Leading AI startup Anthropic, which just raised $13 billion earlier this month at a $183 billion valuation, has agreed to settle a class action lawsuit with a group of authors and publishers for at least $1.5 billion.
On Friday, the startup proposed paying about $3,000 per book to 500,000 authors. It would be the largest copyright payout in history, if approved, per The New York Times.
The case was filed last year by authors Andrea Bartz, Charles Graeber, and Kirk Wallace Johnson, who alleged in the class action suit Bartz v. Anthropic that Anthropic had illegally used their work to train its AI models, downloading copyrighted books for free from pirated datasets. The ruling could also influence the more than 40 other copyright lawsuits filed against AI companies across the country.
“This settlement sends a powerful message to AI companies and creators alike that taking copyrighted works from these pirate websites is wrong,” Justin Nelson, the plaintiffs’ attorney, told CNBC.
The settlement follows a ruling in June on the case from Judge William Alsup of the U.S. District Court for the Northern District of California. The judge ruled that Anthropic’s AI training with copyrighted books was “fair use” because it was “transformative” and turned the books into something new.
“Like any reader aspiring to be a writer, Anthropic’s [AI] trained upon works not to race ahead and replicate or supplant them — but to turn a hard corner and create something different,” Alsup wrote in the ruling.
However, Alsup also determined that Anthropic illegally downloaded countless books from companies like Pirate Library Mirror and Library Genesis to train its AI models. The judge ruled that Anthropic’s executives were aware that these online libraries contained pirated material. Anthropic decided to “steal” the books instead of buying them from reputable sellers, he determined.
“Anthropic had no entitlement to use pirated copies for its central library,” the ruling reads.
Anthropic CEO Dario Amodei. Photographer: Stefan Wermuth/Bloomberg via Getty Images
The authors and Anthropic chose to settle after the judge’s ruling. As part of the proposed settlement, Anthropic agreed to remove pirated works from its database and stated that it did not use pirated books to develop AI that it has now made available to the public.
If approved, the settlement “will resolve the plaintiffs’ remaining legacy claims,” Anthropic’s Deputy General Counsel, Aparna Sridhar, said in a statement, per NYT.
“We remain committed to developing safe AI systems that help people and organizations extend their capabilities, advance scientific discovery, and solve complex problems,” she added.
Though the settlement amount is record-breaking, Anthropic can likely afford it. The startup has raised more than $27 billion since its inception in 2021.
Related: Anthropic Is Now One of the Most Valuable Startups of All Time: ‘Exponential Growth’
According to the June ruling, Anthropic made over one billion dollars in annual revenue last year from its AI chatbot Claude, which asks for $20 to $100 per month for paid subscriptions and also offers a free tier.
Anthropic faces another legal battle against Reddit. In June, Reddit sued Anthropic for using the site for training data without permission, marking the first time a big tech company has filed a complaint against an AI startup over the material it uses to train AI models.
Leading AI startup Anthropic, which just raised $13 billion earlier this month at a $183 billion valuation, has agreed to settle a class action lawsuit with a group of authors and publishers for at least $1.5 billion.
On Friday, the startup proposed paying about $3,000 per book to 500,000 authors. It would be the largest copyright payout in history, if approved, per The New York Times.
The case was filed last year by authors Andrea Bartz, Charles Graeber, and Kirk Wallace Johnson, who alleged in the class action suit Bartz v. Anthropic that Anthropic had illegally used their work to train its AI models, downloading copyrighted books for free from pirated datasets. The ruling could also influence the more than 40 other copyright lawsuits filed against AI companies across the country.
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