The New York Times v. Perplexity AI: New Frontiers in IP and AI

The New York Times recently filed a major lawsuit against the artificial intelligence platform Perplexity AI for infringement of intellectual property rights. The importance of this lawsuit lies in the fact that it does not rely solely on “classic” claims of copyright infringement, but also includes innovative claims of trademark violations and damages.

Lawsuit Against Perplexity AI

A few days ago, the New York Times, which has previously filed several lawsuits against artificial intelligence platforms (including OpenAI and Microsoft), filed another lawsuit—this time against Perplexity AI—with a court in New York. Perplexity AI operates an AI-based search engine that scrapes information from the internet in real time and displays the results in an accessible and synthesized format for users.

The newspaper’s main allegations include:

• Copyright infringement: The New York Times alleges that Perplexity AI committed massive, methodical, and unlawful copyright infringement through unauthorized copying and dissemination of the newspaper’s copyrighted content, which Perplexity AI also used to train and power its AI models. According to the newspaper, the infringements relate to millions of articles and was carried out via sophisticated bots (crawlers) and by scraping vast amounts of content from the nytimes.com website.
• Impact on users:  According to the New York Times, Perplexity’s GenAI products, which are based on copyrighted articles, are verbatim (or strikingly similar) to its original content. As a result, Perplexity AI is alleged to have generated responses for users containing comprehensive and complete information that substantially overlaps with the original text, thereby eliminating users’ need to read the newspaper’s original articles. Perplexity AI’s responses essentially committed direct misappropriation of copyrighted content created by the newspaper and caused severe damage to its economic model.

Innovative Claim – Violation of the Newspaper’s Registered Trademark

Unlike content giants’ previous lawsuits against GenAI engines for copyright infringement, the New York Times did not stop there. The current litigation goes one step further with a groundbreaking claim: Perplexity AI also committed trademark infringement, in violation of provisions of the US Lanham Act (the US federal trademark law of 1946).

The newspaper claims that Perplexity’s products generated fabricated or false information (called “hallucinations”), which it falsely attributed to the New York Times by displaying the newspaper’s registered trademark alongside the fabricated information. The New York Times also alleges that Perplexity AI displays partial, abridged, or distorted versions of its copyrighted content.

According to the New York Times, this practice constitutes erroneous attribution of information to the newspaper, while misleading users and severely tarnishing the newspaper’s reputation for truth and accuracy in reporting. The New York Times further claims that Perplexity AI’s actions also constitute trademark dilution—damage to the newspaper’s distinctive trademark, while prejudicing its differentiation and the trademark’s economic value.

Consequently, the New York Times alleges that its trademark’s ability to fulfill its function has been impaired, since users could mistakenly think that even erroneous or incomplete information reflects the New York Times’ positions and journalistic standards of accuracy.

Possible Implications If the New York Times Wins

This lawsuit opens a new front in the field of IP rights and AI: trademark violations. This front will require reconciling incentives for invention and technological progress not only against copyright law, but also trademark law, which is based on a slightly different rationale, namely the relationship between a product or service and its provider, and the protection of consumers who use them.

If the New York Times wins its lawsuit, the implications could be twofold: (1) Companies developing GenAI platforms may be found liable for unauthorized use of trademarks even if they did not explicitly intend to use them, and when the infringing content is automatically generated. (2) It may lead to the expansion of trademark law into the realm of GenAI and to recognition that hallucinations, or material errors and omissions, are not merely within the scope of technological failures, but may constitute commercial torts of misleading the public and causing reputational damages.

Practical Recommendations

For GenAI operators, the New York Times lawsuit reinforces the need for stricter controls on attribution of copyrighted sources, prevention of the creation of hallucinations or incorrect or fragmented content, and the manner in which third-party names and trademarks are displayed.

We recommend that GenAI operators perform comprehensive examinations of intellectual property, especially in relation to trademarks that may appear in their outputs. We also recommend they implement filtering and identification mechanisms for famous registered trademarks and ensure that trademarks are not misused to lend credibility to AI-generated content.

Within this context, it is also important to manage and document an orderly compliance policy and to implement procedures on the use of trademarks.

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Dr. Avishay Klein is a partner and head of our firm’s Privacy, Cyber and AI Department.

Dr. Ran Karmi is an associate in our firm’s Antitrust and Competition Department.