# Kadrey v. Meta: A Fair-Use Win That Reads Like a Plaintiffs' Brief > Two days after Bartz, Judge Chhabria also found AI training to be fair use, but went out of his way to say the result reflected a failure of advocacy, not a vindication of the practice. His 'market dilution' theory is the doctrine to watch. Topic: Copyright | Author: Lidiia Levitska | Source: Intellectual Property Law (outsideipcounsel.com) Canonical: https://outsideipcounsel.com/blog/kadrey-v-meta-ai-fair-use/ Decided two days after *Bartz v. Anthropic*, *Kadrey v. Meta Platforms, Inc.*, No. 3:23-cv-03417-VC (N.D. Cal. June 25, 2025), reached the same destination by a conspicuously different road. Judge Vince Chhabria granted Meta summary judgment on the fair-use question as to the thirteen author-plaintiffs before him (a group that includes Richard Kadrey and Sarah Silverman), but the opinion is best read not as an endorsement of training-as-fair-use but as a roadmap, addressed to future plaintiffs, for how this defense might be defeated. It is a rare summary-judgment order that tells the prevailing party how lucky it was. ## At a glance - **Case:** *Kadrey v. Meta Platforms, Inc.*, No. 3:23-cv-03417-VC (N.D. Cal.) - **Decided:** June 25, 2025 (order on cross-motions for partial summary judgment), Judge Vince Chhabria - **Holding:** On this record, Meta's use of the plaintiffs' books to train its Llama models was fair use, but only because these plaintiffs failed to develop the market-harm theory the court considered most promising - **Status:** Partial, interlocutory ruling; other claims survive; the fair-use order is generally not yet appealable ## The holding and its hedges On the first fair-use factor under 17 U.S.C. § 107, the court agreed with the now-emerging consensus that training a large language model on books is "highly transformative." But the analysis turned on the fourth factor (the effect on the market for the works), and it is there that Judge Chhabria parted company with any triumphalist reading of his own result. He granted judgment to Meta because *these* plaintiffs had not built the evidentiary record the fourth factor demands. Neither side's expert opined that Llama could regurgitate more than 50 words from any of the plaintiffs' books even under adversarial prompting, so the regurgitation theory went nowhere, and the plaintiffs did not develop the theory of market harm the court found most plausible. The opinion states the limitation in unusually candid terms: the ruling "does not stand for the proposition that Meta's use of copyrighted materials to train its language models is lawful. It stands only for the proposition that these plaintiffs made the wrong arguments and failed to develop a record in support of the right one." A companion order two days later (June 27, 2025) granted Meta summary judgment on the plaintiffs' claim under 17 U.S.C. § 1202(b)(1) of the DMCA, which concerns the removal of copyright-management information, on the ground that fair use is not infringement and so the removal could not have facilitated one. ## Market dilution as the live frontier The doctrinal contribution of *Kadrey* is its articulation of what Judge Chhabria called a "market dilution" theory. The idea is this: a model trained on an author's works can be used to generate a flood of machine-authored competition, depressing demand for human-authored books and thereby inflicting cognizable harm on the market under the fourth factor. The court flagged this as potentially "far more promising" than the theories actually advanced. Then, because it had been neither argued nor substantiated, the court declined to rest its decision on it. That is a significant signal, and it is worth situating doctrinally. Since *Harper & Row* the fourth factor has been treated as among the most important, and *Warhol* reaffirmed the centrality of market substitution to the fair-use calculus. By naming market dilution as the theory most likely to carry the day, and by faulting the plaintiffs for neglecting it, the court has in effect published the prevailing theory of the next case. The conventional fourth-factor inquiry asks whether the secondary use substitutes for the original work; the dilution theory asks a subtler question: whether the secondary use floods the *market* the original competes in, even without copying the work itself. Whether courts will accept that broader conception of market harm is the open question on which the next round of AI-copyright litigation may turn. ## Reading Bartz and Kadrey together Taken in tandem, the two Northern District of California decisions establish that, on the records presented, training can qualify as transformative fair use, but neither should be mistaken for a categorical safe harbor. *Bartz* locates the residual risk in data acquisition: lawful use does not cure unlawful sourcing. *Kadrey* locates it in market harm and in the quality of the plaintiffs' proof. The two are complementary maps of where AI-copyright liability still lives. Both rulings are interlocutory, fact-bound, and non-precedential beyond their own dockets. The fair-use determination in *Kadrey* is unlikely to be appealable until the case resolves, and the opinion expressly disclaims any general holding. Practitioners should resist the temptation to cite either case for more than it decides. ## Open questions First, will any court adopt the market-dilution theory, and if so, what evidence will establish it: econometric proof of substitution, evidence of a displaced licensing market, or something else? Second, how will courts treat output that reproduces or closely paraphrases training works, a fact pattern *Kadrey*'s plaintiffs did not establish but a future plaintiff might? Third, the claim the order expressly left live, that Meta unlawfully distributed the plaintiffs' books by uploading them (leeching or seeding) during the torrenting process, is a piracy-conduct theory in the same family as the one that drove the result in *Bartz*, and its resolution may matter more than the fair-use headline. ## Implications for businesses and creators - **For rightsholders:** The path to defeating an AI fair-use defense runs through the fourth factor. Build the record early: evidence of market substitution, of a licensing market the developer bypassed, and of any verbatim output. - **For developers:** A favorable training-fair-use ruling on one record does not generalize. The combination of *Bartz* (provenance) and *Kadrey* (market harm) defines the two fronts on which liability remains live. - **For both:** These are district-court rulings. The appellate law of AI and fair use has not yet been written. ## Frequently asked questions **Did this case dismiss the authors' lawsuit?** No. It was a partial summary judgment limited to the training/fair-use and DMCA issues; other claims survive. Describing it as a dismissal of the lawsuit is imprecise. **What is the "market dilution" theory?** The argument that AI output trained on an author's work can saturate the market and depress demand for human-authored works, causing market harm under the fourth fair-use factor even without direct copying. The court called it promising but did not decide on it. **Does Kadrey mean training on copyrighted books is legal?** No. The court expressly said it held only that these plaintiffs made the wrong arguments and failed to build the right record. ## Authorities and sources - Order on cross-motions for partial summary judgment (Dkt. 598), *Kadrey v. Meta Platforms, Inc.*, No. 3:23-cv-03417-VC (N.D. Cal. June 25, 2025): [full text (govinfo)](https://www.govinfo.gov/content/pkg/USCOURTS-cand-3_23-cv-03417/pdf/USCOURTS-cand-3_23-cv-03417-37.pdf). - Order granting Meta partial summary judgment on the DMCA claim (Dkt. 601, June 27, 2025): [full text (govinfo)](https://www.govinfo.gov/content/pkg/USCOURTS-cand-3_23-cv-03417/pdf/USCOURTS-cand-3_23-cv-03417-38.pdf). - 17 U.S.C. § 107 (fair use): [Cornell LII](https://www.law.cornell.edu/uscode/text/17/107). 17 U.S.C. § 1202: [Cornell LII](https://www.law.cornell.edu/uscode/text/17/1202).