OpenAI is gearing up for a legal fight with The New York Times. A loss could cause chaos for the entire AI industry.

• OpenAI and Microsoft are facing lawsuits over the AI lab's flagship product, ChatGPT.
• In a recent suit, The New York Times alleged near word-for-word repetition of its articles. 
• OpenAI has fired back at the Times, accusing them of "intentionally manipulating prompts."

OpenAI and The New York Times are gearing up for a legal fight.

The Times sued the AI company in December, accusing OpenAI and its parent company, Microsoft, of taking a "free ride" on its journalism by using it to build products without "permission or payment."

The suit is one of many trying to get the company to pay up for the use of copyrighted content in AI training. It follows several other complaints from copyright owners, including prominent authors such as George R.R. Martin, who accuse the ChatGPT creator of misusing their work.

However, of the lawsuits piling up against OpenAI, the Times's suit is predicted to pack the biggest punch.

While the Times' claim doesn't specify damages, it says the two tech companies should be held liable for "billions of dollars in statutory and actual damages."

The claim contains hundreds of pages of exhibits, featuring examples of nearly word-for-word excerpts of articles said to have been generated by chatbots. In a post on X, Gary Marcus, a leading artificial-intelligence expert, called the excerpts "particularly damning."

OpenAI has indicted its ready to fight the case, arguing the examples provided by the Times are "not telling the full story."

In a blog posted on Monday, the company accused The Times of "intentionally manipulating prompts" to get ChatGPT to regurgitate the articles.

'Catastrophic' consequences

If the Times were to win the case, it could be catastrophic for the entire AI industry, Alex Connock, a senior fellow at Oxford University's Saïd Business School, told BI.

This is because all the main language models "have trained on datasets of questionable provenance, and a loss on the principle that fair dealing could enable learning from third-party materials would be a blow to the entire industry," Connock said.

A win for the Times could open the door for a flood of similar claims from content makers.

Several other companies, including Meta and Stability AI, have already faced legal claims concerning the alleged misuse of copyrighted content.

If OpenAI were to lose the case, Connock said it "would open up the opportunity for all other content makers who believe their content has been crawled (which is basically everyone) and produce damage on an industrywide scale."

OpenAI is seemingly aware of these consequences. The AI company has said it would be impossible to build AI products like ChatGPT without using copyrighted material.

While Connock called the Times' case "extensive and well-argued," pointing in particular to the near-verbatim repetition of entire Times articles, he noted that OpenAI has already shown it can craft arguments to fight similar cases.

In a response to the authors' lawsuit, the company said the plaintiff's claims had misconceived "the scope of copyright, failing to take into account the limitations and exceptions (including fair use) that properly leave room for innovations like the large language models now at the forefront of artificial intelligence."

Chances of success

Just how likely the Times' case is to make it to court is an entirely different question.

The timing is significant, as the media organization has been negotiating with OpenAI since April about licensing its content. The Associated Press signed similar deals with OpenAI last year, as did Axel Springer, which owns BI.

OpenAI said in a statement that conversations with the Times had been "productive and moving forward constructively" and that the company was "surprised and disappointed with this development."

The two, Fortune reported, had reached an impasse in the negotiations before the complaint was filed.

Connock believes the complexities of the case would also incentivize the Times to settle.

"What will almost inevitably happen is that the NY Times will settle, having extracted a better monetization deal for use of its content" than other global publishers, he said.

He added the future of media organizations was contingent on these deals.

"Digital methods will be needed to add an attribution layer to LLMs; these will be monetized, and that could save the content production industry at large, far beyond just the NY Times, from commercial oblivion," he said.