- Yesterday, it was reported that Anthropic is valued at $100 billion for a future funding round. It makes only $3 billion in revenue annually.
- Today, that number seems small when compared to the statutory damages Anthropic may have to pay for downloading millions of copies of pirated books from the shadow libraries LibGen and PiLiMi.
- Judge Alsup just issued an order certifying a class action of copyright owners whose works were in LibGen and PiLiMi and downloaded by Anthropic. The universe of potential works in the class will be limited to: (1) works in the LibGen and PiLiMi downloaded by Anthropic that (2) have an “ISBN or ASIN which was (3) registered with the United States Copyright Office within five years of the work’s publication and which was registered with the United States Copyright Office before being downloaded by Anthropic, or within three months of publication.” The latter 2 requirements ensures statutory damages can be awarded.
- This is the first certified class action in the copyright litigation against AI companies.
- We don’t know the precise number of copyrighted works that will be in the class — but the outer limit has to be something under 7 million, the amount of copies downloaded.
- Plaintiffs have to prepare a list of works within the class by noon September 1, 2025.
- And given the way in which statutory damages are computed per work infringed (not number of copies), the amount can escalate pretty quickly.
In practical terms, what class certification means is that Anthropic faces at least the potential for business-ending liability.
It all depends on the number of works within the class (yet to be determined by the plaintiffs in compiling its list, as Judge Alsup instructed). But it also depends on the figure the jury picks within the statutory range: the standard range is $750 – $30,000 per work infringed. For willful infringement, the maximum goes up to $150,000 per work.
Let’s see how this would play out.
The first table below shows possible scenarios under the standard range, $750 – $30,000 per work. Even under the standard range, it’s a theoretical possibility that the highest award matches or surpasses Anthropic’s reported valuation. These scenarios are unlikely because they would require a very large number of works within the class (4 million – 6 million), although Judge Alsup does cite, on p. 3 of the order, a “5 million unique works” figure that one of the parties used in a brief as a possible example of the total amount of works. Given duplicate copies of the same works in the datasets, plus the several limitations defining the class (see above), such a large number seems less likely. But we can’t know for sure until the plaintiffs undertake the steps in the order to compile the list due Sept. 1.
possible statutory damages under for standard infringement
But, even if there are only 100,000 works in the class, the total damages can easily hit $1 billion to $3 billion under the standard range, as shown in bold in the second row in the table below. To put these billion dollar figures into perspective, the largest copyright statutory damages award that I am aware (that wasn’t reduced) was $1 billion in Cox Communication (10,017 works x $99,830.29/work). But that amount was thrown out on other grounds, and the contributory infringement claim might ultimately fail if the Supreme Court reviews the case as the Solicitor General recommends. And, here, the total number of works can far surpass 10,000, the amount in Cox Communications.
| Works Infringed | $750/work | $1,000/ work | $10,000/ work | $20,000/ work | $30,000/ work |
| 10,000 | $7.5M | $10M | $100M | $200M | $300M |
| 100,000 | $75M | $100M | $1B | $2B | $3B |
| 250,000 | $187.5M | $250M | $2.5B | $5B | $7.5B |
| 500,000 | $375M | $500M | $5B | $10B | $15B |
| 750,000 | $562.5M | $750M | $7.5B | $15B | $22.5B |
| 1,000,000 | $750M | $1B | $10B | $20B | $30B |
| 1,500,000 | $1.125B | $1.5B | $15B | $30B | $45B |
| 2,000,000 | $1.5B | $2B | $20B | $40B | $60B |
| 3,000,000 | $2.25B | $3B | $30B | $60B | $90B |
| 4,000,000 | $3B | $4B | $40B | $80B | $120B |
| 5,000,000 | $3.75B | $5B | $50B | $100B | $150B |
| 6,000,000 | $4.5B | $6B | $60B | $120B | $180B |
Plus, given Judge Alsup’s order and prior opinion on fair use (rejecting it for the downloading of pirated copies), willful infringement by Anthropic is at least in play. In the 9th Circuit, the standard for willful infringement is:
“willful” means acting with knowledge that one’s conduct constitutes copyrightinfringement. 17 U.S.C. § 504(c)(2); Dolman v. Agee, 157 F.3d 708, 715 (9th Cir.1998). A person who believes reasonably and in good faith that conduct does not constitute infringement does not act willfully. Peer Int’l. Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir.1990).
Societe Civile Succession Guino v. Renoir, 305 F. App’x 334, 339 (9th Cir. 2008), as amended on denial of reh’g (Apr. 1, 2009)
Things escalate quickly once we are considering a defendant who committed willful infringement. The jury can pick any figure within the range, now from $750 to $150,000 per work infringed.
The highest amount doesn’t hit a trillion dollars but it comes close, as shown in the table below. All but two scenarios will involve billion dollars or more. Of course, it’s probably an unrealistic assumption to think that the total class will involve 1 million or more works that meet all the criteria, but we can’t rule it out right now. As you can see in this second table, nearly every award is in bold, indicating a billion dollars or more. And, given how dimly Judge Alsup has viewed Anthropic “Napster-like” conduct–which he repeatedly called “stealing,” Anthropic probably can’t expect Judge Alsup to reduce an enormous award under remittitur. So, whatever the jury in San Francisco comes up with is likely to stand, assuming the case doesn’t settle.
And settlement has to be at least a consideration for Anthropic now.
possible statutory damages for willful infringement
| Works infringed | $50K/work | $75K/work | $100K/work | $125K/work | $150K/work |
| 10,000 | $500M | $750M | $1B | $1.25B | $1.5B |
| 100,000 | $5B | $7.5B | $10B | $12.5B | $15B |
| 250,000 | $12.5B | $18.75B | $25B | $31.25B | $37.5B |
| 500,000 | $25B | $37.5B | $50B | $62.5B | $75B |
| 750,000 | $37.5B | $56.25B | $75B | $93.75B | $112.5B |
| 1,000,000 | $50B | $75B | $100B | $125B | $150B |
| 1,500,000 | $75B | $112.5B | $150B | $187.5B | $225B |
| 2,000,000 | $100B | $150B | $200B | $250B | $300B |
| 3,000,000 | $150B | $225B | $300B | $375B | $450B |
| 4,000,000 | $200B | $300B | $400B | $500B | $600B |
| 5,000,000 | $250B | $375B | $500B | $625B | $750B |
| 6,000,000 | $300B | $450B | $600B | $750B | $900B |
I will have more thoughts on today’s order. But it is definitely very bad news for Anthropic.
DOWNLOAD JUDGE ALSUP’S CLASS CERTIFICATION ORDER
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