POLICY

Anthropic's copyright settlement reveals the real AI legal battleground

Anthropic just bought its way out of the AI industry's first potential billion-dollar copyright judgment. The company reached a preliminary settlement with authors who accused it of illegally downloading millions of books to train Claude, avoiding a December trial that threatened the company's existence.

The settlement comes with a crucial legal distinction. Earlier this year, U.S. District Judge William Alsup ruled that training AI models on copyrighted books qualifies as fair use — the first major victory for AI companies. But Anthropic's acquisition method crossed a legal red line.

Court documents revealed the company "downloaded for free millions of copyrighted books from pirate sites" including Library Genesis to build a permanent "central library." The judge certified a class action covering 7 million potentially pirated works, creating staggering liability:

• Statutory damages starting at $750 per infringed work, up to $150,000 for willful infringement

• Potentially over $1 trillion in total liability for Anthropic

• Company claims of "death knell" situation, forcing a settlement regardless of legal merit

The preliminary settlement is expected to be finalized on September 3, with most authors in the class having just received notice that they qualify to participate.

We've tracked these battles extensively, from Anthropic's initial copyright victory to OpenAI's strategy shifts following legal pressure.

Dozens of similar cases against OpenAI, Meta, and others remain pending, and they are expected to settle rather than risk billion-dollar judgments.

This settlement exposes fundamental hypocrisy in the AI industry's fair use defense. Companies want credit for building "transformative" technology while admitting they couldn't be bothered to pay for acquiring training data.

The Association of American Publishers noted that "AI can't exist without using human authorship" — yet the industry's response has been taking that authorship without permission or payment. Whatever Anthropic paid in settlement is almost certainly less than proper licensing would have cost upfront.

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STARTUPS

Blue Water Autonomy raises $50M for unmanned warships

Defense tech is having its moment, and Blue Water Autonomy just grabbed a piece of it. The startup building fully autonomous naval vessels raised a $50 million Series A led by Google Ventures, bringing total funding to $64 million.

Unlike the broader venture market that's been sluggish, defense tech funding surged to $3 billion in 2024 — an 11% jump from the previous year. Blue Water represents exactly what investors are chasing: former Navy officers who understand the problem, paired with Silicon Valley veterans who know how to scale technology.

CEO Rylan Hamilton spent years hunting mines in the Persian Gulf before building robotics company 6 River Systems, which he sold to Shopify for $450 million in 2019. His co-founder Austin Gray served on aircraft carrier strike groups and literally volunteered in Ukrainian drone factories after business school. These aren't typical Silicon Valley founders.

China now has more than 200 times America's shipbuilding capacity, and the Pentagon just allocated $2.1 billion in Congressional funding specifically for medium-sized unmanned surface vessels like the ones Blue Water is building. The Navy plans to integrate autonomous ships into carrier strike groups by 2027.

• Blue Water's ships will be half a football field long with no human crew whatsoever

• Traditional Navy requirements accumulated over 100 years all assume crews that need to survive

• Unmanned vessels can be built cheaper and replaced if destroyed, completely changing naval economics

If America can't outbuild China in sheer volume, it needs to outsmart them with better technology. The company is already salt-water testing a 100-ton prototype outside Boston and plans to deploy its first full-sized autonomous ship next year.

Blue Water faces well-funded competition including Saronic, which raised $175 million at a $1 billion valuation last year. But with defense spending expected to increase under the current administration and venture firms like Andreessen Horowitz launching "American Dynamism" practices focused on national security, the money is flowing toward exactly these types of companies.

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EDUCATION

Melania Trump wants kids to solve America's AI talent problem

America's AI future just got placed in the hands of kindergarteners. First Lady Melania Trump Yesterday launched the Presidential AI Challenge, a nationwide competition asking K-12 students to use AI tools to solve community problems.

The contest offers $10,000 prizes to winning teams and stems from an executive order President Trump signed in April, directing federal agencies to advance AI education for American youth. Students work with adult mentors to tackle local challenges — from improving school resources to addressing environmental issues.

This isn't just feel-good civic engagement. Melania Trump created an AI-powered audiobook of her memoir, utilizing technology to replicate her own voice, thereby gaining firsthand experience with the tools she's asking students to master. She also championed the Take It Down Act, targeting AI-generated deepfakes and exploitation.

While tech giants pour billions into research, the White House Task Force on AI Education is focused on building the workforce that will actually deploy these systems across every sector.

Registration opened Yesterday with submissions due January 20, 2026. Teams must include adult supervisors and can choose from three tracks: proposing AI solutions, building functional prototypes, or developing teaching methods for educators.

• Winners get cash prizes plus potential White House showcase opportunities

• All participants receive Presidential certificates of participation

• Projects must include 500-word narratives plus demonstrations or posters

• Virtual office hours provide guidance throughout the process

China invests heavily in AI education while American schools still struggle with basic computer literacy. Michael Kratsios from the White House Office of Science and Technology emphasized the challenge prepares students for an "AI-assisted workforce" — not someday, but within years.

The initiative coincides with America's 250th anniversary, positioning AI literacy as a patriotic duty. Whether elementary students can actually deliver breakthrough solutions remains to be seen, but Washington clearly believes the alternative — falling behind in the global AI race — is worse.

LINKS

• Microsoft locks down a building at its headquarters after protesters got inside Brad Smith's office, demanding that it cut ties with the Israeli government

• Japanese media groups sue Perplexity over alleged copyright infringement

• AI makes it harder for entry-level coders to find jobs, study says

• Google Gemini’s AI image model gets a ‘bananas’ upgrade

• Apple’s aversion to big deals could thwart its AI push

• Donald Trump Jr.'s VC firm bets on Polymarket

• Google’s AI model just nailed the forecast for the strongest Atlantic storm this year

• Meta’s Louisiana data center to cost $50b, Trump says

• Anthropic launches a Claude AI agent that lives in Chrome

• OpenAI plans to update ChatGPT after parents sue over teen’s suicide

• DOGE accused of copying entire Social Security database to insecure cloud

• Qoder: Agentic IDE for “real software development”

• Command A Reasoning: New model from Cohere for enterprise reasoning tasks

• AI Elements: A component library to design AI-native applications quickly

• Draw a Fish: Draw a fish and then watch it swim :)

• Palantir: Technical Writer

• Fiddler AI: Staff Product Manager

• Limitless AI: Head of Design

• Metropolis: Data Annotation Intern

GAMES

POLL RESULTS

In general, should the U.S. move toward stricter AI rules, keep rules about the same, or loosen rules?

• Much stricter (33%)

• Somewhat stricter (33%)

• About the same (17%)

• Somewhat looser (4%)

• Much looser (6%)

• Not sure (7%)