Artificial Intelligence and Intellectual Property: The Perplexity Lawsuit Explores Tech Policy and Law

AI and Intellectual Property: The Perplexity Case

A new lawsuit brought against the startup Perplexity argues that, in addition to violating copyright law, it's breaking trademark law by making up fake sections of news stories and falsely attributing the words to publishers. Dow Jones (the publisher of the Wall Street Journal) and the New York Post—both owned by Rupert Murdoch's News Corp—filed the copyright infringement lawsuit against Perplexity today in the US Southern District of New York.

This is not the first time Perplexity has run afoul of news publishers; earlier this month, The New York Times sent the company a cease-and-desist letter stating that it was using the newspaper’s content without permission. This summer, both Forbes and WIRED detailed how Perplexity appeared to have plagiarized stories. Both Forbes and WIRED parent company Condé Nast sent the company cease-and-desist letters in response.

Allegations of Hallucination

A WIRED investigation from this summer, cited in this lawsuit, detailed how Perplexity inaccurately summarized WIRED stories. In one instance, it falsely claimed that WIRED had reported on a California-based police officer committing a crime he did not commit. The WSJ reported today that Perplexity is seeking to raise $500 million in its next funding round, aiming for an $8 billion valuation.

Dow Jones and the New York Post provide examples of Perplexity allegedly "hallucinating" fake sections of news stories. In AI terms, hallucination is when generative models produce false material and present it as fact. In one case cited, Perplexity Pro first regurgitated two paragraphs from a New York Post story about US Senator Jim Jordan sparring with EU Commissioner Thierry Breton over Elon Musk and X, but then generated five paragraphs about free speech that were not in the real article.

Trademark Dilution Concerns

The lawsuit claims that mixing in these fabricated paragraphs with real reporting and attributing it to the Post is trademark dilution that potentially confuses readers. “Perplexity’s hallucinations, passed off as authentic news from reliable sources (using Plaintiffs’ trademarks), damage the value of Plaintiffs’ trademarks by injecting uncertainty and distrust into the newsgathering process,” states the complaint.

Perplexity did not respond to requests for comment. News Corp chief executive Robert Thomson compared Perplexity unfavorably to OpenAI. “We applaud principled companies like OpenAI, which understands that integrity and creativity are essential if we are to realize the potential of Artificial Intelligence,” he stated. “Perplexity is not the only AI company abusing intellectual property, and we will pursue any such cases vigorously.”