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OpenAI Copyright Litigation: How Privilege Missteps May Result in Increased Damages

Judge Ona Wang's discovery decision in the ongoing OpenAI copyright dispute with authors and publishers centers on the attorney-client privilege and the deletion of two datasets containing pirated books. This case also tests fundamental questions about copyright law's application to AI training datasets and generative systems.

The OpenAI cases before the Southern District of New York

The ruling occurred in the multidistrict pretrial proceedings involving OpenAI cases pending in the Southern District of New York (In re OpenAI, Inc. Copyright Infringement Litigation, MDL No. 3143 (S.D.N.Y.)). The complaints ask whether OpenAI's use of copyrighted materials to train large language models, including ChatGPT, violates authors' and publishers' exclusive rights under the U.S. Copyright Act. The case hinges on whether AI training qualifies as transformative use under the four-factor fair use test.

The Procedural Ruling

OpenAI's counsel initially stated that two datasets—Books1 and Books2, sourced from the pirate library LibGen—were deleted due to non-use. Notably, these are the only training datasets OpenAI has ever deleted. When plaintiffs sought discovery into the deletion, OpenAI reversed course, claiming all reasons for deletion should be shielded under attorney-client privilege.

Judge Wang rejected this position. OpenAI cannot state a reason (which implies the material is not privileged) and then later assert that the reason is privileged to avoid discovery: by disclosing a reason for deleting the datasets—claiming they weren't being used—OpenAI had already waived privilege protection.

Practical Implications

The ruling requires OpenAI to produce communications that the court reviewed in camera, all written communications with in-house counsel from 2022 regarding the deletion, and internal references to LibGen that OpenAI previously withheld.

The stakes are substantial. Willful infringement under the Copyright Act permits statutory damages of up to $150,000 per work, compared to $750 for non-willful infringement. If the now-discoverable communications reveal that OpenAI's lawyers flagged copyright risk before the datasets were used—or recommended deletion specifically to limit litigation exposure—that would be strong evidence of willfulness. With tens of millions of works potentially at issue across the consolidated cases, exposure could reach billions.

How CILC Can Help?

OpenAI ruling illustrates a broader principle: privilege protections are only as strong as the discipline with which they're maintained. Once litigation is reasonably anticipated, inconsistent positions, selective disclosures, or poorly structured communications can waive protections entirely.

Our attorneys are qualified in both US and EU jurisdictions, enabling us to bridge the privilege gap and advise on structuring communications appropriately for both regimes. Our team includes attorneys with backgrounds at leading international firms delivering sophisticated competition law counsel without the overhead of traditional full-service firms.

If your company has US and EU operations or conducts business in these markets, we encourage you to schedule a consultation to assess your current exposure and discuss privilege-protective structuring options.

Legal professional privilege for in-house counsel and US-only qualified counsel: US companies in the European Union face a fundamentally different legal landscape

Any substantive assessment of EU law compliance should be routed through external counsel who are qualified in an EU jurisdiction. This is not merely best practice; it is the only way to ensure privilege protection in European Commission proceedings.

The European Commission maintains a restrictive position on this issue. Communications with in-house and external US-only qualified counsel are unprotected. This stands in contrast to jurisdictions like the United States, where attorney-client privilege generally extends to in-house counsel communications without distinction, and the UK, where in-house solicitors enjoy the same privilege as external solicitors, provided they're acting in their capacity as legal advisors.

The Transatlantic Privilege Gap

In the United States, attorney-client privilege extends equally to communications with in-house counsel and external lawyers. Many US companies structure their compliance programs around this assumption, routing sensitive law assessments through their legal departments with the expectation of confidentiality.

On November 10, 2025, the European Commission published Competition Policy Brief No. 1/2025, definitively rejecting calls to extend privilege to in-house counsel or to US-only-qualified attorneys.

The European Commission's Conclusions

Self-assessment does not justify extension, and the enforcement effectiveness concerns are paramount. The Commission warned that extending LPP to in-house lawyers "would most likely hamper the effectiveness of EU law investigations," citing structural risks of abuse to conceal wrongdoing. In the Teva Copaxone case from October 2024, the Commission relied on documents from in-house lawyers who were involved in designing Teva's abusive strategy.

Practical Implications

Companies should establish clear protocols distinguishing between business communications (which may involve in-house counsel) and legal advice communications (which should be channeled through external counsel). The Commission noted that in-house lawyers frequently participate in "internal exchanges that are not linked or limited to the provision of legal advice," making segregation essential.

Companies with significant EU exposure should audit existing documentation practices. Legacy documents—particularly those involving competition-sensitive matters like pricing, distribution arrangements, or competitor discussions—may present latent risk if they were created under the assumption of in-house privilege.

How CILC Can Help?

If your company has EU operations or conducts business in EU markets, we encourage you to schedule a consultation to assess your current exposure and discuss privilege-protective structuring options.

Data Collection: Google case in California and the EU Digital Omnibus

A jury in California found Google liable in September 2025 for unlawfully collecting data from nearly 100 million users. The company was ordered to pay $425.6 million in compensatory damages and now faces up to $4.6 billion in additional unjust enrichment damages—representing profits allegedly gained from the data collection. Google used cookies to track users’ activity for advertising and analytics, even when users took steps to block such tracking via browser settings or Google’s own privacy controls.

In the EU, the Digital Omnibus package is expected to include targeted changes to the e-Privacy Directive—rules requiring user consent before tracking technologies like cookies can be placed on devices. The reform aims to reduce “cookie fatigue” while updating outdated rules that many in the industry argue hinder innovation. They argue that current rules demand consent even for minimal or privacy-friendly data uses, discouraging alternative advertising models. Privacy advocates, however, warn that relaxing the consent standard would erode privacy rights guaranteed by EU law and allow further exploitation of personal data.

Practical Implications

The Digital Omnibus aims to harmonize and simplify EU regulations for tech companies, including rules on cookies and tracking technologies, by revising the e-Privacy Directive, but user consent remains a legal requirement for most non-essential cookies and tracking technologies.

Tracking users after they have turned off privacy settings or attempted to block cookies remains a violation of current EU privacy requirements. It is among the practices that have triggered large regulatory fines in the EU. Even with simplification, the Omnibus is unlikely to exempt companies from respecting user choices to opt out of tracking, especially for advertising or behavioral data collection. The reforms will clarify the legal basis for data processing, but Google's conduct would have to align with users’ informed and freely given consent

Google's conduct, as judged unlawful in the US, would not be exempted under the new Digital Omnibus if it involves tracking without valid, user-informed consent. Any changes will likely clarify specific use cases for exemptions, but advertising and analytics tracking without opt-in consent remains a red line under EU law—even after the Digital Omnibus takes effect.

Attorney Legal Privilege Challenges for US and EU businesses

The divergences in the transatlantic framework for the Legal Professional Privilege (LPP)

For businesses operating in the US and EU markets, navigating cross-border legal matters requires more than just expertise—it demands the ability to protect sensitive client communications on both sides of the Atlantic.

An American attorney cannot provide privileged legal advice on European law in Europe under EU rules. To protect client confidentiality and comply with EU law, U.S. attorneys should collaborate with or defer to EEA-qualified counsel when advising on matters governed by European law.

Practical Implications & Increased Costs

Clients seeking comprehensive privilege protection in cross-border matters face increased costs due to these divergences:

Mandatory Engagement of Additional Lawyers
Coordination and communication overheads
Duplicate legal analysis and Work Product.

For a multinational business facing a European regulatory investigation, internal documents and advice must be carefully channeled through EEA-qualified counsel for EU purposes and U.S. counsel for U.S. privilege needs. This not only doubles legal spending but also requires careful planning to maintain privilege in both jurisdictions.

Divergent Legal Standards:
Attorney-client privilege and related protections such as the work product doctrine vary widely between jurisdictions. The US, as a common law jurisdiction, generally offers broad attorney-client privilege, encompassing both in-house and external counsel, and often extends protection to work product. In contrast, many civil law jurisdictions in Europe, including under EU law, provide a narrower scope: privilege typically applies only to communications with external, EEA-qualified lawyers and often excludes in-house counsel

CILC: A Strategic Solution

CILC offers a unique advantage: our attorneys are qualified in both the EU and the US, enabling us to secure legal privilege for clients in both jurisdictions. With CILC, clients benefit from seamless, comprehensive privilege protection in multi-jurisdictional matters—without the complexity of engaging separate legal teams in each region.

Attorney Legal Privilege: Amazon Litigation

Amazon ordered to give the materials to the private consumer plaintiffs

Judge John Chun’s recent ruling underscores the company’s improper designation of business documents as attorney-client privileged, thus enabling private plaintiffs to obtain critical operational materials for their case.

Amazon had improperly classified a range of documents—including operational, business, and strategy papers—as subject to attorney-client privilege or attorney-work product protection. The court ordered Amazon to provide these materials to private consumer plaintiffs, reinforcing judicial scrutiny of privilege claims and supporting transparency in antitrust discovery.

Amazon Cases

Private plaintiff actions—De Coster et al., Brown et al., Hogan, and Frame-Wilson—are proceeding in parallel with the broader FTC and state case against Amazon (FTC et al. v. Amazon). The government case centers on monopolization and anticompetitive conduct under federal law, seeking remedies to reform Amazon’s practices. Private plaintiffs are pursuing damages or injunctions on behalf of consumers, alleging that Amazon’s restrictive agreements caused consumer harm and limited market competition.

Ruling Implications

Judge Chun’s decision demonstrates courts’ willingness to pierce overbroad privilege assertions, facilitating plaintiff access to essential evidence in complex monopoly and anticompetitive conduct cases. It goes without saying that those same documents would almost certainly be disclosable if European antitrust regulators were to investigate Amazon. The European Union’s privilege rules are stricter than the US: only communications with external, independent EU-qualified lawyers for defense purposes are protected, while in-house counsel and business documents do not receive privilege. Therefore, operational, strategic, and mixed-purpose legal documents released under Judge Chun’s order would be subject to review and production if requested by the European Commission or national authorities in an antitrust probe.

Why CILC?

CILC’s integrated business model is centered on attorneys qualified in multiple jurisdictions. This unique approach enables organizations to strengthen privilege compliance and safeguard sensitive communications and documents across borders. Our international attorney network ensures that your organization benefits from expert guidance, tailored legal frameworks, and consistent oversight, no matter where you operate.

Stay ahead of compliance risks. Contact CILC to learn how we can support your organization’s confidentiality needs.

Attorney Legal Privilege: Compliance and Risks in Litigation

A recent US federal court case highlighted the serious risks of improper privilege designation

A judge described the “systemic disregard” of evidentiary rules as “concerning,” noting that a major online platform appeared to be putting “no thought” into marking materials as attorney-client privileged. Such lapses can result in sanctions and reputational harm.

How a Robust Compliance Program Prevents Mistakes

Revamping compliance programs helps organizations address systemic weaknesses and foster a culture of proactive, accurate legal and regulatory adherence. Clear policies, ongoing training, and centralized oversight are essential to ensuring privileged communications are handled correctly.

Strategic Benefits Beyond Avoiding Sanctions

Demonstrating a commitment to proper compliance safeguards a company’s reputation, especially valuable during high-profile litigation or regulatory scrutiny. Operational efficiency and long-term sustainability are further strengthened when compliance is integrated into core business processes.

Why Choose CILC?

Stay ahead of compliance risks. Contact CILC to learn how we can support your organization’s confidentiality needs.