Business
Column: OpenAI just scored a huge victory in a copyright case … or did it?
The snap judgment among legal experts was that a federal judge’s dismissal on Nov. 7 of a copyright infringement lawsuit against OpenAI, the leader in advanced chatbots, will short-circuit an ever-growing effort by artists and writers to keep AI firms from stealing their content.
There’s no question that the ruling handed down Thursday by Judge Colleen McMahon in New York landed with a thud among lawyers trying to bring such cases.
McMahon went beyond merely dismissing the lawsuit brought against OpenAI by Raw Story Media, the owner of progressive news websites. She undermined the basic argument that content creators have made against AI firms: that the process of feeding their AI models data indiscriminately “scraped” from the internet inevitably involves using copyrighted content without permission.
I don’t put a lot of stock in anyone who tells you how these cases are going to turn out.
— Copyright expert Aaron Moss
McMahon’s ruling, based on a Supreme Court decision in an unrelated case, “could leave AI copyright claims on shaky ground,” wrote Los Angeles intellectual property lawyer Aaron Moss on his website. The judge not only dismissed Raw Story’s case; she implied that no copyright holder might be able to show enough harm from AI scraping to win an infringement case.
That’s because the amount of content fed to AI bots such as OpenAI’s ChatGPT to “train” them is so immense that it’s almost impossible to pinpoint any particular content that has been infringed when the bot spits out an answer to a user’s query.
“Given the quantity of information,” McMahon asserted, “the likelihood that ChatGPT would output plagiarized content from one of [Raw Story’s] articles seems remote.”
McMahon’s ruling may also undermine what has been a growing trend toward the licensing of copyrighted content by AI developers — in part to forestall copyright infringement claims. Dow Jones, the parent of the Wall Street Journal, reached a licensing deal with OpenAI in May that could be worth more than $250 million over five years. That followed multimillion-dollar licensing deals OpenAI reached with the Axel Springer, the owner of Business Insider and Politico; the Financial Times; and the Associated Press.
“This court is allowing this thriving, lucrative market for licensed content for AI training to be taken away from Raw Story Media,” Peter Csathy, chairman of Creative Media, a Los Angeles entertainment and media marketing and consulting firm, told me.
That may have happened because Raw Story didn’t make much of that market’s potential in its lawsuit. In its complaint it mentioned the licensing deals OpenAI reached with the Associated Press and Axel Springer, but noted only that the AI firm has “offered no compensation” to Raw Story.
For all that, the full import of McMahon’s decision is anything but clear. That’s because the case brings together two muddy legal regimes: copyright law, which is renowned for its craziness and confusion; and AI law, which may be years away from coalescing into coherence.
At least 12 lawsuits against AI developers alleging copyright violations are currently wending their way through the federal courts — with plaintiffs including the publishers of Mother Jones, the Wall Street Journal and the New York Times; the music recording industry; and writers Michael Chabon and Sarah Silverman.
Intermediate court rulings in these cases contradict each other and raise issues that haven’t been seen before even in high-tech intellectual property law.
Judges have struggled even to define how copyright infringement principles apply to technology that doesn’t output exact copies of copyrighted works but “mimics” them — rather like how the beverage machine in Douglas Adams’ “Hitchhiker’s Guide to the Galaxy” delivered “a cupful of liquid that was almost, but not quite, entirely unlike tea.”
All those cases are still in their early stages. “I don’t put a lot of stock in anyone who tells you how these cases are going to turn out,” Moss says.
Before wading into the legal morass these lawsuits are attempting to navigate, let’s take a quick look at how the technology is developed and why copyright has become an issue.
The models that are in the forefront of artificial intelligence research and development just now don’t think for themselves. They’re repositories of billions of articles, software lines and music or art made by humans. When asked a question, they ply through their database and try to synthesize from it the most probable answer. Often they get it right; often they get it wrong.
Sometimes they’re confused enough to output obvious errors, as Apple researchers found when asking the models to solve math problems written in plain English. Sometimes they show that they don’t know what they don’t know, and fill in the blanks in their knowledge with fabrications — or as AI developers call them, “hallucinations.”
As McMahon observed, the sheer volume of materials the bots draw from and the synthesizing process make it unlikely that any answer will replicate any specific content exactly.
That has been an obstacle for some of the plaintiffs in the copyright cases. Most of those claiming their written content has been infringed assert chiefly that the databases known to have been fed to some AI models are known to include their books or other writing. (At least one of the content repositories used by some AI developers includes three of my own books, but I’m not a party to any of the lawsuits.)
In its lawsuit, the New York Times cites text output by OpenAI’s ChatGPT-4 that reproduces portions of its articles verbatim, without credit or permission. (Microsoft, named as a defendant as an investor in OpenAI and a user of its technology, replied that the New York Times had effectively “coaxed” the chatbot to reproduce its texts by artfully framing its queries to elicit infringing answers.)
That brings us back to Raw Story Media’s lawsuit. The company, which operates the Raw Story and AlterNet news sites, didn’t fashion its claim as a copyright infringement complaint. Instead, it asserted that OpenAI had deliberately removed author, title and copyright labels — collectively known as copyright management information, or CMI — from the articles it imported to train its bots.
Raw Story argued that this process facilitated future infringement by leaving users unaware that they were receiving, and possibly distributing, copyrighted material without permission.
Deliberately removing CMI with the intention of fostering copyright violations is a direct violation of the 1998 Digital Millennium Copyright Act, which governs intellectual property rights of producers of digital content. Raw Story sought damages for OpenAI’s violation of the law and an injunction requiring the AI company to remove from its database all Raw Story content from which the CMI had been removed.
That’s where Raw Story ran into a roadblock erected by the Supreme Court. In a 5-4 decision involving the credit bureau TransUnion in 2021, the court declared that it is not enough for a plaintiff to sue over a defendant’s violation of a federal statute. To have the standing to bring a federal case, the court ruled, a plaintiff must show that they have suffered a “concrete harm” stemming from the violation.
Raw Story couldn’t show that because it couldn’t produce evidence that any of its content had been copied in answers to user queries and therefore that it had suffered “concrete harm.” As a result, McMahon dismissed the lawsuit on grounds that Raw Story didn’t have standing to bring it.
Indeed, McMahon seemed irked at the thought that Raw Story was trying to pull a fast one. “Let’s be clear about what’s really at stake here,” she wrote. The supposed injury for which Raw Story was seeking relief, she wrote, “is not the exclusion of CMI” from OpenAI’s database, but the “use of Plaintiffs’ articles to develop Chat GPT without compensation for Plaintiffs.”
McMahon gave Raw Story the opportunity to refile its lawsuit to show that it was damaged by OpenAI’s acts. She didn’t sound sanguine, calling herself “skeptical” that the company will be able to allege a “cognizable injury.”
But Csathy contends that McMahon overlooked the possibility that her ruling might undermine the licensing market — if AI developers can remove CMI from training data with impunity, they might not feel any need to license copyrighted material in the future. “There’s some real substantial money there,” he says.
Raw Story may well cite the loss of licensing income as a “cognizable injury” if and when it files an amended complaint. That would be a new wrinkle in a field that at this point is virtually nothing but wrinkles.
Business
Nike to Cut 1,400 Jobs as Part of Its Turnaround Plan
Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.
In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”
“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”
Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.
In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.
The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.
“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.
Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.
The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.
Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.
Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.
Business
Senate committee kills bill mandating insurance coverage for wildfire safe homes
A bill that would have required insurers to offer coverage to homeowners who take steps to reduce wildfire risk on their property died in the Legislature.
The Senate Insurance Committee on Monday voted down the measure, SB 1076, one of the most ambitious bills spurred by the devastating January 2025 wildfires.
The vote came despite fire victims and others rallying at the state Capitol in support of the measure, authored by state Sen. Sasha Renée Pérez (D-Pasadena), whose district includes the Eaton fire zone.
The Insurance Coverage for Fire-Safe Homes Act originally would have required insurers to offer and renew coverage for any home that meets wildfire-safety standards adopted by the insurance commissioner starting Jan. 1, 2028.
It also threatened insurers with a five-year ban from the sale of home or auto insurance if they did not comply, though it allowed for exceptions.
However, faced with strong opposition from the insurance industry, Pérez had agreed to amend the bill so it would have established community-wide pilot projects across the state to better understand the most effective way to limit property and insurance losses from wildfires.
Insurers would have had to offer four years of coverage to homeowners in successful pilot projects.
Denni Ritter, a vice president of the American Property Casualty Insurance Assn., told the committee that her trade group opposed the bill.
“While we appreciate the intent behind those conversations, those concepts do not remove our opposition, because they retain the same core flaw — substituting underwriting judgment and solvency safeguards with a statutory mandate to accept risk,” she said.
In voting against the bill Sen. Laura Richardson, (D-San Pedro), said: “Last I heard, in the United States, we don’t require any company to do anything. That’s the difference between capitalism and communism, frankly.”
The remarks against the measure prompted committee Chair Sen. Steve Padilla, (D-Chula Vista), to chastise committee members in opposition.
“I’m a little perturbed, and I’m a little disappointed, because you have someone who is trying to work with industry, who is trying to get facts and data,” he said.
Monday’s vote was the fourth time a bill that would have required insurers to offer coverage to so-called “fire hardened” homes failed in the Legislature since 2020, according to an analysis by insurance committee staff.
Fire hardening includes measures such as cutting back brush, installing fire resistant roofs and closing eaves to resist fire embers.
Pérez’s legislation was thought to have a better chance of passage because it followed the most catastrophic wildfires in U.S. history, which damaged or destroyed more than 18,000 structures and killed 31 people.
The bill was co-sponsored by the Los Angeles advocacy group Consumer Watchdog and Every Fire Survivor’s Network, a community group founded in Altadena after the fires formerly called the Eaton Fire Survivors Network.
But it also had broad support from groups such as the California Apartment Association, the California Nurses Association and California Environmental Voters.
Leading up to the fires, many insurers, citing heightened fire risk, had dropped policyholders in fire-prone neighorhoods. That forced them onto the California FAIR Plan, the state’s insurer of last resort, which offers limited but costly policies.
A Times analysis found that that in the Palisades and Eaton fire zones, the FAIR Plan’s rolls from 2020 to 2024 nearly doubled from 14,272 to 28,440. Mandating coverage has been seen as a way of reducing FAIR Plan enrollment.
“I’m disappointed this bill died in committee. Fire survivors deserved better,” Pérez said in a statement .
Also failing Monday in the committee was SB 982, a bill authored by Sen. Scott Wiener, (D-San Francisco). It would have authorized California’s attorney general to sue fossil fuel companies to recover losses from climate-induced disasters. It was opposed by the oil and gas industry.
Passing the committee were two other Pérez bills. SB 877 requires insurers to provide more transparency in the claims process. SB 878 imposes a penalty on insurers who don’t make claims payments on time.
Another bill, SB 1301, authored by insurance commissioner candidate Sen. Ben Allen, (D-Pacific Palisades), also passed. It protects policyholders from unexplained and abrupt policy non-renewals.
Business
How We Cover the White House Correspondents’ Dinner
Times Insider explains who we are and what we do, and delivers behind-the-scenes insights into how our journalism comes together.
Politicians in Washington and the reporters who cover them have an often adversarial relationship.
But on the last Saturday in April, they gather for an irreverent celebration of press freedom and the First Amendment at the Washington Hilton Hotel: The White House Correspondents’ Association dinner.
Hosted by the association, an organization that helps ensure access for media outlets covering the presidency, the dinner attracts Hollywood stars; politicians from both parties; and representatives of more than 100 networks, newspapers, magazines and wire services.
While The Times will have two reporters in the ballroom covering the event, the company no longer buys seats at the party, said Richard W. Stevenson, the Washington bureau chief. The decision goes back almost two decades; the last dinner The Times attended as an organization was in 2007.
“We made a judgment back then that the event had become too celebrity-focused and was undercutting our need to demonstrate to readers that we always seek to maintain a proper distance from the people we cover, many of whom attend as guests,” he said.
It’s a decision, he added, that “we have stuck by through both Republican and Democratic administrations, although we support the work of the White House Correspondents’ Association.”
Susan Wessling, The Times’s Standards editor, said the policy is a product of the organization’s desire to maintain editorial independence.
“We don’t want to leave readers with any questions about our independence and credibility by seeming to be overly friendly with people whose words and actions we need to report on,” she said.
The celebrity mentalist Oz Pearlman is headlining the evening, in lieu of the usual comedy set by the likes of Stephen Colbert and Hasan Minhaj, but all eyes will be on President Trump, who will make his first appearance at the dinner as president.
Mr. Trump has boycotted the event since 2011, when he was the butt of punchlines delivered by President Barack Obama and the talk show host Seth Meyers mocking his hair, his reality TV show and his preoccupation with the “birther” movement.
Last month, though, Mr. Trump, who has a contentious relationship with the media, announced his intention to attend this year’s dinner, where he will speak to a room full of the same reporters he often derides as “enemies of the people.”
Times reporters will be there to document the highs, the lows and the reactions in the room. A reporter for the Styles desk has also been assigned to cover the robust roster of after-parties around Washington.
Some off-duty reporters from The Times will also be present at this late-night circuit, though everyone remains cognizant of their roles, said Patrick Healy, The Times’s assistant managing editor for Standards and Trust.
“If they’re reporting, there’s a notebook or recorder out as usual,” he said. “If they’re not, they’re pros who know they’re always identifiable as Times journalists.”
For most of The Times’s reporters and editors, though, the evening will be experienced from home.
“The rest of us will be able to follow the coverage,” Mr. Stevenson said, “without having to don our tuxes or gowns.”
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