Proactive Investors - NVIDIA Corp (NASDAQ:NVDA, ETR:NVD) is the latest big tech company to be sued over its alleged use of copyrighted content in training its artificial intelligence (AI).
According to a proposed class action lawsuit filed on Friday night in California, a dataset of about 196,640 copyrighted books was used without permission by NVIDIA to train its AI platform NeMo.
Behind the lawsuit are authors Brian Keene, Abdi Nazemian and Stewart O'Nan who allege their books are part of the dataset used to train NeMo to replicate ordinary written language before it was taken down in October due to “reported copyright infringement.”
The authors allege that the takedown amounts to NVIDIA having “admitted” it trained NeMo using the dataset.
They are seeking unspecified damages. NVIDIA did not respond to media requests for comment.
Similar lawsuits have been filed against OpenAI, Microsoft Corp (NASDAQ:MSFT) and Meta (NASDAQ:META) Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) by various authors alleging their works were also used without permission to train AI.
Following the news of the lawsuit, shortly before noon on Monday NVIDIA shares traded slightly lower at about $872 after the stock dropped about 5.5% on Friday. It remains up 70% in the year-to-date.
XTB research director Kathleen Brooks noted that ahead of the sell-off, which had no single trigger, there had been talks that NVIDIA’s stock price could reach $1,000.
“While there are good reasons to think that NVIDIA’s earnings will continue to deliver this year, as it increases its customer base, and remains the world’s chief producer of GPUs for data centres, Friday’s sell of is a reminder that the market for AI stocks is frothy, after a staggeringly good run over the last 15 months,” Brooks said.
“Even if Nvidia has good fundamentals, the market’s desire to get exposure to the AI theme has reached a level of feverishness that a pullback was likely.”