Two years after the three majors banded together to sue Suno for training its artificial intelligence model on unlicensed music, Universal Music Group (UMG) and Sony Music are still locked in fierce litigation with the leading AI music firm.
At the same time, Suno is making peace with other big players in the music industry. Warner Music Group (WMG) exited the majors’ copyright lawsuit in November by signing a settlement that requires Suno to develop a new model based on licensed music. BMG, which was not part of the litigation, then inked a similar deal with the company this month.
Suno, valued at $5.4 billion in its latest funding round, thus now finds itself pursuing two potentially contradictory strategies. On one hand, it’s arguing in court against UMG and Sony that it doesn’t have to pay for AI training data. On the other, it is actively paying for training data from two of their biggest competitors.
“Suno may be in a little bit of a conundrum,” says David Martinez, a partner at Robins Kaplan who specializes in intellectual property litigation.
That “conundrum” centers on fair use, the legal principle that allows copyrighted works to be reused for free in certain situations. Suno, like dozens of other AI companies facing litigation, has argued that fair use allows it to ingest copyrighted music into its model without licenses in order to fuel technological innovation. At least one U.S. judge has already sided with the AI industry on this in a case brought by book authors against Anthropic, the company behind popular chatbot Claude.
In the Suno case, however, a U.S. judge has not yet decided whether fair use applies to training on unlicensed music (though a German court said in a landmark ruling last month that it does not).
One of several important factors that courts consider when deciding fair use is what is known as “market impact” — whether the new use deprives a copyright holder of current or potential income. UMG and Sony have argued that Suno’s licenses with other music companies are evidence of AI music’s market impact, with their lawyers writing in an April court filing that the WMG settlement “bears directly” on that question.
“Suno’s agreement with Warner to license sound recordings as training data is direct evidence that a market for such licenses exists,” wrote UMG and Sony’s attorneys. “Suno’s agreement with Warner is evidence that Suno’s models do, in fact, rely on copyrighted sound recordings and that there exist options to satisfy Suno’s need to acquire such copyrighted works for training.”
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David Leichtman, a partner at Ellenoff Grossman & Schole who handles music copyright cases, tells Billboard that Suno’s licenses with WMG and BMG could “absolutely” be leveraged by UMG and Sony as part of the fair use inquiry. He says judges can consider whether a licensing market for a copyrighted work was “likely to be developed” at the time of the alleged infringement.
“Here, the proof is in the pudding because these other entities, Warner and BMG, have been able to reach agreement on a licensing deal with the very defendant at issue,” says Leichtman. “So, I think a court would be hard-pressed to say a licensing market is not likely to be developed.”
That argument is not a slam dunk, though. Some courts have refused to consider licensing deals as evidence of market harm. In another major AI case against Meta, a judge ruled last year that such an argument is “circular,” since it would allow copyright owners to simply ink licenses and then sue those who won’t come to the table.
Suno has already cited that ruling in the battle with UMG and Sony, arguing in an April filing that “lost licensing opportunities for a transformative use are not a legally cognizable harm.” Suno’s lawyers also wrote in July that the WMG settlement proves nothing because it was “shaped by litigation risk, not by the competitive forces that define a functioning market.”
“Plaintiffs are incorrect that the settlement is probative of whether there is a viable actual or potential market to license Plaintiffs’ sound recordings for use as training data,” wrote Suno’s attorneys. “That Suno entered a global settlement with one rightsholder after many months of hard-fought litigation does not show whether a licensing market exists.”
Tori Noble, a staff attorney at the digital rights nonprofit Electronic Frontier Foundation, says the earlier ruling for Meta, and Suno’s argument citing it, are “probably the most correct outcome on the law.”
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“Otherwise, you could end up in a situation where the rightsholder could create a market for licenses that they don’t have a right to license,” says Noble. “In effect, extending a licensing market here just because one already exists would almost be like letting someone put up gates around a public park and charge for access.”
A source familiar with Suno’s case tells Billboard, “Copyright is about the advancement of arts and sciences, and factoring settlements into whether there’s a market for something is inherently anti-innovation.”
“Copyright owners are essentially well-organized monopolists, and innovators are often bootstrapped or venture-backed small companies,” adds the source familiar with Suno’s case. “Lawsuits are expensive, so settlements are more an indication of that lopsided power dynamic and the desire to pay a one-time fee to stop litigating, than an indication of where we should balance the copyright monopoly with innovation.”
Reps for UMG, Sony and WMG all declined to comment for this story. BMG did not return a request for comment.
The upshot of all this is that as of now, it’s not clear whether Suno’s licenses will indeed come back to bite the company in ongoing litigation. But Suno’s legal team is no doubt engaged in a delicate balancing act, aware that UMG and Sony could try to use its licenses with other music companies as ammunition in court.
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“I suspect the lawyers who negotiated these agreements were mindful of this issue and structured the agreements with an eye toward how they might affect the market and fair use analysis in the litigation,” says Martinez.
UMG and Sony could still reach licensing settlements with Suno before a judge actually rules on fair use. Right now, negotiations seem to be at a standstill. UMG has suggested it’ll only do a deal if Suno agrees to the same “walled garden” concept laying the foundation for its license with fellow generative AI music service Udio, while Suno says AI music must be allowed to leave the platform in order for innovation to thrive. Sony, meanwhile, hasn’t even signed onto the Udio deal.
As of now, there’s still time. Motions on the fair use question aren’t due until April 2027, and the lightning-fast speed of the AI revolution over the last several years has demonstrated that a great deal can change in eight months.
Martinez notes that 98% of lawsuits end in settlements, and he wouldn’t be surprised if Suno goes that way with UMG and Sony. “Especially for cases with big exposure like this, companies try to mitigate risk and reach a resolution rather than leave it up to a jury,” he says.
Leichtman agrees. “My guess,” says the attorney, “is that Suno [would prefer] to do licensing deals rather than take the risk in court.”
