Anthropic Agrees to Record $1.5 Billion Settlement in Authors’ Copyright Lawsuit

Key takeaways:

The proposed deal marks the first settlement in a string of lawsuits against tech companies, including OpenAI, Microsoft, and Meta Platforms, over their use of copyrighted material to train generative AI systems, and represents what attorneys called "the largest publicly reported copyright recovery in history, larger than any other copyright class action settlement or any individual copyright case litigated to final judgment".

Court ruling creates legal precedent

The settlement follows a pivotal June ruling by U.S. District Judge William Alsup that split the case into two parts. Alsup ruled that Anthropic's use of books to train its AI models was "exceedingly transformative" and constituted fair use under copyright law. However, the judge found that the company violated authors' rights by saving more than 7 million pirated books to a "central library" that would not necessarily be used for training purposes.

"The training use was a fair use," Judge Alsup wrote. "The use of the books at issue to train Claude and its precursors was exceedingly transformative". But he ordered the piracy allegations to proceed to trial, scheduled for December.

The lawsuit was originally filed by three authors: thriller novelist Andrea Bartz and nonfiction writers Charles Graeber and Kirk Wallace Johnson, who later represented a broader class of writers and publishers.

Financial impact and company response

The settlement amounts to about $3,000 per book for an estimated 500,000 works, with Anthropic agreeing to make four payments starting with $300 million due within five business days of court approval. If the final list exceeds 500,000 works, Anthropic will pay an additional $3,000 per work above that threshold.

Anthropic's deputy general counsel, Aparna Sridhar, said in a statement: "In June, the District Court issued a landmark ruling on AI development and copyright law, finding that Anthropic's approach to training AI models constitutes fair use. Today's settlement, if approved, will resolve the plaintiffs' remaining legacy claims".

The company appears well-positioned to handle the substantial payout. Earlier this week, Anthropic announced it had raised $13 billion in a Series F funding round that valued the company at $183 billion, and the company has grown its revenue run rate from $1 billion to $5 billion in just eight months this year.

Broader implications for the AI industry

Legal experts say the settlement could reshape how AI companies approach training data acquisition. Justin Nelson of Susman Godfrey, representing the plaintiffs, told The Stack: "This landmark settlement far surpasses any other known copyright recovery". Nelson also stated: "This settlement sends a powerful message to AI companies and creators alike that taking copyrighted works from these pirate websites is wrong".

Keith Kupferschmid, president and CEO of the Copyright Alliance, noted: "While the settlement amount is very significant and represents a clear victory for the publishers and authors in the class, it also proves what we have been saying all along— that AI companies can afford to compensate copyright owners for their works without it undermining their ability to continue to innovate and compete".

The case involved books obtained from controversial sources, including Library Genesis (LibGen) and Pirate Library Mirror (PiLiMi) databases, which distribute copyrighted works without authorization. As part of the settlement, Anthropic has agreed to destroy the datasets containing the allegedly pirated material.

A U.S. district court is scheduled to consider whether to approve the settlement next week, in what many view as a watershed moment for the relationship between AI companies and content creators. The case could influence numerous other pending lawsuits, including ongoing disputes involving OpenAI, Meta, and other major AI developers.

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