A federal judge in San Francisco granted final approval to Anthropic's $1.5 billion class-action settlement with a group of authors who accused the artificial intelligence startup of improperly using their books to train its Claude chatbot. U.S. District Judge Araceli Martinez-Olguin signed off on the agreement, which is believed to be the largest copyright settlement in U.S. history, rejecting objections from authors who argued the deal was inadequate.

The lawsuit, originally filed in 2024, is one of dozens brought by authors, publishers, and other copyright holders against AI companies over the use of copyrighted works to train large language models. It is also the first major AI copyright case in the U.S. to settle. The agreement had received preliminary approval last year from now-retired U.S. District Judge William Alsup.

Legal Rulings and Fair Use

Last year, Alsup ruled that Anthropic's use of books to train Claude qualified as fair use under U.S. copyright law. However, he also found that the company violated copyright by maintaining a digital repository of more than seven million pirated books that were not necessarily used for AI training. A trial to determine damages related to those pirated copies had been scheduled for last December, with potential liability that could have reached hundreds of billions of dollars before the parties agreed to settle.

“We reached this settlement in 2025, after the court’s landmark ruling that training AI on books is fair ​use under copyright law — which remains the law today,” Anthropic Deputy General Counsel Aparna Sridhar said in a statement. She added that more than 91% of eligible authors and publishers have already claimed their share of the settlement proceeds.

Settlement Details and Attorney Fees

Some authors challenged the settlement, arguing it undervalued their claims, overcompensated plaintiffs’ attorneys, and excluded certain copyright holders. Martinez-Olguin rejected those objections, stating they were “not grounded in ⁠a realistic ​assessment of the overall risks and rewards of a trial.”

The judge awarded plaintiffs’ attorneys more than $101 million in legal fees, a portion of the $187.5 million they had requested. “It ​is the largest known copyright recovery in history. We look forward to making distributions to the Class as promptly as possible,” lead plaintiffs’ attorney Justin Nelson said in a statement. Some authors and publishers opted out of the class action and continue to pursue separate copyright lawsuits against Anthropic.

Anthropic is reportedly negotiating with major banks to secure several billion dollars in new credit lines as the artificial intelligence startup prepares for a potential initial public offering (IPO) as early as October. The company is looking to expand its existing $2.5 billion five-year revolving credit facility, obtained from lenders last year, to increase financial flexibility ahead of its public market debut. This strategy mirrors the approach taken by Space Exploration Technologies Corp, which increased its credit facility with IPO bankers roughly a month before its June public offering.

The move to bolster liquidity comes as Anthropic accelerates its IPO preparations, having recently begun high-level meetings with investors. The same banks extending these credit lines often serve as underwriters for the share sale, providing a bridge to the public listing. Anthropic has hired Morgan Stanley, Goldman Sachs Group and JPMorgan Chase to work on the IPO process, with details ongoing and subject to change.

In May, Anthropic surpassed OpenAI to become the world’s most valuable startup after raising $65 billion in a Series H funding round, valuing the company at $965 billion. Altimeter Capital, Dragoneer, Greenoaks and Sequoia Capital led the funding round. Meanwhile, rival OpenAI is also targeting a trillion-dollar IPO, though recent reports suggest its public listing could be delayed until 2027.

Key IPO Details

Founded in 2021 by former OpenAI employees, Anthropic has established itself as a key player in artificial intelligence, building tools that reshape how businesses approach coding and cybersecurity. The company recently launched Project Glasswing, a defensive cybersecurity initiative utilizing its advanced "Claude Mythos" AI model, partnering with over 50 organizations including Google, Microsoft and Apple to scan for software vulnerabilities.