• by Ray Schultz , Columnist, October 22, 2024

There is one question about lawsuit filed against Perplexity by Dow Jones on Monday. Is this the first of several?

Will Perplexity, like OpenAI, find itself in a round of litigation?

Or will it, also like OpenAI, cut deals with individual companies to license their content, as it has done with crypto firm Polymarket? 

The case, on file with the U.S. District Court for the Southern District of New York, was brought by “news publishers who seek redress for Perplexity’s brazen scheme to compete for readers while simultaneously freeriding on the valuable content the publishers produce,” the company states. It specifies two Dow Jones publications: The Wall Street Journal and New York Post.

Perplexity, which bills itself as an AI search engine, “loudly touts that its answers to user queries are so reliable that its users can ‘Skip the Links’ to the original publishers and instead rely wholly on Perplexity for their news and analysis needs,” the complaint states. 

It continues: “What Perplexity does not tout is that its core business model involves engaging in massive freeriding on Plaintiffs’ protected content to compete against Plaintiffs for the engagement of the same news-consuming audience, and in turn to deprive Plaintiffs of critical revenue sources.” 

Dow Jones has deep pockets for pursuing a case like this. Meanwhile, The New York Times and Condé Nast have sent cease-and-desist letters to Perplexity. 

The most basic copyright violation in this case is Perplexity’s unlicensed and illegal copying of a massive amount of Plaintiffs’ copyrighted works as inputs into its massive RAG (retrieval-augmented generation) database index, Dow Jones asserts.

The lawsuit adds: “Perplexity has marketed itself as, among other things, a substitute purveyor of news, even though Perplexity does not employ any journalists or editors to produce original news stories. According to Perplexity’s website, it seeks to attract customers interested in a “daily [news] briefing.”

The suit asks that Perplexity be enjoined from copying of copyrighted content and from using content for AI outputs, websites, indices, databases or other tools that contain “complete or excerpted portions of Plaintiffs’ copyrighted works without authorization.”

Perplexity had not filed an answer at deadline. 

The complaint also demands destruction of any content in databases and statutory damages up to $150,000 for each infringement. 

Legal reporters will have their hands full as the discovery documents pile up.