Judge cites concerns in Anthropic’s proposed $1.5B settlement case, says class lawyers are striking a deal in secret

U.S. Judge William Alsup cited concerns in the hearing of Anthropic PBC’s proposed $1.5 billion copyright settlement case, saying class lawyers are striking a deal in secret. He believes the initiative will be forced towards authors. 

The federal judge said at the hearing that the motion to approve the deal was denied without prejudice. After the hearing, he later acknowledged in a minute order that approval is postponed pending submission of further clarifying information.

Judge believes lawyers are striking deals in secret

Alsup claimed he felt misled during the first hearing after the deal was announced on September 5. He also said he needs more information about the claim process for class members. 

The judge of the U.S. District Court for the Northern District of California revealed that he has an uneasy feeling about hangers with the amount of money in the case. He also believes that the agreement is nowhere close to completion.

Alsup received some assurance from the authors’ counsel, Justin Nelson of Susman Godfrey LLP, that the attorneys care deeply about every single proper claim getting compensated. He also added that he expects a high claim rate due to the high-profile nature of the dispute.

The federal judge said on Monday he was disappointed that the parties left out important questions for the future, Cryptopolitan reported. He noted that the counsel had left out a list of works covered by the deal and the process for notifying potential class members. 

Alsup said the omitted questions must be addressed before preliminary approval can be granted. The judge’s criticism also forces attorneys to adjust a proposed settlement and a template for similar AI copyright litigation.

Maria Pallante, president and CEO of the Association of American Publishers, argued that the court lacked understanding of how the publishing industry works. She claimed that the court was envisioning a claims process that would be unworkable. Pallante added that the court sees a world with collateral litigation between authors and publishers for years to come.

Anthropic’s case establishes a benchmark for firms to resolve similar claims

Anthropic’s case would resolve the authors’ class action over PBC downloading millions of pirated books. Chad Hummel, an attorney at McKool Smith, said the proposed $3,000-per-book settlement establishes a potential benchmark for other companies to resolve similar claims.

Alsup noted that class members are often tricked in many class actions once the monetary relief is established and attorneys stop caring. He ordered the parties to give very good notice to class members to ensure they could opt in or out. The judge also believes the initiative will protect the AI company from being sued by other potential claimants in the same case.

The federal judge also criticized class counsel for enlisting a flurry of attorneys to work on the settlement disbursement, including some from the Authors Guild and Association of American Publishers. He said extra attorneys won’t be paid from the settlement funds and that attorneys’ fees will be based on how much is paid to class members. Nelson argued that the attorneys are meant to help with complex ownership questions.

The judge called on the parties to design a claim form where owners with copyright claims can opt in to the settlement. Alsup said the settlement won’t cover the works of owners who opt out. He also requested a form for each claim to be submitted, and any disputes over ownership to go to court. Parties have until September 15 to submit a final list of works, which currently stands around 465,000.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.