Andersen v. Stability AI Ltd.

Background

Sarah Andersen, Kelly McKernan, and Karla Ortiz filed a proposed class action concerning Stable Diffusion and related artificial-intelligence products operated by Stability, DeviantArt, and Midjourney. They alleged that Stability and others scraped billions of online images, including the plaintiffs’ works, to create training datasets and train Stable Diffusion. They further alleged that the products could generate images in the style of particular artists.

The complaint asserted direct and vicarious copyright infringement, Digital Millennium Copyright Act claims concerning copyright-management information, statutory and common-law rights of publicity, unfair competition under California law and related theories, declaratory relief, and—against DeviantArt—breach of contract based on DeviantArt’s terms of service and privacy statement.

Copyright claims

The court dismissed McKernan’s and Ortiz’s Copyright Act claims with prejudice because their counsel clarified that they were not asserting those claims. The court limited Andersen’s copyright claims to the collections for which she had registered copyrights. It held that Andersen could proceed at this stage based on her allegations and an online search indicating that some of her registered works appeared in the training data; the defendants could test those assertions in discovery.

The court denied Stability’s motion to dismiss Andersen’s direct copyright-infringement claim based on Stability’s alleged copying and use of training images. The court concluded that the allegations that Stability acquired billions of copyrighted images without permission and used them to train Stable Diffusion were sufficient at the pleading stage.

The court granted DeviantArt’s and Midjourney’s motions to dismiss the direct-infringement claim with leave to amend. As to DeviantArt, the complaint did not clearly explain whether Stable Diffusion contained compressed copies of training images, how the program operated with respect to those images, or how DeviantArt’s use of Stable Diffusion through DreamUp constituted infringement. As to Midjourney, the complaint did not clearly identify whether the theory depended on Midjourney’s use of Stable Diffusion, Midjourney’s own training of its product, or both.

The court dismissed the vicarious-infringement claim against all defendants with leave to amend. Vicarious infringement is secondary liability based on another person’s direct infringement. The court found that the claim could not proceed against DeviantArt or Midjourney without adequately alleged direct infringement. It also required more facts to support the theory against Stability, including facts about supervision, financial interest, and how allegedly copyrighted compressed copies were present in or used by the defendants’ products.

Digital Millennium Copyright Act

The court dismissed the Digital Millennium Copyright Act claim against each defendant with leave to amend. The complaint did not identify the specific copyright-management information—such as an author’s name, ownership information, or other identifying information—that each named plaintiff claimed was removed or altered. It also did not adequately identify which defendant performed the alleged removal or alteration, or when that conduct occurred.

Rights of publicity

The court dismissed the statutory and common-law rights-of-publicity claims with leave to amend. The plaintiffs needed to clarify whether the claims concerned their names, artistic identities, styles, or advertising and promotion. The complaint did not allege specific facts showing that a defendant used a named plaintiff’s name to advertise, sell, or solicit purchases of DreamStudio, DreamUp, or Midjourney, or showing resulting harm to the plaintiffs’ goodwill.

DeviantArt argued that the First Amendment protected its conduct under a transformative-use defense. The court declined to decide that issue at this stage because the publicity claims required amendment and the defense would be better evaluated on an evidentiary record. DeviantArt could raise the defense again after amendment.

Unfair competition and declaratory relief

The court dismissed the unfair-competition claim with leave to amend. It held that the claim based on alleged copyright infringement was preempted by the Copyright Act. The complaint also lacked plausible facts supporting the plaintiffs’ clarified theory that defendants’ products deceived users about the origin, sponsorship, or approval of output images. The court allowed amendment to clarify the unfair, fraudulent, and common-law passing-off theories and to identify facts concerning each defendant’s use of the plaintiffs’ names or association with their works.

The court denied without prejudice the motions to dismiss the declaratory-relief claim as duplicative. The plaintiffs were directed to identify the scope of the requested declarations and provide examples that were not merely duplicative of their statutory claims.

Breach of contract

The court dismissed the breach-of-contract claim against DeviantArt with leave to amend. The plaintiffs had not identified the precise terms that DeviantArt allegedly breached or facts showing that DeviantArt exceeded the limited license in the terms of service. If they relied on agreements involving other entities, they also had to plead facts supporting their theory that they were intended third-party beneficiaries entitled to enforce those provisions.

Class allegations and anti-SLAPP motion

The court denied Midjourney’s motion to strike the class allegations. It held that challenges concerning copyright ownership, registration, similarity, confusion, standing, consent, and other fact-intensive issues were better addressed at the class-certification stage rather than at the pleading stage.

The court deferred DeviantArt’s special motion to strike under California’s anti-SLAPP statute. Because the court dismissed the publicity claims with leave to amend, DeviantArt could renew that motion after the plaintiffs realleged those claims.

Disposition

The court stated that the motions to dismiss were granted in full except for Andersen’s direct copyright-infringement claim against Stability. The plaintiffs were given leave to amend, and any amended complaint had to be filed within 30 days of the order.