Artificial intelligence company Anthropic has reached a settlement with a group of authors in a copyright infringement lawsuit that could have exposed the company to billions in damages.
The settlement, announced Tuesday in federal court filings, resolves a class-action lawsuit brought by authors Andrea Bartz, Charles Graebe, and Kirk Wallace Johnson, who accused the San Francisco-based company of illegally downloading millions of copyrighted books to train its Claude chatbot.
Read: Authors Sue Anthropic for Alleged ‘Large-Scale Theft’ of Copyrighted Books
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“This historic settlement will benefit all class members,” said Justin Nelson, an attorney for the authors, though financial terms were not disclosed. Legal experts estimate the settlement could reach hundreds of millions of dollars.
The case centered on Anthropic’s use of approximately 7 million books downloaded from pirate websites, including Library Genesis and Pirate Library Mirror. While US District Judge William Alsup ruled in June that training AI models on legally obtained copyrighted works constitutes “fair use,” he found that Anthropic’s acquisition of pirated books violated copyright law.
One expert estimated potential damages could have topped $900 billion if a jury found willful infringement. The company, backed by Amazon (Nasdaq: AMZN) and Alphabet (Nasdaq: GOOG), expects to generate no more than $5 billion in revenue this year while operating at a loss.
Anthropic still faces ongoing copyright challenges. Universal Music Group and other publishers are pursuing a separate lawsuit over the alleged unauthorized use of song lyrics, while Reddit has sued the company for allegedly scraping content from its platform without permission.
The case was scheduled to go to trial in December and represented the first certified class action against an AI company over copyrighted materials. The resolution could influence how similar disputes are resolved and may push the industry toward licensing deals with content creators.
Anthropic declined to comment on the settlement terms, which are expected to be finalized by September 5.
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