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US District Judge Paul A. Engelmayer Denies Motion to Dismiss in Reddit Inc. Copyright Lawsuit Against AI Companies

US District Judge Paul A. Engelmayer ruled on Friday that Reddit Inc. may proceed with its copyright lawsuit against Perplexity AI Inc. and SerpApi LLC. The court denied a motion to dismiss, finding that Reddit Inc. argued plausibly that the AI companies conspired to illegally scrape copyrighted content by circumventing technical safeguards. Reddit Inc. contends that Perplexity AI Inc. and SerpApi LLC extracted proprietary data without proper licensing, which allegedly harms the platform's reputation and profits. The ruling is a significant victory for Reddit Inc., as it establishes a precedent for how AI developers may face liability under the Digital Millennium Copyright Act. While the court acknowledged that the defendants may still prove Reddit Inc. lacked authorization for specific protections, the decision allows the case to move forward to the discovery phase. This victory comes as Reddit Inc. reported strong Q2 2026 financial results, despite a 22% stock price drop following management's warnings about volatile search-engine traffic.

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