Anthropic settles $1T copyright lawsuit over AI training data

Anthropic has reached a preliminary settlement in a high-profile copyright lawsuit brought by book authors, avoiding what could have been more than $1 trillion in damages that threatened the company’s survival. The settlement, expected to be finalized September 3, resolves a class action case where authors alleged Anthropic illegally used their works to train AI models by downloading them from “shadow libraries” like LibGen.

The big picture: While a California judge ruled in June that Anthropic’s use of the books constituted “fair use,” he found that the company’s method of acquiring works through piracy sites was illegal, leaving Anthropic vulnerable to massive statutory damages at trial.

The financial stakes: With approximately 7 million works in Anthropic’s training library and statutory damages starting at $750 per infringed work, the company faced potential penalties reaching billions or even exceeding $1 trillion.
• “It’s a stunning turn of events, given how Anthropic was fighting tooth and nail in two courts in this case,” says Edward Lee, a law professor at Santa Clara University.
• “But they had few defenses at trial, given how Judge Alsup ruled. So Anthropic was starting at the risk of statutory damages in ‘doomsday’ amounts.”

What you should know: The case began in 2024 when authors Andrea Bartz, Charles Graeber, and Kirk Wallace Johnson sued Anthropic for allegedly using their copyrighted works without permission to train Claude, the company’s AI assistant.
• Judge William Alsup’s June ruling created a split decision—finding the AI training itself was legal fair use, but the acquisition method through piracy sites violated copyright law.
• The trial was scheduled to begin in December, with most affected authors just beginning to receive notice of their eligibility to participate in the class action.

Author reaction uncertainty: Many writers in the potential class weren’t involved in settlement negotiations, raising questions about acceptance of the terms.
• “The big question is whether there is a significant revolt from within the author class after the settlement terms are unveiled,” says James Grimmelmann, a professor of digital and internet law at Cornell University.
• “That will be a very important barometer of where copyright owner sentiment stands.”

Ongoing legal challenges: Anthropic still faces other major copyright disputes, including a lawsuit from record labels like Universal Music Group alleging illegal use of copyrighted lyrics.
• Plaintiffs recently amended their case to claim Anthropic used BitTorrent to illegally download songs.
• While settlements don’t set legal precedent, this case will be closely watched as dozens of other AI copyright lawsuits continue through the courts.