Yoda and Harry Potter Chatbots Could Be the Next Big Legal Battle

It’s only a matter of time until rights holders notice that new AI tools are playing a little loose with their intellectual property. But first…

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Begun, the AI lawsuits have

On the website of Character.AI, users can create and query hundreds of AI chatbots that represent real people (Tim Cook, Elon Musk) and famous fictional characters. For example, a virtual Master Yoda will tell you about his home planet, Dagobah, while answering questions about current events. (“Bankrupt, Silicon Valley Bank now is. Pensions, people lost.”)

Elsewhere, Hermione Granger from Harry Potter will stop short of ever naming He Who Must Not Be Named, but she will opine on Governor Ron DeSantis (“a person of principle and character”) and President Joe Biden (“I think he genuinely cares about this country.”)

Meanwhile, the companies that own those creations can sit and wonder whether brazen internet startups are once again infringing on their turf.

Character.AI, valued in a recent fundraising round at $1 billion, is not the only site muddying the already vague boundaries between copyrighted content and legally sanctioned variations on that material, known as fair use OpenAI’s ChatGPT can do a pretty good impersonation of Yoda, too, not to mention Rick from the Rick and Morty animated show. (“Oh, jeez, the Ukraine War? That's a real doozy, Morty. It's a complicated mess.”)

Among the so-called AI image generators that let users create images based on a specific prompt, sites using Stability AI’s open-source engine will easily cough up a work with copyrighted characters — say, Batman and Spider-Man fighting amid the ruins of a cyberpunk landscape. They can even base the image on the specific style of a particular illustrator.

A few intellectual property lawsuits have already been lobbed at the makers of these AI services. Getty sued Stability AI for building its image database by scraping millions of online images, many protected by copyright. In a similar suit, a San Francisco-based class action firm representing three artists sued Stability AI, DeviantArt and Midjourney for training their model with billions of copyrighted images. News publishers have also criticized OpenAI for using their articles to train its AI tools.

But the complaints focus on the creation and training of databases that feed these new AI engines — the . It remains to be seen how rights holders will interpret the output — Yoda’s ramblings, for example — which have been coopted by Character.AI and its ilk without permission from Walt Disney Co.-owned Lucasfilm and other rights holders.

It’s also unclear how courts will interpret these novel issues. Is virtual Yoda akin to fan fiction or the nerdy guy who dresses up for Comic Con? Or is it an unlicensed, derivative work capable of attracting a real audience and one day, real revenue?

There are already some indications that internet companies are treading carefully. Dall-E, the image generator made by the Microsoft Corp.-backed OpenAI, resists coughing up images of any copyrighted characters. Character.AI puts guardrails around what its chatbots say; they won’t talk dirty, to the sorrow of some Reddit users, and on its terms of service, the company instructs users that they should own the “right, title and interest in” the content they upload to the site. Of course, the site doesn’t appear to police that.

Rights holders and internet companies have been fighting these kinds of battles for years. Two decades ago, Napster facilitated the free download of music; years later, YouTube enabled the easy upload of copyrighted movies and TV shows. Along the way, Google decided to scan every book from university libraries and put them online.

The tech and media industries fought epic legal battles over these issues, then essentially reached negotiated truces and agreed to share in the lucrative revenues from protecting and selling copyrighted songs, movies and books.

So is everyone more enlightened this time around? “I think it may well be the case that we get to the point that people realize there is real technology we want to value and don’t want to kill, and they will look for ways to accommodate it,” said Mark Lemley, a professor of law at Stanford University and an IP attorney whose clients include Stability AI.

But, he acknowledges, the wrong case, or an unfavorable early judgement, “can bring all development in the industry to a screeching halt.”

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— With assistance by Lucy Papachristou