Seattle Times, Newsday sue OpenAI, Microsoft as copyright cases reach 6

Two regional newspapers took the AI industry's biggest players to federal court Friday, alleging their reporting was harvested from behind paywalls to build chatbots that now compete with them for readers. The Seattle Times Co. and Newsday filed a 38-page complaint in Manhattan's Southern District claiming Microsoft and OpenAI ingested hundreds of thousands of their articles into training datasets for ChatGPT, Copilot and Bing's AI features.

"We feel strongly that we must defend our content — which we spend millions of dollars a year to produce — from being used without our consent or compensation," Alan Fisco, president and chief executive officer of The Seattle Times Co., wrote in a memo to employees.

The suit alleges ChatGPT reproduced an 88-word verbatim passage from the newspaper's Pulitzer-winning coverage of the Boeing 737 MAX crashes when prompted with just the article's headline and URL. It seeks financial damages and court-ordered destruction of training datasets and AI models incorporating the publications' work. The complaint warns that "GenAI that is trained on painstakingly researched, expensive-to-produce content threatens to destroy the very news organizations by competing directly with them through AI-generated substitutive content."

The filing lands the same day news organizations including The New York Times and the Daily News moved for summary judgment in the consolidated Manhattan case, asking Judge Sidney H. Stein to reject the tech companies' fair-use defense at every stage of the AI pipeline — from acquiring articles behind paywalls to training large language models on the copied work. "Resolution of these issues for plaintiffs as a matter of law will streamline this case for trial and, by rejecting defendants' efforts to recast free riding as fair use, recognize that the future not just of journalism but of responsible AI too depends on preserving incentives for humans to produce the creative works on which a healthy society depends," lawyers for the news organizations wrote.

The case expands publisher litigation against the two companies to six outlets, joining the New York Times, Daily News, Ziff Davis and the Center for Investigative Reporting in proceedings before Stein. OpenAI, valued at roughly $850 billion and preparing for an IPO seeking a $1 trillion valuation, has struck licensing deals with more than a dozen outlets including The Associated Press, News Corp. and Axel Springer, with publicly disclosed terms of three deals topping $300 million.

Fair-Use Defense Under Pressure

The summary judgment motions represent the first major test of whether training AI models on copyrighted journalism constitutes fair use. The publishers argue the tech companies' use is not transformative because ChatGPT and Copilot can reproduce passages nearly verbatim and deliver answers that substitute for visiting news websites or purchasing subscriptions.

Microsoft countered with usage data from 8.2 million Copilot chat logs provided to a publisher-hired expert during discovery. The company said only 59,545 logs contained at least 16 words matching grounded news content, and just 24 responses showed 30 or more matching words — figures it argues support its position that the use is transformative. OpenAI argued that "nobody owns facts, just as nobody owns language, grammar, or style."

The publishers' attorney Steven Lieberman called sealed materials from Microsoft executives "scorchingly hot — not just a smoking gun; they're a smoking bazooka." The news organizations have separately sought sanctions against OpenAI for alleged evidence destruction, a motion Stein has yet to rule on.

The case carries an unusual wrinkle: Microsoft Philanthropies underwrites some Seattle Times journalism projects, and in 2024 Microsoft and OpenAI jointly funded a $10 million Lenfest Institute AI fellowship that included both the Seattle Times and Newsday among its inaugural participating newsrooms. The Times says it maintains editorial independence.

What's at Stake for the AI Industry

A ruling against the tech companies could force them to license content from publishers across the industry, reshaping the economics of AI training. The Seattle Times complaint notes that under OpenAI's pricing, generating 1 million news-style articles averaging 500 words would cost roughly $6,800 — a fraction of what human journalism costs to produce. The suit also alleges the companies' products have fueled a proliferation of "pink slime" news sites that plagiarize or remix content from legitimate sources.

The Trump administration filed a statement of interest in the New York Times case this week supporting OpenAI, arguing that a ruling for publishers would stifle American AI development. If Stein sides with the publishers on summary judgment, the case proceeds to trial. A ruling for the tech companies could end the consolidated litigation at an early stage, with implications rippling across the AI industry and the news business that supplies much of its training material.

This article is for informational purposes only and does not constitute investment advice.