Anthropic Settlement Update: Final Settlement Approved

On Tuesday, Judge Araceli Martinez-Olguin granted final approval to the historic class action settlement in the Bartz v Anthropic copyright infringement lawsuit.

At $1.5 billion, it’s the largest recovery ever in a copyright infringement suit, penalizing Anthropic for downloading, storing, and copying pirated datasets consisting of millions of illegally uploaded books in order to use them for AI training. (If you need a refresher, my past blog posts include a general overview of the settlement and the issues surrounding it and an April update.)

Judge Martinez-Olguin’s ruling can be seen here.

Top Takeaways

• Attorneys’ fees have been reduced. Class attorneys had requested 12.5% of the settlement fund, or $187.5 million, plus expenses of $2.5 million and a cost reserve of another $18 million (out of which the settlement administrator would be paid). Rather than a percentage-of-settlement, the judge chose to use a different method of calculation, reducing fees to $101.5 million; this works out to 6.8% of the settlement fund, as opposed to the 12.5% requested–which itself was a reduction from lawyers’ original ask of 20%. The judge granted the expense and cost reserve requests.
• Service awards to class representatives have been reduced. The original request was $50,000 for each of the three class representatives. While acknowledging the time and effort the representatives contributed to the case, the judge deemed those amounts “unreasonable”, and reduced the awards to $15,000 apiece.

These reductions should slightly increase the payout to authors. The math:

• All objections to the settlement are overruled. There were quite a number of these, including objections to the notification process, objections to the composition of the Works list, objections to the copyright registration requirement (which locked large numbers of authors and pirated works out of the settlement), objections to the size of the settlement (too low), objections to the attorneys’ fees and expense requests (too high), and objections seeking miscellaneous (and in some cases somewhat absurd) additional relief.
• Late opt-out requests have also been overruled–with two exceptions. There weren’t a lot of these requests, and the judge deemed that most of them hadn’t shown the “excusable neglect” that would justify approving them. Not so for Laura Esquivel and Jordi Castells, whose requests the judge granted. As it happens, both Esquivel and Castells are plaintiffs in a group of joined lawsuits recently filed by 100 authors and publishers who opted out of the settlement.

The Big Winners, Though? Publishers

The terms of the settlement require publishers and authors to split the per-work payout 50/50 (assuming that publishing contracts are still in force and both parties file a claim). The split is a somewhat arbitrary figure based on a common provision in publishing contracts stipulating that authors and publishers share equally in the recovery from any copyright suits.

This is a sore point with authors, many of whom feel that they are the parties most damaged by pirating and AI training, and shouldn’t have to cut their publishers in on a payout which, though higher than the common award in copyright cases ($750 according to the settlement agreement) is very far short of the $150,000 statutory maximum for willful infringement.

This recent announcement from Bloomsbury demonstrates the lopsided benefit publishers will derive:

14,087 titles x $1,500 (half the estimated $3,000 payout) = $21,130,500.

I posted Bloomsbury’s announcement on social media yesterday.

The response was…sour.

What’s Next?

In many class action settlements, the number of claims isn’t enough to exhaust the settlement fund. This doesn’t necessarily mean more money for those who do respond: settlement terms may direct any excess to be distributed to charity, or it may fall to the court to decide where the extra money goes.

The Anthropic settlement ensures that the entire settlement fund, less attorneys’ fees and expenses, goes to claimants, regardless of how many or how few claims there are. Fewer claims, in other words, means higher payouts. Participation in class action settlements is typically miserable (below 10% on average, according to some estimates), and at the start of the claims process there was speculation that claimants could receive much more than the estimated $3,000 per work payout figure. But participation has been unusually robust: 91.3% according to the motion for final approval, with claims filed for 440,490 of the 482,460 works on the elgible works list. So even with the reduction in attorneys’ fees, any increase will be modest.

When might claimants start to see the money? Per the settlement agreement,

The “effective date” is defined as “the later of” the date on which the time to file an appeal expires (30 days after final approval) or the date on which the resolution of an appeal either upholds approval of the settlement or is dismissed. So…checks could start going out in August. Or, if there’s an appeal, some much later time.

Additionally, Anthropic is depositing funds into the settlement account in four tranches, the last of which isn’t due until 2027 (though Anthropic can choose to deposit earlier)–so it seems likely that payments will go out in waves, or be broken into installments, rather than disbursed all at once. There may also be disputes among rightsholders to be resolved, delaying payments to individuals (a Special Master has been appointed to adjudicate such disputes). Not to mention, simply managing such a massive number of payouts is a monumental task.

Bottom line: no one knows exactly when checks will start arriving. Estimates I’ve seen range from sometime in September to, according to one lawyer I’m in touch with, “not in 2026.”

More Reading

Courtney Milan on the timing of Anthropic’s contributions to the settlement fund and when writers might expect to be paid.

Authors Guild on final approval.

Ars Technica on final approval (including Anthropic’s effort to block late opt-outs)