Roughly half a million writers are set to receive a minimum payout of $3,000 each after Anthropic agreed to a historic $1.5 billion settlement in a class action lawsuit. The case, Bartz v. Anthropic, stems from the company’s use of millions of pirated books taken from so-called “shadow libraries,” which it fed into Claude, its AI chatbot.
The deal represents the largest payout in U.S. copyright history, but it’s not being hailed as a win for authors. Instead, the case underscores how tech companies continue to reap benefits from practices that chip away at creative industries. The AIs powering products like Claude and ChatGPT become more capable as they ingest more data, but after scraping most of the internet, companies are running out of fresh material.
Anthropic’s move to pirate books rather than license them drew legal fire, but the core question of whether training AI on copyrighted text is legal has already been answered. In June, Judge William Alsup sided with Anthropic, ruling that using copyrighted works to train AI is “transformative” enough to be protected under the fair use doctrine. Copyright law hasn’t been substantially updated since 1976, leaving courts to interpret how it applies to new technologies.
“Like any reader aspiring to be a writer, Anthropic’s LLMs trained upon works not to race ahead and replicate or supplant them — but to turn a hard corner and create something different,” Alsup wrote in his opinion.
The judge pushed the case forward not because of the AI training itself, but because Anthropic illegally downloaded the books in question instead of paying for them. Now, with the settlement in place, a trial is no longer necessary. “Today’s settlement, if approved, will resolve the plaintiffs’ remaining legacy claims,” Aparna Sridhar, Anthropic’s deputy general counsel, said in a statement.
The timing comes as Anthropic is flush with cash, having just raised another $13 billion at a $183 billion valuation. That makes the payout more of a costly warning than a devastating financial blow.
