Reed Smith In-depth

Key takeaways

  • Anthropic and Meta decisions both suggest fair use can apply to AI training but they diverged on two key issues: the impact of using pirated content in training and whether AI output capabilities should factor into market harm analysis – both of which will be central in future AI litigation.
  • The rulings do not guarantee fair use for all AI training or entitle rights holders to an automatic right to licensing fees, and further guidance from higher courts or legislation is needed, especially as other industries like music may better show market harm.
  • For rights holders, the ability to demonstrate market harm will be essential and implementing “no train” clauses in licenses should be strongly considered. For AI providers, the use of pirated copies in data sets for training may significantly increase the risk of infringement liability.

Autores: Joshua Love Nick Breen Cole Rushworth Oliver Hogg

Background

Artificial intelligence models, particularly large language models (LLMs), are trained on vast quantities of textual content, much of which is protected by copyright. This has raised critical legal questions about whether and when the use of such material for AI training requires permission from the copyright owner under U.S. copyright law. Two recent rulings in the U.S. District Court for the Northern District of California – Bartz v. Anthropic and Kadrey v. Meta – offer the first significant judicial guidance on how courts will look to apply the fair use doctrine to AI training practices.

Fair use is an affirmative defense to copyright infringement under U.S. copyright law (17 U.S.C. § 107) that permits limited use of copyrighted material without permission from the rights holder, typically for purposes such as criticism, comment, news reporting, teaching, scholarship, or research. Courts evaluate the applicability of the fair use defense by balancing four factors: the purpose and character of the use (including whether it is commercial and whether it is “transformative” – i.e., adds new expression or meaning), the nature of the original work, the amount and substantiality of the portion used, and the effect of the use on the market for the original work. No single factor is determinative, though courts often treat market harm as the most important.

Bartz v. Anthropic

In a recent ruling (June 24, 2025), a California court delivered a landmark judgment in a copyright dispute between several literary authors and Anthropic, an AI company. The case centered on Anthropic’s practice of acquiring millions of books, some by purchasing, scanning, and destroying print editions, others by downloading pirated digital copies from unauthorized online sources, to create a central digital library and to train its LLMs. The court’s analysis under the U.S. fair use doctrine (Section 107 of the Copyright Act) was nuanced and highly instructive for both AI developers and rights holders.