Err neg --- judges will be sympathetic to OpenAI.

Timothy Lee and James Grimmelmann, “Why The New York Times might win its copyright lawsuit against OpenAI,” 02-20-2024, https://arstechnica.com/tech-policy/2024/02/why-the-new-york-times-might-win-its-copyright-lawsuit-against-openai/

Judges may be sympathetic to OpenAI

So far we’ve focused on the legal vulnerabilities of AI companies. But the defendants could have one big factor working in their favor: judges reluctant to shut down an innovative and useful service with tens of millions of users.

Judicial opinions are framed as technical legal analysis, but they are often driven by a judge’s gut feeling about whether a defendant has created a useful service or is merely seeking to profit from the creative efforts of others.

For example, the judges who heard the Google case clearly understood the value of a full-text search engine for books. The Second Circuit praised it as a transformative service that “augments public knowledge.”

Judge Rakoff, in contrast, had few positive things to say about MP3.com. He didn’t seem to feel that MP3.com had created anything particularly valuable, writing that MP3.com “simply repackages those recordings to facilitate their transmission through another medium.”

“The judge was, to say the least, unsympathetic to us,” Michael Robertson told us. Judge Rakoff saw Robertson as a “young, punk upstart tech CEO.”

A judge who feels a product is valuable will look for ways to allow it to stay in business. On the other hand, a judge who feels a product unfairly profits from the creative work of others can be brutal.

After rejecting MP3.com’s fair use argument, Judge Rakoff brought down the hammer, ordering the company to pay $25,000 for each of the thousands of CDs it had copied to its servers. Facing hundreds of millions of dollars in potential damages, MP3.com was forced to settle with one record label for $53.4 million. The company never recovered and was acquired less than a year later for a bargain price.

In theory, the New York Times lawsuit could end in a similar way. The Times claims OpenAI used millions of Times articles to train GPT-4. At $25,000 per article, OpenAI and Microsoft could owe billions of dollars to the New York Times alone.

But there is an important way that OpenAI differs from MP3.com. It already has tens of millions of users and passionate defenders ready to explain how its products help them be more creative and productive.

A ruling that shut down ChatGPT completely would disrupt the lives of its users and could undermine America’s leading position in AI technology. Judges do not like to make waves and will be reluctant to do that.

So, judges could be motivated to view OpenAI’s legal arguments more sympathetically—especially the argument that generative AI is a transformative use. And even if they do find that AI training is copyright infringement, they have off-ramps to avoid putting AI companies out of business. Courts might award much smaller damages, or they might press the parties to settle the lawsuit before reaching a final decision.

And this is another reason why those Italian plumber images may be important: Ultimately, the fate of these companies may depend on whether judges feel that the companies have made a good-faith effort to color inside the lines.