Chat NYT: The New York Times’ Copyright Case Against OpenAI & Microsoft and the Future of Generative AI Systems.

Subomi Otunola

ChatGPT has rapidly become an integral part of daily life, from generating essay ideas to summarizing films and powering AI tools in various apps. However, its impressive capabilities rely on years of extracting vast amounts of data from the internet under Fair Use stipulations. This practice has raised significant legal concerns, prompting eight daily newspapers owned by Alden Global Capital, the second-largest newspaper operator in the U.S., to sue OpenAI and its major investor, Microsoft. The lawsuit, led by The New York Times, was filed in federal court in New York in 2023. It alleges that ChatGPT’s training data includes millions of copyrighted works from the news organizations, used without consent or payment—a massive copyright infringement. he publications argue that ChatGPT and Microsoft profit from journalistic work without compensation. This is underscored by OpenAI’s valuation exceeding $80 billion and Microsoft’s $13 billion investment. This lawsuit is just one among a slew of others that AI companies have been embroiled in over the use of copyrighted material such as the law firm, Susman Godfrey filing a proposed class action suit against Microsoft and OpenAI on behalf of nonfiction authors whose books and other copyrighted material were used to train the chatbots and Getty Images suing an AI company that generates images based on written prompts that rely on the unauthorised use of Getty’s copyrighted visual materials.

While the lawsuit does not state an exact monetary demand, it stipulates that defendants should be held responsible for ‘billions of dollars in statutory and actual damages’ from the ‘unlawful copying and use of The Times’ uniquely valuable works’. The Times is being represented by Susman Godfrey, who won Dominion Voting Systems’ defamation case against Fox News in April 2023. Given the sheer scale of both parties involved, this case presents a unique opportunity for the review of regulations concerning AI’s absorption of copyrighted products, and its ability to override the need for the competitors that it scalped data from.

AI is evidently an industry disruptor, given its ubiquity and integration into a myriad of companies, hence publishers like the Associated Press, News Corp. and Vox Media reaching content-sharing deals with OpenAI. Though The Times had approached OpenAI in April 2023 with their concerns about the uncompensated use of its intellectual property and propose an ‘amicable resolution’, this fell through, and The Times argue that ChatGPT has become substitutional. This potentially endangers The Times, as The Times is part of a small number of outlets that have built successful business models from online journalism, while dozens of physical newspapers and magazines have succumbed to readers’ migration to the internet. Attorney Ian Crosby states that OpenAI’s ‘unlawful use of The Times’ work to create artificial products that compete with it threatens The Times’ ability to provide that service… Using the valuable intellectual property of others in these ways without paying for it has been extremely lucrative’ for OpenAI. OpenAI and Microsoft in a court hearing last week Tuesday filed motions to dismiss some of the Times’ claims and Joseph Gratz, an OpenAI lawyer stated that the program was not designed to spit out copies of information blindly and is not ‘a document retrieval system. It is a large language mode’.

However, the proof is ultimately in the product for OpenAI, as fair use’s standards state that the work has to transform copyrighted material into something new unable to compete with the original in the same marketplace. This is evidently not the case, as ChatGPT has been known to not only spit out information verbatim from copyrighted articles behind paywalls without any credit to the original sources, and they also use association with The Times, stating that the program is trained on the newspaper’s journalism, thus lending the website credibility. More harmful still, the phenomenon of AI ‘hallucinations’ in which the chatbot inserts false/nonsensical information that is wrongly attributed to a source, presents the risk of damaging the newspapers’ established reputations. Therefore, ChatGPT is not only a potentially unlawful competitor, but it takes traffic away from the Times and actively harms their brand.

Ultimately, the uncompensated use of intellectual property by AI systems raises significant challenges for creative industries. Without robust regulations, tools like ChatGPT risk devaluing and replacing established entities such as The Times. Although OpenAI asserts its commitment to journalism and partnerships with media outlets, the unchecked expansion of AI generative systems could erode the very institutions they claim to support. As the first major American media organization to sue an AI company, The Times tests the limits of Fair Use, prompting a critical reassessment of copyright law in the AI era. Stronger regulations are essential to ensure fair compensation and protect the integrity of journalistic work.