Why Gen AI is Failing: 3 Lawsuits Proving You’re Doing It Wrong

I spent the last six months watching companies dump millions into LLMs. They all want the same thing: Infinite content. Zero cost. Maximum scale.

They are failing.

If your strategy is "just prompt it," you’ve already lost.

Here are the 3 lawsuits proving you are doing it wrong—and how to pivot before the hammer drops.

1. The "Memorization" Trap: NYT vs. OpenAI

The New York Times didn't just sue because OpenAI used their data. They sued because ChatGPT was caught red-handed. It was spitting out verbatim articles. Word for word.

This is the "Memorization" problem.

I see CEOs bragging about "AI-written" newsletters. They look identical. They sound the same. They carry the same biases.

Don't ask it to write the article. Ask it to find the logical gaps in your argument. Don't ask it for the news. Ask it to challenge your perspective.

If you can’t tell the difference between your AI’s voice and a Wikipedia entry, neither can your customers. Or the lawyers.

2. The Branding Suicide: Getty Images vs. Stability AI

This is what happens when you prioritize scale over quality.

I’ve seen "AI-First" marketing agencies try to replace human designers. They save $5,000 a month on salaries. They lose $500,000 in brand equity.

In a world of infinite, AI-generated noise, "Perfect" is the new "Boring."

Trust is the only thing that doesn't scale.

3. The Copyright Void: Sarah Silverman vs. Meta/OpenAI

This is the big one. Authors are suing because their books were used to train models without consent.

But here is the hard truth for you: The US Copyright Office has been clear. You cannot copyright AI-generated work.

If you use Midjourney to create your logo, you don't own it. If you use ChatGPT to write your book, anyone can legally copy it and sell it. You have zero IP protection.

I watched a startup spend $20k on an AI-generated brand identity. Three months later, a competitor copied the entire aesthetic. The startup tried to sue. They lost.

Why? Because a human didn't "create" it. The algorithm did.

You are building a "moat" made of water.

If your business relies on assets that you don't legally own, you don't have a business. You have a hobby that Meta and OpenAI are letting you play with—for now.

The Insight: The "Private Data" Moat

Here is what nobody is telling you: Public LLMs are a race to the bottom.

If you use the same model as your competitor, you will get the same results. You will have the same costs. You will have the same legal risks.

Your internal emails. Your 10 years of customer feedback. Your proprietary process that isn't on the internet.

My hot take: The "Content Creator" is dead. The "Data Curator" is the new king.

The lawsuits aren't a bug. They are a feature. They are the market’s way of purging the lazy.

Choose.

The CTA:

Are you building a brand, or are you just renting space in a prompt box?