Microsoft, OpenAI sued for copyright infringement by nonfiction book authors in class action claim

Two nonfiction book authors sued Microsoft and OpenAI in a would-be class action complaint alleging that the defendants "simply stole" the writers' copyrighted works to help build a billion-dollar artificial intelligence system.

The lawsuit, filed Friday in Manhattan federal court, comes more than a week after The New York Times sued Microsoft and OpenAI, which created the AI chatbot ChatGPT, in a similar copyright infringement complaint that alleges the companies used the newspaper's content to train large language models.

Microsoft is an investor in and supplier to OpenAI.

The new suit by authors Nicholas Basbanes and Nicholas Gage notes that on the heels of the Times' suit, the defendants "publicly acknowledged that copyright owners like Plaintiffs must be compensated for Defendants' use of their work." The Times suit seeks "billions of dollars" in monetary damages.

Basbanes and Gage said in the suit that they seek to represent a class of writers "whose copyrighted work has been systematically pilfered by" Microsoft and OpenAI.

"They're no different than any other thief," the suit says.

That class, the suit says, would include all people in the U.S. "who are authors or legal beneficial owners" of copyrights for works that have or are being used by the defendants to "train their large language models." The suit estimates the size of that class to be tens of thousands of people.

The suit seeks damages of up to $150,000 for each work that the defendants infringed.

In September, a group of prominent American fiction writers, among them George R.R. Martin, Jonathan Franzen and Michael Connelly, sued OpenAI for copyright infringement, seeking to represent a class of fiction writers in Manhattan federal court.

Mike Richter, the lawyer representing Basbanes and Gage, said their new lawsuit would cover a broader class of plaintiffs and for that and other reasons should be designated the lead class action claim on the issue.

Richter told CNBC that what OpenAI has done by copyrighted work without permission is "pretty outrageous," and compared it to a homeowner arguing that he should not have to pay for insulation, plumbing and other material hidden behind the walls of a house because it is not visible.

"For some reason, companies seem to devalue the work of writers," said the lawyer, who is Basbanes' son-in-law.

The new lawsuit says OpenAI's system relies on being trained by ingesting "massive amounts of written material," which includes books written by Basbanes and Gage.

CNBC has requested comment from Microsoft and OpenAI on the new lawsuit.

Basbanes is a longtime journalist whose works as an author include several books about books and people who collect them, among them "A Gentle Madness: Bibliophiles, Bibliomanes, and the Eternal Passion for Books."

Gage is an investigative reporter who has worked for the Times and The Wall Street Journal. His best-selling memoir "Eleni," which detailed his family's experience in Greece during World War II, was made into a film starring John Malkovich.

In 1987, then-President Ronald Reagan, in a nationally televised address after a summit with Soviet Union leader Mikhail Gorbachev, cited "Eleni" and Gage by name.

Gage has written several other books and received credit as an executive producer of the film "The Godfather III."

When it was sued by the Times, OpenAI said in a statement, "We respect the rights of content creators and owners and are committed to working with them to ensure they benefit from AI technology and new revenue models."

"Our ongoing conversations with the New York Times have been productive and moving forward constructively, so we are surprised and disappointed with this development. We're hopeful that we will find a mutually beneficial way to work together, as we are doing with many other publishers," the statement said.