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ELEON
PUBLISHING The Case Studies
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https://eleonpublishing.com
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By Hsuan Sung and Afshara Mashiuth, February 1, 2024

The New York Times vs. Microsoft and OpenAI

Note: UN IPL.1- HS.AM JUR.USA ChatGPT

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Copyright @ 2024 Eleon Publishing. No part of this publication may be reproduced without
permission.
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The New York Times vs Microsoft and OpenAI: The Illegal Use of Newspaper Content?

The New York Times launched an intellectual property lawsuit against Microsoft and
OpenAI, the company behind ChatGPT, alleging their illegal use of newspaper content. The New
York Times stated that Microsoft and OpenAI established a business model through massive
copyright infringement and used artificial intelligence systems to copy and preserve many
expressions from The New York Times protected by copyright. The New York Times is seeking
billions of dollars in damages.

The New York Times cited numerous examples to claim that ChatGPT generated content
nearly identical to its published text, limiting revenue opportunities, such as subscriptions,
advertising, and licensing.

The New York Times recognized GenAI's potential power for the public. Still, it stressed
that the company must legally obtain permission from publishers before using the material for
commercial purposes.

OpenAI has stated that it respects the rights of creators and owners and actively engages
in conversations with them on new revenue models. Microsoft, on the other hand, did not
respond to inquiries.

Media publishers are beginning to reveal that generative AI tools use their creative
materials to produce content similar to the original articles, which are subsequently used to train
large language modules (LLMs). OpenAI seeks to mitigate concerns in the news publishing
industry by partnering with Axel Springer, a major European publishing company.

Susman Godfrey, the company that filed the lawsuit on behalf of The New York Times,
is also presenting other authors in lawsuits against OpenAI and Microsoft for the unauthorized
use of their works. Ultimately, Microsoft and OpenAI will face lawsuits alleging copyright
infringement and actual damages caused by the companies.1

Key Players

The New York Times

The media publisher filed the lawsuit as the plaintiff in the case. It alleged that the two
defendant companies copied multiple intellectual properties to create models of GPT. It held the
defendants liable for billions of dollars in statutory and actual damages resulting from the
infringement.

OpenAI

OpenAI is the leading company that created ChatGPT. In this case, it was accused of
using unauthorized published content to train its artificial intelligence program. The company
claimed it was working with The New York Times on a mutually beneficial partnership and was

1From “New York Times sues Microsoft, ChatGPT maker OpenAI over copyright infringement,” by R. Browne, 2023, CNBC.
(https://www.cnbc.com/2023/12/27/new-york-times-sues-microsoft-chatgpt-maker-openai-over-copyright-infringement.html)
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surprised by the development. The outcome of the judgment may affect future cooperation or
disputes between the company and other publishers and creators.

Microsoft

As a co-defendant in this case, Microsoft invested in OpenAI and authorized OpenAI to

use its cloud computing technology. Microsoft did not respond to the request for comment on the
case.

Susman Godfrey

The litigation firm's role in the case is crucial. In addition to this case, Susman Godfrey
has also filed a separate copyright lawsuit against Microsoft and OpenAI on behalf of other
authors.

Axel Springer

As the parent company of several well-known media, Axel Springer has reached a
partnership with OpenAI through a contract with undisclosed terms. OpenAI would pay the
company a specific fee in exchange for licensed content. This example is seen as a solution for
OpenAI to address publishers’ concerns.

Problems and Legal Issues

According to the information given, the following legal problems and obstacles can
surface in the dispute between Microsoft, OpenAI, and The New York Times:

Copyright Infringement

The New York Times' primary allegation will probably center on copyright violations. In
this dispute, the newspaper charges Microsoft and OpenAI with stealing its intellectual property
and exploiting it to train massive language models. Thus, the case might explore what qualifies
as infringement, including whether significant sections of the copyrighted content were utilized
and whether or not permission was obtained.

Fair Use Defense

According to Microsoft and OpenAI, their use of The New York Times content is
permissible under the law and constitutes a fair use defense. Furthermore, it can be worth noting
that this defense considers things like the intent behind the usage, the type of copyrighted work,
how much is utilized, and how it affects market value.

Licensing and Permission

In this instance, The New York Times underlines that consent should be obtained if
Microsoft and OpenAI wish to utilize their research for profit. Therefore, the legal dispute could
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determine whether the businesses properly requested and received licenses or authorization to
use The New York Times ' material.

Derivative Works and Transformation

In this dispute, one significant legal challenge would be whether Microsoft and OpenAI's
AI-generated material is revolutionary or just a reproduction and exploitation of the original
work. Besides, when considering fair use, transformative usage is frequently essential.

Commercial Gain

According to The New York Times, content from journalists should never be exploited
for profit without consent. Thus, the court can investigate whether Microsoft and OpenAI's
business strategy relies on widespread copyright violations and if this leads to unlawful
commercial advantage.

Financial Damages

By way of statutory and actual damages, The New York Times is requesting "billions of
dollars." Therefore, complex calculations based on the claimed infringement's effect on the
newspaper's revenues and market value will likely be required to determine the level of financial
damages.

Precedents and Industry Practices

The legal arguments might refer to past copyright law and business standards instances.
Additionally, the statements made by both parties might even be supported or refuted by citing
prior instances involving AI models exploiting copyrighted materials.

Settlement and Negotiation

In reaction to the lawsuit, Microsoft and OpenAI expressed surprise and dissatisfaction.
Thus, in this dispute, if a settlement cannot be reached via trial, the matter might be settled
through conversations and negotiations during the legal process.

Conclusion

In conclusion, the lawsuit involves complex legal issues and significantly impacts the
industry. Microsoft and OpenAI faced ethical and legal liability for failing to consider
intellectual property rights as the companies built the new artificial intelligence systems. Susman
Godfrey, who represented the New York Times, was crucial in expanding the entire case and
connecting it to those of other authors.

In addition to the infringement allegations, the legal issues covered by the case include
Microsoft and OpenAI’s Fair Use Defense and whether their transformation and application of
others’ works are within a reasonable scope. Due to the precedent of Axel Springer, whether this
case will eventually reach some form of settlement would also be one of the focuses. On the
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other hand, if the facts of infringement are confirmed, the calculation of the defendant's
commercial income loss and the actual compensation amount will also be discussed.

The case undoubtedly raised a significant legal challenge to artificial intelligence-

generated content. The extent to which the materials used by the artificial intelligence system are
reasonably used will be defined through the case. The result may affect future collaborations
between AI developers and content creators, highlighting the importance of balancing
technological innovation and intellectual property rights.

Discussion Questions

1. Consider whether using the content of other people's works to train massive language models
is illegal under intellectual property law.

2. Describe the applicability of intellectual property law in this type of infringement litigation
and discuss whether the court will tend to protect the plaintiff’s intellectual property rights.

3. Describe how intellectual property law should be used to bring legal effects in cases related
to generative AI tools.

4. Discuss the applicability of Fair Use Defense in this case.

5. Regarding the financial damages discussed in this lawsuit, does it involve a complex
calculation of the impact on the New York Times' revenue and market capitalization to
determine the possible amount of legal damages?

6. Does the partnership between the defendant and Axel Springer provide a solution to protect
the plaintiff’s intellectual property rights and may affect potential industry standards?

7. Discuss what kind of precedent this case may set for the future application of ChatGPT and
other generative AI tools to other people's copyrights, especially in the rapid development of
massive language models and artificial intelligence technology.

8. What areas of intellectual property owned by The New York Times are Microsoft and
OpenAI accused of illegally copying and using?

9. In what sense does The New York Times assert that "mass copyright infringement" is the
foundation of Microsoft and OpenAI's business model?

10. What justifies The New York Times's allegation against Microsoft and OpenAI of "billions
of dollars in statutory and actual damages"?

11. In what way does The New York Times assert that Microsoft and OpenAI's AI models
directly compete with its content?

12. How do the AI models change the content of The New York Times, and what effect does this
have on the newspaper's business objectives?
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Your Task

You are one of the appointed jurors in this case. An unknown number of jurors will
decide on this case: all are geographically dispersed and unable to communicate with each other.
There is a time limit for your decision. You may use all available resources to learn about the
case. You will win only if you side with most jurors.

The question is: Does the New York Times have a strong case against Microsoft and OpenAI in
this lawsuit?

YES NO

Reference

Browne, R. (2023, December 27). New York Times sues Microsoft, ChatGPT Maker

OpenAI over copyright infringement. CNBC.

https://www.cnbc.com/2023/12/27/new-york-times-sues-microsoft-chatgpt-maker-o

penai-over-copyright-infringement.html