The New York Times filed suit in 2023 against OpenAI and its principal investor, Microsoft, accusing them of a coordinated and competitive copyright breach by using protected works to train their AI systems. After other publishers joined the litigation, the matters were merged last year in the U.S. District Court for the Southern District of New York.
On Tuesday, the Department of Justice submitted a statement of interest arguing that The New York Times’ position conflicts with fundamental copyright principles and could impede “the Progress of Science and useful Arts.” It maintains that training AI models on copyrighted material, in itself, does not violate copyright law.
Section 107 of the Copyright Act of 1976 outlines the conditions of “fair use,” allowing the use of unlicensed copyrighted works for purposes such as criticism, commentary, news reporting, teaching, scholarship, and research.
The Justice Department contends that any use by the AI companies should be treated as fair use if it serves a transformative purpose. The Times, however, has rejected this argument, asserting there is nothing transformative about using its content “without payment to create products that substitute for The Times and steal audiences away from it.” The outlet argues that OpenAI’s generative AI models “compete with and closely mimic the inputs used to train them,” undermining the fair-use exemption for its copyrighted works.
Tori Noble, staff attorney at the Electronic Frontier Foundation, disagrees. She says training AI models on copyrighted works is precisely what transformative use encompasses. These are “general purpose tools” and “exactly the kind of creation that copyright is designed to foster,” Noble adds. Satya Marar, a research fellow at the Mercatus Center at George Mason University, tells Reason that while there is no blanket fair-use exception for training generative AI, the training itself is “highly likely to be deemed transformative.”
Graham James, a spokesman for The Times, told reporters that the government is “siding with a handful of ‘trillion-dollar A.I. companies’ at the expense of American creators,” the outlet reports. While the statement may appeal to a public skeptical of AI’s benefits, it also misrepresents copyright law, which the Supreme Court— in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith (2023)—said exists to “promote the progress of science and the arts, without diminishing the incentive to create.”
In its filing, the Justice Department cites a Second Circuit ruling in Authors Guild v. Google, Inc. (2015) that states that the “more the appropriator is using the copied material for new, transformative purposes, the more it serves copyright’s goal of enriching public knowledge and the less likely it is that the appropriation will serve as a substitute for the original or its plausible derivatives, shrinking the protected market opportunities of the copyrighted work.”
The district court’s decision in this matter could have serious implications for America’s growing AI sector. Nathan Goodman, a senior fellow at the Mercatus Center, tells Reason that a Times-favorable ruling could “substantially raise the direct financial costs and the transaction costs of forming a training data set.” Goodman believes such a ruling would hinder iterative innovation that builds on prior knowledge.
Noble notes that rights holders speak of licensing as if it were merely a transactional business expense; for smaller developers, having to reach out to each rights holder for permission could prove prohibitively expensive, potentially running into billions of dollars.
AI undeniably represents a transformative technology, and newsrooms of all sizes are embracing it nationwide. The Times itself employs generative AI in its newsroom and opinion sections. Semafor reports that the Times argued its generative AI will help it “become more accessible to more people” through digitally voiced articles and translations into other languages, and that the technology “helps us report stories we couldn’t otherwise.”
Generative AI models don’t write original articles, pursue leads, or reach out to sources. They don’t independently verify facts or propose ideas for new pieces. As the Times itself notes, these models are merely “powerful tools” incapable of competing with the newspaper of record as the nation’s authoritative source.
With several copyright lawsuits against AI companies and their backers pending, this is unlikely to be the last instance where the government weighs in on the matter. Noble warns there is a real risk that courts will misunderstand the technology and use those misunderstandings or negative perceptions of AI to drive rulings that are grounded in hype or stigma rather than the technology’s actual operation.
According to Goodman, regardless of the outcome, the Times’ case will reshape the landscape of creative and innovative activity within society and alter the patterns of innovation and creativity that emerge.
