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OpenAI must defend ChatGPT fabrications after failing to defeat libel suit

OpenAI may finally have to answer for ChatGPT’s “hallucinations” in court after a Georgia judge recently ruled against the tech company’s motion to dismiss a radio host’s defamation suit.

OpenAI had argued that ChatGPT’s output cannot be considered libel, partly because the chatbot output cannot be considered a “publication,” which is a key element of a defamation claim. In its motion to dismiss, OpenAI also argued that Georgia radio host Mark Walters could not prove that the company acted with actual malice or that anyone believed the allegedly libelous statements were true or that he was harmed by the alleged publication.

It’s too early to say whether Judge Tracie Cason found OpenAI’s arguments persuasive. In her order denying OpenAI’s motion to dismiss, which MediaPost shared here, Cason did not specify how she arrived at her decision, saying only that she had “carefully” considered arguments and applicable laws.

There may be some clues as to how Cason reached her decision in a court filing from John Monroe, attorney for Walters, when opposing the motion to dismiss last year.

Monroe had argued that OpenAI improperly moved to dismiss the lawsuit by arguing facts that have yet to be proven in court. If OpenAI intended the court to rule on those arguments, Monroe suggested that a motion for summary judgment would have been the proper step at this stage in the proceedings, not a motion to dismiss.

Had OpenAI gone that route, though, Walters would have had an opportunity to present additional evidence. To survive a motion to dismiss, all Walters had to do was show that his complaint was reasonably supported by facts, Monroe argued.

Failing to convince the court that Walters had no case, OpenAI’s legal theories regarding its liability for ChatGPT’s “hallucinations” will now likely face their first test in court.

“We are pleased the court denied the motion to dismiss so that the parties will have an opportunity to explore, and obtain a decision on, the merits of the case,” Monroe told Ars.

What’s the libel case against OpenAI?

Walters sued OpenAI after a journalist, Fred Riehl, warned him that in response to a query, ChatGPT had fabricated an entire lawsuit. Generating an entire complaint with an erroneous case number, ChatGPT falsely claimed that Walters had been accused of defrauding and embezzling funds from the Second Amendment Foundation.

Walters is the host of Armed America Radio and has a reputation as the “Loudest Voice in America Fighting For Gun Rights.” He claimed that OpenAI “recklessly” disregarded whether ChatGPT’s outputs were false, alleging that OpenAI knew that “ChatGPT’s hallucinations were pervasive and severe” and did not work to prevent allegedly libelous outputs. As Walters saw it, the false statements were serious enough to be potentially career-damaging, “tending to injure Walter’s reputation and exposing him to public hatred, contempt, or ridicule.”

Monroe argued that Walters had “adequately stated a claim” of libel, per se, as a private citizen, “for which relief may be granted under Georgia law” where “malice is inferred” in “all actions for defamation” but “may be rebutted” by OpenAI.

Pushing back, OpenAI argued that Walters was a public figure who must prove that OpenAI acted with “actual malice” when allowing ChatGPT to produce allegedly harmful outputs. But Monroe told the court that OpenAI “has not shown sufficient facts to establish that Walters is a general public figure.”

Whether or not Walters is a public figure could be another key question leading Cason to rule against OpenAI’s motion to dismiss.

Perhaps also frustrating the court, OpenAI introduced “a large amount of material” in its motion to dismiss that fell outside the scope of the complaint, Monroe argued. That included pointing to a disclaimer in ChatGPT’s terms of use that warns users that ChatGPT’s responses may not be accurate and should be verified before publishing. According to OpenAI, this disclaimer makes Riehl the “owner” of any libelous ChatGPT responses to his queries.

“A disclaimer does not make an otherwise libelous statement non-libelous,” Monroe argued. And even if the disclaimer made Riehl liable for publishing the ChatGPT output—an argument that may give some ChatGPT users pause before querying—”that responsibility does not have the effect of negating the responsibility of the original publisher of the material,” Monroe argued.

Additionally, OpenAI referenced a conversation between Walters and OpenAI, even though Monroe said that the complaint “does not allege that Walters ever had a chat” with OpenAI. And OpenAI also somewhat oddly argued that ChatGPT outputs could be considered “intra-corporate communications” rather than publications, suggesting that ChatGPT users could be considered private contractors when querying the chatbot.

With the lawsuit moving forward, curious chatbot users everywhere may finally get the answer to a question that has been unclear since ChatGPT quickly became the fastest-growing consumer application of all time after its launch in November 2022: Will ChatGPT’s hallucinations be allowed to ruin lives?

In the meantime, the FTC is seemingly still investigating potential harms caused by ChatGPT’s “false, misleading, or disparaging” generations.

An FTC spokesperson previously told Ars that the FTC does not generally comment on nonpublic investigations.

OpenAI did not immediately respond to Ars’ request to comment.

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