Bartz v. Anthropic: What the Ruling Means for Businesses Using AI

In an important decision, the U.S. District Court for the Northern District of California issued a mixed ruling in Bartz v. Anthropic, one of the first major copyright cases involving AI training data. 

The court held that training AI models on both unauthorized and lawfully purchased books was “transformative” and constituted fair use, but left open the question of whether maintaining a permanent library of unauthorized books is fair use.

Why This Matters

This ruling is the one of first to substantively address how U.S. copyright law applies to the training of generative AI systems.  

Key Takeaways

1. AI Training May Be Protected—But Not All Uses Are Equal
   If your business is training AI models, this ruling provides some legal cover—but only for the training process itself. Storing unauthorized content for other uses may not be permitted.
    
2. Expect More Litigation and Uncertainty
   This is not the final word. The ruling is likely to be challenged, and future courts may interpret fair use differently. Companies should monitor developments closely and consider legal reviews of their AI data pipelines.  
    
3. Audit Your AI Supply Chain
   Companies using third-party AI tools should ask vendors where their training data comes from. If vendors can’t provide clear answers, that could be cause for concern.
    
4. Prepare for Contractual Shifts
   We expect to see new indemnity clauses and representations and warranties in commercial contracts involving AI tools. Companies should be ready to negotiate these terms.

Final Thought

The Bartz ruling is an important development in our AI industry: AI innovation is moving faster than the law, but courts are starting to catch up. Businesses that proactively manage their data practices and legal exposure will be best positioned to thrive in this evolving landscape.