A federal courtroom in San Francisco isn’t often where the future of artificial intelligence is discussed. But this week, that is precisely what occurred.
On one side is Anthropic, one of the world’s most talked-about artificial intelligence businesses. On the other hand, a $1.5 billion proposed settlement aims to resolve a massive dispute over the usage of copyrighted literature to train AI systems.
And in the midst of it all was a judge — one with a keen recall, sharper questioning, and no tolerance for legal drama.
This arrangement was meant to be momentous. a turning point. A blueprint for how other AI behemoths — OpenAI, Meta (META) , and perhaps even Google (GOOGL) — may clear up their copyright issues.
But as the hearing began, it became evident that something was not adding up.
Not for the judge, and perhaps not for the authors whose work is at the center of it all.
Judge throws cold water on Anthropic’s headline-making deal
Anthropic’s anticipated victory lap evolved into a public grilling.
At a hearing in San Francisco, U.S. District Judge William Alsup declined to sanction the $1.5 billion copyright settlement, at least for the time being.
Instead, he postponed a decision and strongly reprimanded the parties involved for what he called a hasty and insufficient plan that left “critical choices” unanswered.
“I have an uneasy feeling,” the judge stated from the bench, adding that the arrangement and the procedure leading up to it seemed like something being “forced down the throat of authors.”
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The finding does not invalidate the settlement. But it sends a clear message: clearance will not come easily.
Alsup wants clarity on everything, from how writers will be contacted to how copyright conflicts will be resolved. Without it, he cautioned, the accord cannot proceed — and may not survive at all.
In an uncommon reprimand, Alsup said that he felt “misled” by the lawyers and expressed reservations about the structure of the payment process, the participation of third-party groups such as the Authors Guild, and the fairness of the $3,000-per-book compensation system.
He also cautioned that unless the agreement provides Anthropic with clear, legal finality, the business may remain subject to future claims, something the tech giant undoubtedly sought to avoid by signing such a hefty check.
The making of Anthropic’s AI mega-settlement
Anthropic was hoping to create news for the right reasons. In early September, the business revealed a massive copyright settlement worth at least $1.5 billion to a group of writers whose work it allegedly exploited without permission to train AI models.
On paper, the agreement seemed ambitious — and in some respects, it was. It encompassed over 465,000 works and provided compensation of up to $3,000 for each book, which quickly established a precedent in the AI sector.
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The timing was not accidental. Anthropic, like OpenAI and Meta, is under growing pressure to address the legal debate over how huge language models are trained. With numerous cases already pending, this settlement, if authorized, may have served as a blueprint.
Industry experts noticed that Anthropic’s offer came before any court verdict and long before the legal conflicts over generative AI training data reached a critical mass.
In settling promptly and in huge numbers, the firm seemed to be purchasing something even more important than peace: precedent.
But Judge William Alsup was not convinced.
What’s really at stake in Anthropic AI court case
Anthropic isn’t a well-known name yet, but it’s one of the largest companies in the AI field. This court case isn’t just a legal drama; it’s a moment that will have an effect on money.
Anthropic claimed in early September 2025 that it has acquired $13 billion in additional capital.
ICONIQ Growth, together with notable names such as Fidelity Management and Lightspeed Venture Partners, led the company’s most recent Series F funding, which raised Anthropic’s worth to $183 billion.
Why Anthropic’s high valuation matters:
- $183 billion valuation as of September 2025, per Anthropic
- More than double its estimated $65B valuation from earlier in 2025
- Series F raise of $13 billion, led by ICONIQ, Fidelity, and Lightspeed
- Backers including Amazon AMZN, Google GOOGL, and Salesforce CRM, all with deep strategic stakes in generative AI
That kind of capital cushion would make a $1.5 billion payday seem like a good idea, but the math isn’t done yet.
People expect Anthropic to be the best in corporate AI, especially with its Claude model suite, which has made the company’s stock price go up.
But no one knows what its true revenue run rate is. Some independent estimates from earlier this year said its annual recurring revenue was around $1.4 billion. If that is still true, the proposed settlement would be worth more than a year’s worth of pay.
And even though Anthropic may have a lot of money, the company is likely still losing money. Training massive language models takes a lot of capital, especially because of safety, latency, and scalability issues.
This means that every dollar spent on lawsuits or settlements takes away from funds that might be used for product development, computer infrastructure, or expansion throughout the globe.
It’s also possible that the current agreement won’t hold. If the judge’s worries cause the agreement to be renegotiated or perhaps canceled, the corporation might be hit with a lot of follow-on litigation that no investor or board member wants to see after writing a $13 billion check.
This is why Judge Alsup’s doubts make sense. It makes more than one sale harder; it also makes people question Anthropic’s capacity to “clean the slate” in the future.
And now that the company’s worth $183 billion, the pressure to do well and stay out of trouble has never been higher.
Related: What Anthropic’s billion-dollar settlement reveals about AI’s future
