Michael S. Levine, Geoffrey B. Fehling, Armin Ghiam, Madalyn "Mady" Moore of Hunton Andrews Kurth - Publications, The National Law Review; Insuring Intellectual Property – Examining AI and Fair Use
"The frequency of lawsuits involving the development and deployment of AI technologies is increasing by the day. Recent lawsuits seeking to hold companies directly and secondarily liable for “joint enterprises” based on use (or alleged misuse) of copyrighted works for training AI models serve as important reminders about the protections that intellectual property (IP) insurance can offer to cover the risks associated with copyright infringement claims.
Recently, a California federal district court ruled that it was “fair use” for an AI software company to use copyrighted books to train its large language models (LLMs). However, the court also found the company’s unauthorized possession of over seven million pirated books that it downloaded from the internet (apparently for free) amounted to copyright infringement independent from whether the books were ultimately used to train the LLMs. In contrast, where the company purchased books before scanning them into digital files, the use was a permissible “fair use.”
The court’s order in Bartz et al. v. Anthropic PBC, No. 3:24-cv-05417 (N.D. Cal. June 23, 2025), highlights the nuanced permissible use of copyrighted training data and underscores why policyholders engaged in the use of copyrighted material should acquire and maintain robust IP insurance that will reliably respond to claims of alleged infringement."
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