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In a legal clash that could redraw the borders of artificial intelligence and copyright law, bestselling authors suing OpenAI are asking a federal judge to force the company to open the books on its $1 billion licensing deal with Disney, arguing the agreement may undercut OpenAI’s fair-use defense.

In a letter filed Monday with U.S. Magistrate Judge Ona T. Wang, authors including George R.R. Martin, John Grisham and Jodi Picoult urged the court to order disclosure of the Disney agreement, announced last month. They contend the deal could prove that a legitimate licensing market for AI training not only exists, but is viable.

Authors Say Disney Deal Could Shift Fair-Use Analysis

The writers argue that the Disney arrangement — which allows OpenAI to use iconic characters for its AI video generator Sora — is directly relevant to the court’s fair-use inquiry, particularly the question of whether AI training harms the potential market for copyrighted works.

“Evidence of a license negotiated with a major media entity … tends to prove the feasibility of OpenAI entering into the licensing market and negotiating with plaintiffs to use their works lawfully,” the authors wrote. Depending on its terms, they added, the agreement may also demonstrate that a market already exists for licensing copyrighted material to develop generative AI.

The request comes amid multidistrict litigation in New York accusing OpenAI and its financial backer Microsoft of unlawfully using copyrighted texts to train large language models.

Disney Partnership Under the Microscope

OpenAI and Disney revealed last month a three-year partnership that lets Sora users generate AI videos featuring more than 200 characters from Disney, Marvel and Pixar. As part of the arrangement, Disney agreed to make a $1 billion equity investment in OpenAI and become a major customer of the company’s technology, according to public statements.

The authors argue the deal also suggests OpenAI “knew or should have known” that rightsholder consent was required to use copyrighted content in building generative AI systems — a point they say cuts against OpenAI’s defenses.

They further maintain the agreement bears on whether OpenAI’s use of copyrighted works was commercial in nature, another critical factor in the fair-use test.

Discovery Dispute Escalates

According to the filing, OpenAI’s lawyers had not reviewed the Disney agreement as of Friday, despite the plaintiffs requesting details on Dec. 22. The delay, the authors said, hampered efforts to resolve the dispute without court intervention.

OpenAI’s counsel referred questions to the company, which did not immediately respond to requests for comment Tuesday. Lawyers for the authors also declined to comment.

The writers acknowledged they do not yet know whether the Disney deal includes a release of any existing copyright claims Disney might hold against OpenAI for textual works. Even so, they argued, the negotiation and final terms remain “highly relevant,” even if the agreement focuses on characters and video outputs rather than books.

Who’s Representing Whom

The authors are represented by teams from Boies Schiller Flexner LLP, Susman Godfrey LLP, Lieff Cabraser Heimann & Bernstein LLP, and Cowan, DeBaets, Abrahams & Sheppard LLP.

OpenAI is represented by attorneys from Keker Van Nest & Peters LLP, Latham & Watkins LLP, and Morrison Foerster LLP.
Microsoft is represented by lawyers from Orrick Herrington & Sutcliffe LLP and Faegre Drinker Biddle & Reath LLP.

As the court weighs whether to compel disclosure, the $1B OpenAI IP Suit is shaping up as a bellwether battle — one that could determine whether AI’s future is built on fair use, licensing, or something in between.