Chamber Made: The Long Shadow of 'Bartz v. Anthropic'
Settlement in the class action lawsuit unsettles tech-world
You didn’t need a law degree to recognize that the widely publicized settlement in Bartz v. Anthropic might influence the course or outcome of other, similar AI v. Copyright cases, even though the out-of-court agreement does not establish a legally binding precedent. But even those who have a degree probably didn’t anticipate just how spooked tech-world would be by it.
Last week, just before Halloween, the Chamber of Progress, a trade group funded by Apple, Amazon, Google, Nvidia, Midjourney and many other technology giants, wrote to the head of the White House Office of Science and Technology Policy, Michael Kratsios, to urge him to prod President Trump to issue an executive order directing the Justice and Commerce Departments to intervene in legal cases to defend generative AI training as fair use. It also requested that OSTP itself be directed to submit legislation to Congress to “reform the currently coercive and market-skewing statutory damages provisions of the Copyright Act, Digital Millennium Copyright Act, and the Federal Rules of Civil Procedure.”
The Chamber was particularly freaked out by the class action certification in Bartz and the threat of statutory damages in copyright infringement cases.
“Large language model generative AI systems necessarily train on millions of works, many of them copyrighted. These statutory damages provisions invariably make defendant AI developers’ economic exposure an existential risk, particularly if a company is small and young,” the letter said . “Indeed, the magnitude of possible damages is so astronomically large that even established and well-resourced developers cannot make a rational or fact-based economic settlement or licensing calculus, and are thus coerced into settlement. This scenario is not a hypothetical, as the $1.5 billion settlement recently approved by the Court in the Bartz case – the largest in copyright history – makes clear.”
The dominoes have, in fact, begun to fall. Since the settlement in Bartz was announced, Udio has settled a lawsuit brought by Universal Music and Stability AI has settled with Getty Images. While neither case was a class action, the number of works at issue still reached into the tens of millions given the size of the plaintiffs’ catalogs so the threat of staggering damages was present. Stability also reached a major licensing deal with Universal and Perplexity signed up with Getty.
Several plaintiffs in AI cases have also sought to add charges to their complaints regarding defendants’ alleged downloading of pirated works from shadow libraries—a charge that factored heavily in Anthropic’s decision to settle after Judge William Alsup ruled its downloading could not be excused as fair use, even if using the downloaded works to train its models could be. Not all those efforts have been accepted by their respective courts, but in at least one high-profile case, brought by a group of authors against OpenAI, the judge has allowed it to proceed.
Under ordinary circumstances, it might be tempting to dismiss the Chamber of Progess’ letter as so much performative bluster to keep the funders happy. That certainly wouldn’t be unheard of among the armies of industry-funded advocacy groups in and around Washington, DC. But these are anything but ordinary times in the nation’s capital.
The Trump DOJ and Commerce Department have already demonstrated their unheeding fealty to any and all of Trump’s whims. And the White House has made clear, in the America’s AI Action Plan released in July, that sweeping away any impediments to U.S. global supremacy in AI, even self-imposed impediments like copyright law, is a top priority. While courts may, or may not approve intervention by the government in the pending litigation, it’s a sure bet DOJ will try if Trump decrees it. Ditto for the OSTP submitting legislation to get rid of statutory damages.
Many of the Chamber’s funders, moreover, are major backers of Trump’s AI policies, and several, including Apple, Amazon, Google and Coinbase, have already reserved their tables in Trump’s gaudy ballroom-cum-monument to himself now under construction on ground that used to hold the East Wing of the White House. And the rest of the Trump White House is nothing if not a pay-to-play outfit.
Should the proposed legislation actually make its way from OSTP to Capitol Hill, moreover, it is hard to even imagine the scope and ferocity of the battle royale that would ensue. Statutory damages is the most potent weapon in rights holders’ legal arsenal in copyright disputes. The prospect of losing it be viewed as an existential threat and met with commensurate resistance.
On the other side, pretty much anyone who is not a major copyright holder loathes the concept of statutory damages and would leap at the chance to see it eliminated. The tide of money that would flood into Congressional campaign coffers would swamp an aircraft carrier.
Let the games begin.