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COLUMN: The AI copyright showdown — what every business needs to know
Series of lawsuits are foundational battles that will help shape the legal and ethical guardrails for AI training and use
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Dear favorite business leader,
For months, the buzz around generative AI has been electric. Even here, we’ve talked about its power to elevate your marketing, streamline your workflows and help with customer engagement. Yet, beneath the surface of innovation, a legal storm has been brewing — one that threatens to change how AI models are built, trained and deployed and how businesses interact with the content they generate. This storm is now making landfall in courtrooms around the world, and every business, especially SMBs leveraging AI, need to pay attention.
The core of the issue is simple — AI models, especially large language models (LLMs) and image generators, learn by analyzing large amounts of data. Content creators — from news organizations to writers, visual artists and Hollywood studios — are now asking “was our work used without permission or compensation? And when an AI model generates content that looks exactly like our protected content, is that an infringement on our copyright?” The stakes are significant, and here are some high-profile lawsuits to keep an eye on.
Legacy Hollywood studios vs. image generators
Last month (June 11), a landmark lawsuit was filed in a California federal court by the Walt Disney Company, NBCUniversal (Universal City Studios Productions) and related companies against generative AI company, Midjourney, Inc. This is the first major legal action from Hollywood studios targeting a generative AI firm for alleged intellectual property theft. The studios claim Midjourney illegally used copyrighted content from famous franchises like Star Wars, Marvel, Shrek, the Simpsons and Minions to train its AI image generator. More critically, they argue that Midjourney then enabled users to create “endless unauthorized copies” of these characters, turning the AI into a “virtual vending machine” of plagiarism. They are seeking substantial damages and injunctions to prevent future infringement.
This case challenges the notion of “fair use” for AI training and output, especially when the output closely resembles original works. Diving back into my Communications Law class from college, we know “fair use" is a legal doctrine that allows limited use of copyrighted material without permission for purposes like criticism, news, teaching, or research. It balances creators' rights with public benefit. Whether a use qualifies as “fair use” is determined case-by-case (usually in court), considering factors like purpose, nature of the work, amount used, and market impact.
The media vs. LLM platforms
Another seismic case is The New York Times’ lawsuit against OpenAI and Microsoft, filed in December 2023 and still working its way through court. The Times alleges that its copyrighted articles were unlawfully used to train ChatGPT and other LLMs, leading to AI outputs that allegedly regurgitated their content verbatim in competition to their news products. The case highlights the conflict between AI development and the sustainability of quality journalism, potentially forcing a future where AI companies need to license news content. Recent rulings in this case have allowed the bulk of the Times’ copyright infringement claims to proceed, signaling a major challenge for the AI defendants.
Visuals at stake
In another pair of 2023 cases, Getty Images sued Stability AI in both the U.S. and the U.K., alleging unauthorized use of millions of its copyrighted photographs (some allegedly bearing distorted Getty watermarks) to train the Stable Diffusion image generator. Last month (June), Getty dropped its primary copyright claim in the U.K., but continues to pursue other claims in the U.K. case. The U.S. case still is open and moving forward. The two cases highlight the global and multifaceted nature of these legal battles.
Implications for your business
These lawsuits and others are foundational battles that will help shape the legal and ethical guardrails for AI training and use. For businesses, the implications are important.
- Licensing and compliance. The era of unchecked data ingestion allegedly used in AI training is likely ending. And for businesses developing or relying heavily on custom-built AI models, they will likely need to ensure they have the proper licenses for the training data they use. This could mean new costs for accessing high-quality, legally cleared content.
- Scrutinize your AI tools. If you’re using generative AI for content creation, understand the lineage of that tool. Is it built on ethically sourced and licensed data? Using AI tools that generate outputs that potentially infringe on existing copyrights could expose your business to legal risks. Do your due diligence and ask questions about your AI platforms.
- Budget for the AI future. Just as SEO and digital advertising became essential budget line items for businesses so too will AI-related costs. This could include premium AI tool subscriptions, specialized AI marketing strategy and potentially even licensing fees for certain AI-generated content or integrations.
The outcomes of these cases and others will help clarify “fair use” for this new AI digital age, influencing everything from content creation to marketing strategy. Businesses that acknowledge this shifting landscape and proactively adapt their digital and legal frameworks will be the ones that thrive, ensuring their brand’s voice is heard, respected and properly used in the AI-powered future.
Brandfully yours,
Tracy
Tracy Pratt, a Cedar Rapids marketing professional with expertise in communication, consumer behavior and AI strategy, believes in blending data with storytelling to help businesses build stronger relationships. Message her on LinkedIn: linkedin.com/in/1tracypratt.
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