Judge grants preliminary approval of $1.5B Anthropic AI copyright case

SAN FRANCISCO -- Senior U.S. District Judge William Alsup granted preliminary approval of a $1.5 billion settlement authors and publishers arranged with Anthropic PBC on Thursday after getting assurances from plaintiffs' counsel about his previous misgivings.

The judge, who blasted the settlement's terms during a hearing 17 days ago and sent attorneys a long list of questions, said Thursday he was satisfied with their answers during a brief hearing.

"I do want to say this is a fair settlement," Alsup told attorneys and class representatives. "At least it meets the preliminary approval standard." Bartz et al. v. Anthropic PBC, 24-cv-05417 (N.D. Cal., filed Aug. 19, 2024).

He seemed to agree with the praise of the deal by Susman Godfrey LLP partner Justin A. Nelson, who represents the class and described the agreement as "the largest copyright recovery of all time."

"This provides finality," Nelson told Alsup. "It provides certainty. ... We believe it is a home run settlement for all class members."

Nelson pointed out that the case, accusing Anthropic of copyright infringement for using pirated works to train its large language models (LLMs), was "in a new area of law" that might be vulnerable on appeal.

The settlement, if it receives final approval, could serve as a model for similar class actions that have been filed by creators against several AI companies over alleged theft of their works for training LLMs.

Daralyn J. Durie, a partner with Morrison & Foerster LLP who represents Anthropic, expressed support for the deal.

Under terms of the agreement, reached last month, Anthropic would pay roughly $3,000 for each of the 482,460 books it downloaded from pirate sites while destroying the original and any other files.

The settlement proposed a default 50/50 split between authors and publishers on the claim form for most of the works. Alsup still expressed concern during Thursday's hearing about how that might work if one of the parties, such as a publisher of 400 books, opts out.

In one of his questions, the judge asked under what circumstances a "side payment" might be made to induce a class member who has opted out to request re-inclusion. The plaintiffs' attorneys wrote that they were not aware of any publisher that intends to use the re-inclusion process to extract such payments.

Alsup emphasized that there should be "no side payments, no side agreements. They would be getting something better than the rest of the class, and that would be wrong."

The judge's preliminary approval of the agreement averts a December trial in the case.

Alsup said the plan of distribution to authors and publishers was "complicated," but said he had confidence in the attorneys to work it out.

The plaintiffs were also represented by Lieff Cabraser Heimann & Bernstein LLP, Oppenheim & Zebrak LLP, Cowan DeBaets Abrahams & Sheppard LLP and Edelson PC.

Anthropic was also represented by Cooley LLP, Arnold & Porter Kaye Scholer LLP and Lex Lumina LLP.

"We have some of the best lawyers in America in this courtroom and I think you can do it," Alsup said.

Alsup, who took senior status in 2021, said during Thursday's hearing that he "hopes to step off the bench by the end of the year," telling the lawyers they will have to "educate the new judge."