Artificial intelligence (AI) firm Anthropic has agreed to pay $1.5bn (£1.11bn) to settle a class action lawsuit filed by authors who said the company stole their work to train its AI models.

The deal, which requires the approval of US District Judge William Alsup, would be the largest publicly-reported copyright recovery in history, according to lawyers for the authors.

It comes two months after Judge Alsup found that using books to train AI did not violate US copyright law, but ordered Anthropic to stand trial over its use of pirated material.

Anthropic said on Friday that the settlement would “resolve the plaintiffs’ remaining legacy claims.”

The settlement comes as other big tech companies including ChatGPT-maker OpenAI, Microsoft, and Instagram-parent Meta face lawsuits over similar alleged copyright violations.

Anthropic, with its Claude chatbot, has long pitched itself as the ethical alternative among its competitors.

“We remain committed to developing safe AI systems that help people and organisations extend their capabilities, advance scientific discovery, and solve complex problems,” said Aparna Sridhar, Deputy General Counsel at Anthropic which is backed by both Amazon and Google-parent Alphabet.

The lawsuit was filed against Anthropic last year by best-selling mystery thriller writer Andrea Bartz, whose novels include We Were Never Here, along with The Good Nurse author Charles Graeber and The Feather Thief author Kirk Wallace Johnson.

They accused the company of stealing their work to train its Claude AI chatbot in order to build a multi-billion dollar business.

The company holds more than seven million pirated books in a central library, according to Judge Alsup’s June decision, and faced up to $150,000 in damages per copyrighted work.

His ruling was among the first to weigh in on how Large Language Models (LLMs) can legitimately learn from existing material.

It found that Anthropic’s use of the authors’ books was “exceedingly transformative” and therefore allowed under US law.

But he rejected Anthropic’s request to dismiss the case.

Anthropic was set to stand trial in December over its use of pirated copies to build its library of material.

Plaintiffs lawyers called the settlement announced Friday “the first of its kind in the AI era.”

“It will provide meaningful compensation for each class work and sets a precedent requiring AI companies to pay copyright owners,” said lawyer Justin Nelson representing the authors. “This settlement sends a powerful message to AI companies and creators alike that taking copyrighted works from these pirate websites is wrong.”

The settlement could encourage more cooperation between AI developers and creators, according to Alex Yang, Professor of Management Science and Operations at London Business School.

“You need that fresh training data from human beings,” Mr Yang said. “If you want to grant more copyright to AI-created content, you must also strengthen mechanisms that compensate humans for their original contributions.”

Key Points

• Most stocks that Nvidia and CEO Jensen Huang invest in tend to be strategic partners or companies that can expand the AI ecosystem.

• For the AI sector to thrive, there is going to need to be a lot of supporting data centers and other AI infrastructure.

• One stock that Nvidia is heavily invested in also happens to be one of its customers, a first-mover in the AI-as-a-service space.

• 10 stocks we like better than CoreWeave ›

Nvidia (NASDAQ: NVDA), the largest company in the world by market cap, is widely known as the artificial intelligence (AI) chip king and the main pick-and-shovel play powering the AI revolution. But as such a big company that is making so much money, the company has all sorts of different operations and divisions aside from its main business.

For instance, Nvidia, which is run by CEO Jensen Huang, actually invests its own capital in publicly traded stocks, most of which seem to have to do with the company itself or the broader AI ecosystem. At the end of the second quarter, Nvidia owned six stocks collectively valued at about $4.3 billion. However, of this amount, 91% of Nvidia’s portfolio is invested in just one AI infrastructure stock.

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A unique relationship

Nvidia has long had a relationship with AI data center company CoreWeave (NASDAQ: CRWV), having been a key supplier of hardware that drives the company’s business. CoreWeave builds data centers specifically tailored to meet the needs of companies looking to run AI applications.

These data centers are also equipped with hardware from Nvidia, including the company’s latest graphics processing units (GPUs), which help to train large language models. Clients can essentially rent the necessary hardware to run AI applications from CoreWeave, which saves them the trouble of having to build out and run their own infrastructure. CoreWeave’s largest customer by far is Microsoft, which makes up roughly 60% of the company’s revenue, but CoreWeave has also forged long-term deals with OpenAI and IBM.

Nvidia and CoreWeave’s partnership dates back to at least 2020 or 2021, and Nvidia also invested in the company’s initial public offering earlier this year. Wall Street analysts say it’s unusual to see a large supplier participate in a customer’s IPO. But Nvidia may see it as a key way to bolster the AI sector because meeting future AI demand will require a lot of energy and infrastructure.

CoreWeave is certainly seeing demand. On the company’s second-quarter earnings call, management said its contract backlog has grown to over $30 billion and includes previously discussed contracts with OpenAI, as well as other new potential deals with a range of different clients from start-ups to larger companies. Customers have also been increasing the length of their contracts with CoreWeave.

“In short, AI applications are beginning to permeate all areas of the economy, both through start-ups and enterprise, and demand for our cloud AI services is aggressively growing. Our cloud portfolio is critical to CoreWeave’s ability to meet this growing demand,” CoreWeave’s CEO Michael Intrator said on the company’s earnings call.

Is CoreWeave a buy?

Due to the demand CoreWeave is seeing from the market, the company has been aggressively expanding its data centers to increase its total capacity. To do this, CoreWeave has taken on significant debt, which the capital markets seem more than willing to fund.

At the end of the second quarter, current debt (due within 12 months) grew to about $3.6 billion, up about $1.2 billion year over year. Long-term debt had grown to about $7.4 billion, up roughly $2 billion year over year. That has hit the income statement hard, with interest expense through the first six months of 2025 up to over $530 million, up from roughly $107 million during the same period in 2024.

CoreWeave reported a loss of $1.73 per share in the first six months of the year, better than the $2.23 loss reported during the same time period. Still, investors have expressed concern about growing competition in the AI-as-a-service space. They also question whether or not CoreWeave has a real moat, considering its customers and suppliers. For instance, while CoreWeave has a strong partnership with Nvidia, that does not prevent others in the space from forging partnerships. Additionally, CoreWeave’s main customers, like Microsoft, could choose to build their own data centers and infrastructure in-house.

CoreWeave also trades at over a $47 billion market cap but is still losing significant money. The valuation also means the company is trading at 10 times forward sales. Now, in fairness, CoreWeave has grown revenue through the first half of the year by 276% year over year. It all boils down to whether the company can maintain its first-mover advantage and whether the AI addressable market can keep growing like it has been.

I think investors can buy the stock for the more speculative part of their portfolio. The high dependence on industry growth and reliance on debt prevent me from recommending a large position at this time.

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Anthropic has agreed to pay $1.5 billion to settle a lawsuit brought by authors and publishers over its use of millions of copyrighted books to train the models for its AI chatbot Claude, according to a legal filing posted online.

A federal judge found in June that Anthropic’s use of 7 million pirated books was protected under fair use but that holding the digital works in a “central library” violated copyright law. The judge ruled that executives at the company knew they were downloading pirated works, and a trial was scheduled for December.

The settlement, which was presented to a federal judge on Friday, still needs final approval but would pay $3,000 per book to hundreds of thousands of authors, according to the New York Times. The $1.5 billion settlement would be the largest payout in the history of U.S. copyright law, though the amount paid per work has often been higher. For example, in 2012, a woman in Minnesota paid about $9,000 per song downloaded, a figure brought down after she was initially ordered to pay over $60,000 per song.

In a statement to Gizmodo on Friday, Anthropic touted the earlier ruling from June that it was engaging in fair use by training models with millions of books.

“In June, the District Court issued a landmark ruling on AI development and copyright law, finding that Anthropic’s approach to training AI models constitutes fair use,” Aparna Sridhar, deputy general counsel at Anthropic, said in a statement by email.

“Today’s settlement, if approved, will resolve the plaintiffs’ remaining legacy claims. We remain committed to developing safe AI systems that help people and organizations extend their capabilities, advance scientific discovery, and solve complex problems,” Sridhar continued.

According to the legal filing, Anthropic says the payments will go out in four tranches tied to court-approved milestones. The first payment would be $300 million within five days after the court’s preliminary approval of the settlement, and another $300 million within five days of the final approval order. Then $450 million would be due, with interest, within 12 months of the preliminary order. And finally $450 million within the year after that.

Anthropic, which was recently valued at $183 billion, is still facing lawsuits from companies like Reddit, which struck a deal in early 2024 to let Google train its AI models on the platform’s content. And authors still have active lawsuits against the other big tech firms like OpenAI, Microsoft, and Meta.

The ruling from June explained that Anthropic’s training of AI models with copyrighted books would be considered fair use under U.S. copyright law because theoretically someone could read “all the modern-day classics” and emulate them, which would be protected:

…not reproduced to the public a given work’s creative elements, nor even one author’s identifiable expressive style…Yes, Claude has outputted grammar, composition, and style that the underlying LLM distilled from thousands of works. But if someone were to read all the modern-day classics because of their exceptional expression, memorize them, and then emulate a blend of their best writing, would that violate the Copyright Act? Of course not.

“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,” the ruling said.

Under this legal theory, all the company needed to do was buy every book it pirated to lawfully train its models, something that certainly costs less than $3,000 per book. But as the New York Times notes, this settlement won’t set any legal precedent that could determine future cases because it isn’t going to trial.