Anthropic to Pay $1.5 Billion to Settle Pirated Books Case

In June, a group of authors filed a class action lawsuit against Anthropic for using nearly 7 million pirated books to train its Claude AI models. The case was heading to trial in December but this week, the AI startup agreed to settle the case for at least $1.5 billion plus interest.

“This settlement sends a powerful message to A.I. companies and creators alike that taking copyrighted works from these pirate websites is wrong,” a lawyer representing the authors who filed the lawsuit said.

The settlement is the largest-ever payout in the history of U.S. copyright cases, with Anthropic agreeing to pay $3000 per stolen book to over 500,000 authors. It’s being described as the AI industry’s “Napster moment” because it establishes a precedent for what constitutes infringing on the rights of content creators in the AI era. And that will impact literally every major AI company, including OpenAI, Microsoft, Google, Meta, and Apple, all of which have been accused of stealing books to train their AI models. Yes, even Apple.

In June, Northern District of California Judge William Alsup ruled that Anthropic’s use of copyrighted books would be legal had the company purchased the books. In some cases, Anthropic did purchase books to mill for content. But like the other big AI firms, it also scraped the content from millions of pirated books available online from illicit websites like Library Genesis and Pirate Library Mirror. And so its “fair use” arguments were tossed aside in those cases. Anthropic’s use of stolen content was willful, making it liable for damages of up to $150,000 per book. And so Anthropic said in a filing that it was under “inordinate pressure” to settle. Had this gone to trial, Anthropic would have been forced into bankruptcy.

“In June, the District Court issued a landmark ruling on A.I. development and copyright law, finding that Anthropic’s approach to training A.I. models constitutes fair use,” Anthropic deputy general counsel Aparna Sridhar said, referring to the books the company had paid for. “Today’s settlement, if approved, will resolve the plaintiffs’ remaining legacy claims. We remain committed to developing safe A.I. systems that help people and organizations extend their capabilities, advance scientific discovery and solve complex problems.”

Under the terms of the settlement, Anthropic has agreed to delete the pirated works it downloaded and stored. Others who believe Anthropic stole their content will still have the right to sue the company for damages.

Judge Alsup will review the settlement before deciding whether to approve it. But Anthropic would have saved over $1.3 billion if it had just bought the damn books. Granted, it can probably afford the cost: The company was recently valued at $183 billion after raising $13 billion in investment funds and it claims to have a “$5 billion in run-rate revenues.”