Judge Stein reverses Magistrate Judge’s ruling on OpenAI’s attorney-client privilege to deletion of Books 1, 2 datasets. Judge Stein: no waiver by OpenAI. Lisa Blatt secures huge win for OpenAI.

Judge Stein issued the long-awaited decision on OpenAI’s appeal of Magistrate Judge Wang’s ruling that OpenAI waived its attorney-client privilege as to the deletion of Books 1, 2 datasets.

It’s a complete reversal and a major win for OpenAI, who hired Supreme Court litigator Lisa Blatt to brief the appeal. Trial attorney Robert Van Nast argued the motion at the hearing.

If you have been following my analysis, I think this is the 100% correct decision. For some of my prior analysis of Magistrate Judge Wang’s erroneous ruling:

Magistrate Judge’s opinion finding OpenAI waived attorney-client privilege ignores Supreme Court, 2d Circuit precedent

Judge Stein’s ruling sets an important precedent regarding a defense to willful infringement for not just this case, but for all the AI copyright lawsuits:

There is a distinction between a copyright defendant merely denying allegations of willfulness-on which a plaintiff bears the burden of proof-and a copyright defendant affirmatively asserting its good faith belief that its actions were lawful. This distinction can have important consequences-for example, a finding of “willful” infringement permits a court to award increased statutory damages of up to $150,000 per work, while a successful good faith defense permits the court to limit damages to $200 per infringement. 17 U.S.C. § 504(c)(2). The U.S. Court of Appeals for the Second Circuit has highlighted that a finding of a lack of willfulness is not equivalent to a finding of innocent intent or good faith. Fitzgerald Publ’g Co. v. Baylor Publ’g Co., 807 F.2d 1110, 1115 (2d Cir. 1986) (“It is plain that ‘willfully’ infringing and ‘innocent intent’ are not the converse of one another. Thus, it is possible in the same action for a plaintiff not to be able to prove a defendant’s willfulness, and, at the same time, for the defendant to be unable to show that it acted innocently.”); see also Nat’l Football League v. PrimeTime 24 Joint Venture, 131 F. Supp. 2d 458,476 (S.D.N.Y. 2001) (“‘Innocent’ intent, however, is more than just the absence of willfullness.”); 5 Melville B. Nimmer & David Nimmer, Nimmer on Copyright§ 14.04[B][3][a] (2026).

OpenAI has not asserted a good faith defense merely by denying Class Plaintiffs’ allegations of willfulness, and OpenAI has represented that it will not offer evidence of its state of mind regarding the legality of its conduct to rebut Class Plaintiffs’ allegations of willfulness at trial. (Jan. 16, 2026 Hearing Tr. at 32:11-17 (“We do not intend to defend [the action] on a good-faith belief that what we were doing is legal. We intend to defend it on other grounds, like fair use, no liability, and so on. . . . [W]e are not presenting a good-faith defense.”), 43:1- 2 (“[W]e did elect, before Judge Wang, not to present a state-of-mind defense.”).)4 This case is therefore unlike the cases relied upon by Class Plaintiffs in which the defendants sought to use affirmative evidence of their good faith belief in the legality of their actions to defeat elements of the plaintiffs’ cases.5 OpenAI thus has not effected an at-issue waiver of the attorney-client privilege by affirmatively relying on materials over which it asserts privilege to make its defense. In re County of Erie, 546 F.3d at 229.
Judge Stein