IP Law Daily, TECHNOLOGY/INTERNET NEWS: Class action lawsuit alleges privacy violations by OpenAI, Microsoft, (Jun 29, 2023)

By Tom Leithauser,TR Daily

The complaint accuses OpenAI and Microsoft of recklessly racing “to release AI technology with disregard for the catastrophic risk to humanity in the name of ‘technological advancement.’”

OpenAI LLC, related companies, and Microsoft Corp. have violated state and federal laws on privacy and cybersecurity by obtaining the personal information of Internet users without consent and monetizing that data in unlawful ways, according to a putative class action lawsuit filed in the U.S. District Court for the Northern District of California. The defendants have worked together to “secretly harvest massive amounts of personal data from the internet, including private information and private conversations, medical data, information about children—essentially every piece of data exchanged on the internet it could take—without notice to the owners or users of such data, much less with anyone’s permission,” according to the complaint.

The lawsuit alleges violations of the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, and privacy and consumer-protection laws in California, Illinois, and New York.

The lawsuit, P.M., et al. v. OpenAI, et al. (case 3:23-cv-03199-JCS) was filed on behalf of 16 plaintiffs identified only by their initials. “Plaintiffs respectfully request that the Court permit them to keep their identity private as Plaintiffs aim to avoid intrusive scrutiny as well as any potentially dangerous backlash,” it says.

The plaintiffs live in California, Florida, Illinois, and elsewhere and include at least two minors. The lawsuit suggests there are millions of additional Internet users whose privacy rights were violated and seeks class-action status.

According to the complaint, OpenAI was originally founded as a nonprofit research organization to create and ensure artificial intelligence would be used for the benefit of humanity. But in 2019, OpenAI abruptly restructured itself, abandoned its original goals and principles, developing a for-profit business that would pursue commercial opportunities of staggering scale at the expense of privacy, security, and ethics.

“Using stolen and misappropriated personal information at scale, Defendants have created powerful and wildly profitable AI and released it into the world without regard for the risks,” the lawsuit says.

“This class action lawsuit arises from Defendants’ unlawful and harmful conduct in developing, marketing, and operating their AI products, including ChatGPT-3.5, ChatGPT-4.0, Dall-E, and Vall-E (the ‘Products’), which use stolen private information, including personally identifiable information, from hundreds of millions of internet users, including children of all ages, without their informed consent or knowledge,” it says.

“Furthermore, Defendants continue to unlawfully collect and feed additional personal data from millions of unsuspecting consumers worldwide, far in excess of any reasonably authorized use, in order to continue developing and training the Products,” the lawsuit alleges.

“Without this unprecedented theft of private and copyrighted information belonging to real people, communicated to unique communities, for specific purposes, targeting specific audiences, the Products would not be the multi-billion-dollar business they are today,” it adds.

“OpenAI used the stolen data to train and develop the Products utilizing large language models (LLMs) and deep language algorithms to analyze and generate human-like language that can be used for a wide range of applications, including chatbots, language translation, text generation, and more,” it says.

“Once trained on stolen data, Defendants saw the immediate profit potential and rushed the Products to market without implementing proper safeguards or controls to ensure that they would not produce or support harmful or malicious content and conduct that could further violate the law, infringe rights, and endanger lives,” the lawsuit claims.

The data amassed by the products is from users and non-users alike, the lawsuit notes. “As a general matter, internet user data is available for purchase like any other content or property. In the technological era in which we live, a mature market for such data exists given how valuable our personal information has become to companies, for marketing and other purposes. The legal acquisition of data typically depends on consent and remuneration, with some form of consideration exchanged,” it says.

“Despite established protocols for the purchase and use of personal information, Defendants took a different approach: theft. They systematically scraped 300 billion words from the internet, books, articles, websites and posts—including personal information obtained without consent. OpenAI did so in secret, and without registering as a data broker as it was required to do under applicable law,” the lawsuit alleges.

Aside from privacy violations associated with “scraping” data from the Internet, the 157-page complaint claims that OpenAI’s tools could be used to develop malware. It also asserts that unregulated uses of AI could result in wide-ranging, unanticipated harms to humankind in the name of “technological advancement.”

The lawsuit asks the court to enjoin OpenAI and Microsoft from using the AI tools until, among other things, the companies (1) establish an “independent body of thought leaders (the ‘AI Council’) who shall be responsible for approving uses of the Products before, not after, the Products are deployed”; (2) “allow Product users and everyday internet users to opt out of all data collection and stop the illegal taking of internet data, [and] delete (or compensate for) any ill-gotten data”; and (3) establish a monetary fund to “compensate class members for Defendants’ past and ongoing misconduct to be funded by a percentage of gross revenues from the Products.”

“Critically, the injunctive relief sought in this Action seeks only to pause the unfettered and further commercial deployment of the Products, with AI research and development otherwise continuing unaffected. That is because of an equally important truth on which all agree: the United States must remain aggressively locked into the worldwide AI arms-race, set off by Defendants’ launch of the Products (for better or worse), to ensure this powerful technology is developed and deployed for good around the world,” the lawsuit says.

OpenAI and Microsoft had no immediate comment on the lawsuit.

The Case is No. 3:23-cv-03199.

Attorneys: Ryan J. Clarkson (Clarkson Law Firm, P.C.) for P.M., K.S., B.B., S.J., N.G., C.B., S.N., J.P., S.A., L.M., D.C., C.L., C.G., R.F., N.J. and R.R.

Companies: OpenAI LP; OpenAI Incorporated; OpenAI GP LLC; OpenAI Startup Fund I, LP; OpenAI Startup Fund GP I, LLC; Microsoft Corporation

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