Sunday Essay
Three Trials, $500B in Stakes: A Court System Forced to Reason About AI
In the absence of federal legislation, three concurrent proceedings — Musk v. Altman in San Francisco, Bartz v. Anthropic in the same district, and Disney v. Midjourney in Los Angeles — have made the United States court system the de facto venue for AI governance. All three reach decisive milestones in the week ahead.
By any conventional measure, the United States in May 2026 has no national AI policy. The federal preemption executive order that the Trump White House is reportedly preparing has not yet been signed; the Senate’s competing legislative drafts remain in committee; the bipartisan AI Insight Forum that ran through 2024 produced a framework that has yet to be enacted into law. There is, in the conventional sense of the term, a vacuum at the federal level. And yet the question of how artificial intelligence is governed in this country has not been on hold. It has migrated to a different branch of government entirely. Over the past month, three federal proceedings — one in the Northern District of California, one in the same district in a different courtroom, and one in the Central District of California — have advanced to the point where their outcomes will shape the architecture of AI law for years. All three reach milestones in the week beginning Monday, May 18.
The most consequential of the three is Musk v. Altman, which enters its third week of trial proceedings in San Francisco. Judge Yvonne Gonzalez Rogers’s advisory jury — an unusual procedural choice for a complex equitable matter, and one that has produced some of the most dramatic courtroom moments of the year — is scheduled to begin deliberations Monday morning. The jury’s recommendations are non-binding on the judge, but they will be public, and they will frame the equitable remedies Gonzalez Rogers is being asked to consider. Those remedies are, by any measure, extraordinary. Musk’s counsel has asked the court to unwind OpenAI’s 2024 restructuring from a capped-profit subsidiary of a nonprofit foundation into a Public Benefit Corporation; to disgorge what plaintiff experts estimate at up to $150 billion in value back to the original nonprofit; and to impose ongoing structural conditions on how OpenAI deploys its frontier models. As MIT Technology Review reported on Friday in its third-week recap, the testimony has been the kind of material that securities and corporate-law scholars will be reading for years: contemporaneous emails about the conversion, contested accounts of which board members understood the conversion’s consequences, and expert disagreement about how a court should value an entity whose principal asset is a frontier-model franchise. The advisory jury could return its recommendation within the week. Gonzalez Rogers’s ruling, on its present pace, would follow before the end of June.
The second of the three is the matter that closed its evidentiary phase three days ago and now sits with the court. Bartz v. Anthropic, the class action brought by authors and publishers over the use of copyrighted works in training Anthropic’s Claude models, had its final fairness hearing on May 14 in front of Judge Araceli Martínez-Olguín in the same San Francisco courthouse. The hearing addressed a $1.5 billion settlement fund covering an estimated 448,000 works — the largest copyright settlement in any AI matter to date. Reporting from Words and Money described the hearing as proceeding smoothly on the substance of the deal; the judge took the settlement under submission and signaled imminent final approval, with the principal outstanding question concerning the attorney-fee award rather than the recovery itself. Final approval is widely expected within weeks. The structural significance is not the dollar amount, large as it is. The significance is that an Article III court has now signaled a willingness to enforce ordinary intellectual-property doctrine against frontier-model training at a scale that materially affects the lab’s balance sheet. That signal, more than any individual ruling, is what re-prices the risk that every lab carries on its books going into the rest of the year.
The third proceeding is the youngest and, in some ways, the most likely to produce doctrinal innovation. Disney v. Midjourney — consolidated with companion complaints from NBCUniversal and DreamWorks Animation — is the first major Hollywood test of the fair-use training-data theory that frontier image labs have leaned on since the diffusion-model era began. The case is advancing through discovery in the Central District of California; depositions of Midjourney engineering leadership are scheduled for the week of May 18, and a critical Rule 12 motion challenging the plaintiffs’ theory of secondary liability is briefed and awaiting argument. Unlike the Bartz matter, where the principal disputed question was always damages rather than liability, Disney v. Midjourney is positioned to produce a published opinion on the merits of the training-data fair-use defense itself — the question that the Bartz settlement, like the Times v. OpenAI settlement before it, allowed both sides to leave unresolved. If the case proceeds to summary judgment as scheduled, the ruling will be the most-cited fair-use opinion in the AI corpus of law.
The through-line connecting the three is not coincidence. It is a structural fact about American governance in 2026. Congress, for reasons that political scientists will debate for decades, has been unable to produce a federal AI statute, even as the EU AI Act has entered its third year of phased implementation and as the state-level patchwork covered elsewhere in this edition has grown past a thousand bills. In the absence of legislation, fact-finders and judges have been forced to do work for which the common-law tradition did not prepare them: to reason about model architectures, about training corpora measured in petabytes, about corporate restructurings that turn nonprofits into market-cap leaders, about the secondary liability of platforms whose training data was, in the labs’ telling, “publicly available.” The opinions and orders these courts produce are now, functionally, the law that frontier labs plan against. That is not the system anyone designed. It is the system that emerged because the alternative — a national policy framework — did not.
The week ahead will not resolve any of the three matters definitively. The Musk v. Altman advisory verdict will inform but not bind the judge; the Bartz final-approval order is procedural rather than precedential; the Disney v. Midjourney discovery phase is months from summary judgment. What the week will resolve is the question of whether the courts retain the capacity and the will to govern this technology in the absence of legislation. The answer, on every available indication, is that they do, and that they will. Whether that is a satisfactory substitute for a national policy is a separate question, and one that the political process has so far declined to answer.