Billion-dollar settlement against SF AI startup Anthropic gets preliminary approval from judge

SAN FRANCISCO (KRON) — A massive, billion-dollar settlement over a copyright class action suit brought by a group of authors against a San Francisco Artificial Intelligence startup was preliminarily approved by a judge Thursday, the Associated Press has confirmed. The potentially landmark $1.5 billion settlement against Anthropic, one of the leading names in SF’s nascent AI industry, was brought by the authors over use of their work in the company’s training of its AI.

In the lawsuit, the authors alleged nearly half a million books had been illegally pirated to train AI chatbots. The settlement will pay authors and publishers about $3,000 for each of the books covered in the agreement, while not applying to future books.

The deal could mark the first settlement in a string of similar lawsuits against leading AI and tech companies including OpenAI, Microsoft and Meta over using copyrighted material to train generative AI.

U.S. District Judge William Alsup, according to Reuters, called the proposed class-action settlement fair during a hearing Thursday. Alsup declined to approve the settlement earlier this month, requesting more details from both sides.

Alsup’s main concern centered on how the claims process will be handled in an effort to ensure everyone eligible knows about it so the authors don’t “get the shaft.” He had set a September 22 deadline for submitting a claims form for him to review before Thursday’s hearing to review the settlement again.

The judge had raised worries about two big groups connected to the case — the Authors Guild and the Association of American Publishers — working “behind the scenes” in ways that could pressure some authors to accept the settlement without fully understanding it.

Attorneys for the authors said in Monday’s filing they believe the settlement will result in a high claims rate, respects existing contracts and is “consistent with due process” and the court’s guidance.

Bestselling thriller novelist Andrea Bartz, who sued Anthropic with two other authors last year, said in a court declaration ahead of the hearing that she strongly supports the settlement and will work to explain its significance to fellow writers.

“Together, authors and publishers are sending a message to AI companies: You are not above the law, and our intellectual property isn’t yours for the taking,” she wrote.

Anthropic, which along with OpenAI is one of SF’s leading AI startups, is the company behind the popular “Claude” chatbot.

The Associated Press contributed to this report.