Intercept Media, Inc. v. Open AI, Inc.

District court denies in part motion to dismiss news organization’s claim that OpenAI intentionally removed copyright management information from works used to train ChatGPT, holding that plaintiff has standing because its DMCA claims implicate same property-based harm as copyright claims.

OpenAI, Inc., develops generative AI tools, including ChatGPT. The AI tools are powered by large language models, or deep-learning algorithms that can generate human-language text. Microsoft Corp. is OpenAI’s largest investor. News organization The Intercept Media sued OpenAI and Microsoft, claiming defendants intentionally removed Copyright Management Information (CMI) from thousands of plaintiff’s online news articles collected in training sets used to train ChatGPT, and that ChatGPT’s outputs “regurgitate” parts of plaintiff’s copyrighted works without CMI, in violation of the Digital Millenium Copyright Act (DMCA). 

OpenAI and Microsoft moved to dismiss The Intercept’s DMCA claims on grounds of lack of standing and failure to state a claim. The district court issued a bottom-line ruling on Nov. 21, 2024, dismissing both claims against Microsoft with prejudice and dismissing the distribution claim against OpenAI, but allowing the claim based on OpenAI’s removal of CMI to proceed. The district court issued a Feb. 20 opinion explaining its reasoning.

On the issue of standing, defendants argued that The Intercept’s injury was not a concrete injury to satisfy standing requirements, primarily because the injury did not have a close relationship to a harm traditionally recognized as providing a basis for a lawsuit in American courts. The Intercept’s injury derived not from a property-based harm but from harms related to non-attribution, which American law traditionally rejected. 

The district court disagreed, reasoning that although The Intercept’s injury was not “expressly rooted” in the overall history of copyright law, it was nonetheless a concrete injury sufficient for standing because it was part of a long history and tradition of copyright owners’ property rights generally in their original work of authorship, the specific interests of which “evolve over time.” The Intercept’s injury implicated “the same kind of property-based harms traditionally actionable in copyright” and “the same incentives to create that justify traditional copyright.” Even though the specific right created by the DMCA was comparatively new, the district court determined “the injury experienced by The Intercept because of the violation of that right sound[ed] in the same kind of harm long recognized in copyright suits.” 

Notably, Judge Jed S. Rakoff, ruling in this case, reached the opposite conclusion as Judge Colleen McMahon in her November 2024 decision in Raw Story Media, Inc. v. OpenAI, Inc. (Read our summary of that decision here.) In Raw Story Media, Judge McMahon concluded that copyright owners do not have standing to assert removal of CMI claims under the DMCA against AI platforms. 

Because the district court determined The Intercept had “pleaded a concrete injury of a kind long protected by American courts,” it—unlike the court in Raw Story Media—also addressed defendants’ arguments that The Intercept failed to state a claim. The district court granted Microsoft’s motion on both claims because The Intercept’s allegations against it lacked factual specificity and support. The district court likewise granted OpenAI’s motion to dismiss the distribution claim because The Intercept provided no factual support for its allegation that defendants distributed the articles.

However, the district court found The Intercept plausibly alleged that OpenAI intentionally removed CMI from the articles used in OpenAI’s training sets. The district court further found The Intercept plausibly alleged that OpenAI knew at the time the removal of CMI could facilitate downstream infringement by ChatGPT users, satisfying the Second Circuit’s “double scienter” requirement for claims alleging CMI removal.

Summary prepared by Safia Gray Hussain and Jeff Prystowsky