Artificial Intelligence Giant Anthropic to Pay $1.5 Billion Over Pirated Books

(Patria) - Anthropic will pay at least $1.5 billion to settle a class-action lawsuit in the United States over the alleged use of pirated books to train its artificial intelligence (AI) models, according to court documents filed on Friday, AFP reported.

“This significant settlement far exceeds any other known copyright recovery,” said plaintiffs’ lawyer Justin Nelson. “It is the first of its kind in the AI era.”

The settlement stems from a class-action lawsuit filed by authors Andrea Bartz, Charles Graeber, and Kirk Wallace Johnson, who accused Anthropic of illegally copying their books to train Claude, the company’s AI chatbot that competes with ChatGPT.

In a partial victory for Anthropic, U.S. District Judge William Alsup ruled in June that the company’s training of its AI models Claude with books, whether purchased or pirated, had transformed the works so much that it constituted “fair use” under the law.

“The technology in question was among the most transformative that many of us will see in a lifetime,” Alsup wrote in his 32-page decision, comparing AI training to how humans learn by reading books.

However, Alsup rejected Anthropic’s bid for a blanket protection, ruling that the company’s practice of downloading millions of pirated books to build a permanent digital library was not protected by fair use.

According to the legal filing, the settlement covers approximately 500,000 books, translating to about $3,000 per work, four times the minimum statutory damages under U.S. copyright law.

Under the agreement, Anthropic will destroy the original pirated files and any copies derived from them, although the company retains rights to books it legally purchased and scanned.

“This settlement sends a strong message to the AI industry that there are serious consequences when they pirate authors’ works to train their AI, ripping off those least able to afford it,” said Mary Rasenberger, CEO of the Authors Guild, in a statement supporting the agreement.

The settlement, which requires court approval, comes as AI companies face increasing legal pressure over their training practices.

More lawsuits against firms including OpenAI, Meta, and others are still ongoing, with rights holders claiming that scraping copyrighted content without permission violates intellectual property law.

San Francisco-based Anthropic, known for its Claude chatbot and AI models, positions itself as focused on AI safety and responsible development. The company announced this week that it had raised thirteen billion dollars in a funding round, valuing the AI startup at $183 billion.

The capital will be used to expand capacity, deepen safety research, and support international expansion.

Anthropic competes with generative AI offerings from Google, OpenAI, Meta, and Microsoft in a race expected to attract hundreds of billions of dollars in investment over the next few years.

Anthropic, which is strongly backed by Amazon, was founded in 2021 by former OpenAI executives and has grown rapidly since the initial release of Claude in early 2023, with its annual revenue run rate having quintupled to five billion dollars since the beginning of this year.