Investors sue Adobe execs over AI copyright statements

SAN JOSE, Calif. (CN) —  A group of investors claim Tuesday Adobe executives didn’t fully disclose the software company’s prioritization of artificial intelligence and the risks involved in training and utilizing generative AI.

The stockholders say in their complaint that in 2024 and 2025 Adobe officers “caused Adobe to make false and misleading statements about its artificial intelligence strategy, characterizing the strategy as a ‘generational opportunity’ to enhance productivity and creativity through responsible, ‘commercially safe’ models natively integrated into its software ecosystem,”

All this, the plaintiffs said, was represented by the officers as an opportunity to make a lot of money.

Additionally, they say the defendants — including former Adobe Chief Executive Officer Shantanu Narayen; Adobe director Christiano Amon, the current president and CEO of Qualcomm Incorporated, a global wireless tech company; Claude Alexandre, Adobe’s vice president of digital media; and over ten other high-ranking employees at Adobe — signed and approved statements that Adobe didn’t infringe any copyrighted material as part of training its AI software.

However, those statements, the plaintiffs say, were false and misleading, and “the truth finally emerged” after a series of announcements by Adobe this year, notifying stockholders that Narayan and the company’s Chief Financial Officer, Daniel Durn, would resign.

According to the stockholders, one of Adobe’s AI training models relied on a dataset that consisted of approximately 196,640 books copied from Bibliotik, “an online shadow-library known for distributing copyrighted literary works without authorization from authors, publishers, or other rights holder.”

Furthermore, the plaintiffs say, the consideration of how the officers’ statements and conduct regarding the unauthorized use of material for training Adobe’s AI models opened the company up to high-cost litigation was minimal.

Adobe is currently facing lawsuits by authors and other creators whose copyrighted work trained Adobe’s models.

“Adobe’s officers and directors knowingly allowed the company to build its AI strategy on the unlawful infringement of copyrighted materials,” the plaintiffs’ attorney Frank Bottini said in a statement to Courthouse News. “This shareholder derivative suit seeks to hold Adobe’s top leadership liable for destroying billions of dollars in shareholder value.”

After the first announcement on March 12, the plaintiffs say, Adobe’s stock “tanked” over 7%, “wiping out billions of dollars of market capitalization.”  A June 11 announcement about the departure of Durn further hurt stock prices, with Adobe’s stock down over 42% this year.

The plaintiffs demand a jury trial, saying the defendants disregarded “known legal risks, known legal risks, authorizing or permitting an unlawful business strategy, and failing to implement adequate oversight and compliance controls.”

“As a direct result of defendants’ misconduct, the company has suffered substantial harm and continues to face significant legal, financial and reputational consequences,” the plaintiffs say.

The plaintiffs bring claims of breach of fiduciary duty and violations of the Exchange Act and the Securities Exchange Act of 1934.

Adobe did not immediately respond to a request for comment.