Possible Damages in Lawsuits Against AI Companies for Defamatory Communications by Their Products

This week and next, I'll be serializing my Large Libel Models? Liability for AI Output draft. For some earlier posts on this (including § 230, disclaimers, publication, and more), see here; in particular, the two key posts are Why ChatGPT Output Could Be Libelous and An AI Company's Noting That Its Output "May [Be] Erroneous]" Doesn't Preclude Libel Liability. Here, I want to say just a few words about damages.

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The majority view in the states is that "One who falsely publishes matter defamatory of another in such a manner as to make the publication a libel is subject to liability to the other although no special harm results from the publication."[1] To have a case, then, a plaintiff need not prove any particular financial loss. The First Amendment limits this doctrine in private figure/public concern cases that are premised on a showing of mere negligent falsehood (as opposed to reckless or knowing falsehood): In such cases, some showing of damage to reputation, and consequent financial loss or emotional distress, is required.[2] But in cases brought based on speech on matters of private concern, or in cases where reckless or knowing falsehood is shown (more on that below), damages need not be shown.

In any event, though, damages could often be shown, especially once the AI software is integrated into widely used applications, such as search engines. To be sure, the results of one response to one user's prompt will likely cause at most limited damage to the subject, and might thus not be worth suing over (though in some situations the damage might be substantial, for instance if the user is deciding whether to hire the subject, or do business with the subject). But of course what one person asks, others might as well; and a subpoena to the AI company, seeking information from any search history logs that the company may keep for its users (as OpenAI and Google do), may well uncover more examples of such queries. Moreover, as these AIs are worked into search engines and other products, it becomes much likelier that lots of people will see the same false and reputation-damaging information.

But beyond this, libel law has long recognized that a false and defamatory statement to one person will often be foreseeably repeated to others—and the initial speaker could be held liable for harm that is thus proximately caused by such republication.[3] In deciding whether such repetition is foreseeable, the Restatement tells us, "the known tendency of human beings to repeat discreditable statements about their neighbors is a factor to be considered."[4] Moreover, if the statement lacks any indication that the information should "go no further," that lack "may be taken into account in determining whether there were grounds to expect the further dissemination."[5]

[1] Restatement (Second) of Torts § 569.

[2] Gertz.

[3] Restatement (Second) of Torts § 576(c) (1977); see, e.g., Oparaugo v. Watts, 884 A.2d 63, 73 (D.C. 2005) ("The original publisher of a defamatory statement may be liable for republication if the republication is reasonably foreseeable."); Schneider v. United Airlines, Inc., 208 Cal.App.3d 71, 75, 256 Cal.Rptr. 71 (1989) ("the originator of the defamatory matter can be liable for each repetition of the defamatory matter by a second party, if he could reasonably have foreseen the repetition" (cleaned up)); Brown v. First National Bank of Mason City, 193 N.W.2d 547, 555 (Iowa 1972) ("Persons making libelous statements are, and should be, liable for damages resulting from a repetition or republication of the libelous statement when such repetition or republication was reasonably foreseeable to the person making the statement."). The law of some states seems to reject this theory, see, e.g., Fashion Boutique of Short Hills, Inc. v. Fendi USA, Inc., 314 F.3d 48, 60 (2d Cir. 2002), but it appears to be the majority view.

[4] Restatement (Second) of Torts § 576(c) cmt. D (1977).

[5] Id. cmt. d.