US Courts Poised to Shape the Future of AI Copyright Battles in 2026

According to Reuters, a surge of new cases filed in 2025, along with a record-setting settlement, has set the stage for court decisions that could redefine how U.S. copyright law applies to generative AI. The central question is whether technology companies such as OpenAI, Google and Meta can rely on the fair use doctrine to avoid liability, or whether they will be required to compensate rights holders, potentially at a cost of billions of dollars.

The conflict intensified last year as major media and entertainment companies, including The New York Times and Disney, launched new lawsuits accusing AI developers of copying protected works without permission. At the same time, authors reached a $1.5 billion class action settlement with Anthropic, described per Reuters as the largest known copyright payout in U.S. history.

For the first time, U.S. federal judges also began issuing substantive rulings on whether using copyrighted material to train generative AI systems qualifies as fair use. Those early decisions produced mixed outcomes, highlighting the uncertainty facing both content creators and the technology sector.

In most cases, AI companies have argued that training models on copyrighted works is lawful because the process transforms the original material into something new. In June, U.S. District Judge William Alsup in San Francisco appeared to accept that reasoning, calling AI training “quintessentially transformative” and emphasizing that copyright law “seeks to advance original works of authorship, not to protect authors against competition,” according to Reuters.

Related: EU Parliament Report Endorses Compulsory Copyright Licensing for AI Training

However, Alsup also ruled that Anthropic was liable for maintaining millions of pirated books in a separate “central library” that was not directly connected to AI training. That finding exposed the company to potentially enormous damages before it agreed to settle the case in December, as reported by Reuters.

Just two days after Alsup’s ruling, U.S. District Judge Vince Chhabria, also in San Francisco, sided with Meta in a similar lawsuit but cautioned that AI training “in many circumstances” would not qualify as fair use. He raised concerns that generative AI could “flood the market” with new content and erode incentives for human creators, which he described as a core objective of copyright law.

The contrast between the two decisions underscored a growing judicial divide. Alsup dismissed worries about market harm, likening them to complaints that “training schoolchildren to write well” creates competition. Chhabria, by contrast, suggested that generative AI could pose an existential threat to creative industries.

More hearings are scheduled or expected in 2026 in disputes involving Anthropic and music publishers, Google and visual artists, Stability AI, and AI music generator companies. According to Reuters, upcoming rulings could either bring clarity to how fair use applies to AI or deepen the legal uncertainty, shaping whether the industry operates under broad fair use protections or a licensing framework that alters its economic model.

Meanwhile, some copyright owners have chosen a more collaborative approach. In addition to Anthropic’s settlement, Disney agreed in December to invest $1 billion in OpenAI and to allow its characters to be used in the company’s Sora AI video generator, per Reuters. Warner Music also resolved lawsuits against AI music startups Suno and Udio and plans to launch joint music-creation platforms with them in 2026.

Source: Reuters