They aimed for a slam dunk and walked into an open goal. Three writers. Seven million potential claimants. A class action engineered to rattle the industry.
“AI industry groups are urging an appeals court to block what they say is the largest copyright class action ever certified.”
https://arstechnica.com/tech-policy/2025/08/ai-industry-horrified-to- face-largest-copyright-class-action-ever-certified/
The judge’s ruling skipped the messy fair use questions and jumped straight to certification. That omission looks less like legal clarity and more like panic.
“One court found using copyrighted material as training data isn’t plagiarism, but pirating data to train models is illegal.” https://www.bbc.com/news/articles/c77vr00enzyo
Think about the proof problem. Seven million claimants means mountains of discovery. Tracking who saw what, when, and where in training pipelines will swamp any courtroom. The certification that shocked markets could collapse under the weight of evidence logistics. This is a discovery nightmare dressed up as a legal victory.
The headlines scream industry collapse. That panic alone is doing damage. Investors mark down valuations. Stock prices wobble. The lawsuit’s market effect may shrink companies faster than any judgment ever could. In effect, fear is doing the plaintiffs’ work for them.
“a wave of securities fraud lawsuits that feature allegations of ‘AI washing’.”
https://www.reuters.com/legal/legalindustry/investors-increasingly- claim-that-ai-hype-is-securities-fraud-2025-08-07/
“The big news in these trends are the dollars at risk and AI. ‘Mega- litigation’—big claims against big companies—is key.”
https://www.cornerstone.com/insights/press-releases/securities-class- action-filings-remain-steady-while-size-of-filings-increased- substantially-in-first-half-of-2025/
Congress is sitting on draft AI bills that would offer rules and safe harbors. Those bills could stop this chaos. They are not moving. Judges are filling the gap by improvising copyright law in real time. That judicial patchwork invites inconsistency and cross-circuit conflict while policymakers watch from the sidelines.
The filings drip with dramatic language about ruining entire firms. The drama plays well in headlines and bad on balance sheets. Even the plaintiffs have not explained how they will prove damages across millions of records. The legal theory is heavy on rhetoric and light on practical proof.
Midterm AI legislation gathers dust. Courts are left to write policy one case at a time. Investors freeze. Developers freeze. The market trembles.
The only thing moving faster than the lawsuits is the fear.