Blueprint 36: The First AI Copyright Jury Trial

Reid MercerHey, welcome back to Blueprint. I'm Reid, that's Grant, and September just got very interesting for anyone who touches AI and copyright.

GrantInteresting is one word for it. September eighth, an actual jury starts deciding fair use in Andersen versus Stability AI.

Reid MercerTwelve regular people-

GrantMm-hmm

Reid Mercer... pricing an entire industry's training data. Wait for it, first creative AI case to ever reach a jury.

GrantAnd I've got real doubts about whether that's the right body to decide it.

Reid MercerOh, we're arguing about that today for sure.

GrantWe're also getting into the MPA's deal with ByteDance, signed August seventeenth. Watermarking, face blocking, the output side.

Reid MercerBut not the training data question. That part's left alone.

GrantConvenient, right?

Reid MercerRight.

GrantThere's a Tom Cruise deep fake clip buried in why that deal exists at all.

Reid MercerWait, seriously? We'll get into that.

GrantPlus, Disney, Universal, and DreamWorks versus Midjourney, stalled discovery, completely different pace than Andersen.

Reid MercerAnd whether the studio's own AI use comes back to bite them in that case.

GrantThen there's SAG-AFTRA's new synthetic performer rules.

Reid MercerDoes this protect a working actor or just names like Matthew McConaughey?

GrantThat's the fight right there.

Reid MercerWe'll lay out the whole twenty twenty-six calendar too, Fowler, Getty, the Suno and Udio music cases.

GrantGrab a coffee. This one's a full docket.

Reid MercerSo where do we even start?

GrantWith the jury. September eighth is closer than people think.

Reid MercerNow lean in, September eighth, one week from today, and I'd bet most listeners haven't even heard the case name.

GrantWhich one?

Reid MercerAndersen v. Stability AI, case number three twenty-three CV zero zero two zero one, Judge William Orrick, Northern District of California, first creative AI copyright case going to a jury actually.

GrantWow, and it got a fraction of the coverage that ByteDance handshake got.

Reid MercerLess than a fraction. No press conference, no release, just a trial date sitting on a docket.

GrantRemind me who's actually suing.

Reid MercerThree illustrators, Sarah Andersen, Karla Ortiz, and Kelly McKernan. They filed back in January twenty twenty-three against Stability AI, Midjourney, DeviantArt, and Runway. Jipel's breakdown lays out the whole roster.

GrantNo studio, no guild picking up the legal bills.

Reid MercerNobody in Burbank is writing those checks. That's the part everyone skips past.

GrantSo what's actually on trial, the image generator itself?

Reid MercerThe training set underneath it. Jipel traces it to LAION, roughly five billion scraped images used to train Stable Diffusion. That's the question twelve jurors answer instead of some licensing committee.

GrantTwelve random people deciding fair use for the whole industry?

Reid MercerMy read, the deals get the headlines. The docket sets the price. Whatever that jury decides about training data becomes the floor every other negotiation gets priced against.

GrantUh, I don't love betting the motto on that. You're asking people with zero technical background to parse fair use doctrine law professors argue about for a living.

Reid MercerCopyright's worked that way for decades. Juries decided music samplings.

GrantSamplings, four bars of a song. This is billions of images and a black box nobody in that box built.

Reid MercerWhich is exactly why every studio lawyer should have this date circled, not the merger memo they pop champagne over.

GrantSo which one actually sets precedent, the trial or the truce everyone's celebrating?

Reid MercerOne of them binds nobody, the other binds everybody. So while everyone's circling that Andersen jury pool, the MPA and ByteDance quietly dropped an MOU on August seventeenth.

GrantThe one covering CapCut and Dreamina?

Reid MercerRight. TikTok, CapCut, Dreamina, the whole stack. Six months after the MPA's cease and desist over CapCut two point O.

GrantWhat actually changed?

Reid MercerHere's what the press release buried. It's watermarking, C2PA credentials, face blocking on outputs, zero language on training data.

GrantSo it's output side only.

Reid MercerNon-binding too. If Disney sues over ingestion tomorrow, this memo gives ByteDance nothing.

GrantThat's like a seller promising you a full service history instead of handing you the actual receipts. Feels great until the deal's on the line.

Reid MercerThat's the move exactly, and the timing tells you why they blinked.

GrantThe Tom Cruise thing?

Reid MercerYeah, a two-line prompt, photorealistic Cruise versus Brad Pitt reportedly cleared a million views on X in a day.

GrantWow, a day?

Reid MercerA day. Disney, Warner Bros, Paramount, Sony, and Netflix all sent separate letters right after.

GrantFive studios firing off separate letters isn't a coordinated strategy. That's panic with letterhead.

Reid MercerFollow the money, though. Face blocking protects Cruise. Does it protect a working stunt double whose likeness gets scraped with nobody's letter behind it?

GrantThe licensing market for faces protects famous faces. Everybody else is on their own.

Reid MercerWhich is exactly why the MOU sidesteps the one question that matters.

GrantThe training question.

Reid MercerThe same one that Andersen's jury has to answer September eighth.

GrantSo Monday morning, an executive asks legal one thing, "Does our face blocking deal cover ingestion or just what comes the other end?"

Reid MercerAnd if the answer is just the output, you've got a press release, not a shield. Grabbing that training data gap, Jipel's piece lays out the three theories actually alive in Andersen, direct infringement from training, induced infringement through outputs, and a DMCA claim for stripping copyright management info.

GrantHold on. Copyright management what?

Reid MercerCMI, the artist's name, the watermark, the metadata baked into a file. Strip it out during training, that's its own violation, separate from copying the image.

GrantSo scrubbing the signature is a crime on its own.

Reid MercerThat's the claim. But the training theory, direct infringement, Jipel calls that one totally unsettled. No courts answered it.

GrantBecause file itself isn't protected, only the actual expression is.

Reid MercerRight. So plaintiffs can't say. Shifting from Andersen to Disney's own fight, this one's against Midjourney, filed back in June 2025.

GrantThe one with Yoda and Darth Vader in the complaint?

Reid MercerExactly. Georgetown's write-up names Disney, Universal, and DreamWorks, and the ask isn't just damages, it's an injunction. Build filters or stop shipping.

GrantBig difference from suing after the fact.

Reid MercerHuge difference. Andersen's artists filed in 2023, jury trial next week. Disney files in 2025, and by Rinzaras's tracker, the status this July is still-

GrantIn discovery.

Reid MercerIn discovery, docket two twenty-five CV five two seven five, Central District of California.

GrantAnd Midjourney's not just running fair use, they're calling the studios hypocrites.

Reid MercerHow so?

GrantTheir own artists, concept artists, their own vendors using Midjourney for pre-production art and set design. That's the defense.

Reid MercerSo the plaintiff's own pipeline becomes Exhibit A for the defendant.

GrantMm-hmm. And it turns into a discovery fight fast. The Art Newspaper reported Midjourney won a ruling in mid-June forcing Disney, Universal, and Warner Bros. to hand over their internal AI use.

Reid MercerThat's not curiosity, that's leverage.

GrantYou want a jury seeing how much AI's already baked into the studio's own workflow before they decide who the villain is.

Reid MercerWhich is exactly why studios prefer a negotiated framework like that MPA memo over sworn testimony. A memo never makes anyone admit under oath how many artists a prompt replaced.

GrantYou control the story instead of a deposition writing it for you.

Reid MercerAnd that fight over vendor contracts, over who's actually running these tools inside the building, lands right on the people doing the work, the performers. If the studio's own pipeline runs on AI art internally, what stops that logic from reaching faces and voices next?

GrantThat's the argument waiting on the other side of this.

Reid MercerSo if studios already run AI through vendor contracts, the next stop is the actor's own face.

GrantYeah, and the union already priced that in. SAG-AFTRA's TV and theatrical deal ratified back in June.

Reid MercerRuns July first through June 2030, four years, three percent compounding minimums.

GrantRight, but the synthetic performer language is what everybody's actually fighting over.

Reid MercerStudios can use a synthetic performer only when it adds significant additional value.

GrantAnd who defines significant? A studio lawyer in a room, that's who.

Reid MercerFair, but look what's forming above that floor. There's a real market now.

GrantMeaning?

Reid MercerElevenLabs has cleared estate voices, Judy Garland, James Dean, and Matthew McConaughey didn't just license his voice-

GrantWow

Reid Mercer... he invested in the company.

GrantMcConaughey doesn't need the floor. He built himself a second income stream.

Reid MercerThat's ownership working the way it's supposed to.

GrantFor him, not for the guy voicing the third org in a video game who signed away his likeness back in 2019 for a flat session fee.

Reid MercerI'll grant the middle tier is exposed. Audiobook narrators, character actors, nobody's licensing their voice to ElevenLabs for real money.

GrantRight. They're the ones actually replaceable by a clone that adds significant additional value under the contract's own wording.

Reid MercerBut scarcity pricing is still the one thing that's ever protected anybody in this business. Famous voices get paid because they're scarce.

GrantScarcity doesn't help the guy with zero leverage to negotiate it.

Reid MercerNo, it doesn't. Not yet anyway.

GrantSo we've got two calendars running, one priced by contract, another about to be priced by jury.

Reid MercerMonday morning question for the suits, when's the last time anyone audited what significant additional value means in your own contract?

GrantNobody's done that audit, not once.

Reid MercerAnd wait till you hear what's landing at the courthouse that same week. It changes the whole calendar. Circle September eighth twice, jury selection and opening statements in Andersen.

GrantSame day as the fight we just left hanging.

Reid MercerRight, and watch whether Stability blinks on the courthouse steps. Defendants usually do once statutory damages get real, up to $150,000 per work times thousands of images.

GrantYou really think they fold that late?

Reid MercerTheir lawyers run the math on a jury verdict versus a settlement check. That math gets ugly fast.

GrantWhat else is on the board?

Reid MercerRinzara's tracker flags three more. The Supreme Court declined Thaler back in March, locking in that pure AI output gets zero US copyright.

GrantNo human hand, no copyright. Makes sense.

Reid MercerGetty's UK case is still alive on appeal after London rejected it in November, and Suno and Udio have music side rulings coming too.

GrantDifferent medium, same question. Did the training set steal the input?

Reid MercerExactly. So here's the Monday morning question for any exec listening. Has anyone actually audited your AI vendor's training data?

GrantIf the answer's no, you're carrying exposure nobody priced into the budget. I've walked for cars for less, a seller who couldn't produce service records, and everybody at the table knew what that meant. Same instinct here. No paper trail, no deal, whatever the pitch deck promises.

Reid MercerThe provenance problem, just pixels instead of pistons.

GrantSame problem. No records, no deal. September eighth's the reminder either way.

Reid MercerSo September eighth, that trial's coming whether Hollywood is ready or not.

GrantAnd a jury deciding fair use on billions of images still bugs me.

Reid MercerYou and your receipts line, that MOU only covers outputs, remember?

GrantRight, watermarking and face-blocking. Training data still walks free.

Reid MercerBig takeaway, every one of these deals and cases is about who owns the input, not the output.

GrantExactly. If you're running a studio, go ask your vendors what's actually in their training set. Monday morning.

Reid MercerLove that. All right, email us, blueprint@hemato.com, or find us on social and argue with us.

GrantTell a colleague if this changed how you think about it.

Reid MercerNew episode next Tuesday.

GrantThanks for hanging out with us.

Reid MercerSee you then.