlement would not set a legal precedent). Music publishers were hopeful they could point to the settlement with writers in order to win a similar deal for musicians. Others worried that the overall size of the settlement – $1.5 billion – meant that only the largest companies could afford to pay such sums, shutting out smaller startups and limiting competition in this nascent market. Indeed, big as the $1.5 billion settlement was, it paled in comparison to the $13 billion that Anthropic has recently raised, to say nothing of its nominal $183 billion valuation. But a post by Dave Hansen on the Authors Alliance blog puts all these breathless predictions and impressive numbers into perspective. For example, he points out:

The settlement isn’t a settlement with “authors.” Or at least not just authors. The moment Judge Alsup defined and certified the class in this case to include any rightsholder with an interest in the exclusive copyright right of reproduction in a LibGen/PilLiMi book downloaded by Anthropic, this case became at least as important for publishers as authors.

Crucially, that means only a portion of that $1.5 billion would go to the actual authors. Some of it would go to the usual suspects: the plaintiff’s lawyers. But there are other costs that must be covered too, and Hansen writes: “it’s easy to see that about a quarter to a third of this settlement is being used up before rightsholders see anything.” And then there is the question of who exactly those “rightsholders” are: the writers or the publishers? Probably both in many cases, with a variable split depending on the contract they signed.

Even before those complex questions are addressed, there is a huge assumption that the proposed settlement will go through in its present form. That’s by no means assured. As Bloomberg Law reported, Judge Alsup said he was worried that lawyers were striking a deal behind the scenes that will be forced “down the throat of authors,” and that the agreement is “nowhere close to complete.”

Judge William Alsup at the hearing said the motion to approve the deal was denied without prejudice, but in a minute order after the hearing said approval is postponed pending submission of further clarifying information.

During the first hearing since the deal was announced on Sept. 5, Alsup said he felt “misled” and needs to see more information about the claim process for class members.

Another important point underlined by Dave Hansen on the Authors Alliance blog is that even if the settlement goes through, it doesn’t really help to resolve any of the larger copyright issues raised by the new LLMs:

The settlement isn’t far-reaching. While the payment is record-setting for a copyright class action ($1.5 billion), the settlement terms are pretty narrow in scope. Anthropic simply gets a release from liability for past conduct – namely, use of the LibGen and PiLiMi datasets. It is therefore unlike the proposed settlement in the Google Books Settlement that would have created a novel licensing scheme for a wide variety of future uses

The Google Books Settlement is discussed in Walled Culture the book (free digital versions available), as is another notable moment in copyright history. This concerns the fate of Jammie Thomas, a single mother of two. In 2007, she was found liable for $222,000 in damages for sharing twenty-four songs on the P2P service Kazaa. The judge, ordering a new trial for Thomas, called “the award of hundreds of thousands of dollars in damages unprecedented and oppressive”, and took the opportunity to “implore Congress to amend the Copyright Act to address liability and damages in peer-to-peer network cases such as the one currently before this Court.” On retrial, Thomas was found liable for even more: $1.92 million.

It is instructive to compare that $1.92 million fine for sharing 24 songs – $80,000 per work – with the $1,500 per work that Anthropic is now offering to pay. This confirms once more that when it comes to copyright and its enforcement, there is one law for the rich corporations, and another law for the rest of us.

Follow me @glynmoody on Mastodon and on Bluesky. Originally posted to WalledCulture.

Filed Under: ai, copyright, fair use, settlement, statutory damages, william alsup

Companies: anthropic