The sprawling legal fight over tech companies’ vast copying of copyrighted material to train their artificial intelligence systems could be entering a decisive phase in 2026.
After a string of fresh lawsuits and a landmark settlement in 2025, the new year promises to bring a wave of rulings that could define how U.S. copyright law applies to generative AI. At stake is whether companies like OpenAI, Google , opens new tab can rely on the legal doctrine of fair use to shield themselves from liability – or if they must reimburse copyright holders, which could cost billions.
The conflict escalated sharply last year. The New York Times, Disney and other major copyright holders filed new lawsuits, and authors secured a $1.5 billion class action settlement with Anthropic, the largest known copyright payout in U.S. history.
For the first time, federal judges also began deciding whether generative AI training qualifies as fair use, which allows limited, unauthorized use of copyrighted material in certain circumstances. The early rulings were mixed, underscoring the uncertainty for both copyright holders and the tech industry.
DIVIDED RULINGS
The defendants in nearly all cases have argued that their AI systems make fair use of copyrighted material by transforming it into something new.
In June, U.S. District Judge William Alsup in San Francisco called for AI training “quintessentially transformative,” siding with the company on a key fair use factor. Copyright law “seeks to advance original works of authorship, not to protect authors against competition,” he wrote.
But Alsup also found the company liable for storing millions of pirated books in a “central library” not tied to training — a move that exposed Anthropic to potential liability of up to a trillion dollars before it settled in December.
Two days later, Judge Vince Chhabria, also in San Francisco, ruled for Meta in a similar case but warned that AI training “in many circumstances” would not qualify as fair use. He voiced concern that generative AI could “flood the market” with content, undermining incentives for human creators — a core purpose of copyright law.
‘… which is why I’m thrilled to also announce my Corporation Counsel today: Steve Banks, a name that many of you will be familiar with.’
Alsup dismissed fears of market harm, likening them to complaining that “training schoolchildren to write well” creates competition. Chhabria, by contrast, saw generative AI as a potential existential threat to creative markets.
