$1.5B to be Paid by Anthropic AI to Book Authors it Pirated, Infringed

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Welcome once again to Leato's law.
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Here's Steve Leato.
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Edward sent me notes to Steve, check out
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this story. As an author, you might
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appreciate it. And he is correct. A
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company called Anthropic. I could be
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mispronouncing it, but I couldn't find a
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pronouncer on the internet or anthropic
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to pay authors $1.5 billion to settle a
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lawsuit over pirated books used to train
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AI chatbots. So Matt O'Brien wrote this,
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the Associated Press, but the company
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has agreed to pay $ 1.5 billion to
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settle a class action lawsuit by book
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authors who say the company took pirated
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copies of their works to train its
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chatbot. Interestingly though, the court
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did not say that they shouldn't have
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used the material to train the chatbots,
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but the problem is how they acquired the
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material. And so that's what this whole
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thing turns on. The landmark settlement,
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if approved by a judge, could mark a
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turning point in legal battles between
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AI companies and writers and visual
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artists and other creative professionals
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who accuse them of copyright
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infringement for using all that material
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without permission. Companies agreed to
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pay authors or publishers about $3,000
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for each of an estimated half a million
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books covered by the settlement. So, the
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ne lawyer for the author says, "As best
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as we can tell, it's the largest
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copyright recovery
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ever. It's the first of its kind in the
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AI era." Now, three authors sued last
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year. They now represent a broader group
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of writers and publishers whose books
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were downloaded by the company to train
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its chatbot. A federal judge dealt the
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case a mixed ruling back in June,
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finding that training the AI chat bots
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on the copyrighted books wasn't illegal
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by itself, but that the company had
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wrongfully acquired millions of books
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through pirate websites, and that was
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wrong. So, if the company had not
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settled, experts say losing the case
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after a scheduled December trial could
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have cost the company even more money.
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So, a legal analyst says, "We were
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looking at a strong possibility of
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multiple billions of dollars, enough to
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potentially or even put the
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company out of business." A uh district
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judge in San Francisco scheduled a
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Monday hearing to review the settlement
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terms. The company said in a statement
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that the settlement, if approved, will
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resolve the remaining legacy claims will
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resolve the claims. We remain committed
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to developing safe AI systems that help
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people and organizations extend their
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capabilities, advance scientific
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discovery, and solve complex problems,
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says the company's deputy general
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counsel. As part of the settlement, the
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company's also agreed to destroy the
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original book files that it downloaded.
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So books are an important source of data
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that are needed to build the AI large
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language models behind chat bots like
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claude by this company or chat GPT by
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open AI. And so what they've done is
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they've downloaded these you know data
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sets which is billions of words but of
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course the order in which those words
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appear in these books is quite
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important. So the ruling in June found
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that this company had downloaded more
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than 7 million digitized books that it
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knew had been pirated. It started with
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nearly 200,000 from an online library
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assembled by AI researchers outside of
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OpenAI to match the vast collections on
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which chat GPT was trained. Company
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later took at least 5 million copies
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from a pirate website and two million
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from another. That's according to the
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judge. The author's guild told its
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thousands of members last month that it
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expected damages will be minimally $750
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per work or could be much higher if it
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went to trial. Now,
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the settlement's higher award of $3,000
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per work likely reflects a smaller pool
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of affected books because there are
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probably duplicates among those millions
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of books and also those without
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copyright. Now, now I've written a whole
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bunch of books and I assure you they are
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copyrighted.
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Um, recently the CEO of the author's
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guild called the settlement an excellent
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result for authors, publishers, and
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rights holders generally, sending a
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strong message to the AI industry that
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there are serious consequences when they
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pirate authors work to train their AI,
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robbing those least able to afford it.
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Uh, meanwhile, the Danish Rights
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Alliance, which successfully fought to
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take down one of those shadow libraries,
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said Friday that the settlement would be
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of little help to European writers and
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publishers whose works aren't registered
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with the US Copyright Office. So, this
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is going to apply to, in essence,
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American authors. On the one hand, it's
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comforting to see that compiling AI
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training data sets by downloading
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millions of books from known illegal
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file sharing sites comes at a price,
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says the group's head of content
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protection enforcement. On the other
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hand, it fits a tech industry playbook
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to grow a business first and later pay a
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relatively small fine compared to the
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size of business for breaking the rules.
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You know, move fast, break rules. So, it
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is my understanding these companies see
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a settlement like this one as a price of
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conducting business in a fiercely
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competitive space. Now, the privately
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held company we're talking about was
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founded in 2021.
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uh earlier this week put its value at
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$183 billion after raising another $13
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billion in investments. And so
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the um $1.5 billion uh is that's a lot
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of money to you or me, but with that
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kind of money behind them, if it's just
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the cost of doing business, they go,
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"Okay, fine. We we we've got our
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language models now. We don't we don't
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we we're good. We're good. We'll pay the
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1.5 and we'll move on. So the real
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question I have is I've written
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more than 10 books.
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I wonder if any of them got swept up in
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this because if they did, I could get
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some money. And the interesting thing is
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I heard about this case, but I never
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heard about it in the sense that as far
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as I know, I never got notified. And of
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course there are class actions out there
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where if this was a typical class action
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and as a member of the class I might not
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have heard anything yet but I'll have to
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I'll have to look into that. But it's an
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interesting question and so I've known
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that some of my books um are out there
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as ebooks and once they show up out
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there as an ebook then they wind up on
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these pirated sites. I've had other
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books of mine that were never put into
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ebook form. So, you know, uh you know,
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that that wouldn't be a concern, I don't
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think. But I'll have to take a look at
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that and see. So, it's it's it's wild
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because the settlement amount is so
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large, $1.5 billion. And we've often
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talked jokingly about class actions
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where the attorneys will get, you know,
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$79 million, and each member of the
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class gets three cents and a coupon for
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a free soft drink at Big Boy. And um
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makes a lot of sense unless Big Boy is
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not involved in the case. However,
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um here obviously
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it sounds like enough money where I'd go
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cash the check. Um I think I've actually
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gotten some class action settlement
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checks I didn't bother to cash cuz they
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send you a postcard and when you realize
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the check you oh 48 cents do I really
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drag that to the bank and deposit it?
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People are going to go, "Steve, you
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could deposit it electronically." Not
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not back when I got that. It's been a
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while. But I digress. So, if I got a
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check for a couple hundred bucks,
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certainly certainly I would not only
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cash it and deposit it. I would do a
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video about it. So, we'll see if that
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happens. I will keep my eyes peeled. I
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will also do some research. But again,
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it's a company called Anthropic or
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Anthropic. I don't know. And I looked it
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up and according to Wikipedia, their
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actual logo doesn't use an I between the
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P and the C, but they use a a slash.
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I believe it's called a vergul or a
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virtual. But would that be anthropic or
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anthrop? I don't know. I don't know.
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It's a funny thing about a company name.
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It it it should be pronouncable. But
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again, Matt O'Brien wrote that the
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Associated Press. Edward sent me. Thanks
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a lot. Anthropic to pay authors $1.5
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billion to settle lawsuit over pirated
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books used to train AI chatbots. I will
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go do research and see if I'm in the
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class. Questions or comments, put them
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below. Always talk to you later.
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Bye-bye.
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Thank you for watching Leato's Law.