Anthropic AI Proposed a Settlement of $1.5 Billion for Pirated Books; Judge Believes a More Significant Resolution is Necessary

In a surprising turn of events, U.S. District Judge William Alsup has rejected a $1.5 billion settlement between AI company Anthropic and hundreds of thousands of authors. The rejection comes less than a week after the settlement was announced on September 5th.

The settlement was initially hailed as a monumental victory in a wave of lawsuits against tech giants building generative AI. Anthropic, the maker of the chatbot Claude, was accused of mass-scale copyright infringement by a group of authors, who argued that the company had used their life's work without permission or payment.

However, Judge Alsup viewed the settlement as a "half-baked plan" being forced onto authors. He demanded a finalized list of the authors involved in the case and a clear claim form for them. The judge also ordered Anthropic to provide a final list of the nearly half-million books involved in the case.

Under the proposed settlement, nearly 500,000 authors stood to receive about $3,000 per book that was ingested by Claude. But Judge Alsup expressed concern that the authors might be left behind in the settlement process. He also ordered the lawyers to design a claim form that would give every copyright holder for a specific work the explicit choice to opt in or opt out.

The rejection of the settlement raises the bar for what constitutes a "fair" deal in the age of AI, particularly regarding how authors should be compensated when AI companies use their work without approval. The Anthropic settlement, if approved, would set a precedent affecting the AI industry for years to come.

Anthropic faces a potentially ruinous financial liability due to statutory damages reaching up to $150,000 per infringed work. The ruling by Judge William Alsup on the preliminary status of the settlement agreement between the AI company Anthropic and the authors was published on November 30, 2023. Judge Alsup has given the lawyers until October 10 to present the claim form and notification plan for his approval, and until September 15 to submit the final list of works. The Anthropic settlement doesn't provide Anthropic with complete protection from future lawsuits.

Anthropic AI Proposed a Settlement of $1.5 Billion for Pirated Books; Judge Believes a More Significant Resolution is Necessary